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A Project in Human Resources Management
Semester V T. Y. B. M. S.
Sydenham College of Commerce and Economics
We would like to acknowledge our Prof. Sudhir Jadhav for firstly having given us a very relevant topic for the project. This topic is not only relevant in consideration of the examinations, but most importantly also, in the current market situation. The research that was done for the information for this topic has quite lucidly proven its increasing importance and role in the effectiveness of the Human Resources Department. We would like to make a mention of Mr. Colin Brown, from whose website we have obtained a lot of information. This information was very coherently presented. Also, the language used made most of the documents easy to comprehend. We would also like to acknowledge that most of our source of information for this project has been thanks to the widespread reach of the internet and this has enabled us to understand concepts, examples and practices in various companies.
Introduction Reasons for its Increasing Relevance
6. crèche facilities.” 3 . ITES Companies Bibliography 7.” • “Staunching the high employee turnover we have in department x or job function y.” Ask 10 managers what they mean by the term and you’ll receive 10 (sometimes very) different answers. Benefits of Investing in Employee Retention Benefits offered by the BPO Companies Compensation and Benefits provided by IT. Introduction “Employee retention.” • “It’s got to do with our culture and how we treat people. Employee Retention Strategies 1) 2) 3) 4) 5) 6) 7) 8) Retention Focused Recruitment Retention Focused Orientation Job Sculpting Retention Focused Managing Retention Focused Career Support Work – Life Balance Measures Retention Focused Reward Retention Focused Communication 5.” • “Stock options. A Challenge 1) 10 Reasons why Employees Leave 4.” • “Getting our compensation and benefits into line with the marketplace. 8.3. and other perks. Answers like these: • “Employee retention? You mean stopping people from leaving this organization?” • “Employee retention is all about keeping good people.
the essence of “status quo” is just that little or nothing should change in the relationship—and leaving was a pretty big change! What is Employee Retention Today? According to The HR Priorities Survey from ORC Worldwide an HR consulting and data services firm. Yet another supervisory challenge. development. 2007). particularly as part of talent management programs.” Employee retention is one of the hottest management topics in the United States for good reason. employee retention. The findings of the survey also indicated that 33 percent of talent management programs include workforce acquisition. so long as economic conditions allow. Until then. 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. and someone who made many and frequent job changes was seen as somewhat out of the ordinary. Let Us see what “Employee Retention” used to mean This entails understanding just a little history. The number of qualified applicants available for vacant positions is currently in decline and employers are finding it difficult to hire new employees and to keep employees over the long run.Now what u all will be wondering is which one of these is the right definition or is it a combination of these or is it something that we have not yet spoken of? Well it is a combination of all of this and something that we have not yet spoken of. it is impacting employers on a daily basis. The term “employee retention” first began to appear with regularity on the business scene in the 1970s and early ’80s. If they changed jobs. assessment. and retention as areas that will consume most of the survey respondents' time this year 2007 (see Anonymous. it was usually a major career and life decision. and. You may be thinking to yourself. an employee leaving his or her job voluntarily was seen as an aberration. nearly 62 percent of respondents to their survey opined that talent management will be the most pressing strategic issue they face in year. Retention has emerged as the focus of much time and attention in recent years. do a good job. during the early and mid-1900s. 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 time—sometimes for the duration of their working life. I will continue to employ you. and so 4 . something that shouldn’t really have happened. As a natural result of this “status quo” employer-employee relationship. After all. “Oh great.
