MCom I Semester Methods Performance Evaluation Study Material Notes

MCom I Semester Methods Performance Evaluation Study Material Notes: Providing performance feedback what about team performance evaluations International human resource practices selected issues selection managing diversity in organizations performance evaluation work-life conflicts diversity training call centers in India and overview of HR Practices finishing touches through training appraisal outsourcing HR Activities :

MCom I Semester Foundation organization structure Study Material Notes

Methods of Performance Evaluation

The previous sections explained that we evaluate and toho should do the evaluating. Now we ask! How do we evaluate an employee’s performance? That is, what are the specific techniques for evaluation? This section reviews the major performance-evaluation methods.

Written Essays Probably the simplest method of evaluation is to write a narrative describing an employee’s strengths, weaknesses, past performance, potential, and suggestions for improvement. The written essay requires no complex forms or extensive training to complete. But the results often reflect the ability of the writer. A good or bad appraisal may be determined as much by the evalua tor’s writing skill as by the employee’s actual level of performance,

Critical Incidents Critical incidents focus the evaluator’s attention on the behaviors that are key in making the difference between executing a job effectively and executing it ineffectively. That is, the appraiser writes down anecdotes that describe what the employee did that was especially effective or ineffective. The key here is that only specific behaviors, not vaguely defined personality traits, are cited. A list of critical incidents provides a rich set of examples from which the employee can be shown the behaviors that are desirable and those that call for improvement.

Graphic Rating Scales One of the oldest and most popular methods of evaluation is the use of graphic rating scales. In this method, a set of performance factors, such as quantity and quality of work, depth of knowledge, cooperation, loyalty, attendance, honesty, and initiative, is listed. The evaluator then goes down the list and rates each on incremental scales. The scales typically specify five points, so a factor such as job knowledge might be rated 1 (“poorly informed about work duties”) to 5 (“has complete mastery of all phases of the job”).

Why are graphic ratings scales so popular? Although they don’t provide the depth of information that essays or critical incidents do, they are less time-consuming to develop and administer. They also allow for quantitative analysis and comparison

Methods Performance Evaluation

Behaviorally Anchored Rating Scales Behaviorally anchored rating scales (BARS) combine major elements from the critical incident and graphic rating scale approaches: The appraiser rates the employees based on items along a continuum, but the points are examples of actual behavior on the given job rather than general descriptions or traits.

BARS specify definite, observable, and measurable job behavior. Examples of job-related behavior and performance dimensions are found by asking participants to give specific illustrations of effective and ineffective behavior regarding each performance dimension. These behavioral examples are then translated into a set of performance dimensions, each dimension having varying levels of performance. The results of this process are behavioral descriptions, such as anticipates, plans, executes, solves immediate problems, carries out orders, and handles emergency situations.

Forced Comparisons Forced comparisons to evaluate one individual’s performance against the performance of another or others. It is a relative rather than an absolute measuring device. The two most popular comparisons are group order ranking and individual ranking.

The group order ranking requires the evaluator to place employees into a particular classification, such as top fifth or second fifth. This method is often used in recommending students to graduate schools. Evaluators are asked whether the student ranks in the top 5 percent of the class, the next 5 percent, the next 15 percent, and so forth. But when used by managers to appraise employ ces, managers deal with all their subordinates. Therefore, if a rater has 20 employees, only four can be in the top fifth and, of course, four must also be relegated to the bottom fifth.

The individual ranking approach rank-orders employees from best to worst. If the manager is required to appraise 30 employees, this approach assumes that the difference between the first and second employees is the same as that between the twenty-first and twenty-second. Even though some of the employees may be closely grouped, this approach allows for no ties. The result is a clear ordering of employees, from the highest performer down to the lowest.

Multiperson comparisons can be combined with one of the other methods to blend the best from both absolute and relative standards. For example, recent studies of Ivy League universities have found widespread evidence of grade inflation. In one recent year, 46 percent of all undergraduate grades at Harvard were A’s. At Princeton, 43 percent of all undergraduate grades were A’s, with only 12 percent below the B range. One way for these universities to deal with this problem would be to require instructors to include not only an absolute letter grade but also relative data on class size and rank. So a prospective employer or graduate school could look at two students who each got an “A” in their physical geology courses and draw considerably different conclusions about each because next to one grade it says “ranked 2nd out of 26.” while the other says ranked 14th out of 30.” Obviously, the former student performed better, relatively, than did the latter.

