Inflation deflates hiring prospects

Written by Smita Joshi Saha | Updated: Aug 17 2008, 03:28am hrs
It isnt the spring of hope for Indias job market. Nursing the lull after the boom, the market has got more bad news in store. Human resource managers now say surging inflation could depress the hiring prospects in India. Inflation, they say, will leave its scar on the financial and manufacturing sectors and the overall job market. But India Inc is brushing the threat aside, and using the lull to stabilise its human resources and value hunt.

Says Rahul Ghatak, vice-president, human resource, Ceat Ltd, I remain optimistic. Companies would certainly need to become far more operationally efficient in view of the huge input cost-push, but wouldnt want to compromise on strategic growth opportunities. The depressed environment in certain sectors is temporary, since the economy is fundamentally robust.

TeamLease Services Pvt Ltd, a staffing company, in its latest employment outlook report (April-June 2008), says the negative pointers in the marketdollar depreciation, subprime crisis, US recession and stock market declinehave affected job growth in the last few months. The IT & ITeS sector is the worst hit, it says. With the new fiscal year setting in, business confidence looks grim, especially on the IT & ITeS front. At this stage, the challenge for organisations would be to consolidate their resources for optimal productivity, says Sampath Shetty, vice-president, TeamLease Services, in the report.

Experts believe, in the current environment, any salary hike would largely be neutralised for the employee by rising prices and higher bank lending rates. There is also a possibility of sharper differentiation in salary hikes based on the pay for performance principle and companies are likely to move away from similar across-the-board increases.

Current price hike of essential commodities and the resulting inflation is a matter of concern across the industry and the companies have been conservative in salary rises. However, its important to take cognizance of the performance that individuals have shown during the year, which merits appropriate rewards, points out Sachin Tikekar, chief of people operations, KPIT Cummins Infosystems Ltd. He buttresses the point, adding, At KPIT Cummins we are committed to always reward measurable high performance as we identify it as a critical means to sprint towards higher goals.

Similarly, Ceat has differentiated aggressively this year on the pay for performance principle; while ensuring that pay for critical talent and high-fliers are aligned to the market. The company is focusing on other ways of retaining talent with interventions such as young executive board and career dialogues among others.

The fact remains that we are going ahead with a radial greenfield expansion as we see in it a business opportunity in the near future, and strategic hiring around the project is very much on; theres no question of pulling back. Further, we continue to infuse fresh talent from the premier B-schools, having taken 10 management trainees this year, says Ghatak.

In contrast, consultants like Ma Foi, which saw a highly buoyant hiring trend with companies making aggressive additions to their staff strength, say now a calibrated approach to hiring is visible. Companies are still hiring, though the exuberant hiring approaches are no there.

Says E Balaji, CEO, Ma Foi Management Consultants Ltd, Most companies have good communication practices where their top management communicates to employees frequently to give them a picture of where the organisation stands. Employees are also more knowledgeable compared to many other sectors. Thus, they are reasonably aware of these situations and many have toned down their expectations.

In such a situation, HR managers have to be flexible and dynamic. They have to align themselves to the company strategy and be continuously aware of the dynamism in expectations. They have to closely monitor skills and performance of the employees, maintaining apt information flow and transparency. Managing emotions in the open environment is also a key aspect, says Tikekar.

Ceats Ghatak says the challenges are three-fold in the current environment: to attract and retain the best talent in difficult conditions; to optimise productivity; and to ensure that morale doesnt drop.

According to experts, in such a situation, companies need to educate employees on managing their finances along with the other programmes like re-skilling or part-time higher studies.

Says Balaji, We see three trends emerging. One is that companies are using this time as opportunity to stabilise their teams with a reduction in attrition levels. For example, there is a greater focus on performance and productivity enhancement through improved feedback and training approaches. The second trend is that companies are value hunting. Many companies are able to hire senior mid-management talent for 20% hikes compared to 70 to 80% hikes people got used to. The third trend is companies are hiring to prepare themselves for future opportunities.

It is imperative now for companies to optimise efficiency and cost of efforts. In future, therefore, the single most important aspect in hiring would be to hire the right person with the ability to deliver the maximum in the least time, and with minimum resource investments, adds Tikekar. Adversity, after all, is an opportunity, too.