the cost to replace an employee is $3. “Today talented persons are like frogs in a wheelbarrow. In addition the perception of having a job for life in a public sector role no longer exists. can increase productivity and keep employees energized and motivated to give their best. according to the Bureau of National Affairs. The US Department of Labor’s Bureau of Labor Statistics estimates average costs to replace a worker in private industry at $13.much is known about it that the HR practitioner who tries to integrate it into a talent program may grow bewildered by the huge volume of research about it Employee retention is more than just keeping employees on the job. Job satisfaction can equate to employees who stick with their current employer and strive to perform at or above expectations and standards. (To determine an 5 . in turn. Retention is thus the opposite of turnover . It is also about sustaining employees. Even at the former minimum wage. the negative impact on customer service is a direct result of their high turnover. And. the Bureau now reports.996.700. which can jump at any point of time when they sense opportunities” Reasons for its Increasing Relevance • Average employee turnover is 14. • The blow to morale and increased job stress when remaining employees are burdened with the distribution of the departed employee’s workload.4% annually. The trend for the younger generation of workers is to shift from job to job and this is becoming a norm of society.Employee retention is commonly considered to mean the ability to maintain a stable workforce. a wellknown concept. Companies that can recruit the best talent and retain them will have an edge in the long run. It is often linked to morale and to organizational productivity. • Replacement costs for a departing employee are estimated at one-third of his or her salary. primarily by enhancing their job satisfaction. Job satisfaction. turnover also varies widely among different industries. turnover rates are on the rise.
*) This also leads to future turnover of employees who are lured to other organizations by their friends who have departed.organization’s annual turnover costs. the negative financial impact of turnover to the bottom line can be substantial. So much money has been thrown at the challenge of keeping good people—in the form of better pay. The only sectors seeing a (slight) decrease in turnover were Real Estate. • In-depth interviews by the Gallup Organization of over 80. up 7% from the previous year.4% and Information.000 managers in over 400 organizations and offers the following finding: “…It tells us that people leave managers. • Estimates have determined that lost knowledge that leaves with the departing employee can be as high as 50% of the exiting employee’s salary for one year of service. And the recent turnover figures about U. up 5.5%. Taking a fairly conservative estimate that the financial loss from one employee is equal to his or her annual salary.” • Most of the HR functions of IT organizations spend more than 50 % their time and energy in hiring new resources without investing much time in the way their human resources can be retained. voluntary turnover increased slightly to 23. better perks. in the end. Leisure and Hospitality. Fact is. • The total cost of turnover is estimated to be somewhere between 30 percent of the annual salary of hourly employees (Cornell University) and 150 percent as estimated by the Saratoga Institute (Price Waterhouse Coopers).2%. are Overall U. Sectors that saw the highest increase in turnover were Accommodation and Food Services.7% the previous year. The highest turnover by far is still in the Accommodation and Food Services sector at 56. and better training— when. If you have a turnover problem. it takes 25 to 30 % more for organization to retain the existing qualified resource as compare to spending more than 50 % in getting new resource as a replacement of an existing resource.S. 6 . not companies. and Professional and Business Services. turnover is mostly a manager issue. simply multiply turnover cost by the number of annual new hires. this figure grows by 10% for each year of employment. and. • On average. 30% of a financial advisor’s clients will move with their advisor if he or she changes firms. Natural Resources and Mining.S. up 4. up from 22.4% annually. look first to your managers.4% and the Leisure and Hospitality sector at 52.
Expectations not met: Expectations play a large part in determining whether an employee is satisfied or dissatisfied with the current state of affairs. harming productivity. but each departure is yet more disruption. A Challenge 10 Reasons Why Employees Leave 1.3% up from 5. It is not unusual for employees to leave within the first six months when they discover that things aren’t quite as they imagined they would be. all areas were up slightly except the Northeast which saw a slight decrease. Their expectations may have been unrealistic from day one. bonus and so on. turnover was up slightly at 8. adding extra unnecessary costs and making it more difficult to reach goals for sales. They don’t ask candidates about their expectations.7%. On joining the firm the individual will have a range of expectations covering areas such as the style of management.2% with the Federal sector increasing the most to 9. the working hours. Few firms seem to appreciate the importance of expectations. revenue and profitability. holidays. Regionally. giving them the 7 .In the Government sector. pay.
