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HRM Practices Its Impact on Employee Retention

Dr Uma Narang
PG Department of Commerce
Post Graduate Government College
Sector 46, Chandigarh

Abstract
The demand for talent in the country like India has increased to a great extent due to globalization. Globalization has
changed not only the business world but also the minds of the individuals. Every organisation is interested to grab
the fittest from such a competitive environment. The retention of human resources has been shown to be momentous
to the development and the accomplishment of the organizations goals and objectives. Increased emphasis has been
laid on retention especially with the onset of revolution of information technology which is human sensitive. In this
paper, an attempt has been made to analyse the impact of HRM practices (career development opportunities,
supervisor support, working environment, rewards and work-life policies) on employee retention in the banks.
Key Words: Employee, HRM, Retention

Introduction
Employee retention, especially of The best, most desirable employees, is a key challenge in organizations
today. The demand for talent in the country like India has increased to a great extent due to globalization.
Globalization has changed not only the business world but also the minds of the individuals. Every organisation is
interested to grab the fittest from such a competitive environment. Employee retention issues are emerging as the
most critical workforce management challenges of the immediate future, driven by employee loyalty concerns,
corporate restructuring efforts and tight competition for key talent. Hiring top-quality individuals is an important
task on its own, but essential to any managers ongoing process is a critical retention strategy.
There is a saying by -Aristotle Employee
Pleasure in the job puts perfection in the work
The term employee retention first began to appear with regularity on the business scene in the 1970s and early
80s. Until then, during the early and mid-1900s, the essence of the relationship between employer and employee
had been (by and large) a statement of the status quo: You come work for me, do a good job, and, so long as
economic conditions allow, I will continue to employ you. It was not unusual for people who entered the job market
as late as the 1950s and 60s to remain with one employer for a very long timesometimes for the duration of their
working life.
Employee Retention is a process in which the employees are encouraged to be with the organization for the
maximum time. Though, employee employer relationship has undergone a fundamental change, which has
implications on the attrition, motivation and retention of talented employees. Employee retention is beneficial for
both the organization and employee. Employee retention refers to the various policies and practices which let the
employees stick to an organization for a longer period of time. For retaining the most important asset, best HR
practices need to be used. Studies have indicated that retention driven by several key factors, which ought to be
managed congruently: organizational culture, strategy, pay and benefits philosophy, and career development systems
(Fitzenz 1990). Employee retention is important for firm performance. If the organization is not able to retain its
employees, it will not be able to capitalize on human assets developed within the organization (Shekshnia, 1994).
There are the five determinants such as Career Development Opportunities, Superior Support, Work Environment,
Rewards, and Work-Life Policies to study the impact of HRM practices on retention of employees. In this study
employee retention is dependent variable and others are independent variables.

Literature Review
Career Development Opportunities
Career development opportunities is one of the most important variables as employees are more conscious about
their career so they prefer a job where they can get more opportunities to develop their skills. A company that wants
to strengthen its bond with its employees must invest in the development of their employees (Hall & Moss, 1998;
Hsu, Jiang, Klein & Tang, 2003; Steel et al., 2002; Woodruffe, 1999). Career development is a system which is
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HRM PRACTICES ITS IMPACT ON EMPLOYEE RETENTION

* DR.UMA NARANG
OCTOBER-DECEMBER2013

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organized, formalized and its a planned effort of achieving a balance between the individual career needs and the
organizations workforce requirements (Leiboiwitz et al, 1986).

Superior Support
By having support, employees are less likely to leave an organization and be more engaged by having good
relationship and open communication with the supervisor (Greenhaus, 1987). According to Eisenberger and
associates (1990), an employees view of the organization is strongly influenced by their relationship with their
supervisor. If the supervisor focuses towards the employees progress, other than the formal evaluation process; this
improves the employees retention and commitment towards the organization. (Freyermuth, 2007).

Work Environment
Employees expect a work environment, where they can utilize their abilities and satisfy their basic needs.
Workspace designs have a profound impact on workers and tend to live with job as long as satisfied (Brill,
Weidemann, Olsen, Keable & BOSTI, 2001). Work environment is one of the factors that affect employees
decision to stay with the organization (Zeytinoglu & Denton, 2005). Workspace designs have a profound impact on
workers and tend to live with job as long as satisfied (Brill, Weidemann, Olsen, Keable & BOSTI, 2001). An
employee loves to work at a place, where he is given a proper environment to work. Many companies are providing
flexible schedules and work arrangements and are experimenting with other ways to help individuals manage their
work and personal life issues (Perry-smith and Blum 2000: Solomon 1999).

Rewards
Rewards can be financial or non financial, intrinsic or extrinsic. It can be recognition such as naming a worker or
employee of the year, and on the other hand a reward refers to a tangible incentive or a thing that an organization
gives to the worker or employee in response of their contribution or performance so that they become motivated for
future positive behavior. Attractive remuneration packages are one of the very important factors of retention because
it fulfills the financial and material desires as well as provide the means of being social by employees status and
position of power in the organization. Many researchers demonstrate that there is a great deal of inter-individual
difference in understanding the significance of financial rewards for employee retention (Pfeffer, 1998; Woodruffe,
1999).

Work Life Policies

In todays competitive environment, the employee willingness to opt for reduced hours schedules is not simply a
matter of scheduling it involves redesigning work arrangements which leads to change in organization culture and
careers, viable reduced-hours career options require simultaneous changes in the areas of compensation, assignments
and promotions. So it is more cost-effective and productive or management to design the work arrangements to fit
the human than it is force the human to fit the system (Barnet & Hall, 2001).Many researchers tested the impact of
work and family benefits which comprise of flexible schedules, childcare assistance, parental leave, childcare
information and parental leave on organization commitment. Researchers showed that there is greater organizational
commitment if employees had access to work life policies and also these employees articulated considerably with
lower intent to renounce their profession (Grover and Crooker, 1995).