Methods Performance Evaluation

Suggestions for Improving Performance Evaluations

The performance evaluation process is a potential minefield of problems. For instance, evaluators can make leniency, halo, and similarity errors, or use the process for political purposes. They can unconsciously inflate evaluations (positive leniency), understate performance (negative leniency), or allow the assessment of one characteristic to unduly influence the assessment of other characteristics (the halo error). Some appraisers bias their evaluations by unconsciously favoring people who have quali ties and traits similar to themselves (the similarity error). And, of course, some evaluators see the evaluation process as a political opportunity to overtly reward or punish employees they like or dislike. Although there are no protections that will guarantee accurate performance evaluations, the following suggestions can significantly help to make the process more objective and lair.

Emphasize Behaviors Rather Than Traits Many traits often considered to be related to good performance may, in fact, have little or no relationship to performance. For example, traits such as loyalty, initiative, courage, reliability, and self-expression are intuitively appealing as characteristics in employees. But the relevant question is: Are individuals who are evaluated as high on those traits higher performers than those who rate low? We can’t answer this question easily. We know that there are employees who rate high on these characteristics and are poor performers. We can find others who are excellent per formers but do not score well on traits such as these. Our conclusion is that traits such as loyalty and ini tiative may be prized by managers, but there is no evidence to support that certain traits will be adequate synonyms for performance in a large cross section of jobs.

Another weakness of trait evaluation is the judgment itself. What is “loyalty? When is an employee “reliable”? What you consider “loyalty,” I may not. So traits suffer from weak interrater agreement.

Document Performance Behaviors in a Journal Journals help evaluators to better organize information in their memory. The evidence indicates that keeping a journal of specific critical incidents for each employee helps evaluators to be more accurate and less prone to rating errors. 54 Journals, for instance, tend to reduce leniency and halo errors because they encourage the evaluator to focus on performance-related behaviors rather than on traits.

duration increases. and the final performance evaluation is made up from the cumulative scores of those remaining. The logic of multiple evaluators applies to organizations as well. If an employee has had ten supervisors, nine having rated her excellent and one poor, we can discount the value of the one poor evaluation. Therefore, by moving employees about within the organization so as to gain a number of evaluations or by using multiple assessors (as provided in 360degree appraisals), we increase the probability of achieving more valid and reliable evaluations, Evaluate Selectively Appraisers should evaluate only in areas in which they have some expertise.58 If raters make evaluations on only the dimensions on which they are in a good position to rate, we increase the interrater agreement and make the evaluation a more valid process. This approach also recognizes that different organizational levels often have different orientations toward those being rated and observe them in different settings. In general, therefore, we would recommend that appraisers should be as close as possible, in terms of organizational level, to the individual being evaluated. Conversely, the more levels that separate the evaluator and the person being evaluated, the less opportunity the evaluator has to observe the individual’s behavior and, not surprisingly, the greater the possibility for inaccuracies.

Train Evaluators If you can’t find good evaluators, the alternative is to m e evaluators. There is substantial evidence that training evaluators can make me more accurate raters. 56

Common errors such as halo and leniency have been minimized or eliminated in workshops where managers practice observing and rating behaviors. These work shops typically run from one to three days, but allocating many hours to training may not always be necessary. One case has been cited in which both halo and leniency errors were decreased immediately after exposing evaluators to explanatory training sessions lasting only five minutes. But the effects of training appear to diminish over time. This suggests the need for regular refresher sessions. Provide Employees with Due Process The concept of due process can be applied to appraisals to increase the perception that employees are treated fairly. Three features characterize due process systems: (1) Individuals are provided with adequate notice of what is expected of them; (2) all relevant evidence to a proposed violation is aired in a fair hearing so the individuals affected can respond; and (3) the final decision is based on the evidence and is free from bias.