A role that exposes their weaknesses. shared views. Mismatch between person and the culture of the firm It is not so much that there is a single ideal culture. Ideal for people who thrive on adrenaline. and therefore. Some workplaces are high pressured. not everyone is likely to be ideally suited to culture of your firm. 4. emotional. They don’t settle. They think about where they would like to be in 5 years time. a job that they find difficult.opportunity to select someone who is unlikely to be disappointed. It is an environment in which they can function to the best of their abilities. and determination they possess. Mismatch between the person and the role Employees who find themselves in roles that do not suit their individual strengths. Endless dialogue before action is taken. Faced with the prospect of having to spend many months. dynamic. Insufficient opportunities for growth and advancement Employees want to make progress. 8 . in 10 years time. fast paced. Everyone’s opinion counts. most of them choose to leave the company and go. more that cultures vary. Others are caring. long discussions. more likely to stay. in a job that is a struggle. they miss the feel of previous employers where they were able to contribute more. a job that is a mismatch for their specific talents. the skills. 3. their style or their approach and it rarely works. But put an employee in a firm whose culture does not suit their personality. They want to make that next step up the career ladder. they under-perform. Put an employee in a culture that suits their temperament and they feel at home. to make the most out of the natural talents. 2. perhaps years. to get ahead. They leave. A productive employee gets promoted into a position that requires skills that they do not possess. Their loyalty is largely to themselves. a role that they do not enjoy. and as a result. constantly being on the go. who enjoy this tempo. tend not to stay around that long. and as many departures show.
And it doesn’t take much to tempt them away. Salaries rarely remain a secret. And they need to get away. Employees that did not feel valued. Poor relationships between employees and their managers are one of the most common reasons for employee turnover. Problems with direct manager The state of the relationship between an employee and their direct manager goes a long way towards determining whether they stay or leave. that felt that their efforts. Dissatisfaction with pay Not receiving a fair salary. start to wonder why they bother. Employees want to feel valued. They want someone to say thank you. Insufficient recognition or appreciation The Employees that don’t receive adequate recognition for their contribution. someone that lacks basic people skills. if it isn’t equitable. refining current ones. getting new experiences. as though the business needs them. a fair bonus. was not appreciated. That their achievements. A previously adequate salary starts to feel insufficient when you have just learnt that a new arrival is receiving a higher wage for performing a similar role. Some employees stay far longer than might otherwise be expected because of the relationship they have with their supervisor. is just too much to bear. Thanks for that piece of work. 5.They recognize the importance of building new skills. Because the daily challenge of dealing with someone they dislike. if the procedure for determining pay 9 . their hard work. Dissatisfaction with financial rewards is complex. they will find look elsewhere. their contribution to the success of the business. 6. 7. was not recognised. thanks for helping out in a crisis. that get little appreciation for their efforts. thanks for dealing with that problem. If it isn’t fair. If the opportunities aren’t available with their current employer. Much of the dissatisfaction is due to comparisons. The information leaks out. a fair pay rise. Others leave jobs in the first few months because they sense their manager is not someone that brings the best out of them. as though their role is important.
watch the news. Attrition is high. staying late to get things finished. particularly leadership. Perhaps they coped better when they were younger. Time to take care of loved ones. if not hours. to their friends. They don’t want to be left without a job. Loss of confidence in the firm. 8. to realize the risk involved. working during weekends to meet deadlines. They need to have time for themselves. They need a better balance.settlements is tainted. employees can take only so much. And in time they too will probably leave for much the same reasons. or be taken over. If there is an alternative. There are times when the demands of work require extra hours. you just need to read the papers. When employees lose confidence in the firm’s leadership they head towards the exit door. They simply want to get away from the workplace. They know that confidence matters. Stress The stress of work. For some employees the demands of work are no longer compatible with the needs of their family. Confidence matters. employees become dissatisfied. the needs that exist beyond the workplace. Stressful work environments tend to be high turnover environments. Free time not devoted to work. from the firm. And in time many of them leave. that seemingly invincible companies can collapse in days. people take it. to their families. Companies go bust. the stress related to pressure from above. Stress drives employees into the arms of alternative employers. 9. should the company go under. people don’t matter. But now the arrangement just isn’t practical. Lack of work life balance Employees have responsibilities to their employer. the stress from working long hours. Other factors for Retention being a challenge are: A robust economy 10 . before they got married. there will always be someone else to fill the vacancy. from the people involved. 10. before they had a family. A stressful workplace is rarely a productive one.
