INTRODUCTION

OF THE PROJECT

1
 INTRODUCTION TO “RETENTION”

“High performers are like frogs in a wheelbarrow-

They can jump out at any time”
-Mc Kinsey & Company Study.

“Genius begins and labor finishes” is an old saying that would be profoundly significant if
interpreted in the context of corporate and large employers. Concepts, visions and decisions
do take shape within the four walls of corporate boardrooms. However, it is only the
employees that implement and give tangibility to the corporate’s mission. In other words if it
is the highest rung in the corporate hierarchy that has ideas, it is the employees’ rung that
has the chisel to bring the vision to life.

In the best of worlds, employees would love their jobs. Like their co-workers, work hard for
their employers; get paid well for their work, ample chances of advancement and flexible
schedules so they could attend to personal or family needs when necessary. And never leave.

But then there’s the real world. And in the real world, employees, do, leave, either
because they want more money, hate the working conditions, hate their co-workers, want a
change, or because their spouse gets a dream job in another state. Unlike inanimate products
and systems that subject themselves to fine tuning without any reaction, employees would
not subject themselves to any measure taken without reaction and analysis. Hence managing
human resources, particularly retaining them, is an art that calls for special skills and
strategies.

EMPLOYEE RETENTION
Employee Retention involves taking measures to encourage employees to remain in the
organization for the maximum period of time. Corporate is facing a lot of problems in
employee retention these days. Hiring knowledgeable people for the job is essential for an
employer. But retention is even more important than hiring. There is no dearth of
opportunities for a talented person. There are many organizations which are looking for such
employees. If a person is not satisfied by the job he’s doing, he may switch over to some
other more suitable job. In today’s environment it becomes very important for organizations
to retain their employees.

The top organizations are on the top because they value their employees and they know how
to keep them glued to the organization. Employees stay and leave organizations for some
reasons.

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.

2
The picture states the latest statement that corporate believes in “Love them or lose them”

The reason may be personal or professional. These reasons should be understood by the
employer and should be taken care of. The organizations are becoming aware of these
reasons and adopting many strategies for employee retention.

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:

1) COMPENSATION 2) ENVIRONMENT 3) GROWTH

4) RELATIONSHIP 5) SUPPORT

Employee retention would require a lot of efforts, energy, and resources but the results are
worth it.

3
 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.

4
 WHAT MAKES EMPLOYEE LEAVES?
Employees do not leave an organization without any significant reason. There are certain
circumstances that lead to their leaving the organization. The most common reasons can be:
Job is not what the employee expected to be: Sometimes the job responsibilities don’t come
out to be same as expected by the candidates. Unexpected job responsibilities lead to job
dissatisfaction.

1. Job and person mismatch: A candidate may be fit to do a certain type of job which
matches his personality. If he is given a job which mismatches his personality, then
he won’t be able to perform it well and will try to find out reasons to leave the job.
2. No growth opportunities: No or less learning and growth opportunities in the current
job will make candidate’s job and career stagnant.

3. Lack of appreciation: If the work is not appreciated by the supervisor, the

employee feels de-motivated and loses interest in job.

4. Lack of trust and support in co-workers, seniors and management: Trust is the
most important factor that is required for an individual to stay in the job. Non-
supportive co-workers, seniors and management can make office environment
unfriendly and difficult to work in.

5. Stress from overwork and work life imbalance: Job stress can lead to work life
imbalance which ultimately many times lead to employee leaving the organization.

6. Compensation: Better compensation packages being offered by other companies

may attract employees towards themselves.

7. New job offer: An attractive job offer which an employee thinks is good for him
with respect to job responsibility, compensation, growth and learning etc. can lead an
employee to leave the organization.

5
 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>

6
 RETENTION DETERMINANTS
It has been recognized by both employers and employees that some common areas affect
employee retention. If certain organizational components are being provided, than other
factors may affect retention. Surveys of employees consistently show that better
compensation package and better career opportunity are the two most important
determinates of retention. Finally, job design and fair and supportive employee relationship
with others inside the organization contribute to retention. Following are the components
that affect employee retention: -

Career opportunities
1. Training
Continuity.
2. Development &

Rewards
1. Competitive pay & benefits.
2. Performance reward
differentiation.
3. Recognition.
4. Special benefit & perks.

Organizational Components
Values and Culture.
Strategies & Opportunities.
Well managed & results-
oriented.
Job continuity & security.
Job design & work
1. Job responsibility &
autonomy.
2. Work flexibility.
3. Working conditions.
4. Work/Life balancing.

Employee Relationship
1. Fair/nondiscriminatory
treatment.
2. Supervisory/management
support.

7
These were the determinants of retention. An affective leadership assumed by the top
management would be a very important feature that keeps the work force intact and loyal. In
fact, the approach to the task of formulation of strategies for employee retention should be
comprehensive and the honest intention of the employer to implement every stipulation in
the package of appointment should be evident. However, there would, in each employing
corporate, be a section of so-called ‘good employees’, whom it would be unwise to loose.
Special strategies and special kind of efforts are required in the task of retaining them.
Probably it would be the hardest task for the employer to retain them as persons and rivals
would be making relentless bids to woo this section of employees. To counter these
onslaughts from peers, special efforts are called for.