Why the reluctance to give performance feedback? There seem to be at least three reasons. First, managers are often uncomfortable discussing performance weaknesses directly with employees. Given that almost every employee could stand to improve in some areas, managers fear a confrontation when presenting negative feedback. This apparently even applies when people give negative feedback to a computer! Bill Gates reports that Microsoft conducted a project that required users to rate their experience with a computer. “When we had the computer the users had worked with ask for an evaluation of its performance, the responses tended to be positive. But when we had a second computer ask the same people to evaluate their encounters with the first machine, the people were significantly more critical. Their reluctance to criticize the first computer to its face sug. gested that they didn’t want to hurt its feelings, even though they knew it was only a machine.” Sec ond, many employees tend to become defensive when their weaknesses are pointed out. Instead of accepting the feedback as constructive and a basis for improving performance, some employees challenge the evaluation by criticizing the manager or redirecting blame to someone else. A survey of 151 area managers in Philadelphia, for instance, found that 98 percent of these managers encountered some type of aggression after giving employees negative appraisals. Finally, employees tend to have an inflated assessment of their own performance. Statistically speaking, half of all employees must be below-average performers. But the evidence indicates that the average employee’s estimate of his or her own performance level generally falls around the 75th percentile. So even when managers are providing cood news, employees are likely to perceive it as not good enough

The solution to the performance feedback problem is not to ignore it, but to train managers in how to conduct constructive feedback sessions. An effective review-one in which the employee perceives the appraisal as fair, the manager as sincere, and the climate as constructive can result in the employee leaving the interview in an upbeat mood, informed about the performance areas in which he or she needs to improve, and determined to correct the deficiencies. In addition, the performance review should be designed more as a counseling activity than a judicial process. This can best be accomplished by allowing the review to evolve out of the employee’s own self-evaluation.

Methods Performance Evaluation

What About Team Performance Evaluations?

Performance evaluation concepts have been almost exclusively developed with only individual employees in mind. This reflects the historic belief that individuals are the core building block around which organizations are built. But as we’ve described throughout this book, more and more organizations are restructuring themselves around teams. In organizations that use teams. how should they evaluate performance? Four suggestions have been offered for designing a system that supports and improves the performance of teams.66

1 Tie the team’s results to the organization’s goals. It’s important to find measurements that apply to important goals that the team is supposed to accomplish.

2. Begin with the team’s customers and the work process the team follows to satisfy customers’ needs. The final product the customer receives can be evaluated in terms of the customer’s requirements. The transactions between teams can be evaluated based on delivery and quality. And the process steps can be evaluated based on waste and cycle time,

3. Measure both team and individual performance. Define the roles of each team member in terms of accomplishments that support the team’s work process. Then assess each member’s contribution and the team’s overall performance. Remember that individual skills are necessary for team success but are not sufficient for good team performance.67

4. Train the team to create its our measures. Having the team define its objectives and those of each member ensures that everyone understands their role on the team and helps the team to develop into a more cohesive unit.

International Human Resource Practices: Selected Issues

Many of the human resource policies and practices discussed in this chapter have to be modified to reflect societal differences 68 To illustrate this point, let’s briefly look at the universality of selection practices and the importance of performance evaluation in different cultures.

Selection

A recent study of 300 large organizations in 22 countries demonstrated that selection practices differ by nation.69 A few common procedures were found. For instance, the use of educational qualifications in screening candidates seems to be a universal practice. For the most part, however, different countries tend to emphasize different selection techniques. Structured interviews, as a case in point, were popular in some countries and nonexistent in others. The authors of the study suggested that “certain cultures may find structured interviews antithetical to beliefs about how one should conduct an interpersonal interaction or the extent to which one should trust the judgment of the interviewer. 70

The above study, when combined with earlier research, tells us that there are no widely accepted universal selection practices. Moreover, global firms that attempt to implement standardized worldwide selection practices can expect to face considerable resistance from local managers. Policies and practices need to be modified to reflect culture-based norms and social values, as well as legal and economic differences.

