Talent acquisition and retention are both key elements of an HR strategy. Businesses strive to attract the best talent for key roles so that they can be trained and moulded into future leaders of the company. On the other hand, retention is also important because acquiring talent is not the end of the road. Giving them growth opportunities and engaging them so that it becomes a long-term investment is also important.
So how does HR decide whether talent acquisition is more important or retention? For some businesses, acquiring big teams is not a priority. For instance, according to a white paper, companies such as Raytheon, a defence contractor firm in the US, are able to create value with a relatively small team of engineers. On the other hand, companies working in the retail or pharmaceutical sectors, need a huge sales force, and therefore, it is common for them to maintain large sales teams, depending upon the scale of work.
“Aligning the company culture with the purpose of the individual can take care of the retention factor”
Jayant Kumar, president – HR, Adani Ports & SEZ
We are aware that the attrition rate is relatively high in the IT sector in India, where people are the most valuable assets. In such sectors, employee retention becomes critical. Recently, it was reported that Infosys faced an increase in attrition rate from 10 per cent to 15.2 per cent in the January -March quarter. In the last quarter of FY 21, TCS and HCL were the only companies that managed to keep their attrition rate below 10 per cent. So, what should be the focus — talent acquisition or talent retention? Does it vary from company to company or industry to industry?
Either way – part of the same coin
According to Rajorshi Ganguli, president & global HR head, Alkem Laboratories, both talent acquisition and talent retention are part of the talent-management strategy in a company. Therefore, it is difficult to conclude which is more important or more relevant.
In fact, Ganguli believes that both are quite related at times. If the talent-acquisition strategy is good — which also includes getting people on board properly, giving them a good onboarding experience — it has a positive impact on the tenure of the talent in the company. Although there are other tools and techniques for better retention, this also makes a difference.
“One cannot really separate talent acquisition from talent retention, because both these functions form an integral part of the whole talent-management strategy”
Rajorshi Ganguli, president & global HR head, Alkem Laboratories
“One cannot really separate talent acquisition from talent retention, because both these functions form an integral part of the whole talent-management strategy,” says Ganguli.
Retention is always a challenge
On the other hand, Chandrasekhar Mukherjee, CHRO, Bhilosa Group, believes that talent retention is relatively more important than talent acquisition. He feels it is comparatively easier to acquire or recruit talent by giving attractive benefits and compensation, than retaining them, which is a much more difficult job.
Another factor is that the cost of replacing talent is very high as compared to acquiring new talent across levels. Also, if the attrition rate of the company is high, it tends to raise questions on the employer brand of the company. “For me, retention is more important because it directly impacts the employer brand of the company, and building a brand takes a fairly long time,” explains Mukherjee.
For acquiring talent, the HR team does not require too many skills, but the retention of talent depends on several factors. “Developing a good culture, transparency, equity, creating opportunities to grow within the organisation and ensuring engagement, requires a lot of skill and is a part of a number sub-functions within HR,” adds Mukherjee.
“For me, retention is more important because it directly impacts the employer brand of the company, and building a brand takes a fairly long time”
Chandrasekhar Mukherjee, CHRO, Bhilosa Group
Reetu Raina, CHRO, Quick Heal also feels talent retention is more important for multiple reasons. First, people who stay on for long do not only add value to the company, but also the employer brand, which further helps attract good talent. Second, if a company focuses on retaining talent it reduces the pressure on the talent-acquisition team. Third, the internally- groomed talent, which stays for longer periods of time, also emerge as future leaders for the company. That means, the company will not have buy talent for leadership roles in the future.
Quick Heal works in a segment where it is difficult to find ready-made talent. Still, the company acquires people who are quite ready for the role they are taking on. “I get 80 per cent ready talent from the talent market. We focus on retaining our talent and investing in upskilling them,” shares Raina.
Does the focus on talent acquisition or retention depend on the nature of the companies, or the industry they operate in? Mukherjee is sure that retention will anyway be more important for any company, even if it requires to hire in huge numbers in certain functions. “Even in the pharma sector, where the sales force is quite big, no company would want people to leave as it can result in loosing intellectual business knowledge to other companies,” points out Mukherjee.
Ganguli thinks that acquisition and retention are both equally important, but at the same time, he does agree that retention becomes more important in companies or industries where the attrition level is very high. “I believe a low attrition rate is healthy as it can help weed out non-performers, but yes, if the attrition rate is high, such as in the IT sector, retention will gain importance in the affected companies,” says Ganguli.
“I get 80 per cent ready talent from the talent market. We focus on retaining our talent and investing in upskilling them”
Reetu Raina, CHRO, Quick Heal
Talent acquisition is complex; needs focussed approach
For some HR leaders, talent retention is more important and for some both are vital to the talent- management strategy. However, Jayant Kumar, president – HR, Adani Ports & SEZ, is of the opinion that talent acquisition is more important than talent retention. Kumar believes that talent acquisition involves a lot of complex processes. First, one needs to see the fitment factor of the candidate.
Simply sourcing talent is not enough, but sourcing it from the right platform and making it available to the hiring managers is important. Also, at times, it is essential to train the hiring managers too.
Additionally, as recruiters, it is very important to understand the organisational culture and what type of people can thrive in that culture. Giving an example, Kumar shares that there are two kinds of people — ones who oppose innovation and ones who are all for it. The former like to work in a more structured and organised environment, where rules are strictly followed with less scope for changes and innovation, while the latter want to be empowered and bring innovation to the table. Understanding the internal culture is necessary to attract the right people who can survive and thrive in the company’s culture. This, in turn, ensures retention.
“Aligning the company culture with the purpose of the individual can take care of the retention factor,” opines Kumar.