Employee retention is a process in which the employees are encouraged to remain with the

organization for the maximum period of time or until the completion of the project. Employee
retention is beneficial for the organization as well as the employee.

Employees today are different. They are not the ones who don’t have good opportunities in hand. As
soon as they feel dissatisfied with the current employer or the job, they switch over to the next job. It
is the responsibility of the employer to retain their best employees. If they don’t, they
would be left with no good employees. A good employer should know how to attract and retain its
employees. Retention involves five major things:

Compensation

Compensation constitutes the largest part of the employee retention process. The employees always
have high expectations regarding their compensation packages. Compensation packages vary from
industry to industry. So an attractive compensation package plays a critical role in retaining the
employees.

Compensation includes salary and wages, bonuses, benefits, prerequisites, stock options, bonuses,
vacations, etc. While setting up the packages, the following components should be kept in mind:

Salary and monthly wage: It is the biggest component of the compensation package. It is also the
most common factor of comparison among employees. It includes

o Basic wage

o House rent allowance

o Dearness allowance

o City compensatory allowance

                     

Salary and wages represent the level of skill and experience an individual has. Time to time increase
in the salaries and wages of employees should be done. And this increase should be based on the
employee’s performance and his contribution to the organization.

Bonus: Bonuses are usually given to the employees at the end of the year or on a festival.

Economic benefits: It includes paid holidays, leave travel concession, etc.

 Long-term incentives: Long term incentives include stock options or stock grants. These
incentives help retain employees in the organization's startup stage.

Health insurance: Health insurance is a great benefit to the employees. It saves employees money
as well as gives them a peace of mind that they have somebody to take care of them in bad times.
It also shows the employee that the organization cares about the employee and its family.

After retirement: It includes payments that an Employee gets after he retires like EPF (Employee
Provident Fund) etc.

Miscellaneous compensation: It may include employee assistance programs (like psychological

counseling, legal assistance etc), discounts on company products, use of a company cars, etc.

Organization Envirnment

It is not about managing retention. It is about managing people. If an organization manages people
well, employee retention will take care of itself. Organizations should focus on managing the work
environment to make better use of the available human assets.

People want to work for an organization which provides

 Appreciation for the work done

 Ample opportunities to grow

 A friendly and cooperative environment

 A feeling that the organization is second home to the employee

Organization environment includes

 Culture

 Values

 Company reputation

 Quality of people in the organization

 Employee development and career growth

 Risk taking

 Leading technologies

 Trust

Types of environment the employee needs in an organization

 Learning environment: It includes continuous learning and improvement of the individual,

certifications and provision for higher studies, etc.

 Support environment: Organization can provide support in the form of work-life balance.
Work life balance includes:

o Flexible hours
 o Telecommuting

o Dependent care

o Alternate work schedules

o Vacations

o Wellness

 Work environment: It includes efficient managers, supportive co-workers, challenging

work, involvement in decision-making, clarity of work and responsibilities, and recognition.

Lack or absence of such environment pushes employees to look for new opportunities. The
environment should be such that the employee feels connected to the organization in every respect.

Growth and Career

Growth and development are the integral part of every individual’s career. If an employee can not
foresee his path of career development in his current organization, there are chances that he’ll leave
the organization as soon as he gets an opportunity.

The important factors in employee growth that an employee looks for himself are:

Work profile: The work profile on which the employee is working should be in sync with his
capabilities. The profile should not be too low or too high.

Personal growth and dreams: Employees responsibilities in the organization should help him
achieve his personal goals also. Organizations can not keep aside the individual goals of employees
and foster organizations goals. Employees’ priority is to work for themselves and later on comes the
organization. If he’s not satisfied with his growth, he’ll not be able to contribute in organization
growth.

Training and development: Employees should be trained and given chance to improve and
enhance their skills. Many employers fear that if the employees are well rained, they’ll leave the
organization for better jobs. Organization should not limit the resources on which organization’s
success depends. These trainings can be given to improve many skills like:

 Communications skills

 Technical skills

 In-house processes and procedures improvement related skills

 C or customer satisfaction related skills

 Special project related skills

Need for such trainings can be recognized from individual performance reviews, individual meetings,
employee satisfaction surveys and by being in constant touch with the employees.
 Importance of Relationship in Employee Retention Program

Sometimes the relationship with the management and the peers becomes the reason for an
employee to leave the organization. The management is sometimes not able to provide an
employee a supportive work culture and environment in terms of personal or professional
relationships. There are times when an employee starts feeling bitterness towards the
management or peers. This bitterness could be due to many reasons. This decreases employee’s
interest and he becomes de-motivated. It leads to less satisfaction and eventually attrition.

A supportive work culture helps grow employee professionally and boosts employee satisfaction. To
enhance good professional relationships at work, the management should keep the following points
in mind.

Respect for the individual: Respect for the individual is the must in the organization.

Relationship with the immediate manager: A manger plays the role of a mentor and a coach.
He designs ands plans work for each employee. It is his duty to involve the employee in the
processes of the organization. So an organization should hire managers who can make and maintain
good relations with their subordinates.