Performance Evaluation

We previously examined the role that performance evaluation plays in motivation and in affecting! behavior. Caution must be used, however, in generalizing across cultures. Why? Because many cultures are not particularly concerned with performance appraisal or, if they are, they don’t look at it the same way as do managers in the United States or Canada.

Let’s look at four cultural dimensions: individualism/collectivism, a person’s relationship to the environment, time orientation, and focus of responsibility.

Individual-oriented cultures like the United States emphasize formal performance evaluation systems to a greater degree than informal systems. They advocate, for instance, written evaluations performed at regular intervals, the results of which are shared with employees and used in the determination of rewards. On the other hand, the collectivist cultures that dominate Asia and much of Latin America are characterized by more informal systems-downplaying formal feedback and disconnecting reward allocations from performance ratings, Japanese technology giant Fujitsu, for instance, introduced a formal, performance-based evaluation system in Japan in the mid-1990s. But the company recently began to dismantle it, recognizing that it “had proved flawed and a poor fit with Japanese (collectivist) business culture.”

U.S. and Canadian organizations hold people responsible for their actions because people in these countries believe that they can dominate their environment. In Middle Eastern countries, on the other hand, performance evaluations aren’t likely to be widely used because managers in these countries tend to see people as subjugated to their environment

Some countries, such as the United States, have a short-term time orientation. Performance evaluations are likely to be frequent in such a culture at least once a year. In Japan, however, where people hold a long-term time frame, performance appraisals may occur only every five or ten years.

Israel’s culture values group activities much more than does the culture of the United States or Canada. So, whereas North American managers traditionally emphasized the individual in performance evaluations, their counterparts in Israel are much more likely to emphasize group contributions and performance.

Managing Diversity in Organizations

David Morris and his father, Saul, started Habitat international in 1981. Located in Rossville, Georgia, the company manufactures a grass-like indoor-outdoor carpet. From the beginning, the Morrises hired refugees from Cambodia, Bosnia and many of whom didn’t speak English. But when a social service worker suggested in 1984 that the company hire mentally challenged people, Saul balked. Hiring someone with a condition such as Down’s syndrome seemed too chancy. But David thought otherwise. He talked his dad into giving it a try.

The first group of eight mentally disabled workers came in with their job coach from the social services agency and went straight to work boxing mats. Two weeks later, says Saul, employees were coming to him and wondering why the company couldn’t “hire more people like this, who care, do their work with pride, and smile?”

Today, 75 percent of Habitat’s employees have some kind of disability. People with schizophrenia, for instance, are driving forklifts next to employees with autism or cerebral palsy. Meanwhile, the Morris father-son team are doing good things both for these people and for themselves. The disabled employees have enhanced self-esteem and are now self-sufficient enough to be off government aid, and the Morrises enjoy the benefits of a dedicated, hardworking labor force. “We have practically zero absenteeism and very little turnover.” says David.

Habitat International illustrates the role of employee selection in increasing diversity. But effective diversity programs go well beyond merely hiring a diverse Through a global initiative called workforce. They also include managing work/life conflicts and providing diversity

Work/life conflicts grabbed management’s attention in the 1980s, largely as a Fridays to be there with his children result of the growing number of women with dependent children entering the workforce. In response, most major organizations took actions to make their workplaces more family-friendly.74 They introduced programs such as on-site child care, summer day camps, flextime, job sharing, leaves for school functions, telecommuting, and part-time employment. But organizations quickly realized that work/life conflicts were not experienced only by female employees with children. Male workers and women without children were also facing this problem. Heavy workloads and increased travel demands, for instance, were making it creakingly hard for a wide range of employees to meet both work and personal responsibilities. A Harvard study, for example, found that 82 percent of men between the ages of 20 and 39 said that a “family-friendly” schedule was their most important job criterion. Even among employees who seemed to be able to do it all,” many were experiencing guilt or stress.

