Case Study

SMU806

SEMICON INDIA: DEMYSTIFYING WORKFORCE ANALYTICS (B)

To unscramble the issues behind the high turnover rate at Semicon India, Daw formulated a series of

hypotheses and carried out a detailed data analysis. Based on the analysis, he made the following

observations.

Table 1: Job Levels and Turnover Drivers

Turnover Reasons Job Levels

IC-1 IC-2 IC-3

Higher Studies 32% 16% 8%

Job Profile 25% 24% 31%

Relocation 24% 20% 8%

Better Pay 5% 10% 15%

Dissatisfaction with Managers 1% 4% 8%

Low Performance 5% 4%

Overseas Opportunity 2% 8%

Involuntary Resignations 3% 6% 15%

Performance Rating 1% 4%

Own Venture 2% 8%

Transfer 2% 8%

• At entry level, employees from tier-one technical institutes left sooner.

This case was written by Dr Fermin Diez, Professor Tan Hwee Hoon and Lakshmi Appasamy at the Singapore Management University. The case was prepared solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. The case is based on the article “Using an Analytical Approach to Increase Retention in High-Growth Countries: An Example in India”, by Fermin Diez, published in WorldatWork Journal, Second Quarter 2009, and has been developed with permission from WorldatWork [Contents © 2009. Reprinted with permission from WorldatWork. Content is licensed for use by purchaser only. No part of this article may be reproduced, excerpted or redistributed in any form without express written permission from WorldatWork. WorldatWork website: ww.worldatwork.org]

Copyright © 2020, Singapore Management University Version: 2020-05-18

For the exclusive use of J. Giesbrecht, 2021.

This document is authorized for use only by Joanne Giesbrecht in 2021.

SMU-20-0011(B) Semicon India: Demystifying Workforce Analytics

Figure 1: Compa-Ratio1 Vs Performance Ratings

0.869

0.997 1.028 1.026 0.935

0.50

0.75

1.00

1.25

1.50

1 2 3 4 5

C O

M P

A -R

A T

IO

APPRAISAL GROUPING

Figure 2: Turnover by Performance Rating

Rating 1 7%

Rating 2 34%

Rating 3 24%

Rating 4 4%

Rating 0,5 31%

• Almost all of the employees rated 4 tended to leave the company soon after appraisal.

1 Compa-ratio measures an employee’s pay relative to the midpoint of the pay range of the employee’s job/position. A compa-ratio of 1 means the employee pay is same as the midpoint of the pay range for his/her job; a compa-ratio of less than 1 means the employee’s pay is below the midpoint of the pay range and a compa-ratio of more than 1 means the employee is earning above the midpoint. This is a useful measure to determine if the employee is earning significantly more or significantly less than the midpoint of their range and decide

if he/she needs a salary freeze or hike.

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SMU-20-0011(B) Semicon India: Demystifying Workforce Analytics

Table 2: Managers and Attrition

Business

Group Manager Turonver

Turnover

percentage

Manager

Performance

Rating

Employee

Survey

Manager

Score

A A1 3 (Rater 2,5) 3 (Rater 3) 67% 2 0.26

B B1 4 (Rater 1,2) 4 (Rater 3) 62% Quit 0.38

C C1 2 (Rater 1, 2) 2 (Rater 3) 50% 2 0.52

C C2 2 (Rater 1, 5) 1 (Rater 3) 50% 1 0.65

D D1 4 (Rater 1,2,5) 2 (Rater 3) 47% 1 0.06

A A2 5 (Rater 1, 2,5) 42% 1 0.23

E E1 4 (Rater 2,0) 40% 2 0.15

C C3 3 (Rater 1,2,) 38% 2 0.58

D D2 3 (Rater 2) 2 (Rater 3) 36% 2 0.29

C C4 2 (Rater 0) 1 (Rater 3) 33% 1 0.51

F F1 2 (Rater 2,0) 33% 2 0.52

G G1 5 (Rater 2,5,0) 31% 2 0.73

G G2 4 (Rater 2,5,0) 31% 2 0.61

G G3 4 (Rater 2,5,0) 1(Rater 3) 28% 2 0.44

H H1 4 (Rater 2,5) 1(Rater 3) 27% 2 0.28

C C5 1 (Rater 2) 2 (Rater 3,4) 27% 2 0.43

A A3 2 (Rater 2,5) 27% 2 0.18

B B2 2 (Rater 2,5) 27% 1 0.35

Figure 3: Attrition by Tenure

60%

50% 48%

A tt

ri ti

o n

P e

rc e

n t

40%

16%

9%

20% 21%

32%31%

30%

17%20%

10%

0%

< 6 Months 6 Months - 1 Year -1.5 1.5 Years -2 2 Years -2.5 2.5 Years -3 3 Years -3.5 > 3.5 Year s 1 Year Years Years Years Years Years

Tenure

• Men accounted for most of the attrition for employees below 2.5 years of tenure.

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SMU-20-0011(B) Semicon India: Demystifying Workforce Analytics

Figure 4: Promotion and Recruitment

Daw inferenced from the findings that SI’s promotion rates were lower than the established minimum

rate of 15%. While fresh recruits were assured at the time of recruitment that they would be promoted

after two years, the promotion rate did not concur with the assurance. The market midpoint

differentials2 between the three IC levels were in the order of 50% to 75%, while the market average

salary increase for last year was 13% to 16%. SI’s midpoints were calculated using the range observed in the market and industry. SI’s midpoints differentials were roughly the same as the salary

increase that it provided.

What insights could Daw draw from the above observations to prove or disprove his hypotheses?

And based on those insights, what recommendations should he make to Semicon’s HR with regard to recruitment, retention, talent development and women employees?

2 A pay range, which is the upper and lower limit of compensation, has a minimum, midpoint and a maximum. The midpoint is

equidistant from the minimum and maximum pay and is aligned to the market value of the job or simply put a fair price for the job based

on what the competitors are offering. Usually entry level employees are hired at or around the minimum pay and those who meet the company’s performance expectations or exceed them are paid at or around the midpoint compensation and depending on factors such as experience, tenure, performance, or the employee’s value to the organization employees are paid at or around the maximum compensation. Companies typically have a pay range for each job and pay range is built with reference to the pay range that prevails in the market for similar jobs. In large organisations with several jobs, the jobs with similar level of responsibilities and value to the

organisation are grouped together into grades and a pay range is built for each grade instead of each job. Midpoints of pay ranges are

compared and evaluated annually with that of the market/industry and ranges are adjusted as necessary to keep the pay structures competitive. Midpoint differential is the difference between the midpoints of adjacent grades, in the case of SI it the difference between

the midpoints of IC-1, IC-2 and IC-3. It is usually expressed as a percentage increase: (Higher Midpoint-Lower Midpoint)/ Lower

Midpoint = Midpoint differential. The higher the midpoint differential between two grades, the higher the mid-point progression between those two grades and reflects how pay increases between two grades in one’s salary structure.

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