Shift in how people view their careers Changes in the unspoken "contract" between employer and employee Corporate cocooning A new generation of workers Changes in social mores 11 .
• Person/skills . Determine their competencies. Study your best performers. • Sharing expectations at interview – Expectations regarding the pay policy. It is a fact of life that many hiring failures come . ability to work effectively in teams. Current employees are unlikely to want to jeopardise their own standing by referring friends who are just not appropriate for the work involved.Talents .Self-management traits . A fair proportion of early departures are employees that were never likely to be able to perform to an appropriate level within the firm.For roles that a largely team based. it is worth taking into consideration the opinions of those who will have daily contact with the post holder.To avoid new recruits leaving during the first few weeks when they discover the job is somewhat different to what they had expected.Think carefully about the skills needed to do the job well. They have the advantage of inside information and so are less likely to find the job or role contains unpleasant surprises. willingness to work long hours. willingness to travel and the candidate’s expectations regarding career advancement. provide a realistic job preview.Knowledge .Employee Retention Strategies 1) Retention Focused Recruitment: Recruitment and retention are interlinked. expected rate of rise in salary. need to conform to the firm's culture. • Realistic job preview . preferred management style • Person . Select for competencies: . • Including team members in the recruitment process . Some departures are almost inevitable from day one. or managerial. Make sure you select the right person in the first place.job fit .Motivations • Referrals .culture fit . due to having values that are incongruent with those of the firm.new recruits that were referred by current employees tend to stay longer.It is important that employees share similar values and are able to function within the cultural environment of the firm.
it may look like the best option is to leave. if they remain with the firm.Internal promotions send a signal to employees that they too may get the chance of career advancement.save money on recruitment . When interviewing prospective managers.culture fit known 2 . if strong internal candidates are not selected. • Promote rather than hire .person .save money on signing bonuses . consider the notion of upward feedback. if you want to get ahead. . Conversely.down to clashes of personality.signal to employees .
endless form filling Not involving the new recruit's manager and department Monologue rather than dialogue Instead. • First impressions count. • Make sure equipment is in position • Show them how they can achieve • Explain what is expected of them • Explain how to add value • Explain how to be a team player • Help them to feel at home • Buddies On their first day: • Introduce the new employee to team members • Give them a brief tour of the workplace. objectives. The purpose of orientation is to get the new recruit settled into position as quickly as possible. showing them where things are kept • Explain the importance of their role in the success of the business • Introduce them to their buddy • Brief them on the company's business strategy. too much information. values etc • Ask the employee to promise that they will come and talk to you before deciding to leave the company During the first week: . yet many orientation programs are little more than induction.2) Retention Focused Orientation: Effective orientation plays a vital role in the longer term retention of employees. • The time window is very small. Common mistakes • • • • • Not having the new employee's equipment in place Ignoring them or leaving them to read manuals Long lectures.
motivated • Give appropriate assignments • Get them started so they can make a real contribution • Establish medium term goals including both personal and career development goals • Detail available resources.• Ask them how they like to be managed. before they opt to leave. schedule any training. • Move them internally first . see if you can find them a new position internally. arrange a mentor if appropriate • Arrange short meetings to check how they are doing • Get colleagues to meet them to explain how best to communicate • Invite them to the next social event 3) Job Sculpting: Many departures arise from frustrations due to the day to day experience of the role. 2 .If someone is unhappy in their role. rather than the issues relating to the firm or to individuals.
