How IT leaders Can Harness Digitalization To Manage Attrition -Part 1

January 31, 2024


At a glance
• Managing attrition and improving productivity are leadership challenges
• Different types of attrition
• Digitalization provides tools to manage attrition
• Top leadership needs to seize the initiative

Attrition has always been a major business issue for companies that rely on talent. In the past, companies could stem attrition through a combination of pay and perks.

IT companies started offering large sign-on bonuses, stock options, top-class campus facilities, attractive pay, and stay-on bonuses to retain their talent. This could be sustained as long as the tech budgets of their customers kept rising and the competition was manageable.

Even small startup companies backed by venture capital could offer excellent compensation packages. Increasing competition in the IT sector, disruptions due to the Covid-19 pandemic, and geo-political instability have all combined to cause raging inflation and uncertain consumer demand putting constraints on customers’ tech budgets.

The pandemic has also caused lasting shifts in expectations of employees who have tested flexibility and savings in living costs made possible by extended periods of the work-from-home model.

In the first of this two-part series, we shall explain how the top leaders of IT companies can seize the initiative to overcome the challenges of attrition and productivity using digitalization technology.

We shall discuss specific root causes of attrition and how leaders can use Professional Services Automation (PSA) software to address them in the second of this series. 

A leadership issue

All the above factors have made it necessary for IT companies to manage employee attrition keeping in mind the constraints on pay hikes and the need to raise their productivity. Therefore attrition is not merely an HR problem, it has become a leadership issue.

HR departments frame policies for employee contracts, hiring & firing, working conditions, performance reviews, and compensation packages. So they are naturally tasked with managing attrition. But like other business problems, the roots of attrition go deeper and wider. That’s where an organization’s leadership comes in.

Employee surveys, exit interviews, and anecdotes of water cooler conversations show that attrition has struck deep roots in work. It implies that the leaders at levels in every organization play roles in either increasing or decreasing attrition.

Digitalization technology

In organizations that employ 100s, 1,000s, or 10,000s knowledge workers it is impossible to rely only on personal knowledge and intuition to understand what is going on with their people. Leaders need information, analytics, indicators, and flagging of exceptional situations daily.

Tech assisted decision making

Fortunately, today we have digitalization technology that can provide all the above information to leaders at various levels. Leaders now have the tools to make work-related decisions while taking into account their effects on their people.

Attrition: natural and driven

There are two types of attrition. The natural type of attrition is due to normal wear and tear that takes place in any organization. People may leave due to reasons like the need to relocate, changes in their lives and priorities, retirement, etc. 

Most organizations are equipped to handle natural attrition. They can rely on their HR policies and processes that deal with the ‘hygiene’ factors like pay and working conditions. Their periodic reviews and updates are necessary to keep the natural attrition manageable.

The second type of attrition takes place when people are driven to leave. Surveys show that ‘ a bad boss’ and ‘mismatched work’ are the two very dominant causes of driven attrition.

Top leaders need to seize the initiative

Leaders at all levels need to play decisive roles in managing driven attrition with the help of technology. To start with, top leadership in your company should recognize that it is not merely an HR issue and that it has many work-related causes like misallocation of work, lack of learning opportunities, wasteful activities, bad data, wrong planning, errors in contract estimation, etc.

The top leadership then needs to initiate a digital transformation and resolve to undertake this journey. Professional Services Automation (PSA) software platforms are indispensable for the digital journeys of companies that deliver projects to their customers.

Leadership teams need to evaluate PSA software for full digitalization of opportunity-to-cash cycles, tested and configurable workflows, modularity, and integration with other enterprise packages. 

Top leadership teams of IT companies need to collaborate and partner with vendors having proven experience in successfully implementing configurable and modular Professional Services Automation (PSA) software. Leaders should learn from those companies that have successfully deployed the PSA software.

In the second part of this two-part series coming up next, we shall discuss how leaders can use the PSA software-based digitalization to address specific root causes of attrition.



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