Relationship with colleagues: Promote team work, not only among teams but in different
departments as well. This will induce competition as well as improve the relationships among
colleagues.

Recruit whole heartedly: An employee should be recruited if there is a proper place and duties for
him to perform. Otherwise he’ll feel useless and will be dissatisfied. Employees should know what
the organization expects from them and what their expectation from the organization is. Deliver
what is promised.

Promote an employee based culture: The employee should know that the organization is there
to support him at the time of need. Show them that the organization cares and he’ll show the same
for the organization. An employee based culture may include decision making authority, availability
of resources, open door policy, etc.

Individual development: Taking proper care of employees includes acknowledgement to the

employee’s dreams and personal goals. Create opportunities for their career growth by providing
mentorship programs, certifications, educational courses, etc.

Induce loyalty: Organizations should be loyal as well as they should promote loyalty in the
employees too. Try to make the current employees stay instead of recruiting new ones.

Support
Lack of support from management can sometimes serve as a reason for employee retention.
Supervisor should support his subordinates in a way so that each one of them is a success.
Management should try to focus on its employees and support them not only in their difficult times
at work but also through the times of personal crisis. Management can support employees by
providing them recognition and appreciation.

Employers can also provide valuable feedback to employees and make them feel valued to the
organization.

The feedback from supervisor helps the employee to feel more responsible, confident and
empowered. Top management can also support its employees in their personal crisis by providing
personal loans during emergencies, childcare services, employee assistance programs, counseling
services, et al.
Employers can also support their employees by creating an environment of trust and inculcating the
organizational values into employees. Thus employers can support their employees in a number of
ways as follows:

 By providing feedback

 By giving recognition and rewards

 By counseling them

 By providing emotional support

Importance Of Employee Retention

Now that so much is being done by organizations to retain its employees, why is retention so
important? Is it just to reduce the turnover costs? Well, the answer is a definite no. It’s not
only the cost incurred by a company that emphasizes the need of retaining employees but also
the need to retain talented employees from getting poached.

The process of employee retention will benefit an organization in the following ways:

1. The Cost of Turnover: The cost of employee turnover adds hundreds of thousands of
money to a company's expenses. While it is difficult to fully calculate the cost of turnover
(including hiring costs, training costs and productivity loss), industry experts often quote 25% of
the average employee salary as a conservative estimate.

2. Loss of Company Knowledge: When an employee leaves, he takes with him valuable
knowledge about the company, customers, current projects and past history (sometimes
to competitors). Often much time and money has been spent on the employee in
expectation of a future return. When the employee leaves, the investment is not
realized.

3. Interruption of Customer Service: Customers and clients do business with a company

in part because of the people. Relationships are developed that encourage continued
sponsorship of the business. When an employee leaves, the relationships that employee
built for the company are severed, which could lead to potential customer loss.

4. Turnover leads to more turnovers: When an employee terminates, the effect is felt
throughout the organization. Co-workers are often required to pick up the slack. The
unspoken negativity often intensifies for the remaining staff.

5. Goodwill of the company: The goodwill of a company is maintained when the attrition
rates are low. Higher retention rates motivate potential employees to join the
organization.

6. Regaining efficiency: If an employee resigns, then good amount of time is lost in

hiring a new employee and then training him/her and this goes to the loss of the
company directly which many a times goes unnoticed. And even after this you cannot
assure us of the same efficiency from the new employee

Employee Retention Strategies

The basic practices which should be kept in mind in the employee retention strategies
are:
 1. Hire the right people in the first place.

2. Empower the employees: Give the employees the authority to get things done.

3. Make employees realize that they are the most valuable asset of the organization.

4. Have faith in them, trust them and respect them.

5. Provide them information and knowledge.

6. Keep providing them feedback on their performance.

7. Recognize and appreciate their achievements.

8. Keep their morale high.

9. Create an environment where the employees want to work and have fun.

These practices can be categorized in 3 levels: Low, medium and high level.

             <Low>                               <Medium >                               <High>

Low Level Employee Retention Strategies

  Appreciating and recognizing a well done job

 Personalized well done and thank-you cards from supervisors

 Congratulations e-cards or cards sent to spouses/families

 Voicemails or messages from top management

 Periodic days off for good performance

 Rewards ( gift, certificates, monetary and non monetary

rewards)

 Recognizing professional as well as personal significant events

 Wedding gifts

 Anniversary gifts

 New born baby gifts

 Scholarships for employee’s children

 Get well cards/flowers

 Birthday cards, celebrations and gifts

 Providing benefits

o Home insurance plans

o Legal insurance

o Travel insurance

o Disability programs

 Providing perks: It includes coupons, discounts, rebates, etc

o Discounts in cinema halls, museums, restaurants, etc.

