FACTORS AFFECTING ATTRITION AND STRATEGIES OF

RETENTION

Why Do People leave Jobs?

There are various factors that affect an individual’s decision to leave a job. While an employee’s
leaving the job is considered attrition by one organization, it is looked at as talent acquisition by
the new organization and to the individual it means a career move, economic growth and
enhanced quality of life/convenience or closeness to family etc. Hence, what is a problem for
one may be an opportunity for another.

This short note examines the key reasons for attrition and explores ‘what enhances retention’ as
well as outlines some of the factors that can control attrition. It also touches up those factors that
are beyond ones control.

Factors Affecting Attrition and Retention

There are various reasons why people leave their current job. These reasons may vary from
individual to individual and when data are collected from a large number of individuals leaving
or who have left an organization, some consistencies may be observed-providing more insights
as to why people leave in large numbers. If these are controllable-one attempts to control. If
these are not within the control of the organization, the organization should prepare itself for
managing attrition.

Managing attrition does not mean reducing attrition only. It could also mean bringing down the
negative affects of attrition and increasing the positive affects of attrition. To increase the
positive effects of attrition and reduce the negative affects, appropriate retention and capacity
utilization or talent utilization tactics should be used. In one of the organizations, attrition has
been used as brand building opportunity. Thus an organization may say that we provide talent
for other companies or they may say that if you join us your brand value goes up and you get
good jobs etc.

Today when a person leaves it causes a lot of disturbances in the organization. If it is a small
organization the disturbance is even greater. Hence it is important to understand and manage
attrition. There can be various reasons for people leaving their current jobs.
Some of these include:

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 FACTORSAFFECTING
FACTORS AFFECTINGATTRITION
ATTRITION

INDIVIDUAL ORGANISATIONAL OTHERS

Peer pressure
Ambitions/Career Role Related
aspirations
Culture Environment
Parental/Family
No challenge Growth and
mobility
No learning career paths
Personality factors
Style of boss Pay packets
Role clarity
Role stress
Lack of independence

Ambitions or Career Aspirations: It is but natural in a growing society and growing economy
that employees at all levels aspire to build their career. There are economic aspirations,
professional aspirations, family aspirations and all kinds of aspirations and ambitions that affect
a persons desire to move. It is rare not to have such career aspirations. In the past, organizations
grew at a pace and stability and individuals mostly saw their career in the current organization
and stuck to the same. Now a days either organizations don’t grow at the pace at which the
individual career aspirations grow or other organizations grow at a pace that matches the
individual causing individuals to move. When you treat all the world as a large space for growth
and building a career, it is futile for any organization to all the time compete with the rest of the
world and try to provide careers for all the employees at the same pace at which the entire world
or the best of the organizations in the world is moving. It is better to appreciate the growth and
mobility and movement of the mind and take attrition as a natural phenomenon than to be
agitated about it and have sleepless nights. However, if the organization can do something to
create new opportunities, that meet the growing aspirations of competent people, it should
certainly be attempted. However, such attempts require correct diagnosis of the situation.

Comparisons and Equity Considerations: Comparisons with peers or classmates from the
same college, batch, age group, organization, first job, city, etc. there are numerous dimensions
on which similarities can be picked up and compared. Individuals today are flooded with such
comparisons. Business magazines, compensation surveys by consultants and MNC companies
have only aggravated this situation and enhanced comparisons. Organizations in their zeal to
compete with one another in the market places commission such compensation surveys and
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further fuel the situation instead of controlling it. Unfortunately some of these organizations
have to suffer the consequence of what they have created in their hay days.

Parental and family mobility; Some times the desire to be with the closed ones also pushes the
person to move. Although we have largely moved away from the joint family concept, there are
still strong affiliations and affections. Need for being close with the family, spouse, children,
parents etc. at different stages of ones life to fulfill different types of affiliation needs prompt a
few people to leave their jobs and move from one city to another.

Personality factors: Some people have a high need for variety. They get bored and fatigued
easily. They need to change their job or what they are doing at periodic intervals. Other wise
they are restless and create morale problems with others working with them. They waste others
time discussing organizational politics and polluting the atmosphere. Some people are constantly
searching and seeking. They are highly ambitious and restless. They are highly achievement
driven and want to achieve new heights in the shortest time. They have either been socialized so
or fulfill their own power or other motives. Some may have a different motivation or value
profile which may not be matched by the current job or the company and hence the decision to
leave.

