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?

5 comments:

  1. How good or bad is it to have bonds in a company?

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  2. Spot on. This is the REAL reason. As temp commented this figure is also a question mark on the placement process followed by the IIMs as it makes the student take job decisions which he does not want to take.

    I am sure if one looks at the percentage of people moving out of their second job that will be far less.

    I am sure most of us are in touch with our batchmates who are in an organisation for years - because they found the right one straight away. Quite a few of my friends placed and D&T, Citibank, TAS, HLL etc. have remained with these companies for durations ranging between 4-8 years now.

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  3. we also cant ignore that the same X,Yand Z are also aware of the fact that there is some other company looking out for their kind of talent.

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  4. hi gautam
    do provide me some email id of urs...need to discuss smth....

    ReplyDelete