Objectives

To analyze the major determinants of employee retention in banking sector of Punjab.

To measure the impact of various independent variables (major determinants) on employee retention in the
banking sector.

Research Methodology
This study examined the relationship of career development, superior support, work environment, rewards and
work-life policies with employee retention among the employees of banking sector of Punjab. For the present study,
primary data was used. The primary data was collected through the questionnaires which were filled from the
employees of two banks viz; HDFC, AXIS Bank. After the literature survey, the variables were considered which
were described in the theoretical framework. Employee retention was the dependent variable, which was going to be
checked for relationship with career development, supervisor support, working environment, rewards and work-life
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HRM PRACTICES ITS IMPACT ON EMPLOYEE RETENTION

* DR.UMA NARANG
OCTOBER-DECEMBER2013

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policies that were considered as independent variables. For analyzing the major determinants of employee retention,
the secondary data was gathered from the books, research papers, magazines/journals etc.
The sample size is 60 for the study. Among them 35 respondents were from HDFC, 25 from AXIS bank. The
frequencies and crosstab techniques are applied to analyse the data.

Analysis and Interpretation

Likert scale technique has been used in order to analyse the impact of HRM practices on the retention of employees.
The responses from every respondent for each determinant are scored on a five point scale i.e.; strongly agree, agree,
uncertain, disagree and strongly disagree. Higher scores in each determinant indicate the high level of impact on
employee retention and lower scores indicates less impact of determinants level of job satisfaction. In total 6
questions were asked from the respondents, which were related to the determinants taken in the study. The responses
of the various respondents have been given below in Table-1.

Table I Responses of Various Employees

Determinants
Chances of Promotion
Complaint Ignorance by Superior
Help by Colleagues
Allocation of Rewards regarding work
Too much work burden
Conflict between work and personal
life

Strongly Agree
14
1
16
7
1
1

Agree
34
14
39
41
3
1

Uncertain
8
15
2
4
1
1

Disagree
3
25
1
6
37
30

Strongly Disagree
1
5
2
2
18
17

Table II gives all details about the responses of various employees regarding their willingness to retain in the
organisation in relation to various determinants.

Table II

Willingness to Retain in the Organisation

Strongly
Disagree
Yes
1
No
0
Complaint of Ignorance by Superior
Yes
4
No
1
Help by Colleagues
Yes
2
No
0
Allocation of Rewards Regarding Work
Yes
1
No
1
Too Much Work Burden
Yes
13
No
5
Conflict between Work and Personal Life
Yes
9
No
8
Chances of Promotion

Disagree

Uncertain

Agree

Strongly Agree

Total

2
1

6
2

27
7

12
2

48
12

22
3

12
3

11
3

1
0

50
10

1
0

2
0

28
11

16
0

49
11

4
2

3
1

36
5

7
0

51
9

33
4

1
0

2
1

1
0

50
10

21
9

1
0

10
1

1
0

42
18

The first variable Chances of Promotion was taken up which is related to Career development opportunities. Out
of total respondents, 34 respondents were agreed and 14 were strongly agreed that there are good chances of
promotion in their banks. The willingness of the respondents to retain in the concern was for 48 respondents.
The second variable Complaint ignorance by supervisor was related to supervisors support. Out of total
respondents, 25 respondents were disagreeing and 15 were uncertain. But there were 14 respondents who agreed that
the supervisor ignored the complaints made by them. The willingness to stay in the concern was for 50 respondents.
The third variable Help by colleagues is related to work environment. Out of the total respondents, 39 respondents
agreed that they were helped by their colleagues and 16 respondents were strongly agreed. Employees who were
strongly agreed were ready to retain in the organization.

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HRM PRACTICES ITS IMPACT ON EMPLOYEE RETENTION

* DR.UMA NARANG
OCTOBER-DECEMBER2013

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The fourth variable Allocation of rewards regarding work is related to rewards or compensation. 41 respondents
were agreed that they were rewarded properly in case of their achievements at work. Out of these respondents, 36
were ready to retain in the organization.
Another variable Too much work burden is related to work-life balance determinant. Out of the total respondents,
37 respondents disagreed about work burden and 18 were strongly disagreed with the same. Out of those
respondents who were disagreed, 33 were willing to retain in the concern.
The variable Conflict between work and personal life is related to work-life balance. Out of total respondents, 30
respondents disagreed and 17 strongly disagreed that there was any imbalance between their work and personal life.
Among them who were strongly disagreed, 9 respondents wish to stay in the concern over a period of life.

Conclusion
The concept of retention has been receiving considerable attention from academicians, researchers and practicing
HR managers. The findings of the questions showed that there was a good relationship between the employee
retention and the HRM practices. The frequencies of career development, allocation of rewards regarding work and
work environment show the highest values in relation to their perceived level of retention with the concern. It means
that the respondents are more inclined towards their career growth, rewards and want to work in an environment
where they get support from their colleagues. So, in todays environment the organizations should treat their
employees as the most valuable assets and have to take care of them in order to achieve the organisational goals.
Organizations have to provide their employees with the best career growth opportunities, working environment,
rewards, supervisor support and work-life balance and should work on them. In this way, it will help the employees
to put their best in the organisation.

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