Job related factors: The job related factors that cause the decision to leave are many these
include the following:
1. Inability to use ones’ competencies
2. Lack of challenge
3. Boss and his styles
4. Lack of scope for growth in terms of position’ salary, status and other factors
5. Role clarity
6. Job Stress or role stress or role stagnation
7. Lack of independence or freedom and autonomy
8. Lack of learning opportunities
9. Lack of excitement and innovation, novelty etc. in the job

These factors may be intrinsic and job related or extrinsic and job related or job chemistry
related. Intrinsic factors are the factors related to the characteristic of the job. These are in plenty
in BPOs where the work conditions (night work, work at odd hours, the nature of clients to deal
with, etc) pose difficulties.
Extrinsic factors are factors like role clarity, independence and autonomy, bad boss, wrong
chemistry of the team, work conditions that can be changed easily, lack of respect shown to the
individuals, etc. A large number of the extrinsic factors can be controlled.

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Economic Factors: this deal with the aspirations in relation to salary and perks, housing, quality
of living, need for savings etc.

In addition to these there could be many other factors that affect decisions:
 Mobility of partner
 Fatigue
 Family reasons like having to look after old parents
 Closeness to kith and kin ROI in education

Factors affecting Individual decision to leave:

The factors can be classified as the following:

1. Individual related factors

2. Role or job related factors
3. Organization related factors
4. Professional factors
5. Societal factors including Peer pressure factors and socio-economic environment related
factors

Some of the Potential methods of managing retention and employee engagement or skill
utilization include the following:

First Find the Source of Attrition- where and why?

Any method of controlling attrition or increasing retention should be based on a good

understanding of the factors leading to attrition. The factors may be some times very simple and
could be reveled by an examination of the statistical data. The statistical data could answer
simple questions like the following:

Where is the attrition occurring?

Is it more in males than females? What levels? Is there anything in common among those who
leave? Is it related to some disciplines or people from a particular region or linguistic group? Is
it more among candidates from certain colleges or institutions? Age groups? Etc. Simple
demographic analysis among those who leave could reveal some insights.

For example: in one oil Exploration Company such an analysis reveled that attrition is limited to
those from the Drilling division and financial services division. Those who left the drilling
division were found to be older in age and those who left Finance department younger in age.
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Those who left the Drilling department left with VRS and got good jobs elsewhere because
experienced people are in demand. Those who left the finance department left because the
demand for young CAs and financial managers had gone up in the outside environment. In both
cases there were push as well as pull factors operating simultaneously.

UPS found that they had a lot of attrition amongst its drivers who pick up and deliver the parcel
services. They were a very critical part of the organization as they were most familiar with the
routes and clients. They then discovered that the driver’s job included loading and unloading
which they hated. It then became easy for UPS to hire loaders and save the drivers from this
work. It reduced the attrition rate remarkably.
In one study by the author of an engineering services company the attrition was found to be
more among certain section of engineers who faced the stress due to changing technologies and
requirements of the company. Until the study was conducted it was assumed that people left
because they did not like the style of their manager. The survey revealed that on the contrary
employees stayed longer because of the task centered but developmental style of their manager.

In another study of a software services company the root cause for attrition was found to be the
differential wage structure of the permanent employees as compared to the temporary
employees. Temporary employees were paid on an hourly rate at double the amount of hourly
rate calculated for permanent employees by dividing the cost to the company by 2000 hours.
However they were not properly informed of the amounts spent by the company through various
benefits and the outsourcing fee that was paid to the agency. Later the company had to undertake
a program to change the CTC structure and also to educate the permanent employees.

Once the source/cause of attrition is identified, solving the problem becomes relatively easy. At
least the organization can then determine if any internal interventions will help reduce attrition.
Some of the possible interventions that could help in enhancing retention are as follows:

Compensation, Financial restructuring and New Incentive schemes- including Salary and
perks restructuring, ESOPs, PLPs, etc. ILFS introduced a new Performance Linked pay in mid
nineties to manage retention at all levels. In this system all employees received a performance
linked pay at the end of the year depending on the company performance (financial),
departmental performance and individual performance. Combining all the three performance
parameters it was possible to get as much as a year’s salary or more as PLP depending on the
financial performance of the company. Introducing small recognition schemes may go a long
way.

