It must have been a maniac Monday for ICICI Securities Private Wealth Management this week when 33 top line executives left and joined WGC Wealth, an arm of financial services group Wadhawan Global Capital. While employees leaving en masse in teams is nothing novel but what makes this exodus novel is the fact that it was one of the largest mass exits in the wealth management space in India.
For WGC, which entered the wealth management space in August by hiring Atul Singh, former CEO of Julius Baer Wealth Advisors India as its CEO, the strategy of hiring an entire team in one go make sense. Be it a new entrant or an established player, acquiring a full team in a single go is a tested way to get a business up and running in the shortest time possible and in a most efficient way.
Anshul Lodha, Director, Michael Page India reveals, “A lot of new players are looking to set a foothold in the private banking space along with existing setups which are looking to scale up given buoyant markets. This has led to the big demand of private banking professionals in the market. For new entrants as well as established players, team movement is a very efficient and quick way to build their business. They will first hire a senior banker from competition in a leadership role and then use the same to attract the team that reported to him/her to move along with them.”
This way they can build out large teams and move AUM in one go than having to go through the tedious process of individual hiring’s. Bankers are also comfortable moving to new set-ups as they have worked with this leader in their current organization which makes the transition to new organization easier. With most private banking players having aggressive plans to build out AUM in India; Anshul adds a sharp rise in team movements in India is expected.
Earlier in July this year, WGC Wealth had hired senior executives from Julius Baer, IDFC Bank and Kotak Mahindra Bank to form a 70-member team in India. Fourteen executives from Julius Baer, eleven from IDFC Bank and nine from Kotak Mahindra Bank were hired with WGC signing up 70 people across the country.
At that time Atul Singh, CEO at WGC Wealth had stated, “The market is very attractive but we need more people. The biggest challenge right now is getting good quality people. To get senior people we need employee ownership which we are offering along with the India growth story.”
With the new recruitments, WGC Wealth now has a 100-member team, which it plans to extend to 150 by the end of the year. But ICICI stands at the receiving end having to deal with the consequences of a mass employee exodus.
Could ICICI Securities have foreseen it? What can HR do to prepare for such an eventuality? Are their signs that a company can pay attention to prevent such an exodus? Because the fact remains that teams and companies go through shaky periods where for one reason or another there’s a mass exodus of employees. Not only is it a formidable blow to the company but also negatively affects the morale of the remaining employees.
Before the exit: pick up early warning signs
In today’s dynamically changing workplaces, it is not possible to predict mass exits entirely. An improving economy, a better compensation, a bigger and fresher opportunity with competitors-all could be external triggers for an exit.
However, there are still enough warning signs internally which the HR and the management can interpret to predict employee dissatisfaction which leads to mass exits. A bad manager, poor corporate communication, corporate scandals, a lack of purpose and the inability to make an impact through their work, increasing absenteeism, dissatisfaction with compensation, waning enthusiasm are some signs that could point to a brewing desire to move on to better companies to work for.
Aditya Narayan Mishra, Director and CEO of HR consulting firm Ciel HR Services Pvt Ltd, says, “The HR team has to keep their ears grounded so that they can pick up early warning signs. Mass exodus doesn't happen all of a sudden. It is a result of weeks of introspection, evaluation of the opportunity, long deliberations and preparation for it.”
Aditya adds that the triggers for such an act are more often internal than external. These are normally a set of factors; however, the major factors are normally rooted in the behavior and actions of senior managers. In such cases, an external opportunity appears very attractive and emotional reasons such as being together for a cause takes over the mind. The HR should be aware of these and keep a watch on internal group dynamics in the organization.
Thus, organizations should remember that the cost of a bad manager is too high to tolerate. After all, in a majority of cases, people don’t leave companies, they leave managers.
Pankaj Raj, Co- founder & Director at Search Value, a startup in the space of providing critical and top management hiring and advisory firm advises the first thing to always watch out to avoid this kind of behavior (mass exits) is to be careful and watchful in not building a leader or leaders who grow because of being a sycophant. Just in case you have hired a leader like this, do not let him/her build a team of his ex-colleagues and associates. A good CHRO always keeps a close watch on some of these attributes. He adds that the reality is if people come to you as a team, they can and will also leave you as a team.
Also, if the employees do not see an opportunity for growth and an increase in income or any movement towards their long-term career goals, they will be on the lookout for a fresher opportunity. An opportunity that allows them to move as a team will look further appealing if the team dynamics are strong.
Umasanker Kandaswamy, COO and Joint Director, Bruhat Insights Global says, “When a single star employee leaves the workplace, its costs the company tens of thousands of dollars and the overall productivity takes a step back. Which means, when numerous employees leave the workplace within a short span of time, it quickly runs up the costs. However, there are visible signs in the workplace that companies can turnaround to increase their retention ratio. In the era of millennials, many studies suggest that career advancement opportunities as one of the leading factors for employees to shift job opportunities.”
Anshul reiterates the same when he says HR managers need to be very proactive and increase engagement levels with their teams to avoid such exodus/team moves. Organizations are also making leadership team adhere to stringent no-poach clauses making it very difficult for them to move teams. It is also advisable to have a Co-head model to ensure there is no leadership gap when a senior person leaves the organization.
Shilpa Vaid, CHRO, Arvind Lifestyle Brands also stresses the same. She says,
“What has happened with ICICI Securities is rare but not unheard of. I am not sure if it is possible to preempt such an exodus of talent even if as an HR leader/ partner you have your ear to the ground. While many companies have NDAs/ non competes as part of the appointment letters; I am not sure how many are rigorously implemented in India. It is common for leaders to move and take key resources from their teams although 33 is a remarkably high number. Stronger non-competes and non-poach agreements will definitely help.”
Similarly, quickly appointing a successor within the team as he/she would have internal relationships and influence is the best solution as the promotion would motivate them to hold on to their immediate team, believes Kamal Karanth, Co-Founder of Xpheno.
After the exit: Communicate, Evaluate, Care
It is but natural that after an event like a mass exit shakes a company, the focus will be on firefighting and on the employees who have left. But the HR and the management need to shift the focus to the employees who are still in the company. It is in times like these that communicating with the employees directly becomes of paramount importance. It is not the time to take the remaining team for granted but rather talk to them, convey the truth to them, take their feedback, and understand their concerns.
While obviously better compensation is a strong driver for exits, remember that dissatisfaction with potential career development and poor management are one of the strongest drivers. Keep this in mind as work and responsibilities are reallocated among the remaining employees- directly asking employees will make them feel valued and also cement your relationship with them. Knowing your employees’ goals and discussing with them as to what development opportunities can take them there will go a long way in engaging the remaining employees.
More so, if the remaining employees do not see the mass exodus as an opportunity to grow, it is a warning sign of more trouble to come.
If they are not keen to take up the opportunity and assume more responsibility, it clearly points out that there is a serious problem the HR and the organization need to fix. Why do people not perceive the extra opportunity as a means to growth?
That means there is something that is lacking either in the management or the culture or the compensation structure that people are not ready to go after growth even when provided with an opportunity. While there are some problems that can be solved by overcompensation but remember that even more money is not a substitute for a bad workplace in the long term.
Hence take this exodus with a pinch of salt to re-examine and reflect the company’s culture, management, working style, growth opportunities. It is times like these which should force the management to evaluate are they providing enough opportunities for growth, a culture which cares for the employees, and a sense of purpose which enables them to create impact. Fixing problems early on and not taking employees for granted is one way companies can avoid being surprised by mass exits.