Two years back OQT had demerged from its mother concern, a large pharmaceutical company and one of the top five generic Oncology (cancer drug) players in India, to stand alone as a closely held public limited company (PLC). Since the demerger, OQT's biggest challenge has been to attract and retain highly skilled employeed (mostly research scientists) who would prefer to join a multinational pharma. OQT was depending on a few select recruitment agencies for hiring its employees.
OQT used a performance management system which was deigned to reward the scientist for a performance based on their goal achievement, as assessed during annual performance evaluations. The performance evaluation process involved scientist setting goals for the financial year on the basis of the company's business and functional plans. Performance evaluation discussions during the year between managers and employees emphasized a focus on achievement of these goals. Employees are evaluated with a performance rating based on their goal attainment on a scale of 1 to 5, 1 being low and 5 being the highest. Both employees and managers sign the performance rating sheet. Manager the discuss these ratings with the CEO and together they decide the overall performance rating of the employees. Overall performance was rated from "Outstanding" to "Poor." Ratings are the plotted on a bell curve of possible pay increases, which was developed by the CEO and HR on the basis of overall budget for pay hikes. The Managing Director then gave the final approval. Employees are then promoted and given pay increases on the basis of these ratings. The overall performance ratings and the principle of the bell curve were kept confidential and not shared with manager or employees. Management had also devised an annual refresher program for all employees - operations (research and development, testing and manufacturer of drugs), sales, and support staff. It was a 6 day program at the corporate office with class room session on issues such as business achievements, pharma test, ranges, sales process, machines, tracking systems. OQT had strategically positioned its overall compensation compared to competitors at the 50th percentile. Though the company was investing time, money and effort to motivate employees to be productive and contribute the attrition rate of people within one year and between one and three was 32%. To try to control (even reverse) this trend, and to deal with its consequences , the scientist at bench were rotated through all platforms of research on molecular pathology so that at every point in time more than one scientist had the knowledge of any given platform and workflow so that operation would not be interrupted by attrition in the labs. Still the organization was struggling with the dilemma of the high attrition: should they meet the talent need by hiring just-in-time from competitors or should OQT create long term talent development plans?

1. What are the possible reasons for high levels of attrition and what can be done to reduce attrition level?
2. Should OQT consider a different performance evaluation
3. How would you evaluate the compensation system as managed through the performance evaluation process
4. Is there anything about the international context of this case that might help explain OQT's experience.