Today’s progressive workplace is being modified to accommodate the varied needs of a diverse workforce. This includes providing a wide range of scheduling options and benefits that allow employees more flexibility at work and allow them to better balance or integrate their work and personal lives. For instance, employees at the corporate office of retailer Eddie Bauer are provided with flexible scheduling, plus a full array of on-site services, including dry cleaning pick-up and delivery, an ATM, a gym with personal trainers, flu shots, Weight Watcher classes, and financial seminars 77 Exhibit 17-2 lists some broader examples of initiatives that organizations provide to help their employees reduce work/life conflicts.

Recent research on work/life conflicts has provided new insights for managers into what works and when. For instance, evidence indicates that time pressures aren’t the primary problem underlying! work/life conflicts. It’s the psychological interference of work into the family domain and vice versa. People are worrying about personal problems at work and thinking about work problems at home. So dad may physically make it home in time for dinner but his mind is elsewhere while he’s at the dinner table. This suggests that organizations should spend less effort helping employees with time-management issues and more effort at helping them clearly segment their lives. Keeping workloads reasonable. reducing work-related travel, and offering on-site quality child care are examples of practices that can help in this endeavor. Also, not surprisingly, people have been found to differ in their preference for scheduling options and benefits. Some people prefer organizational initiatives that better segment work from their personal lives. Others prefer initiatives that facilitate integration. For instance, flextime! segments because it allows employees to schedule work hours that are less likely to conflict with personal responsibilities. On the other hand, on-site child care integrates by blurring the boundaries between work and family responsibilities. People who prefer segmentation are more likely to be satified and committed to their work when offered options such as flextime, job sharing, and part-time hours. People who prefer integration are more likely to respond positively to options such as out site child care, gym facilities, and company-sponsored family picnics.

Diversity Training

The centerpiece of most diversity programs is training. For instance, a relatively recent survey found that, among companies with diversity initiatives, 93 percent used training as part of their programs.80 Diversity training programs are generally intended to provide a vehicle for increasing awareness and examining stereotypes. Participants learn to value individual differences, increase their cross-cultural understanding, and confront stereotypes. In today’s global economy, and in the aftermath of the terrorist attacks of 9/11. diversity training can be particularly helpful in accelerating cooperation in multinational work teams, facilitating group learning, and reducing cultural misunderstandings. 82

The typical program lasts from half a day to three days and includes role-playing exercises, lectures, discussions, and sharing of experiences. For example, a training exercise at Hartford Insurance that sought to increase sensitivity to aging asked participants to respond to the following four questions: (1) If you didn’t know how old you are, how old would you guess you are? In other words, how old do you feel inside? (2) When I was 18. I thought middle age began at age .(3) Today, I think middle age begins at age (1) What would be your first reaction if someone called you an older worker Answers to these questions were then used to analyze age-related stereotypes. In another program designed to raise awareness of the power of stereotypes, each participant was asked to write an anony mous paper detailing all groups women, born again Christians, blacks, gays, Hispanics, men–to which they had attached stereotypes 81 They were also asked to explain why they’d had trouble working with certain groups in the past. Based on responses, guest speakers were brought into the class to shatter the stereotypes directed at each group. This was followed by extensive discussion.

Methods Performance Evaluation

Call Centers in India-An Overview of HR Practices

After the software service industry put India on the world map, it is the turn of IT-enabled services (ITS), which has taken the baton to keep the Indian flag high and flying, ITS was the silver lining in the dark clouds of the Indian IT marketplace during the turbulent year of 2001 as it posted a growth of 78 percent, from a turnover of Rs 4,100 crore in 1999-2000, to nearly Rs 7,100 crore in 2001-02.

The National Association of Software and Services Companies (NASSCOM), through a study, has pointed out that outsourcing IT-enabled services/business process operations to India cut the costs by as much as 40-50 percent for companies, which in turn generates free cash-flows due to reduced investments in infrastructure and equipment. Total value of outsourcing to India ($17.2 billion to 2004-05) is estimated to be 44 percent of the world-wide total. The overall Indian IT industry (including domestic market) grew by 32 percent in financial year 2004-05 registering revenues of $22 billion, up from $16.7 billion in 2003-04. The target projected for FY 09 is $50 billion.