Some employees find it difficult to connect their day to day work with the end product. It’s one of those common sayings that are mentioned in almost every book on retention. a little imagination. Connecting to passions is a great way can be a great way to improve retention. others like change. 3 .Match talents to the requirements of the role.• Match talents to the requirements of the role . Get employees to use their natural strengths. By explaining how their job fits into the big picture. Most people enjoy doing what they are good at. their intrinsic talents. If you want people to stay. get them to use their natural talents. In a sense their work appears to lack meaning. thus increasing their motivation. Autonomy and Feedback • Intrinsic motivation . but leave managers. a small adjustment. you can create meaning. • Meaningful work . Customizing roles to suit individuals can be a winning retention strategy for some firms. • Enriching jobs .Sometimes the lack of variety involved in their role can frustrate employees to the extent that they decide to leave. and perhaps their willingness to stay. it makes sense to tailor roles to suit them. can be the difference between losing them and retaining them. • Increase job variety . Task completion. 4) Retention focused managing: People join companies.If you have individuals you wish to retain. Most alternatives will start to look far less attractive once an employee gets the chance to focus on something they are passionate about.Enriched jobs have long been shown to offer extra value to many employees The keys to job enrichment: Skill variety.Understand why people want to work in the first place • Passions . Again. • Tailor roles to suit individuals . Some people like routine. Task significance.Individuals that get to focus on their passions are far more difficult to tempt away. They like being able to excel. This way they get far more value from work and it is more difficult for other firms to attract them away.
• Use incentives.• Select managers with good people skills . autonomy and initiative • Encourage ideas • Provide challenging work 5) Retention Focused Career Support: The new psychological contract between employee and employer appears to be largely focused around career development.Do reassign poor people managers into areas where they can use their strengths. don’t expect them to pay much attention to retaining employees. • Coaching and mentoring 4 . that is what they are likely to focus on. Don’t promote individuals into people management roles when their strengths lie elsewhere. recognition and support to encourage retention . • Explain why their work is significant • Work life balance guide • Performance agreement • Development plan • Dialogue • Goal setting • Provide the resources they need to the job • Delegation. Focus on creating value for employees. Sometimes the smart tactic is to explain the problem and ask managers to help.The selection of managers is crucial. • Do reassign poor people managers so they can use their strengths . can be designed to encourage behaviour that will assist retention. get employees to provide upwards feedback.Asking managers to help you. • Consider upwards feedback . It is far easier to build on natural strengths than to fix weaknesses. • Pay careful attention to the way you assess and reward managers .To encourage managers to pay attention to employee development. and perhaps even reward. If their pay is determined solely by results.Use incentives. Think about ways in which their assessment.If you assess managers on the numbers. recognition and additional support to encourage managers to adopt behaviour that reduces the push factor • Ask managers to help you .
• Career development interviews .Annual career development interviews are a sensible retention measure. • Alternative career paths • Filling unmet needs Build a culture that promotes learning. job sculpting. Not something that can be achieved overnight. 5 . special projects. rather than having to leave the firm. Examine a wide range of options from new work assignments. Giving employees more control over the hours they work can be the difference between retaining them and having to spend a fortune trying to find a replacement. not necessarily at the managerial level. • Development plans • Qualifications: professional and educational • Upwards feedback on manager as employee developer • Internal job banks . training. the best you can hope for is to extend the length of time an employee stays. 6) Work – Life Balance Measures: Offering a range of flexible working options can have a dramatic impact on employee turnover in certain circumstances. job enrichment. to internal and external moves. but a few low cost strategies that encourage learning can have an impact in situations where employees are unhappy about the amount of career support they are getting. it can work as employees are willing to stay while they are developing new skills that will benefit their career in the longer term. If opportunities for genuine career advancement are limited. additional responsibilities.Create new options so that employees can move internally. Make sure the focus is on what is best for the employee. Though this sounds a strange way to improve retention.
Others appoint people in roles specifically designed to listen in to employee opinion. Of all the various reward strategies to have been implemented over recent years. profit sharing appears to be the most effective from a retention perspective. It is possible to improve lines of communication should employee insight reveal this to be an issue that needs to be addressed. • • • • • Part time work Flexi-time Job sharing Compressed workweek Working from home 7) Retention Focused Reward: Profit sharing. Communication in the opposite direction is rarely as effective. 6 . or gain sharing. appears to be the most effective reward strategy from a retention perspective. 8) Communication: Recent years have seen firms place emphasis on communicating their message to employees. Some firms use schemes that encourage employees to contribute their ideas on potential improvements.Try to move towards focusing on productivity and results rather than hours worked.