8
 MANAGER ROLE IN RETENTION
When asked about why employees leave, low salary comes out to be a common excuse.
However, research has shown that people join companies, but leave because of what their
managers’ do or don’t do. It is seen that managers who respect and value employees’
competency, pay attention to their aspirations, assure challenging work, value the quality of
work life and provided chances for learning have loyal and engaged employees. Therefore,
managers and team leaders play an active and vital role in employee retention by creating a
motivating team culture and improving the relationships with team members. This can be
done in a following way:

1. Creating a Motivating Environment: Team leaders who create motivating

environments are likely to keep their team members together for a longer period of
time. Motivation does not necessarily have to come through fun events such as
parties, celebrations, team outings etc. They can also come through serious events
e.g. arranging a talk by the VP of Quality on career opportunities in the field of
quality. Employees who look forward to these events and are likely to remain more
engaged.

2. Standing up for the Team: Team leaders are closest to their team members. While
they need to ensure smooth functioning of their teams by implementing management
decisions, they also need to educate their managers about the realities on the ground.
When agents see the team leader standing up for them, they will have one more
reason to stay in the team.

3. Providing coaching: Everyone wants to be successful in his or her current job.

However, not everyone knows how. Therefore, one of the key responsibilities will be
providing coaching that is intended to improve the performance of employees.
Managers often tend to escape this role by just coaching their employees. However,
coaching is followed by monitoring performance and providing feedback on the
same.

4. Delegation: Many team leaders and managers feel that they are the only people who
can do a particular task or job. Therefore, they do not delegate their jobs as much as
they should. Delegation is a great way to develop competencies.

5. Extra Responsibility: Giving extra responsibility to employees is another way to get

them engaged with the company. However, just giving the extra responsibility does
not help. The manager must spend good time teaching the employees of how to
manage responsibilities given to them so that they don’t feel over burdened.

6. Focus on future career: Employees are always concerned about their future career.
A manager should focus on showing employees his career ladder. If an employee
sees that his current job offers a path towards their future career aspirations, then
they are likely to stay longer in the company. Therefore, managers should play the
role of career counselors as well.

9
 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 have a look on
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.

10
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 improving 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.

11
 BENEFITS OF ATTRITION

Attrition is not bad always if it happens in a controlled manner. Some attrition is always
desirable and necessary for organizational growth and development. The only concern is
how organizations differentiate “good attrition” from “bad attrition”. The term “healthy
attrition” or “good attrition” signifies the importance of less productive employees
voluntarily leaving the organization. This means if the ones who have left fall in the
category of low performers, the attrition in considered being healthy.

Attrition rates are considered to be beneficial in some ways:

1. If all employees stay in the same organization for a very long time, most of them will
be at the top of their pay scale which will result in excessive manpower costs.

2. When certain employees leave, whose continuation of service would have negatively
impacted productivity and profitability of the company, the company is benefited.

3. New employees bring new ideas, approaches, abilities & attitudes which can keep
the organization from becoming stagnant.

4. There are also some people in the organization who have a negative and
demoralizing influence on the work culture and team spirit. This, in the long-term, is
detrimental to organizational health.

5. Desirable attrition also includes termination of employees with whom the

organization does not want to continue a relationship. It benefits the organization in
the following ways:
• It removes bottleneck in the progress of the company

• It creates space for the entry of new talents

• It assists in evolving high performance teams

6. There are people who are not able to balance their performance as per expectations,
lack potential for future or need disciplinary action. Furthermore, as the rewards are
limited, business pressures do not allow the management to over-reward the
performers, but when undesirable employees leave the company, the good
employees can be given the share that they deserve.

Some companies believe attrition in any form is bad for an organization for it means that a
wrong choice was made at the beginning while recruiting. Even good attrition indicates loss
as recruitment is a time consuming and costly affair. The only positive point is that the
realization has initiated action that will lead to cutting loss.

12
 RETENTION SUCCESS MANTRAS

1) Transparent Work Culture

In today’s fast paced business environments where employees are constantly striving to
achieve business goals under time restrictions; open minded and transparent work culture
plays a vital role in employee retention.

Companies invest very many hours and monies in training and educating employees. These
companies are severely affected when employees check out, especially in the middle of
some big company project or venture. Although employees most often prefer to stay with
the same company and use their time and experience for personal growth and development,
they leave mainly because of work related stress and dissatisfactions.

More and more companies have now realized the importance of a healthy work culture and
have a gamut of people management good practices for employees to have that ideal fresh
work-life. Closed doors work culture can serve as a deterrent to communication and trust
within employees which are potential causes for work-related apathy and frenzy.

A transparent work environment can serve as one of the primary triggers to facilitate
accountability, trust, communication, responsibility, pride and so on. It is believed that in a
transparent work culture employees rigorously communicate with their peers and exchange
ideas and thoughts before they are finally matured in to full-blown concepts. It induces
responsibility among employees and accountability towards other peers, which gradually
builds up trust and pride. More importantly, transparency in work environment discourages
work-politics which often hinders company goals as employees start to advance their
personal objectives at the expense of development of the company as a single entity.

Employees comprise the most vital assets of the company. In a work place where employees
are not able to use their full potential and not heard and valued, they are likely to leave
because of stress and frustration. In a transparent environment while employees get a sense
of achievement and belongingness from a healthy work environment, the company is
benefited with a stronger, reliable work-force harboring bright new ideas for its growth.

2) Quality of Work
The success of any organization depends on how it attracts recruits, motivates, and retains
its workforce. Organizations need to be more flexible so that they develop their talented
workforce and gain their commitment. Thus, organizations are required to retain employees
by addressing their work life issues.

The elements that are relevant to an individual’s quality of work life include the task, the
physical work environment, social environment within the organization, administrative
system and relationship between life on and off the job.

13
The basic objectives of a QWL program are improved working conditions for the employee
and increase organizational effectiveness.

Providing quality work life involves taking care of the following aspects:

1. Occupational health care: The safe work environment provides the basis for the
person to enjoy working. The work should not pose a health hazard for the person.
The employer and employee, aware of their risks and rights, could achieve a lot in
their mutually beneficial dialogue.