The enormous growth of call centres is due to importance attached by companies to customer care, telemarketing, telebanking, home shopping, etc., as well as due to market liberalization of utilities and growth of direct marketing. Call centre, originally conceived as separate and individual distribution channel of the customer care system, have been transformed into an integrated customer management system. With the integration of Internet technology in call centres they are equipped to handle telephone, fax, Internet TV and enquiries 24 X 7.

Methods Performance Evaluation

There has been a mismatch between demand and supply of human resources in the industry in India. Both employment generation and attention levels are high, inspite of 1,50,000 jobs added to the ITes/BPO in 2004-05. Demand for experienced professionals, expected supply and attribution was between 25 and 10 percent. By 2008, the sector is expected to fall short by 2.62.000 people out of a total requirement of about 10 lac people according to the Planning Commission. ITS-BPO companies were the largest recruiters in 200405. The industry is also targeting new service lines like technical help desks, finance and accounting services, engineering services, equity research etc. to widen its gamut of services and achieve further growth.

All call centre operations require huge manpower which accounts for 55 percent to 60 percent of their total cost. But in India, manpower cost is almost one-tenth of what it is overseas. Obviously, lot of overseas call centre operations are now moving grounds here. Thus, appropriate management of HR in these variegated call centres becomes the most challenging job of this sector

Methods Performance Evaluation

Recruitment and Selection-Changing Trends

Recruitment is carried out by any one of the three methods, i.e., walk-in interviews, employee referrals, or placement agencies. The skills, required for call centre job involves communication skills. ability to understand, accent language skills, computer literacy, previous BPO experience, and a high level of alertness. For selection, various tests such as written and spoken English tests, group discussions, telephone assessment, and one-to-one interviews are conducted either by the company itself or by an assessment centre. These centres use a comprehensive and standardized procedure in which multiple assessment, including psychometric tests, are used to assess candidates and arrive at a credible level of behavioral forecasting, since they have to work under constant pressure. But for an outbound lead generation or sales program, the selection procedure includes tests on selling skills to measure assertiveness, persistence, drive, empathy, convincing capability), achievement ori, entation, and script delivery.

The experiences of most call centres show that only about 2 percent to 5 percent of the candidates qualify from a single recruitment campaign. The process of recruitment is time-consuming and costly, especially if it is done through placement agencies. Also, selection can prove to be incorrect, at times, since the first shortlisting is done by traditional methods, on the basis of education, experience etc.

Methods Performance Evaluation

Most call centres are observed to have around 50 percent or more employees between age group of 21-24 years and around 25 percent or more between age group of 25-30. This is mainly due to easy of smart and enthusiastic youngsters, who desire to make a quick buck for themselves and gain job experience.

As per the NASSCOM, survey 2005 the male-female ratio working in call centres is 35:65. This itself indicates that call centres prefer women employees as they are presumed to have a better temperament for the job and a high level of patience. Certain barriers like shift duties, interaction with “unknown foreign customers’ and unbalanced leave options, however, become major restrictions for women applicants. But, there is a possibility that the number of women working in call centres will go up exponentially, once the job gains greater social acceptance. However, the ratio is reversal in IT, 65:35 (male: female)

The current salaries in the BPO sector for customer care representatives is Rs 8,000-Rs 15,000 per month Team leaders get Rs 17,000-Rs 26,000 per month, managers Rs 3 lacs-Rs 5.5 lacs per annum, and training heads Rs 8 lacs–Rs 12 lacs per annum, training managers Rs 5 lacs-Rs 8 lacs per annum, and trainers Rs 2 lacs-Rs 5 lacs per annum. Specialized I Tes professionals with MBA, B.E. B.Tech., C.A.(CPA) etc. are paid higher salaries depending upon the expertise required for the desired work profile. The salary paid also depends upon attendance regularity and targets achieved. At times incentives may exceed salary as well. Though the salary structure is very appealing initially to a fresher, gradually, the routine creates burden. In BPOs almost 200 personnel are being hired every working day of the year. There has been a shift away from hiring freshers to professionals with more domain-specific skill-sets, and business analysts with programming skills.

