These are interesting times for the Indian HR industry. Attrition is high, but so are job opportunities. Salaries are skyrocketing, but responsibilities and work profiles are expanding, too.

The Manpower Employment Outlook Survey for Q4 2006 recognises these trends - almost half of the over - 4,700 Indian employers interviewed by the international HR consultancy for the survey say they expect their staffing needs to increase in the next three months. Clearly, the churn will continue.

Iain Herbertson, managing director of Manpower Asia Pacific, spoke with Govindkrishna Seshan on the challenges of finding and retaining talent in India. Excerpts:

There's a lot happening in HR in India. Issues like finding talent, the right compensation levels, dealing with attrition are all pushing for centrestage. What do you think is the biggest challenge facing the country?

Our research shows India will have robust employment growth in key sectors. Even as the economy grows at 7-8 per cent, the services sector's growth is nearly three times that. Hence the pressure on finding, acquiring and retaining top talent is only going to increase.

Indian companies will have to address this challenge seriously because businesses in India will soon be people restrained. They will not be restrained by capital or by manufacturing capabilities, but by the lack of the right people.

How can Indian organisations address this need?

I have read that some companies believe the situation will improve in a couple of years. I don't agree. I don't think these companies are drawing the macroeconomic factors into their day-to-day policies.

This morning I met a key client in Mumbai: retirements in his company are going to treble in the next three years.

Now, this is not a very uncommon meeting in India or China. And companies in both countries need to design their organisations around their people.

Already, forward-looking companies are forming their strategies to first attract the top talent, then retain that talent and finally at getting the best out of them.

Multinational companies are known to be good at that, and they are hugely respected because they tend to invest more on their people. Some local companies like the Aditya Birla Group and the Tata Group, too, have developed a massive brand name by doing the same.

So what CEOs need to do is focus not just on their corporate brands or their consumer brands, they also need to focus on building their people brands. Going forward, building "employer" brands that stand for something specific will be critical in the search for key talent.

How can companies build these employer brands?

One of the important areas that organisations need to focus on is the values of its people. If a corporation stands for honesty and integrity, then it is vital that the people it employs believe in the same values. Consider GE. It attracts and retains people of a certain type and the company is very proud of that.

There is a GE type of DNA and people who have the same DNA will thrive. Companies must build themselves on a core set of values for both the organisation and its employees. Once you have become known to stand for a certain set of values, you have established a brand.

You mentioned that some companies are already rejigging their recruitment and retention strategies. What are these companies doing specifically?

Typically in India, the recruitment process has a series of assessments. There's a first interview, then a second one and then a final interview.

The entire process takes six or seven weeks. If you work that way, you will never attract the top talent. Organisations need to design a recruiting process where the prospective employee has to be engaged with the company for days, not weeks.

Remember, most candidates who apply have multiple offers and if the process runs into weeks, you stand to lose them to counter offers. Several companies in the technology sector - like IBM or Indian companies like Infosys [Get Quote] and Wipro [Get Quote] - have already taken initiatives to redesign their recruitment process.

Another example is the induction process. The recruiting process should be designed keeping in mind that a candidate is likely to be offered many roles by various companies. Often, people accept offers but don't show up later. But what good companies are doing is that during the recruiting process they ensure that the prospective employee meet not only the HR team, but also his future boss and colleagues.

By doing this, the employee becomes engaged with the company long before he or she joins. So the induction process doesn't start after an employee joins the company; it starts as soon as he or she accepts the offer.

But clearly, not all companies are being so proactive. What are the kinds of mistakes Indian companies are making in their recruitment strategies?

The companies that are struggling with people problems are making one big mistake: they are importing best practices from the US and other developed nations, and applying them here. But these techniques won't work in developing companies.

For instance, in the developed world, a career review would be conducted only annually. This is too long a period in the Indian market. In India, career reviews should be conducted at least every six months.

The Indian market is more dynamic, there are more opportunities here. You, therefore, need to signal to your employees how they will grow.

Another common mistake is that HR executives believe most people leave their jobs for more money. That is not true. We conducted research in India and China where we went to executives who had jumped jobs and asked them why they left their last jobs. We also asked HR professions why people had left their companies.

Mostly, the HR people said it is all about money. The interviews with the candidates proved otherwise.

Money actually came third on the list. The biggest reason why executives left their jobs was because they felt they weren't receiving enough training in new skills. What employees wanted most was training in relevant skills. The second item on the list was career development.

So what should companies be doing to retain employees?

The first step to retain your employees is to make the development of talent a key component of leadership responsibility. Organisations can give incentives to make sure employee development happens within the company.

Companies that as a policy don't believe in incentives, should then make it part of its measurement process.

For instance, we measure leadership against three criteria. One is the activity of the team, another is the performance of the team, not just in terms of money, but customer service and so on.

The third criterion is developing your people. To grow at Manpower, you have to be good at developing people. This is because we expect 80 per cent of appointments, other than entry level, to be filled internally.

What lessons must companies follow while hiring people?

You need to be thinking now about how to hire people who will be managers in the future. You need to hire only those people today who are capable of becoming first- and second-level supervisors in the coming years. Wise organisations plan the future roles of their employees at the time of recruitment.