The crispy bhujias, mathris and mithais offered by Bikaner’s famous Bikaji Foods are favourites of Indians across the globe. The ₹1,600-crore namkeen and savoury maker, which produces over 1,000 tonnes of bhujia daily, plans to hit the stock market soon. The company, a descendant of bhujia baron Haldiram Agarwal, is, however, facing a piquant situation — finding high-quality professionals. Despite attractive ESOPs (employee stock option plans) and perks, including a week-long holiday at an international destination every year, attracting good-quality professionals remains a huge challenge, says managing director Deepak Agarwal. “The only issue people have in joining us is our location, Bikaner. Though our compensation packages are at par with MNCs, it takes us close to a year to convince professionals to join us.”
Attracting talent is, however, not the only problem. High attrition rate is another concern. Factors such as lopsided HR policies, not-so-attractive compensation packages and lack of evaluation mechanisms dissuade professionals from working in a company headquartered in a Tier-II or III city. It is extremely difficult to find marketing, sales, supply chain, legal and HR professionals.
The city and its social life matter. The gorgeous handloom stores in Bhubaneswar or the street food at Chhapan in Indore may be go-to places for tourists, but they can’t woo professionals to relocate. Rashima Misra, co-founder, Milk Mantra, a new-age dairy start-up headquartered in Bhubaneswar, flags such issues every time she attends campus placements of prominent business schools in cities. “I was once asked by a candidate if Bhubaneswar had a micro-brewery. The biggest concern people have in joining a company in a Tier-II or III city is the quality of social life. We have to work hard to convince them to join us,” says Misra.
Agarwal of Bikaji cites the example of a campus placement from IIM-Ahmedabad a few years ago. “The woman worked with us for a year, but then she wanted to move to a bigger city. She said she would like to join us again after a few years.”
Last year Jaipur-based tech start-up Verve Logic gave its employees an extended weekend off to binge-watch Money Heist on Netflix, as a gesture of thanking them for working hard during the lockdown. It was not only a brand-building exercise, but also an outreach to retain talent.
However, most companies in Tier-II and III cities are not too keen on building a positive narrative. Many of them are third or fourth-generation family businesses. They aspire to expand nationally and are keen on automation and technology. However, what they lack is a fundamental policy to attract talent. “Most of them are not too bothered about attrition, and don’t have sound HR policies. Employees don’t feel recognised, and therefore, attrition rates are quite high,” explains P. Sriram, chief strategist, Avtar Group.
He cites the example of a woman professional of a company headquartered in a Tier-II city. “She had to travel for work to a Tier-III location. However, the company did not ensure the car stayed back. She had to return to the company headquarters in a truck. Within three months she quit.”
According to Sriram, the company should have ensured that the car which drove her to the location stayed back to bring her home and a senior manager should have accompanied her. “If I work over-time, do I have a vehicle to drop me home, do I get a compensatory off? These are basic hygiene factors. Organisations need to have sound HR policies, else they will face challenges,” he explains.
With the cost of living being much less in smaller towns, compensation packages are also lower. Organisations could bridge the gap by sweetening benefits, suggests Aditya Mishra, CEO, CIEL HR, a staffing firm. “They can offer the professional a car, a house or club membership. Most Tier-II cities today have good healthcare facilities. Schools, companies can tie up with them and extend those services to employees. Relocating to Indore or Rajkot is a risk as far as career is concerned due to limited options. Hence, companies in Tier-II and III cities have to walk the extra mile.”
Amit Kumat, managing director of Indore-based Prataap Snacks says he has institutionalised ESOPs to retain talents. “We had given ESOPs to our labourers and drivers once. However, we now make sure that all our senior management professionals get ESOPs. It has reduced attrition.”
Professionals, says Kumat, also look for an environment of empowerment. “As a rule, we never interfere in the day-to-day functioning of any of our professionals. They have come from reputed organisations so they need to be empowered. However, I must say that attracting good talent hasn’t been too easy,” he admits.
The patriarch of a Rajkot-headquartered food company was irked when his sons hired a professional CEO some months back. “We were paying a fortune to this man, but he hardly understood our dhanda,” he told Fortune India. The CEO, meanwhile, put in his paper within months of joining, citing trust as a major cause of concern, beside governance issues.