Methods Performance Evaluation

Finishing Touches through Training

Communication of the right kind is an essential requirement in a call centre job. Usually, the training period lasts for more than a month, involving Voice and Accent Training and Customer Care Training. According to the Mckinsey report, apart from Mumbai, Delhi, and Bangalore, the quality of graduates applying for jobs in other cities is not as per les requirement. India produces over 100.000 graduates every year but the quality of spoken English is not very good in small towns. The training costs for an employee ranges from Rs 25,000 to RS 50,000 for a two to five months session and there is a constant pressure to learn the American British accent through accent training Through training, an American British style of work culture is also created.

Methods Performance Evaluation

Appraisal

A very high degree of surveillance is used through technology and management techniques to appraise performances. It is based upon the number of calls handled, time given to each call, repeat calls, punctuality and attendance, and team work. Employees are monitored constantly and contin uously by team leaders, which pressurizes the employees all the time. Quick turnaround of feedback is most essential to the effectiveness of call monitoring. The evaluation report also gives suggestions for improvement. Those who succeed in maintaining the standard performance levels are given monetary incentives and also coupons to hotels, discotheques etc. According to Nasscom, only 5 out of 150 employees become team leaders in a year, hence cash incentives is one way of keeping employees happy.

Methods Performance Evaluation

Attrition and Manpower Shortage

One of the biggest challenges that BPO companies face today is that of high attrition rates. According to NASSCOM, as of March 2003, the attrition rate is 35 percent in non-voice call centers and 45 percent in voice call centers. Job-hopping has become an increasingly popular practice amongst starry-eyed contact center agents, who search for higher salary packages. About 80 percent of employees look out for better opportunities and higher positions in the same industry. The reason for the high rate of attrition is mainly due to lack of comfort, lack of enrichment potential in terms of career growth, non-standard working hours, adjusting to western work culture. The problem of high attrition rates in the BPO and IT industry is set to become more acute as manpower shortages are expected to increase as per Nasscom and Mckinsey study report of 2005. India needed at least 6,30,000 IT professionals in 2004 but was short of 1.75,000. The shortage will increase to 3.6 million by 2012. This of course, spells a boom for the IT training industry and more challenges for the HR managers of BPOs.

Methods Performance Evaluation

Coping HR Shortage

As more and more BPOs grapple with their biggest problem, a high attrition rate, call centres are doing a re-thinking about the kind of employees they want. The preferred kinds of employees usually demanded are S-types or submissive types personalities, who are most likely to stick to the job. Aggressive youngsters with lots of enthusiasm are now being replaced with mild and conservative ones. A study conducted by Team Value Profiling Services (TVPS) among Indian BPOs reveals that enthusiastic employees are not cut out for monotonous tasks and get bored and even the most attractive pay packets are not enough to hold them back. Many call centres also resort to Pre Employment Screening (PES) service providers, mostly MNCs operating in the security and risk analysis fields with mini call center-like apparatus and technology aids. The BPO sector is processing more and more sensitive information of the job applicants with respect to their educational and professional qualifications, employment details, and reference checks. While the checks are openly done for junior and middle management, for senior positions, behavioral patterns are scrutinized through psychometric analysis. 85

Hiring mature talent, possibly people over 35 years of age can curb the problem related to attrition. Outstation candidates from small towns could become a good asset to the industry, especially if they are provided with shared accommodation. Attractive bonus payments without linking to performance/targets can be a good option for stabilizing the workforce. Specialized diplomas and MBA courses are being introduced for those who aspire to upgrade their knowledge base.

Methods Performance Evaluation

Outsourcing HR Activities

The outsourcing of HR activities has several potential risks as well as benefits. It enables the internal HR staff to focus on strategic activities that add more value to the business. It enables a decentralized structure that supports innovation and flexibility, alleviating the bureaucratic burden of centralized administration. It also helps HR professionals to play an important role in corporate downsizing efforts and facilitates access to new ideas and approaches outside the organization.

The most frequently mentioned factors discouraging HR outsourcing were perceived to be higher cost, lower quality, and fear of losing control. If companies depend too much on vendors then they can lose strength in core competencies.

Methods Performance Evaluation