HALF OF ITC MANAGERS HAVE BEEN WITH THE COMPANY FOR MORE THAN 25 YEARS, THE LAST TIME ITC HIRED WAS 23 YEARS AGO WHEN IT ROPED IN S SIVAKUMAR, CHAIRMAN YC DEVESWAR JOINED IN 1968 AS A TRAINEE, COMPANY DRIVEN BY PROFESSIONALS - NOT PROMOTERS- THROWS UP OPPORTUNITIES FOR ENTREPRENEURSHIP.
ITC:
Zero attrition at senior management since 15 years; remuneration & reward
strategy cited as main reasons
Writankar
Mukherjee, ET Bureau Jan 18, 2012, 03.44PM IST
KOLKATA:
Half of ITC's 7,000-odd managers have been with the tobacco, hotels and
consumer products enterprise for more than a quarter of century. Attrition at senior management levels - from
chief executive officer to business heads - has been zero for at least 15 years
now.
The last time ITC hired to fill up the top deck was 23
years ago when it roped in S Sivakumar from a
farmers' co-operative to conceptualise the path-breaking e-Choupal model. And
perhaps fittingly, Anand Nayak, chief of human resources, has been with the
Kolkata-headquartered consumer goods giant for almost four decades.
Meet the lifers at perhaps the only
corporation amongst the top tier of India Inc that has so many managers who
dedicate their entire professional life to a single company. Hindustan Unilever
(HUL) is the only other sizeable Indian operation that comes close to matching
ITC's ability to keep the brass together in such huge numbers for as long a
time. Half of HUL's 1,500 managers are lifers. At senior
management levels, it goes up to 60% although if you combine mid- and
senior-level managers, it comes down to a third. HUL's overall attrition rate
is 5% and of late it has lost senior managers to rivals. The Unilever
subsidiary has also displayed a new-found willingness to hire for top positions
- for instance, former PepsiCo ED Geetu Verma recently came on board as head of
foods.
In financial services, organisations such as ICICI Bank , HDFC and Kotak Mahindra have had
closely-knit teams over decades. Yet, these companies can't hold a candle to
ITC for two reasons. One, while ICICI has not felt the need to headhunt for
core positions, it has lost people in the top deck after they didn't win the
race to succeed former chief executive officer KV Kamath.
And, two,
while the core team at companies such as Kotak Mahindra has remained more or
less intact, the difference at ITC is that it does not have lifers only in the
top management but at the second- and third-rung levels, too.
Chairman YC Deveshwar joined as a management pupil (or
trainee) way back in 1968, and even though he worked as the chairman and
managing director of Air India
Among the three executive directors on the
board, Nakul Anand (hospitality, travel and tourism) and PV Dhobale
(paperboards, speciality papers and packaging) are lifers; Kurush Grant
(cigarettes and FMCG) joined after spending less than a year as a management
trainee at DCM.
The EDs
have been identified as potential successors to Deveshwar. At the
divisional chief executive and functional head level in ITC, the heads of
tobacco, foods, lifestyle retail, personal care, paperboards and speciality
papers, education and stationery products, hotels and R&D are all lifers. Clearly,
ITC believes there are business benefits with such a structure. HR chief Nayak
says the lifer workforce has become its DNA.
One major reason for such low attrition is a compensation structure that rewards retention handsomely, although Nayak does point
out that "we don't pay what Unilever or P&G does". "The remuneration and reward strategy is uniquely
designed to attract and retain talent. Remuneration is competitive and
contemporary, with unique elements that encourage long-term careers," adds
the HR head. Any manager who completes six years in ITC becomes eligible
for employee stock options. At last count, over 900 managers had subscribed to
the scheme. Nayak,
however, stresses that it is the intangible benefits at ITC that outweigh
remuneration - the spirit of entrepreneurship, opportunity to build brands, and
to start new businesses from scratch.
The unique
advantage of ITC is that it is driven by professionals and not by a promoter
(as of December 2011, British-American Tobacco owned just under 31% stake in
the company with financial institutions holding 32.67%). This allows for a
structure that gives full freedom to business heads to lead a segment almost as
if they own it.
Many of
these lifers have played an important role in powering the new engines of
growth that has made ITC a diversified enterprise spanningsoaps to hotels.
"Given the pace at which we are growing, it is always better to nurture
lifers since we can blindly trust them with investments," Nayak says.
As Hemant
Malik, ITC's chief operating officer (trade marketing and distribution - FMCG),
a lifer himself, says: "ITC instills a sense of ownership and encourages
you to perform with independence and freedom. People move on and change jobs in
the quest for new experiences; we get that here." E Balaji , CEO at HR firm Ma Foi Randstad, says the battle to grow
lifers in HUL and ITC is something to watch out for. "Ultimately, the
number of lifers will depend on hiring plans, continued growth and expansion
plans. And both the companies are equally aggressive in these areas," says
Balaji.
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