2. Suitable working time: Organizations are offering flexible work options to their
employees wherein employees enjoy flexi-timings for dedicating their efforts at
work.

3. Appropriate salary: The appropriate as well as attractive salary has always been an
important factor in retaining employees. Providing employees salary at par with the
other counterparts of above that what competitors are paying motivates them to stick
with the company for long.

QWL consists of opportunities for active involvement in group working arrangements or

problem solving that are of mutual benefit to employees or employers, based on labor
management cooperation. People also conceive of QWL as a set of methods, such as
autonomous work groups, job enrichment, and high-involvement aimed at boosting the
satisfaction and productivity of workers. It requires employee commitment to the
organization and an environment in which this commitment can flourish.

Providing quality at work not only reduces attrition but also helps in reduced absenteeism
and improved job satisfaction. Not only does QWL contribute to a company's ability to
recruit quality people, but also it enhances a company's competitiveness. Common beliefs
support the contention that QWL will positively nurture amore flexible, loyal, and motivated
workforce, which are essential in determining the company's competitiveness.

3) Supporting Employees
Organizations these days want to protect their biggest and most valuable asset and they want
to do this in a way that best suits their organizational culture. Retaining employees is a
difficult task. Providing support to the employees acts as a mantra for retraining them.
Employers can also support their employees by creating an environment of trust and
inculcating the organizational values into employees.

The management can support employees directly or indirectly. Directly, they provide
support in terms of personal crises, managing stress and personal development. Management
can support employees, indirectly, in a number of ways as follows:

1. Manage employee turnover: Employee turnover affects the whole organization in

terms of productivity. Managing the turnover, hence, becomes an important task. A

14
 proactive approach can be adopted to reduce attrition. Strategies should be framed in
advance and implemented when the times arrives. Turnover costs should also be
taken into consideration while framing these strategies.

2. Become employer of choice: What makes a company an employer of choice? Is the

benefit it offers or the compensation packages it gives away to its employees? Or is it
measured in terms of how they value their employees or in terms of customer
satisfaction? Becoming an employer of choice involves following a road map which
tells where to go as a brand.

3. Engage the new recruits: The newly hired employees are said to be least engaged in
the organization. Keeping them engaged is an important task. The fresh talent should
be utilized to maximum before they start feeling bored in the organization.

4. Optimize employee engagement: An organization’s productivity is measured not in

terms of employee satisfaction but by employee engagement. Employees are said to
be engaged when they show a positive attitude toward the organization and express a
commitment to remain with the organization. Employee satisfaction also comes with
high engagement levels. So, organizations should aim to maximize the engagement
among employees.

5. Coaching and mentoring: Employees whose work performance suffers due to poor
interpersonal relationships or because of lack of interpersonal skills should be
provided proper coaching by their superiors. Planed coaching sessions help an
individual to work through issues, maximize his potential and return to peak
performance.

4) Feedback
Feedback acts as a channel of communication between the employee and his manager. The
amount of information employees receive about how well or how poorly they have
performed is what we call feedback. It is a dialog between a manager and an employee
which acts as a way of sharing information about the performance. It suggests where the
employee performance is effective and where performance has to improve.

Managers can provide either positive feedback or negative feedback to employees. This
feedback helps the employee assess his performance and identify the improvement areas.

Positive feedback communicates managerial satisfaction. Positive recognition for good

performance boosts up morale of employees and results in performance improvement to a
higher productivity level. It is believed that positive feedback is the only type of feedback
that generates performance above the minimum acceptable level.

Negative feedback obviously communicates manager’s dissatisfaction. However, negative

feedback sometimes make employee to put more efforts to improve his performance. But
such times are very rare. Moreover this improvement is short term.

15
Some managers do not provide any kind of feedback to their employees. Due to no
feedback, employees may assume that they are performing productively or they may feel
that the manager is satisfied with their performance. Studies reveal the performance tends be
same or even decreases if no feedback is provided.

Thus, feedback is necessary because:

1. It builds trust and enhances communication between manager and employee.
2. It gives managers and employees a way to identify and discuss skills and strengths.
3. Positive feedback leads to employee retention and motivation.
4. It helps in identifying performance areas that need improvement and specific ways to
improve them.
5. It acts as an opportunity to enhance performance by identifying resources for skill
development.
6. It is an opportunity for managers and employees to assess and identify career and
advancement opportunities.
7. It helps employees to understand the effectiveness of their performance and
contributes to their overall knowledge about the work

Managers have tendency to ignore good performances of their employees. Providing no

feedback may de-motivate employees and may lead to employee absenteeism. Input from
manager’s side is necessary as it help employees to improve their performance and increase
productivity.

5) Communication between Employee and Employer

Communication is the solution to almost everything in this world. Same applies to employee
retention also. Straight-from-the-shoulder communication is what the employees need from
their employers. Employees look for organizations where communication and process are
transparent. Nothing is hidden and shared with the employees. Communication is also the
way to win the employees trust in the organization. Employees trust the employers who are
friendly and open to them. This trust leads to employee loyalty and finally retention.
Employers also feel that the immediate supervisors are the most authenticated and trusted
source of information for them. So the organizations should hire managers who are active
communicators.

Communication mediums
1. Open door policy: Organizations should support open door policies so that the
employees feel comfortable and are able to express their doubts and feeling to their
employers.
2. Frequent meetings and Social gatherings
3. Emails, Newsletters, Intranet and many more.

So there should be effective communication across the organization & this communication
should be two-way. Communication alone can lead to unimaginable heights of employee
retention.

