May 1, 2006

Higher salary means higher attrition?

IBN reports about a research done by Ma Foi which said that 24% of premiere B School students in India leave within the first 12 months of joining the organization.

“There is a mismatch in compensation. A lot of salaries include perks, but when the students get their salaries in hand there is a huge gap,” Executive Director Ma Foi Management Consultants E Balaji explains.
And since huge chunks of their salaries comprise of perks - that may not always translate into hard cash - candidates often become unhappy when they discover the money in hand is much less than their initial expectations.

I have another theory.

Apart from the expectation mismatch, these students also have friends in other organizations who have a internal ear to the job openings coming up. So, if one has missed the "dream company" at the time of campus placements, one can join it in the next few months.

Lets explain it with an example.

Suppose there is a great consulting firm Dream Consulting Group. It hires students L, M and N from B School No.1 and students X, Y and Z from B School No. 2.

Unknown to it, students L, M and N get an offer from their "other dream company" Aspired Investment Bank. M and N take the decision to ditch Dream Consulting for Aspired.

However, Dream who had done its manpower planning and filled six entry level vacancies does not come to know of the decision until the placements at school no. 1 has finished.

It does not want to hire from school no. 3 because of the prestige of only hiring from the "Top 2". So when L, X, Y and Z join Dream they find out that there exist two more vacancies and they spread the word to their friends who work for organizations like Stable Consumer Goods and Plodding FMCG Ltd. And finally V and W join Dream from Stable and Plodding.

That's the real story behind the 24%.

I wish they had labelled the story as 76% of top B School students stay with their company for more than a year. Wouldn't have been so sensationalist then, right?