a record low. Keep in mind that Google has a fastpaced. 7 . where turnover is 2.6% -. While a few firms choose to conduct pulse surveys to measure the temperature on certain key issues. Conducting retention focused interviews every six months is a sensible way to keep track of the current state of play. stressful and demanding work culture! • The 2006/2007 Work USA® survey of more than 12. Benefits of Investing in Employee Retention • Money invested in the “100 Best Companies to Work for”® would have returned almost three times more than the same amount of a portfolio in the S&P 500 during the past six years • The Number 1 “Best Company” for 2007 is Google.000 US workers across all job levels and in all major business sectors shows that financial performance of organizations is strongly related to employee engagement.Annual employee attitude surveys are a common occurrence in many sectors.
for the typical S&P 500 organization. Benefits Offered by BPO Companies The average attrition rate in this sector is still 35-40%. Employee Benefits Provided By Majority of the BPO Companies A part from the legal and mandatory benefits such as provident-fund and gratuity. non-earning parents and children above three months 8 . All employees and their dependent family members are eligible.3% higher profit growth and a 66. Dependent family members include spouse. Group Medi-claim Insurance Scheme: This insurance scheme is to provide adequate insurance coverage of employees for expenses related to hospitalization due to illness. a significant improvement in employee engagement is associated with a $95 million increase in revenue.• This same study found that. below is a list of other benefits…BPO professionals are entitled to the following: 1.8% reduction in turnover over companies that do not use similar practices. • A study by Cornell University professor Christopher Collins found that small businesses that implement employee-management strategies experience 22.1% higher revenue growth. the Watson Wyatt Human Capital Index® study of 147 employers found that firms that fill vacancies quickly (within a month) have financially outperformed those that take longer by 48 percentage points over a three-year period. • Additionally. 23. disease or injury or pregnancy in case of female employees or spouse of male employees.
Companies also have well equipped gyms. 3. 9 . 6. Recreation. Personal Health Care (Regular medical check-ups): Some of the BPO'S provides the facility for extensive health check-up. Cellular Phone / Laptop: Cellular phone and / or Laptop are provided to the employees on the basis of business need. Employees are also provided with financial assistance at the time of their wedding. 9. Company Leased Accommodation: Some of the companies provides shared accommodation for all the out station employees. And. The purpose is to provide to the employees to lead a more comfortable work life balance. For employees with above 40 years of age. chess tables and coffee bars. The lunch provided is also subsidized. Corporate Credit Card: The main purpose of the corporate credit card is enable the timely and efficient payment of official expenses which the employees undertake for purposes such as travel related expenses like Hotel bills. Subsidized Food and Transportation: The organizations provide transportation facility to all the employees from home till office at subsidized rates. 10. This covers total / partial disablement / death due to accident and due to accidents. the medical check-up can be done once a year. Air tickets etc 7.2. personal trainers and showers at facilities. Educational Benefits: Many BPO companies have this policy to develop the personality and knowledge level of their employees and hence reimburses the expenses incurred towards tuition fees. Personal Accident Insurance Scheme: This scheme is to provide adequate insurance coverage for Hospitalization expenses arising out of injuries sustained in an accident. Cafeteria. 4. 5. Loans: Many BPO companies provide loan facility on three different occasions: Employees are provided with financial assistance in case of a medical emergency. ATM and Concierge facilities: The recreation facilities include pool tables. in fact some of the BPO companies also undertakes to pay electricity/water bills as well as the Society charges for the shared accommodation. The employee is responsible for the maintenance and safeguarding of the asset. 8. the new recruits are provided with interest free loans to assist them in their initial settlement at the work location.