16
 EMPLOYEES TURNOVER
Employee’s turnover has always been a sensitive issue for all organizations. Calculating
employee turnover rate is not that simple as it seems to be. No common formula can be used
by all the organizations. A formula had to be devised keeping in view the nature of the
business and different job functions. Moreover, calculating attrition rate is not only about
devising a mathematical formula. It also has to take into account the root of the problem by
going back to the hiring stage.

Employees Turnover rate or Attrition rate means:

In terms of numbers:
Total number of resigns per month (whether voluntary or forced) divided by (Total Number
of employees at the beginning or the month plus total number of new joiners minus total
number of resignations) multiplied by 100.

If calculating in monetary terms, it includes the following:

Costs Due to a Person Leaving

1. Calculate the cost of the person(s) who fills in while the position is vacant. Calculate
the cost of lost productivity at a minimum of 50% of the person’s compensation and
benefits cost for each week the position is vacant, even if there are people
performing the work. Calculate the lost productivity at 100% if the position is
completely vacant for any period of time.

2. Calculate the cost of conducting the exit interview to include the time of the person
conducting the interview, the time of the person leaving, the administrative costs of
stopping payroll, benefit deductions, benefit enrollments.

3. Calculate the cost of the manager who has to understand what work remains, and
how to cover that work until a replacement is found.

4. Calculate the cost of training your company has invested in this employee who is
leaving.

5. Calculate the impact of departmental productivity because the person is leaving.

Who will pick up the work, whose work will suffer, what departmental deadlines
will not be met or delivered late.

6. Calculate the cost of lost knowledge, skills and contacts that the person who is
leaving is taking with them out of your door. Use a formula 50& of the person’s
annual salary for one year of service, increasing each year of service by 10%.

7. Subtract the cost of the person who is leaving for the amount of time the position is
vacant.

17
Recruitment costs
1. The cost of advertisements; agency costs; employee costs; Internet posting costs.

2. The cost of internal recruiter’s time to understand the position requirements, develop
and implement a sourcing strategy, review candidates backgrounds, prepare for
interviews, conduct interviews, prepare candidate assessments, conduct reference
checks, make the employment offer and notify unsuccessful candidates. This can
range from a minimum of 30 hours to over 100 hours per position.

3. Calculate the cost of the various candidate pre-employment tests to help assess
candidates’ skills, abilities, aptitude, attitude, values and behaviors.

Training costs
1. Calculate the cost of orientation in terms of the new persons’ salary and the cost of
the person who conducts the orientation. Also include the cost of orientation
materials.

2. Calculate the cost of departmental training as the actual development and delivery
cost plus the cost of the salary of the new employee. Note that the cost will be
significantly higher for some positions such as sales representatives and call center
agents who require 4-6 weeks or more of classroom training.

3. Calculate the cost of the person(s) who conduct the training.

4. Calculate the cost of various training materials needed including company or product
manuals, computer or other technology equipment used in the delivery of training.

Lost productivity costs

As the new employee is learning the new job, the company policies and practices, etc. they
are not fully productive. Use the following guidelines to calculate the cost of this lost
productivity:

1. Upon completion of whatever training is provided, the employee is contributing at a

25% productivity level for the first 2-4 weeks. The cost therefore is 75% of the new
employees’ full salary during that time period.

2. During weeks 5-12, the employee is contributing at a 50% productivity level. The
cost is therefore 50% of full salary during that time period.

3. During weeks 13-20, the employee is contributing at a 75% productivity level. The
cost is therefore 25% of full salary during that time period.

4. Calculate the cost of mistakes the new employee makes during this elongated
indoctrination period.

18
New Hire Costs
1. Calculate the cost of bring the new person on board including the cost to put the
person on the payroll, establish computer and security passwords and identification
cards, telephone hookups, cost of establishing email accounts, or leasing other
equipment such as cell phones, automobiles.

2. Calculate the cost of a manager’s time spent developing trust and building
confidence in the new employee’s work.

Lost Sales Costs

1. Calculate the revenue per employee by dividing total company revenue by the
average number of employees in a given year. Whether an employee contributes
directly or indirectly to the generation of revenue, their purpose is to provide some
defines set of responsibilities that are necessary to the generation of revenue.
Calculate the lost revenue by multiplying the number of weeks the position is vacant
by the average weekly revenue per employee.

The cost of employee’s turnover or attrition is:

(Total staff * employee’s turnover rate/attrition rate %) * (annual salary *

80%)

The ‘rule of thumb’ appears to be very inaccurate indeed and, while it depends upon the
category of staff, it is probably better to estimate around 80% of salary as a truer rule of
thumb- and this will be on the conservative side.

What kind of strategies would be effective in producing the desired results of maximum
‘Employee Retention’ and minimum ‘Employee Turnover’? The answer is obvious. It
should be the aim of each employee to keep his work force fully satisfied with no room for
disgruntlement.

Retention of employees has become a primary concern in many organizations foe several
reasons. As a practical matter, with lower turnover, every individual who is retained means
one less person to have to recruit, selects, and trains. Also, the continuity employees who
know their job, co-workers, organizational services and products and firm’s customers
enhance organizational and individual performance. One survey of supervisor and workers
found that losing high performance made it more difficult for organizations to reach their
business goals. Additional continuity of employees provides better “Employee image” for
attracting and retaining other individuals.

19
 WAYS TO REDUCE EMPLOYEE TURNOVER
Following are some of the ideas to reduce employee turnover:

1. Hire the best candidate.

2. Welcome new employees. Customize your induction program for new employees
according to the requirements. Same induction program can not be applied to all the
candidates. Make them feel welcomed.