This, in fact, is a bone of contention between professionals and owners of family-run businesses. Most family-run businesses suffer from a severe trust deficit, which proves to be counter-productive. “Owners trust only a few people and end up giving larger roles to them, which is a narrow way of looking at business,” explains Sriram of Avtar.
Mishra of CIEL says the HR head in most of these organisations has no role in the recruitment. “Most often the owner not just decides the candidate, but also his compensation. The candidate would have been referred by the owner’s friend and the role of the HR head would be restricted to issuing the appointment letter.”
Agarwal of Bikaji says letting a private equity player invest in his business has helped him attract good-quality professionals. “It gave confidence to the people that we have serious growth plans and we are professionals.”
Employer branding plays a huge role in attracting good talent. The corporate website and the LinkedIn page of Milk Mantra describes itself as a for-profit company with an underlying purpose. “At the heart of the company is functional innovation and its ethical milk sourcing with the motto of ‘Happy Farmers = Happy Cows = Best Milk’. It directly impacts more than 55,000 farmers in Odisha and has increased farmer income by 40%,” says the Milk Mantra website. Last year, the company hired Sandipan Ghosh as CEO from Lactalis India. In a recent interview with Fortune India, Ghosh had said the innovation and ethical milk sourcing proposition did influence his decision to quit his metro job and relocate to Bhubaneswar.
Terms such as ‘purpose’ and ‘sustainability’ appeal to millennials and a lot of start-ups headquartered in smaller towns are trying to build their narrative on these lines. Coimbatore-based footwear company Walkaroo’s tagline is ‘BeRestless’. It’s recent post on LinkedIn, for instance, is a presentation made by its marketing director to students of IIM-Kozhikode, where he talks about how the brand identifies with today’s generation, who are always on their toes and are always looking to achieve more. “These initiatives help in brand building and attracting talent. We even get students who we had earlier hired from those campuses to go and speak about their experience at Walkaroo, which gives confidence to the new entrants,” says Binu Rajendran, director, Walkaroo International. “We also advertise in IPL, and that has added to our visibility. Candidates have realised that we are not a typical South Indian company,” he adds.
For electric vehicles company Boom Motors, also based in Coimbatore, the sleepy town in Tamil Nadu was an ideal place to kick off its business because of the large engineer talent base the city produces every year. “Students coming out of these colleges are interested in automobiles, but Coimbatore doesn’t have too many opportunities for them. We are able to provide them that opportunity. Attracting talent in Coimbatore has been easier than it would have been in Bengaluru,” says Anirudh Ravi Narayan, CEO, Boom Motors.
Though getting engineers and talent for their assembly lines isn’t much of a challenge, both Walkaroo and Boom have to go out of the way to attract professional talent for marketing, sales, HR, IT and design roles. Designers, for instance, seldom want to relocate to smaller towns. However, both these Coimbatore-headquartered companies claim to have fixed this challenge to an extent. While they have set up their design studios in Tier-I locations, for other roles they have partnered with head-hunters to identify senior talent from Coimbatore and adjoining places such as Madurai and Palakkad who are working in metros but wish to get back to their roots. “The process is time-taking but is yielding good results,” says Rajendran of Walkaroo.
Rajiv Krishnan, managing director and CEO, Ma Foi Strategic Consultants, believes the line between Tier-I and Tier-II and III cities is getting blurred. “Today large healthcare and tech companies are emerging from outside of the metros. There is a package they are able to offer in terms of better work-life balance and higher education options.” Also, since a lot of these newer IITs and IIMs are in smaller towns and the talent emerging from these are largely people who have lived there, attracting them to work in Tier-II and III cities is no longer a big challenge, he adds.
Kumat of Prataap Snacks says ever since Indore was declared the cleanest city in India, attracting professional talent has become relatively easier. Even the Covid-induced lockdown has to a certain extent made working in a Tier-II and III city more aspirational. However, there’s still a long way before the craze of working in a large company in a big city translates into the love for small-town living. Companies in Tier-II and III India, on the other hand, still need to up their ante.