The war for talent is on, and how!

Twenty-six-year-old Anay Kumar (name changed) had a bachelors in IT with five years of work experience as a front-end developer. At the India unit of a UK-based healthcare company, Kumar was working at a CTC of ?9.5 lakh. In 2021, as he began searching for a new job, he got offers from four companies before joining a leading software solutions enterprise at a pay hike of over 200% (?29 lakh). Shweta Sharma, a techno functional business analyst with over four years of experience, moved from an annual salary of ?7.5 lakh to ?27 lakh with a MNC software enterprise – the highest among the three offers she received. The client had the position open for four months since it was a niche skillset, and despite interviewing 15 candidates, could not find the right fit. In high demand, Sharma negotiated for a premium package.

Specialist staffing firm Xpheno had a junior-level full-stack developer who came in with seven job offers. While the firm’s client offered a pay of ?24 lakh, he went shopping yet again to finally join a large MNC pharma company in Bengaluru.

The war for talent is clearly on, and this has ushered in what some are referring to as ‘the age of the employee’. Reason? A bumper year for desi startups with a total funding of $39 billion in 2021 – a three-fold increase over the previous year, as per data from Tracxn . Forty startups turned unicorns, opening up an arsenal to get the right type of talent to propel growth.

But it’s not just startups. With fast-paced digitisation as a result of the pandemic, large companies seeing stellar performances too are looking for similar talent. “So, you see it’s like a double whammy,” Narayan R Thammaiah , Chief People Office of venture capital firm Accel tells me. To check attrition, organisations have set aside a fund for their top 5-10% performers for counteroffers. As per Xpheno, data analysts, data scientists and data engineers are seeing up to 120% salary hikes as counteroffers.

Startups are also getting smarter in attempting to woo back employees looking to exit, especially with respect to employee stock options as there’s more room for creativity there. Social commerce platform Meesho has given every employee the choice to convert 25% of their annual CTC into ESOPs which vests completely in one year. Online meat delivery company Licious is enabling daily vesting for all its eligible employees once the one-year period is over. As per a VCCircle analysis , 32 startups spent $440 million to buy back ESOPs last year.

Are such sharp hikes and counteroffers sustainable?

Exorbitant pay hikes are sustainable in the short run for startups who are on an immediate scale-up mode, Kamal Karanth , co-founder of Xpheno says. Tech companies have been huge beneficiaries of the digital revolution and are raking huge revenues, even as many have saved costs due to work-from-home, travel and onsite savings. At the same time, Indian niche talent has been grossly underpaid over the years. “This is correction time. 2022 will be another year of similar trend,” Karanth says.

But are sharp hikes in pay the only way to retain talent?

Like every crisis ever, COVID-19 has changed people’s priorities. While pay and benefits are important, job seekers just as equally consider company culture and flexibility now. In a LinkedIn poll asking members what factors they consider most important while taking up a job, 44% of the over 8,000 respondents said it was a company’s culture. One-third rated salary as most important while one in five voted for flexibility.

Knowledge workers, especially, are not transactional, they’re thinkers, Thammaiah says. So it’s important to give them clarity of information and define them with purpose. Younger generation employees value transparency and are eager to express themselves.

“Employers need to show empathy, share information such as company’s targets and OKRs. Managers need to be coached at how to talk to their employees. Play it by the ear of the environment.”

Are sharp hikes in pay the only way to retain talent? What is the most important factor for you while considering a new job? Share your views in the comments.