The Hindu Business Line : Attrition resolved, the SME way

Loud clapping, piercing whistles, gleeful shrieks and a toffee are not exactly things you’d expect of a wooden box. But the ‘ideas box’ in Prabha Engineers’ plant in Alwar, Rajasthan, does exactly that. If a worker takes the trouble of writing out a suggestion for improvement on a piece of paper and puts it in the box, he gets an instant reward.

Prabha Engineers, a supplier of components to Ashok Leyland, has come up with many such fun-filled ways of interaction within the organisation. For instance, people dress up like demons and sit at places that need to be negatively highlighted, such as unclean areas, or areas with an inventory pile-up or where work is left unattended.

Underlying these pranks is a desire to make the workplace fun to be in. And, behind this desire is another motive — employee retention.

Today, when even large companies are finding it hard to retain trained workmen, what is the plight of the small and medium enterprises, which cannot match the big companies in salary scales or the money spent on training. Neither do they have a brand pull to keep their flock together. Yet they have to work in the same competitive environment, as the large companies.

But SMEs such as Prabha Engineers have a few tricks up of their sleeve — something the other SMEs could learn from. Through innovative combinations of fun at work, opportunities to earn extra and job satisfaction, they are able to tackle the problem of retention.

Take for instance, Solkar Solar Industries, where attrition has rarely crossed 10 per cent. A percentage of the company’s sales goes towards an employee benefit fund. Each year (in April), this fund collection is distributed equally among employees as an incentive. “But there is a twist,” points out K.E. Ragunaathan, Managing Director. All expenses incurred due to wrong installations/ a bad product/ re-work (within the guarantee period) are deducted from this fund.

The fund now acts as a quality control mechanism — in order to protect their individual collection, the employees work harder to ensure that their colleagues do not deploy bad products.

“The employees know that the results of their labour will come back to them. They ask me not to hire more people as this would bring down the incentive earned,” Ragunaathan says.

Hasan Abdul Kader, Managing Director, CCS Infotech Ltd, a 150-strong listed company that manufacturers computers, believes in giving employees independence in making business decisions.

For instance, the company hired an accounts professional six months ago and he was given a free hand to change the billing system. He was also free to recruit or fire anybody from his department or change accounting standards and practices, says Kader.

Clearly, paying high salaries is not an option. “Though a few SMEs try to match the salaries of the big companies, it is difficult as even a Rs 1,000 hike per person can seriously impact the company’s bottom line,” notes R. Mohan, General Manager, Ma Foi, a company that has worked with SMEs since its inception in 1992. Salaries at the entry level for shop floor jobs range from Rs 3,000 to Rs 4,000 a month, compared with around Rs 6,000 at large companies.

SMEs, therefore, hire “the second best” candidates and train them.

Kader, for instance, says he has never approached an engineering college or ITI to hire candidates, but only looks at the ‘open market’ or approaches human resources consultants. For marketing positions, he hires candidates with any degree and 1-2 years of experience, while B. Com graduates and CAs are hired for accounting.

Ragunaathan says they take on students from “down-scale” colleges who generally do not get a break in the big companies. “We hire such candidates (qualified engineers) as semi-skilled labour in our office for about Rs 2,500 a month,” he says.

M. Venkatachalam, Vice President – Operations with the 30-strong Enzotech Solutions Pvt Ltd agrees. Acknowledging that SMEs like his have to settle for “the second best,” says, “the industry should try people with abilities and not qualification alone.” Enzotech, which produces sewage treatment plants, believes that employees learn from their mistakes. It backs its junior employees when they take wrong decisions and also counsels them on future roles — within and outside the company.

The strategy to ‘pick up second best and train’ works well for recruiting, but what about retention? There are interesting examples of what some companies have done in this area.

Prabha Engineers is a 600-strong company and 90 per cent of its headcount comprises shop floor workers. Since 1997, the company has been bringing employees’ spouses to the office to explain how their other-halves were contributing to the company. “We also send monthly letters along with a Rs 25 money order to employees’ parents saying how their wards have performed at work that month and their individual successes,” says Sivakumar. Sivakumar believes in giving training in fun-coated doses. The demon trick worked well it was able to draw the workers’ attention to waste and wasteful activity, and the need to cut down on such activity.

What have these practices resulted in? “We have had a steady stream of talent to hire from all these years. Candidates from Sundaram Brake Linings and Ford have expressed interest in working with us. They see us a valued employer,” Sivakumar says.

Guru Prasad, Director of the Bangalore-based V3 Engineers Pvt Ltd, feels the SME sector is maturing. He is hopeful that they will be able to employ personnel with a better education given the number of management institutes and courses available today. “For the present, if there is some governmental benefit or recognition to personnel belonging to SMEs, things may improve“, he moots.

Do these companies nurture a hope of being able to attract the same candidates that the top league of companies do? No. “We cannot hope to grow like the big companies unless our clients pay us a better price for our goods,” says Ragunaathan of Solkar. “How can I make a presentation at a college and expect a top student to join me for Rs 2,000 a month?” he asks.

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