Now, cos look to fix attrition liability on recruitment firms
Corporates suffering high attrition rates have got a new punching bag. Every time an employee leaves, the biggest beneficiary apart from the company he joins, is the recruitment company.
By K Yatish Rajawat & Chhavi Dang, TNN |
MUMBAI: Corporates suffering high attrition rates have got a new punching bag. Every time an employee leaves, the biggest beneficiary apart from the company he joins is the recruitment company.
Companies are recognising that recruitment firms should be made responsible for retention as they gain from attrition and job hopping of employees.
Attrition rate has jumped across sectors like retail, aviation, BPO and banking, and is now running at an alarming average of 22%. This means that one in five employees in these sectors is likely to leave for a competitor.
Realising that it will not be enough to just keep filling the vacancies, companies are getting tough with recruitment firms. Madhu Bhojwani, COO, EmmayHR, says customers insist that recruitment firm give a guarantee that the candidates will stay for a minimum period.
“If recruited candidate leaves employment during this time period, then the recruitment firm is liable to replace the candidate free of cost. The guarantee period varies from six months to one year.” Minimum retention period guarantees were earlier provided only by executive search firms and for only senior level candidates. Now, companies are demanding this for entry and mid-level candidates from mass hiring & recruiting firms.
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Another facet that has changed is the way payment is made to recruitment firms. Ma Foi works on a 33-33-33 fees model. This means 33% of the fees is paid when the mandate reaches the recruitment firm, one third is given when offer letter is accepted by the employee and the remaining is paid when the employee joins the organisation. E Balaji, COO, Mafoi, says, “We also provide guarantee period to our strategic clients.”Though these fees structures or even the minimum guarantee period are all negotiable for a large contract. While recruitment companies can today afford to refuse business, they will not allow a large brand or attractive customer to walk away. Recruitment firms are also becoming more circumspect in vetting candidates that they recommend to their strategic clients.
If high attrition rates are giving nightmares to corporates, it is getting business for the recruitment agencies. Recruitment firms claim that they scrutinise CVs to predict potential stability of a candidate. “Customers are insisting that they don’t want employees with an average of less than two years in a company,” Gautam Sinha, CEO, TVA Infotech, says.
Clients these days, give specific requirements about the kind of employees they want. An executive, who has changed three jobs in the last five years, is not seen as a top contender, says Mr Balaji.
Companies are also signing “no-poaching” agreements with recruitment firms. In return for business to recruitment firms, companies are insisting that recruitment firms should not poach on their employees.
“Poaching from one’s own clients is unethical and a strict no-no,” says Mr Sinha. “We have written contracts that clearly restricts us from poaching employees from our clients’ company. Moreover, we don’t even entertain job enquiries sent in by the employees of our clients,” adds Ms Bhojwani.
Ma Foi has an internal “off-limit” list which has about 40 of its top clients. Under the contractual terms, the HR firm can’t poach from the companies listed in the off-limit list. However, if an employee from these companies comes with his CV through a newspaper advertisement given by Ma Foi, they do accept his resume and put it through the natural cycle, says Mr Balaji.
What companies can demand from recruitment firms:
• Demand Guarantee period ranges from three months to one year
• If the employee quits within stipulated period, demand free of cost by replacement
• Demand no poaching agreement
• Demand your recruitment agency not to entertain even CVs from your employees
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