o Retail store discounts

o Computer peripherals purchase discounts

 Providing workplace conveniences

 o On-site ATM

o On-site facilities for which cost is paid by employees

 laundry facility for bachelors

 Shipping services

o Assistance with tax calculations and submission of forms

o Financial planning assistance

o Casual dress policies

o Facilities for expectant mothers

 Parking

 Parenting guide

 Lactation rooms

 Flexi timings

 Fun at work

o Celebrate birthdays, anniversaries, retirements, promotions, etc

o Holiday parties and holiday gift certificates

o Occasional parties like diwali, holi, dushera, etc

o Organize get together for watching football, hockey, cricket matches

o Organize picnics and trips for movies etc

o Sports outings like cricket match etc

o Indoor games

 Occasional stress relievers

o “Casual dress” day

o “Green is the color” day

o Handwriting analysis
 o Tatoo, mehandi, hair braiding stalls on weekends

o Mini cricket in office

o Ice cream Fridays

o Holi-Day breakfast

 Employee support in tough time or personal crisis

o Personal loans for emergencies

o Childcare and eldercare services

o Employee Assistance Programs ( Counseling sessions etc)

o Emergency childcare services

Medium Level Strategies for Employee Retention

 Appreciating and recognizing a well done job

 Special bonus for successfully completing firm-sponsored certifications

 Benefit programs for family support

 Child adoption benefits

 Flexible benefits

 Dependents care assistance

 Medical care reimbursement

 Providing conveniences at workplace

 Gymnasiums

 Athletic membership program

 Providing training and development and personal growth opportunities

o Sabbatical programs

o Professional skills development

o Individualized career guidance

High Level Strategies

 Promoting Work/Life Effectiveness

  Develop flexible schedules

 Part-time schedules

 Extended leaves of absence

 Develop Support Services

 On-site day care facility etc.

 Understand employee needs: This can be done through proper management style and
culture

 Listen to the employee and show interest in ideas

 Appreciate new ideas and reward risk-taking

 Show support for individual initiative

 Encourage creativity

 Encouraging professional training and development and/or personal growth opportunities: It can
be done through:

o Mentoring programs

o Performance feedback programs

o Provide necessary tools to the employees to achieve their professional and personal goals

o Getting the most out of employee interests and talents

o Higher study opportunities for employees

o Vocational counseling

o Offer personalized career guidance to employees

 Provide an environment of trust: Communication is the most important and effective way to
develop trust.

o Suggestion committees can be created

o Open door communication policy can be followed

o Regular feedbacks on organization’s goals and activities should be taken from the
employees by:

 Management communications
  Intranet and internet can be used as they provide 24X7 access to the information

 Newsletters, notice boards, etc.

 Hire the right people from the beginning: employee retention is not a process that begins at the
end. The process of retention begins right from the start of the recruitment process.

o The new joinees should fit with the organization’s culture. The personality, leadership
characteristics of the candidate should be in sync with the culture of the hiring organization.

o Referral bonus should be given to the employees for successful hires. They are the best
source of networking.

o Proper training should be given to the managers on interview and management techniques.

o An internship program can be followed to recruit the fresh graduates.

Retention Myths
The process of retention is not as easy at it seems. There are so many tactics and strategies
used in retention of employees by the organizations. The basic purpose of these strategies
should be to increase employee satisfaction, boost employee morale hence achieve retention.
But some times these strategies are not used properly or even worse, wrong strategies are
used. Because of which these strategies fail to achieve the desired results.There are many
myths related to the employee retention process. These myths exist because the strategies
being used are either wrong or are being used from a long time. These myths
prevent the employer from successfully implementing the retention strategies. Let us learn
about some of these myths.

1. Employees leave an organization for more pay: Money may be the motivating factor
for some but for many people it is not the most important factor. Money matters
more to the low-income-employees for whom it’s a survival issue. Money can make
an employee stay in an organization but not for long. The factors more important
than money are job satisfaction, job responsibilities, and individual’s skill
development. The employers should understand this and work out some other ways
to make employees feel satisfied. When employees leave, management tries to
retain them by offering more money. But instead they should try to figure out the
main reason behind it. Issues that are mainly the cause of dissatisfaction are
organization’s policies and procedures, working conditions, relationship with the
supervisor and salary, etc. For such employees, achievement, growth, respect,
recognition, is the main concern.

2. Incentives can increase productivity: Incentives can surely increase productivity but
not for long term. Cash incentives, volume work targets and speed awards are old
management beliefs. They can generate work speedily and in volumes but can’t
boost employee commitment. Rather speed can hamper the quality of work
produced. What really glues employees to their work and organization is quality
work, meaningful responsibilities, recognition, respect, growth opportunities and
friendly supervisors.

3. Employees run away from responsibilities: It is a myth that employees run from
responsibilities. In-fact employees feel more responsible if they are given extra
responsibilities apart from their regular job. Employees look for variety, greater
control on the processes and authority to take decisions in their present job. They
want opportunities to learn and grow. Management can assign extra responsibilities
to their employees and appreciate them on the completion of these tasks. This will
induce a sense of pride in the employee and will improve the relationship between
 the management and the employee.

4. Loyalty is a thing of the past: Employees can be loyal but what they need is an
employer for whom they can be loyal. There is no reason for the employee to hop
jobs if he’s satisfied with the employer.

5. Taking measures to increase employee satisfaction will be expensive for the

organizations: The things actually required to improve employee satisfaction like
respect, career growth and development, appreciation, etc. can’t be bought. They
are free of cost. An employer or management that reacts well to the employee’s
ideas and suggestions is enough for the employees to be retained.