3. Produce quality managers who can really manage employees well.

4. Provide employees with work schedules that are flexible enough to suit their needs.

5. Don’t be too demanding. You re hiring human beings who have their own life and
family commitments. Respect them.

6. Provide career counseling and development.

7. Discuss your future plans regarding the candidate with the candidate. Let them know
that the management is interested in retaining them and cares for them.

8. Take proper feedback from employees regarding their grievances.

9. Remember your former employees. They can be helpful to you in future. It is also a
part of employee retention.

20
 FACTS ABOUT EMPLOYEE TURNOVER
It is difficult to accept when organizations say they have zero attrition rates. Companies may
have healthier turnover rates, however, there is no such thing as zero attrition. There are
other such facts about turnover, about which most of us are not aware. Some of such facts
have been highlighted below:

1. Turnover always happens: Companies who believe in zero attrition rates only fool
themselves. This happens because employees keep on moving due to reasons like
marriage or further education. Nothing can stop these employees from moving on.
So, rather than achieving zero attrition companies should focus on identifying whom
they want to keep so that they have healthy attrition rate.

2. Some Turnover is Desirable: Zero attrition is not desirable mainly because of two
reasons. Firstly, if all employees continue to stay in the same organization, most of
them will be at the top of their pay scale which will result in excessive manpower
costs. Secondly, new employees bring new ideas, approaches, abilities & attitudes
which can keep the organization from becoming stagnant.

3. Turnover includes costs: Turnover always includes some costs. Consider the costs
of replacing the key employee who falls in to the category of high performers. This
includes the costs of recruitment advertisement, referral bonuses, selection testing,
training costs, etc. Moreover, turnover results in loss of time & efforts, low
productivity, loss of morale, loss of knowledge and so on.

4. High salary doesn’t work: Most managers assume that a high salary package is
enough to keep employees loyal to their organization. Employees may face other
problems like low job satisfaction, low engagement levels, no recognition, poor
working conditions, less support from superiors and so on. Salaries are not always
the solution to attrition. Managers should try to identify the roots of the problem and
then find a feasible solution.

5. The manager can reduce attrition: Managers should take primary responsibility
for retaining their employees. Much of the employee’s perception of job satisfaction
stems from the relationship they share with their immediate supervisor. Managers
should try to support their subordinates and give proper feedback on performance.
HR managers should work in collaboration to make the key employees last in their
organization.

6. Reducing Turnover takes Commitment: Reducing turnover takes an investment in

coaching, developing, motivating, mentoring & listening to people. There should be
universal acceptance of the goal of reducing turnover along with top management
commitment and dedication.

21
OBJECTIVES OF
THE STUDY

22
 OBJECTIVES OF THE STUDY

1. To study the common reasons of employee voluntarily leaving or staying in

organization.

2. To suggest the strategies and steps for reducing turnover and improving
retention.

3. To study efforts made by organization to retain employee.

4. To study various career development programs offered by the organization.

5. To study the impact of induction & training programs on retention of employees.

6. To determine the organizational climate.

23
 REVIEW OF
LITERATURE

24
1. Research on “The impact of the Health Insurance Portability and
Accountability Act on Participant Recruitment and Retention”

Deidre D. Wipke-Tevis
University of Missouri-Columbia

Melissa A. Pickett
University of Missouri-Columbia

Recruiting and retaining an adequate sample is critical to the success of any research project
involving humans. Recent reports indicate that the Health Insurance Portability and
Accountability Act (HIPAA) privacy rule has adversely affected research. Few resources are
available to help researchers navigate the challenges to recruitment and retention after
HIPAA privacy rule implementation. This article addresses obstacles to recruitment in
prospective clinical research studies related to the HIPAA privacy rule, as well as HIPAA-
compliant strategies to enhance recruitment and retention. Recruitment challenges discussed
include evolving interpretations of the HIPAA regulations, inability to directly contact
potential participants, complexity of HIPAA-required documents, increased costs of
recruitment, and an expanding administrative burden. Among the strategies addressed are
preparatory research reviews, using clinical collaborators and staff liaisons, pre-screening
potential participants, minimizing participant burden during the consent process, enhancing
participant follow-up, facilitating recruitment for future studies, and streamlining
compliance training for staff.

2. Research on “Making Decisions in the Dark: Disconnects Between

Retention Research and Middle-Level Practice”

Donald E. Larsen
Woodring College of Education, Western Washington University, donald.larsen@wwu.edu

Tariq T. Akmal
Department of Teaching and Learning, College of Education, Washington State University

This study of grade-level advancement/retention policies and procedures in 10 school

districts shows how retention policy and procedure are disconnected from retention research.
Administrators and teachers experience ethical dilemmas when district policy and prescribed
practice collide with realities that underlie student failure. However, acts of discretionary
insubordination offer compromises. As the study demonstrates when policy and research
align and when educators acknowledge that neither retention nor social promotion is
acceptable, viable alternatives and intervention programs can be explored.

25
3. Research on “Effect of Paced and Unpaced Practice on Skill Application
and Retention: How Much Is Enough?”

Provalis Research
University of Montréal

This study examined the relative benefits of mastery learning, overlearning, and fluency-
building instructions for academic performance and long-term retention. College students
enrolled in introductory quantitative methods classes (n = 168) were asked to practice every
week with a computerized flash-card program until they attained various mastery criteria.
The results confirmed that practicing until mastery improved individual exam scores, group
success rates, and long-term retention. Moreover, over learning provided additional benefits,
especially in long-term retention. However, fluency-building instructions did not further
increase academic achievement or long-term retention. Despite the alleged detrimental
effects of drill and practice on motivation, a positive relationship was found between amount
of practice and attitudes toward the course, the subject matter, and practice activities.

