How to deal with employees’ ‘reverse retention’ tactics

Employees are confidently negotiating for higher compensations these days

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While inflation has been a much-debated topic around the world for some time now, political leaders in the UK have been struggling with the challenges it has brought with it. The cost of living is at a constant high in the UK and it is naturally impacting the employees severely. What is worse is that employees are taking advantage of the situation and how!

A survey conducted in the UK suggests that 79 per cent of the working population is thinking of deploying or using the ‘reverse retention’ tactic. ‘Reverse Retention’ is when employees threaten their employers that they would leave the job for a higher pay package.

Inflation is not an issue in the UK alone. In India as well, inflation and cost of living have been on the rise and the behaviour of employees here is no different. They tend to threaten their employers with resignations or demands of higher pay. What lends these employees the confidence to issue a resignation threat? Well, there is no dearth of opportunities and the demand for certain skills has only been increasing rapidly.

“When people realise that their skills are critical to the company, they tend to negotiate on their pay. Moreover, the younger generation wants instant reward and gratification”

Deepti Mehta, head – HR, RR Kabel

Human resource leaders agree that instances of employees using the reverse retention tactic have increased a lot since the pandemic.

“When I was in the retail sector, post COVID I saw an uptick in the instances of employees seeking higher pay packages outside and negotiating with their current employers for a raise,” observes a senior HR leader with an experience in retail sector.

Before we find out what actually triggers this kind of behaviour in employees, we should first see whether this tactic is being witnessed across roles and functions in the corporate world.

The demand for quality talent to fill tech roles has certainly surged post the COVID- 19 pandemic. That is why, employees have no dearth of opportunities in the market. This increases their negotiation power and they are able to demand higher remuneration. “This phenomenon is much seen more in tech roles rather than non-tech one,” says a senior HR leaderto HRKatha.

Deepti Mehta, head – HR, RR Kabel, shares that every critical and specialist role in her industry encounters this phenomenon. “The demand for employees working in the R&D, design and certain niche roles in finance, such analysts or rewards and compensation specialists in HR, has surged in my sector,” observes Mehta.

As per experts, any role related to digitalisation or which supports the digitalisation process in the company has seen a spike in demand.

“Employees also need to understand that companies have their own constrains and compensation bands, which they have to adhere to”

A Senior HR leader

All HR leaders have witnessed and agree that the push towards digitalisation during the pandemic is responsible for the huge demand for digital skills. This, in turn, has led to ‘reverse-retention’ tactics being employed by employees to bargain for pay hikes.

According to Mehta, such a behaviour is more rampant in millennials who have worked in a niche role for a year or two. “When they realise that their skills are critical to the company, they tend to negotiate on their pay. Moreover, the younger generation wants instant reward and gratification,” shares Mehta.

At RR Kabel, according to Mehta, the Company has taken multiple steps to tackle this challenge. “We do not believe in simply agreeing to the terns of the employees but believe in giving them an opportunity to earn more and create a career,” says Mehta.

In such cases, the Company gives an option to employees to work on diverse cross- functional projects outside their regular job. On the basis of their performance in those projects, they are given the opportunity to earn 15-20 per cent more. Over and above this, the employees also get an opportunity to work directly with senior leaders in the Company in these projects.

Over and above this, RR Kabel has come up with a retention-bonus strategy which is linked to an employee’s performance throughout the year. Employees can earn this bonus over a period of three years, provided they stay in the company for three years.

As per Mehta, these measures by the company helped the company to retain 40-50 per cent of their critical talent.

“Attrition rate is anyway high in the IT sector, the IT companies tend to use various tactics to retain people, which often leads to pay hikes and related negotiations”

A senior HR leader from E-commerce Sector

Experts also points out that companies realise that certain skills in the market have become premium, and therefore, they need a restructuring of compensation through external bench marking. “However, employees also need to understand that companies have their own constrains and compensation bands, which they have to adhere to,” a senior leader adds.

One senior HR leader, who did not wish to be named, mentions that since the attrition rate is anyway high in the IT sector, the IT companies tend to use various tactics to retain people, which often leads to pay hikes and related negotiations. This, in turn, encourages employees to resort to reverse-retention tactics.

It is essential to understand what triggers the employees to resort to such tactics. After all, not everyone switches jobs without a logical reason, and money cannot always be the motivations. “If we can identify these triggers that lead to employees switching the company, and address at the right time, we can tackle such situations and challenges better,” says the HR leaders.

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