Loyalty pay is a good mechanism of retaining the employee. In the loyalty pay the individual
gets his share of the performance linked pay or enhanced incentive pay proportionate to his stay.

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For example in the ILFS case only a part of the PLP was given at the end of the first year and
the remaining part is given proportionately at the end of the second and third years.
Organizations use most of the time compensation surveys and hike up the salaries. The tendency
to use “Golden handcuffs” with deferred compensation, investment options etc. are useful.
However in a competitive world often they artificially hike up the salaries as the recruiters also
work out mechanisms of buying out such handcuffed people at any cost. Hot skills premium is
paid by some companies for those who have crucial skills in short supply. They premium can be
removed as the skill availability increases or the need goes down.

ESS and OC interventions: Organizational climate and employee satisfaction surveys help in
indicating the factors affecting attrition and help organizations take corrective action. In the case
of one manufacturing company a climate survey revealed the lack of schooling facilities,
commuting facilities to a nearby town; schooling facilities could improve the tenure of its
employees. In another study the technological innovations were found to create tension and
resulting is decisions to leave in fresh and junior levels of management. Such climate schemes
may indicate small things like organizational communications, social get togethers and
celebrations could inculcate a sense of identity and belonging ness and enhance the we feeling
and thereby retention. Climate surveys also indicate those aspects of the personnel policies that
need to be revamped for enhancing retention. In one company such a survey indicated that too
much of differentiation and discrimination between the workmen and officers in terms of the
canteen food, leave facilities and other work conditions reduced the resentment to management
an enhanced commitment to the company. The attrition was more psychological than physical in
this company. Psychological attrition and retirement are particular problems in Indian PSUs.

In the development sector CARE India is one such agency that undertakes periodic
organizational climate surveys to keep in touch with the large number of employees engaged in
development work and use it to restructure its processes and HR polices and retain people. It is
interesting to have such a program in an organization where the jobs are contractual. In a
development organization it is considered all the more essential to have motivated staff all the
time.

HRD Audit also gives insights in to the factors that may enhance retention. In one HRD audit it
of an electronics company located in Bangalore where the salaries for found technicians was 20
% to 30% more than the market salaries, intention to leave the company were related to lack of
career plans of the company. The company did not have any career plans as even the strategic
plan was being determined by the Head Office in Europe and year to year targets came through
the MD of the company. On the basis of the audit, the MD of the company was able to present
his case to the Head office and get a strategic plan prepared and also institute career planning
mechanisms.

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Audits and surveys by them selves are not solutions to the issue. Some times they could raise the
hopes of an individual. In any case they are at best diagnostic tools and unless they are followed
up in terms visible actions they may also set some amount of cynicism in motion.

Celebrations and Social and cultural Networks: In some of the surveys and audits with which
TVRLS is associated it has been found that employees get a sense of belongingness if the
organization encourages some form of social networks, cultural programs, team celebrations.
These can be done with very little investments. By encouraging employees to have picnics,
social gatherings, celebrations and festivals etc. we encourage some amount of social
networking and sense of belonging ness. Tata and Birla group of companies are known for doing
these in their own ways. Some of these organizations have created a sense of belongingness
through their clubs, cultural forums and group celebrations and activities. When the person and
is family feel at home with a company and have developed a social network retention goes up.
Loyalty to colleagues can be thus made a significant retention force. New forums and methods
need to be thought of to suit the requirements and chemistry of a given group. Thus in one case
there may be an investment club, in another Golf Club, and a third cooperative society a fourth a
charitable group to assist local community and so on.

Assimilation and Integration

Studies have linked the retention capacity of a firm to the induction and assimilation process.
The new Economy industry and the need to be competitive require that the person needs to be
indicted into the company even before he/she joins it. If the new employee joining at the top
level joins the organization with full understanding of the culture, and the role he is supposed to
handle a lot of employee turn over can be contained.

