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Infosys is a global information technology service provider with its headquarters in India. With the rapid rates of its growth and the changing environmental factors, the human resource department faced the challenges of the increased rates of turnover caused by the reduced employees’ satisfaction with their working conditions.
This paper will discuss the main precursors of the employees’ dissatisfaction and turnover and the measures which were imposed by the human resource department for the purpose of building the employees’ competencies, retaining the skillful workforce, increasing the levels of their engagement and translating it into the improved performance.
Summary of the case
Having been ranked as the no. 1 in the Best Employer Surveys in 2001 and 2002, Infosys toppled from these lists and reported a significant decrease in the employee’s satisfaction and commitment in 2003. Recognizing the role of human resources in the company’s organizational success, the top management investigated the main underlying causes of the existing problems and took measures for improving the current state of affairs.
Created in 1981 by Narayana Murthy and his six colleagues with borrowed $ 250, after the decades of its hard struggle against the bureaucratic environment and near to death survival, the company was growing at a rapid rate since 1999. The shift from body-shopping to offshoring, moving up the IT value chain, improving the company’s brand equity and ensuring that the company is the employer of choice for the best potential employees, Infosys managed to overcome the difficulties occurring at the initial stage of its development.
Ensuring that the salaries of their employees were about 15-20 % higher than offered by the competitors and developing a deep understanding of the workers’ attitudes, the company created favorable working environment. As it was admitted by the company’s HR manager, “There are three ways in which we add value to the employee: learning value-add through training, emotional value-add through the work environment, and financial value-add through compensation and benefits” (Delong 6).
At early 2000s, the skyrocketing number of employees and the external challenges in the form of the US restrictions on the visas for business purposes decreased the employees’ satisfaction and commitment which required the changes in the human resource strategies for handling the issues of the high turnover rates and improving the performance.
Value-add through training
Realizing the importance of introducing the employees into the Infosys culture, the company developed separate training programs for the college graduates coming to the company as their first working place and the employees coming to Infosys from other companies.
The emphasis upon learnability instead of strong IT backgrounds in the candidates for fulfilling the vacancies allowed Infosys to hire promising specialists and take the advantages of effective hiring processes which was complimented with the following training programs (Birkinshaw 20).
Nurturing the talent and competencies was recognized as one of the primary objectives at Infosys in the organizational report of 2008-09 (“Infosys Sustainability Report 2008-09”). The enrollment of the employees into the training programs aimed at enhancing their professional, leadership and sustainability knowledge has become a common practice at the company.
The Special Training Program is a new initiative at Infosys which through the partnership with the Indian universities and balancing their curricula builds the necessary competencies in the students from the socially disadvantaged sectors. This solution can be recognized as an important contribution to the future hiring processes as the company.
Value-add through the work environment
Along with the training programs aimed at building the competencies in the employees, Infosys takes the initiatives for creating the favorable working environment within the company. The goal of preserving the position of one of the leading employers in the industry was proclaimed as one of the business objectives at Infosys in the organizational report of 2008-09 (“Infosys Sustainability Report 2008-09”).
As it was reported in 2008-09, the programs such as STRAP (Strategic and Action Planning), Voice of Youth (VoY) and Infosys Women Inclusivity (IWIN) are aimed at increasing the employees’ involvement into the decision making processes and creating the favorable working environment and giving serious consideration to the diverse needs of the employees’ population.
The attempts to support employees with physical disabilities have been made since 2006 when the Equal Opportunities Team was created (“Infosys Sustainability Report 2008-09”). Moreover, the Family Network Program was launched for the purpose of supporting the employees in balancing their work-personal life issues.
Another important objective was facilitating the employee-employer dialogue which was achieved through conducting meetings and surveys focused on the employees’ inclusivity and satisfaction. Sparsh as the company’s intranet allowed fostering the feeling of community and inclusivity among the workforce, whereas Infy TV as the first corporate TV channel in India allowed creating a strong communication platform.
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The strategies aimed at improving the working environment were helpful for improving the employees’ satisfaction with their working conditions. Still, the rates of turnover at Infosys remained enormously high and reached 14, 568 employees leaving the company during the year 2009 (with the 104,850 as the total number of employees in 2009) (Dey 45).
Value-add through compensation
Turning the employees’ competencies and engagement into high performance is an important element of the human resource strategy at Infosys.
Infosys was one of the first Indian companies to offer the stock options to its employees in 1994 for the purpose of retaining the brightest workforce and reducing the risks of losing them to the US competitors. However, with the skyrocketing number of employees in early 2000s, Infosys replaced its stock options with the higher levels of incentive pay (Birkinshaw 19). Currently, employees can associate their pay with their individual and corporate performance.
Another significant improvement was the change of the promotion model. The promotion policy linked to the specific needs of the organization was one of the major causes of the employees’ dissatisfaction (Delong 9). Developing clear role definitions and the performance assessment scales was a significant step forward in solving this problem.
Additional factor aimed at stimulating the employees’ improved performance is the highly competitive working place. Thus, after the performance assessments are completed, every individual is informed on his/her place within the peer group. Combining the collaborative approach with competitive environment within Infosys is expected to foster the workers’ motivation and improving their performance.
Recognizing the importance of retaining the skillful workforce and adopting the effective hiring strategies for the company’s business performance, Infosys has been making attempts to improve the working environment, training and compensation patterns for increasing the employees’ satisfaction since the early 2000s.
Though the turnover rates within the company still remained rather high as it was reported in 2009, the measures taken for improving the environment, facilitating the employee-employer dialogue and improving the workers’ motivation and engagement were important for improving the existing situation.
Birkinshaw, Julian. “Infosys: Computing the Power of People”. Business Strategy Review, Winter 2008, 19(4): 18-23. Print.
Delong, Thomas. “Infosys (A): Strategic Human Resource Management”. Harvard Business School, 16 Oct. 2006, Print.
Dey, Subhendu. “Employee Retention- A Key to Organizational Growth”. Globsyn Business School, January-June 2009, 3(1): 45- 49. Print.
“Infosys Sustainability Report 2008-09”. Infosys Corporate Site, 31 March 2009. Web.