4. Research on “The Role of Elaboration in the Comprehension and

Retention of Prose: A Critical Review.”

Lynne M. Reder
Carnegie-Mellon University

A review is given of recent research done in the area of prose comprehension, broadly
defined. Research in the areas of educational psychology, psychology, and artificial
intelligence is represented, although no pretense is made that this review is complete. This
review discusses work concerned with factors that affect amount of recall, with
representations of text structures, and with use of world knowledge to aid comprehension.
The need for more information processing models of comprehension is stressed and an
argument is made for the importance of elaboration to comprehension and retention.

5. Research on “The Effect of Service Price Increases on Customer

Retention.”

John Dawes
Ehrenberg-Bass Institute, University of South Australia

This study examines the impact of actual price increases on customer retention in a service
context and how the effect of a price increase is moderated by both tenure and breadth of the
customer's relationship. The study finds that tenure is associated with lowered customer
sensitivity to price increases as well as having a favorable direct effect on customer retention
rates. The study also finds that relationship breadth can exacerbate the adverse effect of
price increases on customer retention. The study represents a unique contribution to the
service marketing literature, which to date reports little research examining the effect of
actual price changes on consumer behavior.

26
6. Research on “The Discrimination, Acquisition, and Retention of Aiming
Movements Made with and without Elastic Resistance.”

David I. Anderson
San Francisco State University, San Francisco, California

Two experiments were conducted to compare the discrimination, acquisition, and retention
of movements made with and without elastic resistance. Using methods from psychophysics,
Experiment 1 revealed that a discrete 800-mm movement could be discriminated equally
precisely when it was performed with and without elastic resistance. Similarly, there was no
difference in the spatial accuracy of a discrete aiming movement made with and without
elastic resistance when extended practice with knowledge of results (KR) was provided in
Experiment 2. Contrary to expectation, when KR about the outcome of the movement was
removed on a retention test given 24 h after practice, the accuracy of the movements made
with elastic resistance declined much more rapidly than those made without resistance.
These findings question the common assumption that elastic resistance is a desirable
characteristic of a control mechanism. Actual or potential applications of this research
include the design of control mechanisms that facilitate performance under a variety of task
and environmental conditions.

7. Research on “Retention under Chicago’s High-Stakes Testing Program:

Helpful, Harmful, or Harmless?”

Melissa Roderick and Jenny Nagaoka

University of Chicago

In the mid-1990s, the Chicago Public Schools declared an end to social promotion and
instituted promotional requirements based on standardized test scores in the third, sixth, and
eighth grades. This article examines the experience of third and sixth graders who were
retained under Chicago’s policy from 1997 to 2000. The authors examine the progress of
these students for 2 years after they were retained and estimate the short-term effects of
retention on reading achievement. Students who were retained under Chicago’s high-stakes
testing policy continued to struggle during their retained year and faced significantly
increased rates of special education placement. Among third graders, there is no evidence
that retention led to greater achievement growth 2 years after the promotional gate. Among
sixth graders, there is evidence that retention was associated with lower achievement
growth. The effects of retention were estimated by using a growth curve analysis.
Comparison groups were constructed by using variation across time in the administration of
the policy, and by comparing the achievement growth of a group of low-achieving students
who just missed passing the promotional cut-off to a comparison group of students who
narrowly met the promotional cut-off at the end of the summer. The robustness of the
findings was tested using an instrumental variable approach to address selection effects in
estimates.

27
 RESEARCH
METHODOLOGY

28
 RESEARCH METHODOLOGY
• RESEARCH DESIGN: The exploratory research design is adopted for this
project.

RESEARCH APPROACH: Research worker contacted the respondents personally

with well-prepared sequentially arranged questions. The questionnaire is
prepared on the basis of objectives of the study. Direct contract is used for
survey, i.e., contacting employees directly in order to collect data.

• SAMPLE SIZE: The study sample constitutes 100 respondents constituting in

the research area.

• SAMPLING AREA: Baddi.

• SAMPLING DESIGN: Stratified random sampling is used.
• COLLECTION OF DATA: Most of the data collected is primary data
through personal interview, where the researcher and the respondent operate face –
to – face.

• RESEARCH INSTRUMENT: The researcher has used a structured

questionnaire as a research instrument tool which consists of open ended questions,
multiple choice and dichotomous questions in order to get data. All the questions in
the questionnaire are organized in such a way that elicits all the relevant information
that is needed for the study.

• STATISTICAL TOOLS: The statistical tools used for analyzing the data
collected are percentage method, chi square, bar diagrams and pie diagrams.

• ANALYSIS OF DATA: The data are collected through survey and books,
reports, newspapers and internet etc. The data collected by the researcher are
tabulated and analyzed in such a way to make interpretations. Various steps, which
are required to fulfill the purpose, i.e., editing, coding, and tabulating. The collected
data are analyzed and interpreted using statistical tools and techniques.

29
 DATA ANALYSIS
AND
INTERPRETATION

30
 DATA ANALYSIS & INTERPRETATION
1) Since how long are you working in this organization?
a) Below 3 months b) Between 3-6 months
c) Above 6months

Options Response
Below 3 months 30%
Between 3-6 months 40%
Above 6 months 30%

Response

Below 3
30% 30% months
Between 3-6
months
Above 6
months
40%

The response shows that most of the employees are working in this organization since past
3-6 months.

31
2) Are you satisfied with your current job?
a) Yes b) No
c) Can’t say

Options Response
Yes 70%
No 0%
Can’t say 30%

Response

30%
Yes
No
0%
Can’t say
70%

The response shows that most of the employees are satisfied with their current job.

