Clues for discovering the Holy Grail of Employee Retention

The employee attrition rate in India is at an all time high. The Hewitt Associates’ annual Asia Pacific Salary Increase survey for 2009-10 pegs the turnover rate in India at 13.8 per cent. This high employee turnover rate results in both direct and indirect losses to a company and causes continued and unwarranted pressure on the HR department. I believe that given the current job opportunities the attrition rates would continue to see an upward trend in the near future.

Before we discuss a solution for this problem it is important to understand the causes leading to employee defection. Most of the causes revolve around the level of satisfaction the job provides to the employee. Job satisfaction can be a factor of salary provided, level of workload, opportunity for growth, level of skill competency and level of job security.

I would assume compensation as being the most important factor for employee defection. Resolving job compensation issue can be a tricky situation wherein a consensus needs to be reached between what the company is willing to pay and the employees’ perceived value of him. However either of the attrition factors cannot be held in isolation. It is always a combined effect, for example if a company invests in improving employee skills then a progressive employee may not mind a lower salary. On the other hand, low job compensation coupled with excess work hours and no opportunity for growth is a sure shot recipe for losing the employee.

One more not so obvious reason leading to employee defection is the lack of job skills. Most employees exaggerate their competence for a given sill set. This allows the candidate to be hired, however as the work load begins to mount and deadlines are set, there develops a fear of getting fired. Rather than get in a situation where his/her skill sets are questioned the employee begins to seek alternate job opportunities and defects ASAP.

Most of the HR manager may be aware of the above causes of employee attrition and may also have the necessary steps in place to prevent the same. However the implementation of a thorough employee background check during the hiring process can provide insight into the candidate’s professional background and personality.

The valuable information provided by a thorough background check arms the HR manager with the information for making critical hiring decisions and allows filtering of candidates that are a mismatch to the organizational culture.

Why are Employee Background Checks so costly in India?

The cost of employee background verification depends primarily on the types of the checks selected, number of each such check and the vendor selected. This has been dealt with in detail in a previous blog post – How much does Employee Background Verification cost? The reason behind these checks being so costly in India is that there are certain checks that require a lot of physical operations and running around as against online database checks (which are the norm in more developed nations). The address, education and criminal verifications in particular are relatively costlier. This post will focus on why these verifications cost as much as they do.

Address Verification
Address verification is conducted through a field officer’s visit to the mentioned address. The field officer verifies the address details, the tenure of stay, the ownership status and details of other members residing there. If in case the door is found locked, the officer goes ahead and verifies the details from people residing in the neighborhood. The cost of such a check will typically depend upon the remoteness and accessibility of the location. This check may not be feasible in certain disturbed areas or may cost extremely high. With the advent of Aadhar, this cost may probably be lowered substantially, as physical verification might not be required anymore in some cases.

Education Verification
Absence of a centralized database is the main cause behind education checks being high-priced. Some of the universities have started maintaining online records of their students. However, development of the system and implementation going forward will may turn out to be fast but retrospectively will take time; they have a huge data to transfer from the old system to the new online model. Therefore, a unified, centralized educational database will still remain a challenge.

So physically, you can go to the universities and check the old records, but there are hurdles associated with that. Thanks to the endless sinewy protocols in Indian academic institutes, it can take a long time for the university authorities to find and verify the record you are looking for. Only a few of the higher education institutions have placed their graduates’ lists online. In addition, the HRD Ministry sponsored National Database of Academic Qualifications is still in the development stage. So a physical visit to the institution becomes imperative in most cases.

Therefore, the best and only reliable method is that a designated officer physically visits the registrar’s office with a photocopy of the certificate, mark sheets and sometimes even examination hall cards to verify the authenticity of the degree. The pricing therefore depends on the distance and the mandatory university fees.

Criminal Verification
The police records are available at different levels – national (National Crime Records Bureau), state, city/town/district, and local police station. While the records are computerized at NCRB and most of the state levels, they may not be available in electronic form at most of the district and local police station levels.

Therefore, the criminal records have to be accessed at the state, district, or police station level by physically visiting the specific office and requesting the criminal background verification.

Criminal verification in India is more difficult as there are no Felony or Misdemeanor courts in India like western nations. Instead, India has Police Departments of various states and metros. With each Indian state having its own system of functioning, and absence of computerized database in many cases, as almost all records are filed manually, it becomes difficult to verify criminal records.

Now you have a fair idea about the costs associated with verifications. However, have you ever wondered what is the cost of negligent hiring, or not executing due diligence in the Employee Background screening process. The blog post Employee Background Verification and its effect on Employee Turnover Rate will help you understand the implications of negligent hiring.

Does your Current Employee need a Background Check?

Most of the times companies hire new talent with all the necessary precautions. This entails a thorough interview process, a hard-to-crack written exam and a detailed background check. Only when the candidate meets the company’s stringent standards, is he made part of the workforce. However once the candidate is onboard there is little done in terms of ongoing background checks. There have been many cases where a candidate having passed the pre-employment background check was hired, but later lead to having caused irreparable damage to the company’s exchequers, brand and/or its employees.

The point to keep in mind is that human character is ever evolving and a person’s interaction with his circumstances continues to define/redefine who he becomes. Human psychological evolvement can be either positive or negative; it is not possible to accurately predict outcomes of these psychological changes. However the responsibility of being aware of any negative outwardly action (recorded or reported) performed by the employee, lies squarely on the HR managers shoulders. Carrying out regular post employment background checks holds many long term benefits for the company a few of which have been listed below:

• The awareness of a post employment background check being carried out on a regular basis helps keeps the employees alert and puts an additional pressure on them to check themselves from carrying out any acts of misdemeanour, both in and out of the office.
• An ongoing employee background check keeps the HR manager updated of any new criminal record filed against the employee. Required action based on the severity of the crime can then be taken by the HR manager.
• A change of address that the employee failed to report can easily be tracked and the employee can be asked to submit the new residential information. Having an updated employee address record is especially important for companies that work on client sensitive information.
• More than often, employees fake educational qualifications to get a higher pay raise, during the appraisal process. An educational background check can help the company validate the educational qualifications and allow the company to make the required pay raise.

Having a process of check and balances helps weed out unwanted elements from the company’s workforce effectively. The cost associated with ongoing employee background checks are minimal to the benefits the company can reap from having the most ideal candidate for a required position.