Mu Sigma has grown to be one of the best Management Consultancies firms in India. They have been recruiting vehemently from all major colleges past few years. Their training is considered to be the most proficient in the analytics field. However, they have had a major problem with the attrition rate of their employees. Similar issues are faced by a lot of companies when it comes to dealing with freshers. The better the training, the better CTC a job jump gets you. Companies have come up with a variety of solutions to the problem.
For example, currently any employee joining Mu Sigma gets an immediate amount of Rs 5,00,000 transferred to his account as advance salary. They have to sign a 3-year bond, breaking which would require an employee to serve 6-month notice period and giving the entire sum of 5 Lakhs back. This, as their CEO claimed is a step to show ‘gratitude’ towards its employees. It brings your 3 year CTC to 21Lakhs from their previous 18Lakhs. The previous scheme had bonuses at the end of the year, which would deliberately(arguably) be delayed so that employees stick around to complete a few months more. The new scheme seems very lucrative at first! But employees rarely realise that it’s a trap for the newly graduated desperate crowd. If the company is that worried about attrition rate, why not just match the market salary or maybe not make people work 12 hr/day. Similar methods have been employed by other companies like Michelin Tyres (5 Lakh bond with a Non-compete), Toshiba (3 Year bond), BYJU’S (1/3rd of my salary is in yearend variable) or for that matter of fact any company with a retention bonus.
On the outset, these methods do not seem to be very cruel. A company like Michelin does spend a lot to give you foreign training. So, it would certainly want their employees to stick around; but isn’t a 5-year bond a little too much? Same goes with Sales dominant firms which promise you incentives based on the performance and then delay it, till it becomes a number big enough for you to stick around. The yearend bonus also gives the illusion of a bloated CTC. However, the devil is always in the details of the offer letter; the company always reserves the right to deny the entire amount owing to bad market or employee performance. To be fair, we are always told about the schemes beforehand. However, at what point does it become preposterous? Think of this- You have an FD in a bank that provides you 20% returns (general average is 8%); but you need to keep it for 40 years and to break the Deposit before maturation, would cost you a 70% fine. Nothing wrong, right? You are told the terms and you can join at your own risk. Riddle me this-why do you not have such schemes though??? The government shall never allow such a scheme to get into place as on some level it is inhuman to trap someone’s money for so many years; also, I think the government assumes that desperation and stupidity go hand in hand (I know there’s a more mature explanation but will have to do an MBA in Finance to understand I guess).
A few years back the Judiciary ruled that if a person enrols for a two-year coaching class, he can choose to terminate after a year and get refund. If charging for two years violates the consumer rights, why is there no such province in place for employees? Wasn’t this how colonisation started? I think we should have more measures to protect an employee in the country, especially fresh graduates who would say a ‘Yes’ every time the interviewer asks, “We would make you do……………., would you still want the job?” The current situation reminds me of the Naukri.com ad below-