32
3) If no, why (please rank)
a) Low salary b) No personal life
c) No growth opportunities d) Policies & procedures not conductive
e) Uneasy relationship with peers or managers
f) Others
If others please specify_______________________________________

Options Response
Low salary 0%
No personal life 0%
No growth opportunities 0%
Policies and procedure not conductive 20%
Uneasy relationship with peers or 10%
managers
Others 70%

Response Low salary

0%
20%
No personal life

10%

70% No growth
opportunities

Policies and
procedure not
conductive

33
The response shows that the reason of dissatisfaction of employees is some other than
above-mentioned reasons. But they also don’t want to disclose the reason for the same.

4) Are you looking/ planning for any change?

a) Yes b) No
c) Can’t say

Options Response
Yes 10%
No 70%
Can’t say 20%

Response

20% 10%

Yes
No
Can’t say

70%

The response shows that about 70% of employees are not planning for any change. It shows
that they are satisfied with their job.

34
5) According to you what are the reasons of resigning from job?
a) Low salary b) Bad employment practices
c) Bad experience with peers
d) Lucrative opportunities from other companies
e) Lack of social life f) others
If others please specify_______________________________________

Options Response
Low salary -
Bad employment practices 12.5%
Bad experience with peers -
Lucrative opportunities from other 43.2%
companies
Lack of social life 5.8%
Others 12.5%

35
 - 1 2 .5 0 % -

L u c ra tive
o p p o rtu n itie s fro m
20%
o th e r c o m p a n ie s
L a c k o f s o c ia l life
9%

71% O th e rs

The response shows that the main reason behind leaving the job is lucrative opportunities
from other companies. And the minor reason is lack of social life. And rest employees don’t
want to reveal the reasons for resigning the job.

6) Does organization takes initiative in retaining employees?

a) Yes b) No
c) Can’t say

Options Response
Yes 50%
No 0%
Can’t say 50%

36
 Res pons e

Y es
50% 50% No
Can’t s ay

0%

The response shows that 50% of employees are in the favor of organization that they takes
initiative to retain employees and rest 50 % can’t say anything about retaining employees.

7) If yes what efforts do they make?

a) Offer salary hike b) Offer training and development programs.
c) Offer a promotion d) provides flexible work hours
e) Opportunities for international travel f) Provides assistance for personal problems
g) Others
If others please specify _______________________________________

Options Response
Offer salary hike 30%

37
 Offer T & D programme 15%
Offer promotions 10%
Provides flexible work hours 25%
Opportunities for international level 0%
Provides assistance for personal 10%
problems
Others 0%

Response Offer salary

hike

11% 0%
0%
Offer T & D
33%
programme
28%

Offer
11% 17% promotions

Provides
flexible work
hours

The analysis shows that organization provides salary hike to its employees to retain them.

8) How frequently you are been rewarded/ praised by your boss?

a) Once in a month b) Once in 2-3 months
c) More than 3 months d) Never/Rare
e) On achieving the targets

Options Response
Once in a month 10%
Once in 2-3 months 0%
More than 3 months 0%

38
 Never/Rare 50%
On achieving the targets 30%

Response
Once in a
month
11% Once in 2-3
0%
months
33%
More than 3
months
Never/Rare
56%
On achieving
the targets

The response shows that 50% of employees say that that they are either never or rare
awarded/ praised by their boss. And 10% can’t say anything about this.

9) Does the organization provide you with training programs if required?

a) Yes b) No
c) Can’t say

Options Response
Yes 60%
No 40%
Can’t say 0

39
 Res ponse

0%

40% Yes
No
60%
Can’t say

About 60% employees say that they are provided with the training programs and 40% say no
that they are not provided with any training.

10) Do you find opportunity for direct communication with management?

a) Yes b) No

Options Response
Yes 90%
No 10%

40
 Response

10%

Yes
No

90%

About 90% of employee’s finds opportunity for direct communication with management and
rest don’t find it.

11) Does organization provide you career development programs?

a) Yes b) No
c) Can’t say

Options Response
Yes 60%
No 20%

41
 Can’t say 20%

Response

20%
Yes
No
20% 60%
Can’t say

About 60% response was in the favor of organization that they provide career development
programs to them. And 20% of response was against the organization and rest 20% can’t say
anything about it.

12) Does the organization give importance to physical fitness of an employee?

a) Yes b) No

Options Response
Yes 60%
No 30%

42
 Can’t say 10%

Response

10%

Yes
30% No
60%
Can’t say

The response shows that 60% of employees say that organization give importance to
physical fitness of employees.

13) According to you how much importance does organization gives to following?
(Please rate 1-5)
a) Work Standards b) Satisfaction of employee

Options Response

43
 Work standards 60%
Satisfaction of employee 40%

Response

W ork standards
40%

60% Satisfaction of
employee

The response shows that much importance is given to work standards rather than satisfaction
of employees.

14) Do you find yourself comfortable with the organizational culture?

a) Yes b) No

Options Response

44
 Yes 80%
No 10%

Response

11%

Yes
No

89%

The response shows that most of the employees find themselves comfortable with the
organizational culture.

15) Which of the following attributes does your organizational climate has?
a) Openness b) Confrontation
c) Trust d) Autonomy
e) Proactive f) Authentication

45
 g) Collaboration h) Experimentation

Options Response
Openness 15
Confrontation 5%
Trust 35%
Autonomy 5%
Proactive 15%
Authentication 5%
Collaboration 5%
Experimentation 15%

The response shows that the most common attribute found in the organizational climate is
trust.