Regular Get together and other cultural programs: The companies organizes cultural program as and when possible but most of the times. The Salary consists of Basic. The Pay for Performance can be as much as 22% of the salary. acting. Health situation. Special Allowance 14. speed. etc and regularly play matches with the teams of other organizations and colleges. yearly benefits and income tax payable. and/or other management qualification at India's top most Business Schools. Flexible work schedules are initiated by employees and approved by management to meet business commitments while supporting employee personal life needs . The Flexible Benefit Plan consists of: House Rent Allowance. Leave Travel Assistance. 12. 15.examination fees. The parameters for calculation are process performance i. 10 . Medical Reimbursement. Employee Referral Scheme: In several companies employee referral scheme is implemented to encourage employees to refer friends and relatives for employment in the organization. DA and Conveyance Allowance. accuracy and productivity of each process. It is applicable of all the employees of the organization. football. and purchase of books subject. once in a quarter.The factors on which Flexi time is allowed to an employee include: Child or Parent care. in which all the employees are given an opportunity to display their talents in dramatics. singing. dancing etc. Performance based incentives: In many BPO companies they have plans for. Flexible Salary Benefits: Its main objective is to provide flexibility to the employees to plan a tax-effective compensation structure by balancing the monthly net income. 11. Maternity. Flexi-time: The main objective of the flextime policy is to provide opportunity to employees to work with flexible work schedules and set out conditions for availing this provision. Formal education program 13. performance based incentive scheme. for pursuing MBA.e. Apart from that the organizations also conduct various sports programs such as Cricket.
Bangalore is the most expensive in terms of compensation for IT . The 11 . IT and ITES industry companies have a very high cash orientation compared to other traditional industries.Compensation & Benefits in the IT and ITES Sector Compensation: 1. 48 per cent companies position their compensation above the market median.2 per cent in 2002 to 15. Junior Management). Performance-based increases in the IT industry rose by 23 percentage points when compared with last year. A jump in the average salary increases from 12. with a Cash to Benefits ratio of 75:25. 91 per cent of IT and 97 per cent of ITES companies have a stated philosophy of benchmarking compensation against the market. 2.4 per cent in 2003 in the ITES companies and from 12. An 18 percentage point increase was reported in variable pay plans in the industry.e. 3. 6.17 per cent higher than the national average. 4. 5. when compared with last year.5 per cent in the IT companies for the Professional/Supervisor/Technical Level (i.9 per cent to 14.
with a greater focus on employee attraction and retention. Cash based components (base salary. Loan Programmes: A 5 to 15 percentage point decrease was reported in the various loan schemes (housing. whereas Benefits (loans.3 per cent increase in training hours over last year. and orientation from 2002 to 2003.ITES and IT companies are currently in a high-growth phase. Training: Training hours in the IT industry decreased by 13 per cent. 12 . 7. Stock Options: Stock options are losing their charm in the IT and ITES industry. vehicle. and this supports the high salary increases.14 percentage point reduction was reported in the allocated budget for recruitment. conveyance and housing) have gone down. hiring. More and more companies are now using a higher proportion of their total employee budget towards variable pay to drive business results. cash emoluments and variable pay) have gone up from last year. Benefits: Organizations in both the IT and ITES industry are consolidating benefits. A 10 percentage point drop was reported in the prevalence of stock option programs between 2002 and 2003. and other loans) from last year. whereas the ITES industry reported a 4. as more companies moved towards cash-based programs. such as superannuation programs. People Practices: Recruitment: A 7 . Company Cars: An 18-20 percentage point reduction was reported in company car programs in the IT and ITES industry. Non-Statutory Retirement Benefits: There was a 5 to 10 percentage point decrease in the number of companies offering nonstatutory retirement benefits.
A 14 percentage point increase was reported in the number of organizations offering employees a formalized career path.html www. This figure for the ITES industry stood at 11.Ashwathappa Websites: www.shtml www.5 per cent.com www. Rewards and Recognition: There has been a 4 percentage point increase in the number of organizations offering special recognition awards to their employees.employee-retention-guide.entrepreneur.employeeretentionstrategies. with 95 per cent of the ITES companies having these awards in place.bpoindia.org/research/retention-strategies-call-centerindustry.com/encyclopedia/term/82184.Career Paths: ITES organizations are focusing on more long-term orientation for employees.com 13 .com www. Bibliography Textbook: Human Resources Management .orcworldwide. Workforce: 41 per cent of the IT companies saw a significant workforce reduction (affecting 5 per cent or more employees).
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