According to studies in the US while firms go to great lengths to hire new employees, only 20%
of them stay two years. Nearly 70% of the newly hired seniors leave within two years .There is
only a 50% chance that when some one takes up a new job he will be with the company for
more than two years. In a 3 month period in the year 2000 alone 350 CEOs in the US let their
jobs. According to a HBR article (2000, issue 78) 80% of a pool of executives changed their
jobs within two years. Another study reports that 47% of executives appointed as presidents left
within four years. In a study of 359 positions listed in resumes it was found that 68% left their
previous jobs within twelve months. (Smart, 1999)

Bradford Smart (1999) estimates that the cost of mis-hires are perhaps.. 40 times base cost at top
levels. When you consider recruiting, actual compensation expenditures, severance, and
additional cost of lost productivity, the time it takes for some one to become productive,
business mistakes and missed opportunities etc. Research by Sibson & Co in four high turn over
four high turn over industries found that replacement costs have reduced the earnings and stock

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process by an average of 38%. The estimated cost of replacement has to be multiplied at least
three fold for every top leader who does not make it failed or left the origination)

Effects of losing a leader ripple through out the organization.

 Loss affects the organization's competitive position due to leadership vacuum
 Triggers turnover at other levels
 Creates loss of developmental and intellectual resources
 Disrupts and weakens customer relationships
 “Employee turnover has a significant effect on companies’ bottom-line by inhibiting
their ability to keep current customers, acquire new ones, increase productivity, and
pursue growth opportunities”

People don’t quit companies. They quit bosses. Numerous studies have indicated the correlation
between job satisfaction and direct supervisors and managers. According to new study 41% of
high value employees who intend to leave their jobs are dissatisfied with their managers or
supervisors. Gallup of 2 million employees form 700 companies indicated that strong links
between employee tenure and employee-supervisor relationships.

When a new leader joins the team they join three types:
 Functional team they lead
 Executive team they collaborate with including the senior leaders
 Project related cross functional teams
 When leader turnover is high the working alliances across the organization are not in
place long enough to embed any changes that are introduced

The purpose of induction and assimilation therefore is to ensure that leaders will adapt
and become full contributors in the new organization faster, better and with fewer
destabilizing effects to the individual and the organization. A successful assimilation is one
in which both the individual and the organization are transformed for the better and are
able to leverage each others’ strengths to achieve mutually beneficial goals. The individual
and the organization need to treat together for this purpose.

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Assimilation of new leaders occurs in four stages: It begins with point of hire and completes
when the individual is a full contributor and no longer an outsider. The assimilation journey is a
continuous negotiation between the two extremes and they need
To be balanced.
The balance needs to be between:

 Being patient and becoming productive

 Setting ones own pace versus following organization’s pace
 Trusting intuition versus making data based decisions
 Pleasing various stake holders versus meeting ones own priorities
 Implementing change versus respecting the culture of the organization
 Demonstrating competence versus seeking advice when one needs it
 Building relationships based on trust versus testing assumptions about others
 Intervening appropriately versus waiting until you have all information
 Drawing on the past versus not letting the past bind you
 Acting with authority versus staying in learning ode
 Not leading ego versus staying with confidence
 Making your position clear versus seeking feedback
 Affiliating with people versus maintaining boundaries

The HR Departments as well as the top management and other line manager have a
responsibility to ensure that the managers indicted at the top levels assimilate the culture, role
and other things of the company fast and manages the contradictions mentioned above. This will
only ensure that the retention is higher and top management recruited newly into the firm give
their best and high ROI.

Assimilation is both fluid and dynamic. It can be influenced by different factors at different
points of time of the organizational life cycle. New leaders are most likely to leave when they
lack support they need to their best work. Attrition is usually the result of not being able to
contribute what they were hired to make. They are most likely to stay if they feel a deep
commitment and affiliation to an organization.

Effective assimilation strategy:

 Acknowledges difficulties of entry into a new organizations
 Legitimizes and individual’s adjustment period
 Builds in multifaceted supporting mechanisms an institutional level (peer support, tips on
bridging organizational knowledge, and learning gaps) to asset the new leader through
the process

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Assimilation savvy organizations should:
 Focus on assimilation as a tool for retention and leaderships strategy
 Have a formal system and program of assimilation
 Use coaches for assimilation
 Use HR for assimilation process

People join an industry that is perceived as leader but stay only if they meet intellectual and
emotional needs.