46
 FINDINGS

FINDINGS

1. According to analysis the main reasons for voluntarily leaving the job are:
• Lucrative opportunities from other companies

47
 • Bad employment practices
• Lack of social life

2. Steps and strategies that should be taken to reduce attrition rate

• Provide lucrative opportunities within organization
• Implement good employment practices
• Try to create a healthy environment
• Provide attractive salary to its employees.

3. The main cause for reduction in number of employees is resignation.

4. Efforts made by organization to retain its employees are:

• Offer salary hike.
• Offer training &development programs to employees.
• Offer recreational facilities.
• Provides assistance in case of personal problems.
• Offer a promotion.

5. Provides career development programs to retain as well as to motivate employees to

work efficiently in the organization.

6. Organizational climate of Tractor Indo Firm is OCTAPACE.

48
CONCLUSION

CONCLUSION

49
As employees are the bases for company so retention of employees is a major focus for HR
department. The management should identify the important factors that affect retention and
should take necessary measures to improve these. Also, the management should take
appropriate measure to identify the reasons of employee voluntarily leave.

It is only the employees that implement and give tangibility to the corporate’s mission. In
other words if it is the highest rung in the corporate hierarchy that has ideas, it is the
employees’ rung that has the chisel to bring the vision to life. In the best of worlds,
employees would love their jobs. Like their co-workers, work hard for their employers, get
paid well for their work, have ample chances of advancement and flexible schedules so they
could attend to personal or family needs when necessary. And never leave.

But then there’s the real world. And in the real world, employees, do, leave, either
because they want more money, hate the working conditions, hate their co-workers, want a
change, or because their spouse gets a dream job in another state. Unlike inanimate products
and systems that subject themselves to fine tuning without any reaction, employees would
not subject themselves to any measure taken without reaction and analysis. Hence managing
human resources, particularly retaining them, is an art that calls for special skills and
strategies.

Employee survey and exit interviews can be used for assessing the reasons of
employee voluntarily leave. HR interventions such as improving selection process, effective
orientation and training, better employee relation, better career development programs and
planning etc should be used to improve employee retention.

50
 SUGGESTIONS

SUGGESTIONS
1. Following steps/ efforts should organization take to retain its employees:

51
• Lucrative opportunities
• Implement good employment practices
• Maintain healthy organizational climate
• Proper training should be provided to employees according to their skills
• Proper salary structure should be there.

2. Need to restructure company’s policy and follow certain process to overcome

problems.

3. Should make a hierarchy for various positions.

4. Company should follow standard SDLC process.

52
LIMITATIONS

LIMITATIONS

53
1. Time constraint- the duration of training was short, due to which it was difficult to
collect data.

2. One constraint has been regarding the cost, as study involves the collection of
primary and secondary data. Therefore, the cost incurred was much more.

3. Another constraint has been geographical area, which is confined only to Baddi.

4. Normally employees hesitate to disclose the information.

54
 BIBLIOGRAPHY

BIBLIOGRAPHY
(A) BOOKS

55
 1) Gupta Shashi K. & Joshi Rosy, Human Resource Management, Tata McGraw
Hill, Fourth Revised & Enlarged Edition, 2007. (Page 20.9-20.14)

2) KOTHARI C.R., Research methodology, New Age Publishing House, Second

Edition.

(B) LINKS
1) http://epa.sagepub.com/cgi/content/abstract/27/4/309
2) http://erx.sagepub.com/cgi/content/abstract/21/6/423

(C) WEBSITES
1) www.google.com
2) www.yahoo.com
3) www.jomsagepub.com

56
 ANNEXURE

QUESTIONNAIRE
1) Since how long are you working in this organization?
a) Below 3 months b) Between 3-6 months
c) Above 6months

57
2) Are you satisfied with your current job?
a) Yes b) No
c) Can’t say

3) If no, why (please rank)

a) Low salary b) No personal life
c) No growth opportunities d) Policies & procedures not conductive
e) Uneasy relationship with peers or managers
f) Others
If others please specify_______________________________________

4) Are you looking/ planning for any change?

a) Yes b) No
c) Can’t say

5) According to you what are the reasons of resigning from job?

a) Low salary b) Bad employment practices
c) Bad experience with peers
d) Lucrative opportunities from other companies
e) Lack of social life f) others
If others please specify_______________________________________

6) Does organization takes initiative in retaining employees?

a) Yes b) No
c) Can’t say

7) If yes what efforts do they make?

a) Offer salary hike b) Offer training and development programs.
c) Offer a promotion d) provides flexible work hours
e) Opportunities for international travel f) Provides assistance for personal problems
g) Others
If others please specify _______________________________________

8) How frequently you are been rewarded/ praised by your boss?

a) Once in a month b) Once in 2-3 months
c) More than 3 months d) Never/Rare
e) On achieving the targets

9) Does the organization provide you with training programs if required?

a) Yes b) No
c) Can’t say

10) Do you find opportunity for direct communication with management?

58
 a) Yes b) No

11) Does organization provide you career development programs?

a) Yes b) No
c) Can’t say

12) Does the organization give importance to physical fitness of an employee?

a) Yes b) No

13) According to you how much importance does organization gives to following?
(Please rate 1-5)
a) Work Standards b) Satisfaction of employee

14) Do you find yourself comfortable with the organizational culture?

a) Yes b) No

15) Which of the following attributes does your organizational climate has?
a) Openness b) Confrontation
c) Trust d) Autonomy
e) Proactive f) Authentication
g) Collaboration h) Experimentation

Comments, if any
__________________________________________________________________________
______________________________________________________________________

59