People Strategies for Captives

As I mentioned in one of my comments on the home page of this blog, going by the questions/calls I have been getting, "People Strategies" seems to be a popular area of discussion. I thought the best way to share my thoughts and invite comments was to create a separate section on this blog on this topic.

I am presenting this in the form of FAQs and will keep adding to this. Do keep in mind that these views are my personal views, and if you choose to adopt any of these strategies/approaches you do so at your own risk:-)

So here go the questions (please keep checking back for additions):

What role should compensation play in attracting and retaining talent?

Very critical role – but that does not mean that you need to necessary pay the best. Your HR practices, the growth opportunities, recognition that you provide, opportunities to learn, respect for the individual are some of the important considerations.

However, if you are setting up a new captive, these aspects are not yet established in the market, so compensation will play an important role, alongwith how well you launch your captive.

A good way to begin, is to benchmark yourself against captives in your industry and also against third party services organizations –assuming these are your target organizations, to attract talent from.

Then you need to take a position as to where you will peg yourself from a compensation perspective – will you be the best paymaster or will you position yourself at say a 70 – 80 percentile level?

I would argue that unless you are competing for the rarest of talent, don’t peg yourself as one of the top paymasters. You are just increasing your cost.

But then, you may ask, how do you attract talent if you don’t pay them top salaries (since you are not yet established?)?.

The answer to this is twofold – the first one is to do with how well you have launched yourself in the Indian market (your branding strategy) and the second is to attract talent at the “right motivational”level.

Let me expand on this latter point a little more.

Large third party vendors have thousands and thousands of associates who are very competent, keen to grow, are ready to take on larger roles, but have not yet found the opportunity within their organizations. The same can be said of established captives (though their sizes may not be as large). Find these people….as an example if you are looking for a team lead for a process, can you find a senior associate who is ready to be promoted and hire him away to perform a larger role? The compensation you would offer would be higher than what he was getting, yet still be lower than the topmost paymaster, if you were to hire a team lead directly from the market.

Of course your selection process needs to be top-notch to be able to spot these winners.
Good luck!

What level of attrition should a captive be aiming for?

Somehow I feel there is far more credit given to this question than it deserves. Most people I have spoken to feel that attrition is a serious problem and the moment attrition starts entering double digits, is a major concern.

Sure attrition is a problem (after all hiring a replacement takes time and effort and money), but lets look at the bigger picture.

There are some roles where associates are absolutely key and pivotal. This is the base that needs to be protected.

For the rest of the associate base, attrition can be healthy and used as an opportunity to wean out the unsatisfactory performers, bring in fresh thinking and perspective. No recruitment system is perfect, so you do get some underperformers along with the rest of your associate base – you are particularly vulnerable when there is a need to hire rapidly – say when the captive is first set up and processes are not well-tuned. The “hiring error rate” here is likely to be much higher.

So I recommend that you consider attrition rates for different levels and roles.

For example the key leadership roles in the captive are absolutely key. Attrition levels there should be zero.

For other key and pivotal roles, I would say attrition needs to be contained to low single digits.

Keep an eye on the overall attrition rate – if it starts climbing steadily, then something is wrong.

In the early stages of a start-up, it should be very low (people have just joined), and is likely to stay that way for the first two years or so, and then will climb a couple of notches. As I have mentioned above, this is an opportunity for the company.


  1. I have just posted my response the the question "What level of attrition should a captive be aiming for?". I look forward to hearing of any additional or different views.

  2. I feel attrition is more maket driven in region/city/country. As such it will follow the general trend.

    Since most of the parent companies operate in an environment where attrition is low, the expectation continues that the captive follow the trend.

    Rather than control attrition to a desired level, the focus needs to be on the effect that attrition has i.e. knowledge erosion.

    Knowledge retention happens differently in India. Unlike in other countries, where a person/role is solely responsible for a domain or a critical area. Here along with the expert are some junior wannabe's who are enthusiatic about learning and growth. Thus, knowledge rather than being centered in one person is loosly spread around. Moreover, repositories, training materials etc can play a part in ramping up in case the primary person moves on.

  3. I agree completely, Suresh. So what are the approaches companies could adopt in dealing with attrition? By this I mean the entire gamut - minimizing attrition where it has high impact and also ensuring maximum knowledge retention? I was recently invited to an HR symposium to talk on "Recruitment and Retention Strategies during an economic downturn" and while this was not focused on captives, the points there may be relevant. So please check out and keep your comments coming!