Coaching services: With increased competition and scope for career enhancement the world of
executives is becoming a busy world. It is a world of work pressures, competition. Organizations
pay more and put pressures on employees to perform as they need to get their ROI on CTC. The
young manager is busy proving to his company that he can make a difference and serves what he
is being paid. There is no time for family and self. This is resulting in increased stress and
frustration. The world is becoming some times and for some people most of the time lonely
world. In such a situation making available mentors, coaches and guides will go a long way in
helping the individuals get the right type of counseling and advice. Such advise with a group of
mentors and experienced counselors could go a long way in helping employee get realistic
picture of what he is likely to get or don’t get from the change he makes.

Employee Engagement: The best way to retain is to provide work motivation. Challenge, job
satisfaction, treating the employee with significance, being sensitive to his needs, making the
organization predictable with systems and practices that are not bent or changed to
accommodate any individual at any time etc. may help retention. Using task forces could be
constituted to examine the sources of attrition. When employees are adequately engaged and
care is taken to see that they enjoy their job ad their families are taken good care of and adequate
social and financial security is provided retention goes up on its own. There is no substitute for
an engaging company with a secure and protective atmosphere. The engagement should come
from challenge. There are many examples of HR practices that have been found to engage
employees. Providing periodic training, learning opportunties, freedom and autonomy at the
work place, recognition of contributions, supportive boss, recognition of contributions etc. will
make a lot of difference in enhancing retention rates.

Market Driven Approach: Prudential introduced a “building management capability” program

which integrates recruitment, retention and training efforts. The program is anchored by a
sophisticated planning model that enables business managers to develop highly targeted
retention programs that create cost-effective contingency plans for filling potential gaps in skills.
Prudential has begun to assess how long the organization would like the employees to stay on
board. They decide those whom the company wants to have indefinitely, those who should be
there for a shorter period and those on whom retention investments don’t make any sense. Then
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they use a number of mechanisms depending on the categories of employees. They tailor the
programs for the retention requirements rather than employing them across the board (Cappelli,
2000)

Job Design and OB Customization: This method involves assessment of which tasks to be
included in what jobs. For example the united parcel service mentioned earlier redesigned the
job of drivers by separating the loading job from that of the drivers. Though it increased the
turnover of the loaders it decreased the turn over of drivers which are considered an important
role. The loaders could be replaced with ease. Designing the jobs for specified periods of time is
another way of managing retention. If a person is appointed for a period of three years and the
organization is prepared for the same and the employee is also prepared part of the issues
resolved. CARE India and many other international NGOs use this approach. In customization
programs the employees are given scope to define their job after an assessment of their skills
and interests. “Key employees might undertake a formal self-assessment of their work and non-
work goals and how those goals could best be achieved in the context of company;’ operations.
The assessments would form the basis for individual employment agreements, which might be
created using cafeteria-style programs similar to those in allocating employee benefits”
(Cappelli, 2000 p 107).

Change of Styles through 360 Degree Feedback and Internal Customer satisfaction
Surveys: Some times the style of manager may be responsible for employees in certain
departments to leave. With supportive managers and Head of departments employees think
several times before they leave. Some managers may not realize that their coercive style,
excessive task centeredness, and the way they assign tasks including the clarity with which they
give instructions, respect etc to employees have tremendous impact on their staying with the
company. By recognizing the roles they play and the styles they exhibit and seeing the impact
they are making senior managers can at least reduce the push factors for attrition. There are
several cases of Senior Managers realizing the impact of their style in the 360 degree Feedback
programs conducted by TVRLS.

Other Methods:

 Start with recruitment. Don’t recruit those people who will be the most difficult to retain.
Pay attention to this aspect from recruitment stage itself.
 Adapt to Attrition. Attrition is the order of the day. Market forces are too strong. Focus
on what you can change. Don’t focus on what you can’t change and lose your sleep.
Some times you don’t have to recruit all high powered staff. In the olden days some of
the business houses did not go to business schools where the graduates are expensive and
are job-hoppers. These included a highly rated business schools. They recruited from the
less popular business schools and found them to contribute a lot and stay loyal.
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  Simplify and standardize jobs and use multi-skilling to help meet any contingencies.
 Focus on retaining intellectual capital even when employees leave. Think of appropriate
mechanisms and build organizational memories and knowledge systems to retain talent
and intellectual capital. Teamwork task forces and standardized systems help. IT support
helps. Electronic records of employee knowledge helps in many cases.
 Cooperate with competitors. Form clubs and associations.
 Work with local schools and communities and develop a large source of skill base by
giving projects and grants to local colleges.

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