The 3 month notice period, which must be served by employees in the IT sector before they can quit their job, has had a severe impact on the industry. Notice periods across the globe range from one week to one month; rarely do companies choose a 3 month notice period. According to a report by Business Today, a 90 day notice period costs the tech industry over $6B in hidden costs. Additionally, a report by HR tech platform Hush found that eight out of 10 employees want the duration of the notice period reduced to a month. The survey had a sample population of 2,800 employees in major banks and IT companies in metro cities.
Experts have highlighted that a three month notice period heavily costs the company from which the candidate resigns. This is because the candidate will have a lower level of productivity since they already have one foot out of the door, which leads to a loss of time and resources for the company. From the candidate’s point of view, a 3 month notice period may hinder their chance to be hired by a new organisation as the long duration between hiring and joining creates a level of uncertainty. Moreover, the 90 day notice period is rendered futile when the following factors are taken into consideration:
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- No change in employee attrition rates – companies are not able to retain outgoing employees by way of longer notice periods.
- Low productivity – Outgoing employees may choose to use up all their paid leaves, waste time, provide minimal effort in ongoing projects, leading to a waste of company resources.
- Encourage colleagues to quit – an outgoing employee may talk about their new flashy packages, influencing other employees.
- Lowers company morale and organisational harmony.
What do experts have to say
When asked about his take on the idea of a 15 day notice period for tech companies, the CEO of NetConnect Global, Mr Sunil Bist, said, “I think it is a great idea when you think about employee growth. After the pandemic, we have seen an acute competition spree to hire the right talent as soon as possible—a more extended notice period would mean losing out on it because of time constraints. Therefore, I believe any notice period of more than 15 days is long and unnecessary.” In his opinion, “The current norm of a 3 months notice period in most tech companies was started with good intentions, but what a company needs to see is whether it serves its intended purpose.” He believes it is essential to set the notice period based on certain important factors such as the age of the person, their length of service, type of employment, and availability of similar jobs.
Chief People Officer & Head of Corporate Communications – CredAble, Debashree Lad, told Analytics India Magazine that, “A 15-day notice period would work out to be a win-win situation for all the parties. It will result in a more focused and amicable transition and departure. While some may argue that 3 months is the ideal time required for transition, most companies in the US manage well with it. In my opinion, 15 days is a good enough time for knowledge transfer — to get the substituting employee up to speed on the tasks and internal processes. This would also call for functional leaders to be more well planned in terms of identifying successors for critical roles.”
In Lad’s opinion, “the pros definitely outweigh the cons. Longer notice periods could impact project deliverables with outgoing employees slacking off.”
The only downside of a shorter notice period is that employees may take advantage of it and hop from one job to another. A longer notice period of two or more could be retained for senior leadership, whose roles are critical for business continuity and cannot be easily replaced. Debashree Lad
According to Babita Paul, Senior Manager, People & Culture – Avalara India, “Longer notice periods are downstream pain. The typical three month notice period, I believe, is primitive. It’s hard on the employee morale and employee well-being and, therefore, a major no-no. The younger employees want to switch faster, and no one can deny how many opportunities exist out there–which employees are forced to lose out on.
I am all in for the intent of knowledge transfers, but I feel there is no point in leaving a bad aftertaste to the whole working experience. Babita Paul
The real win-win is leaning more on employee retention for productivity in the long run, over dragging notice periods.”
Faster the better?
Experts believe that a long transition period is generally required for senior or executive-level positions. This is because the organization must find a candidate with a rare skill-set who can well comprehend and perpetuate the philosophy of the company. However, this long notice period need not be served by all employees as they tend to produce low quality work and might hinder the process of a smooth transition. Additionally, an employee with a foot out of the door portrays his place of new employment as greener pastures. This might influence the existing employees at the firm and lead to a drop in commitment and productivity levels. Hence, there is a need for a more flexible notice period that suits both the employer and the employee.