Operations Management

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IV. Case Body

Causes of Turnover

Our interviews and surveys with the respondents highlight one major cause why employees leave their jobs: the nature of the work itself.

The work at Integreon Philippines involves off-shored basic and routine functions, primarily large document review projects for litigation disclosure or transactional due diligence. More graphically, lawyers employed by Integreon sit in front of a computer all throughout their shift, reviewing electronic documents and identifying whether or not the documents are: (1) relevant to the case, (2) confidential, (3) privileged/protected, and (4) “key” or “hot.” It is a very standardized and mechanistic task, and it is all they do every day.

Now it must be pointed out that there is actually controversy on whether document review is a legal function. There are some who deem document review work as non-legal, and describes it as a “data processing and computer services” function. But whether the work is legal or non-legal, there is no question that document review is a relatively low skill job for lawyers.

Indeed, in our survey, majority of the respondents disagreed (with some even strongly disagreeing) on the following statements:

- My work gave me a feeling of personal accomplishment.

- My job made good use of my skills and abilities.

- There was enough variety of tasks for what my position requires.

As to the statement: “Considering everything, I was satisfied with my job” – current employees agreed, while those who already left the job disagreed.

In our interviews with both current and former employees, they affirmed that many lawyers indeed leave the company because they did not like the nature of the work. Unlike other legal jobs, their work at Integreon was not intrinsically interesting. The work was highly repetitive and mechanistic, and many employees disparagingly call themselves “clickers” – because they click their mouse all day long to tag the documents. Worse, they have tightly regulated breaks, and stringent office environment - they are not even allowed to bring their bags, cellphones, or any kind of paper inside the office.

Another reason for the turnover is that employees feel that avenues for career development at Integreon are limited. In our survey, again majority of the respondents disagreed to the statement “I had a clear path for career advancement.” Interviews also revealed that promotions at Integreon are almost unheard of, and trainings are also very seldom conducted. Employees feel that Integreon has no interest to build their skill sets that would enable them to develop their careers effectively.

HR Custom to Reduce Turnovers

To address the shortage of lawyers, Integreon offers higher salaries to retain employees. Indeed, all the lawyers interviewed and surveyed answered that their compensation and benefits are better than average, if not excellent. They earn - basic salary and incentives - that are almost double of what their counterparts earn in the government or private law practice.

Also, HR has become rather indiscriminate in hiring. They practically hire everyone who applies – whether lawyers with no experience at all or even retired and old lawyers.

Nevertheless, turnover has not ceased and due to the mounting expense of turnovers, HR has introduced another breed of employees - the project attorneys. Project attorneys are not regular employees of the company, and they will not be absorbed as regular employees unless they voluntarily apply for regularization. In exchange, they are given more leeway in choosing their work shifts – they can choose whatever work shift they want; they can choose to be part-time employees who are only required to report to the office four (4) hours each day; they are not prohibited to work for other companies – they can be full-time employees by other companies, but still be part-time document review attorneys; and they can stop working any time – with no bond, no resignation notice, or any other formality of that sort.

V. Solution Notes

Analysis of the HR Custom

The strategy of giving higher salaries to retain employees is a very typical convention. However, in an industry where costs are a key source of comparative advantage (of course, companies outsource to reduce costs), paying higher salaries to retain employees is almost self-defeating, as it threatens the longer-term viability of the industry. Thus, we believe Integreon has to find other means of employee retention.

We likewise note that the indiscriminate hiring of employees can be extremely costly in the long run. Although the indiscriminate-hire approach may postpone the adverse impact of employee shortage, however, it magnifies the chances of hiring the wrong people – which can also magnify employee turnover. Now, of course, the most expensive of turnovers is that of employees who leave in the first year of employment – considering the cost of recruiting and training them, and the fact that they leave when they are not yet even fully productive. A high turnover in the first year of employment can therefore represent a particularly painful cost.

As to resorting to project employment, it has its advantages and disadvantages. Two of the major advantages of using project employees are: 1) staffing flexibility for the company – as the company can potentially hire more employees – especially part-time ones who are attracted to the flexibility the company offers; and 2) reduced costs – as project employees often are less expensive in terms of salary and benefits (project employees receive no benefits).

However, one major drawback in using project employees is that many project employees will lack loyalty and commitment to the organization. Additionally, the fact that project employees can move around more and can contract with multiple employers may generate concerns about breach of confidentiality or conflict of interest. This is especially of concern in the legal outsourcing sector where confidentiality is of utmost importance.

Recommendations

Integreon has the distinctive challenge of managing relatively well-educated employees who are doing primarily low-skill jobs. For such given employee concerns, it is indubitable to say that the responsibility lies in the Human Resources