Are Service Level Agreements Driving Top Engineering Talent Away from Big Firms? How Can Companies Adapt?

Hi seniors, nowadays, most engineering firms provide service level agreements for certain periods, typically 2-3 years. Although it is justified from the company's point of view due to training expenses, it can lead to the loss of top talent. I have observed that several students from NITs or other prestigious colleges prefer not to engage in such bond agreements. In larger firms where engineering talent is crucial, how can they ensure they do not miss out on the best candidates?

Your response would be highly appreciated.

Thank you.

The Impact of Bond Agreements on Organizational Reputation

First of all, any kind of bond holding original documents or imposing bindings on employees causes significant damage to the organization's reputation. Secondly, these practices are considered unethical trade practices. Finally, employees should be given the freedom to perform their functions willingly and voluntarily so that the organization can prosper.

With warm regards.

Employee Retention in IT Firms

Many organizations in the IT sector hire based on specific projects. If they have invested heavily in employee training, they need to ensure that the employee stays for the defined period. Everyone wants a guarantee for their investment; why not companies? Moreover, many employees jump ship even for a smaller hike. It seems ingrained in their behavior, but why should companies suffer?

One strategy is to offer a loyalty bonus along with a defined hike after the completion of the bond period if the employee stays on for an additional six months. This will surely motivate them.

I don't believe that building a culture where employees love to work for the company will be effective. The young, newly working generation often has high ambitions that don't always match their talent. They tend to make decisions on whims, which are not always best for their career growth. It becomes crucial to curb these tendencies. The same candidates happily sign bonds for PSUs and top IT firms, so why not for other firms? Note that IT firms even charge for training and the space you occupy, which they reflect in your gross CTC even after the bond period. So, where is the objection to this usual practice?

Regards

Thank you for your prompt reply to my post. As you rightly said, candidates choose a good company even if there is a service bond. I appreciate your idea of a loyalty bonus. Don't you think the time has come for companies to think beyond bond agreements? In this war for talent acquisition among competing companies, firms should introduce innovative ideas like motivational tools to retain employees instead of relying on bonds.

Warm Regards,
Shashi S. Jha

As I have said earlier, motivational tools do work but to a lesser degree for a trainee profile, as for them, 'M' is not for Motivation but money. You will see them comparing their joining salary with their batchmates, not trophies or certificates won for performance. Moreover, they have high ambitions and value themselves much more than they deserve. So, you can't sell a fridge to an Eskimo.

The Role of Bonds in Employee Retention

A bond should not be thought of as a constraint but as a preventive measure. Moreover, if another organization is really interested, they can buy out his notice period/bond amount. So that the company gets compensated because, as we all know, cutting-edge tech does cost, and hiring trainers costs a lot more. So, if I'm imparting the best training, then shouldn't an HR guy ensure that the money is best utilized?

Evolving Expectations of Young Talent

Today's young talent is waking up to jobs that provide much more than a lucrative salary, which was not there during my time. Sure, they will mature in a few years, and then these motivational tools will work. It can't be a give-give-give relationship, but a give-take relationship leading to a win-win situation.

Regards

Reconsidering the Bond System for Talent Retention

If the bond system is not providing you with the best talents, consider doing away with it. Instead, adopt the best HR practices so that employees do not feel the need to leave. Attracting and retaining talent is a significant HR challenge.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]