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Chapter 2 - Literature Review

Employee retention Retention is the organizational outcome and refers to the workers intention to leave and, for those who have already left their reasons for leaving and reasons for getting a different job. Retention and turnover are opposite sides of the same coin, affected by the same factors, with positive effects of these factors contributing to retention and negative effects contributing to turnover decisions. (Zeytinoglu & Denton, 2005). Retention is an intricate concept and there is no single formula for keeping employees close with a company. Retention is defined as continuing relation between employees and their organization. (Sinha & Sinha, 2012). Retention is a multi-faceted component of an organizations human resource strategies. It begins with recruiting the right people and continues with implementing programs to keep them engaged and committed to the organization. Retention strategies should be in place throughout an employees career, including the period prior to retirement (Freyermuth, 2007). Turnover refers to the number of staff who leave your facility for any reason; retention is keeping valued employees (Ontario, 2004). Excessive turnover is often a symptom of fundamental problems within the business. Its critically important to retain them; to do this, one must know how an employee can remain in the particular company (Shoaib, Noor, Tirmizi, & Bashir, 2009). Retention is an important component of human resource practices. If retention strategies are not properly implemented all the effort and business processes since recruitment ultimately fails and increases cost to the organization. The benefits of retaining the critical employees include the ability of the company to achieve its strategic business objectives and to gain a competitive advantage over its current and potential competitors (Ramlall, 2003). Retention factors: There are organizational factors and human resource management factors influencing employees retention. Organizational factors are; Leadership, company culture and structure, communication and consultation, effective integration (working relationships) and satisfactory working environment. Human resource management practices include; Selection, reward and recognition,

training and career development, challenging assignments and work opportunities and equity of compensation and benefits (Chew & Entrekin, 2004). Firms should pay attention to employee participation and involvement, pay, group cohesion, dissatisfaction and conflict with supervision, rewarding jobs, career development and training to avoid turnover and high turnover cost (Curtis & Wright, 2001). Six critical factors that need to be considered in the retention of high technology employees: compensation (base salary); job characteristics (skill variety and job autonomy); training and development opportunities; supervisor support; career opportunities and work/life policies. (Dockel, Basson, & Coetzee, 2006). For this study the following retention factors are chosen. These factors are identified by Dockel (2003) in his research. Compensation:
Financial reward:

Financial rewards are extrinsic monetary rewards that organizations pay to their staff for services delivered by them. These financial rewards include: base salary, cash recognition, incentives, flexible pay, stock options/initial price offerings (IPOs) and hot skills premiums. A reward can be a cash reward, such as a bonus, in other cases a reward refers to recognition, such as naming a worker employee of the month, and at other times a reward refers to a tangible incentive, such as a television A reward itself, by definition, is a type of recognition therefore rewards can take several forms. These include recognition awards, cash bonuses, free trips, and free merchandise. Each of these types of rewards has different characteristics and can be expected to affect employee behavior and perception in different ways (Silbert, 2005). One of the main devices used by companies to retain technical talent is the reward system. Not only are the traditional rewards of salary and promotion receiving renewed attention, but intrinsic rewards, team awards, recognition events, and special financial awards such as stock options are being deployed (Farris, 2000). It is found salary to be positively related to organizational commitment and negatively related to turnover (Igbaria & Greenhaus, 1992). In middle to the relationship between employers and employees is the compensation exchange or transaction process. The reason most people work is because they depend on salary or wages to

exist. While intrinsic factors play a notable role in why employees seek and remain in employment relationships, compensation plays the central role (Dulebohn & Werling, 2007). Job characteristics: The job should be rewarding. It should be designed to maximize skill variety, task significance, autonomy and feedback, and should provide opportunities for learning and growth. The jobholder will not willingly leave such a job (Curtis & Wright, 2001). The higher the level of autonomy that the individual possesses, the more negatively it is correlated with turnover (Marsh & Mannari, 1977). The Job Characteristics Model proposed by Hackman and Oldham (1980) is based on the idea that the job itself is a key to employee motivation. Factors such as compensation, effective supervision, compensation, and similar factors are not effective in increasing motivation, but rather act as neutralizers. It is only through enhancing the job itself that motivation can be increased according to the model.
Supervisor Support:

Research consistently supports that managers and supervisors have the greatest impact on employee retention (Freyermuth, 2007). Supervisory relationship with employees is extremely important for retention. Employees want leaders who know them, understand them, treat them fairly, and are supervisors that they can trust (Borstoff & Marker, 2007). The supervisor makes decisions on behalf of the organization, and because the supervisor employs the organizations resources to fulfill these decisions, the employee will view his or her supervisor as a representative of the organization (Silbert, 2005)

Supervisor discusses employees progress, often outside the formal evaluation process. They help employees to find the right position in the organization, not simply the next rung on the ladder (Freyermuth, 2007). The supervisor's influence is stronger in the area of such favorable job

conditions as providing opportunities for challenge and personal development than in the array of extrinsic rewards. The results show that supervisors would be well advised to act primarily upon intrinsically satisfying aspects of the job in order to build a constructive relationship with employees, such action will ultimately increase the likelihood that employees stay with their

organization (Stinglhamber & Vandenberghe, 2003). The supervisor is so essential to retention that it can be said that employees leave bosses, not jobs (Ontario, 2004). Career opportunities: Dissatisfaction with career prospects is a major cause of turnover (Curtis & Wright, 2001). Career is a major life constituency it evolves around work, and work provides sense of purpose, challenge, self-fulfillment, and, of course, income. Moreover, work is a source of identity, creativity, life challenge, as well as status and access to social networking. Overall, one see career as a life journey (Baruch, 2004). Organizations need talented employees for Its a mutual benefit process for

maintaining the sustainable competitive advantage and individuals require career opportunities to develop and grow their competencies (Prince, 2005).

organizations and individuals because career development provides the important outcomes for both parties (Hall, 1996: Kyriakidou and Ozbilgin, 2004). Work-life balance: Employees who believe that the work environment is not family-supportive may fear that the use of benefits will have a deleterious effect on their future career prospects within the organization (Allen, 2001). Managers should focus on their employees and provide them work life balance to reduce stress as well as turnover (Shahzad, Rehman, Shad, Gul, & Khan, 2011). Reduced work hours can have beneficial effects on employee creativity, work quality, satisfaction, and retention. Employee willingness to opt for reduced hours schedules is not a simple matter of scheduling. Redesigning work arrangements entails changing organizational cultures and careers. Possible reduced-hours career options require associated changes in the areas of compensation, assignments, and promotions (Barnett & Hall, 2001) Today a major concern in business is Workplace flexibility. The one thing becomes very clear that money alone is not enough; employees are willing to trade a certain amount of money for reduced work hours in their schedules (Shoaib, Noor, Tirmizi, & Bashir, 2009). The flexible work schedule is increasingly being an important issue in the efforts to retain an organizations critical employees (Ramlall, 2003). Work-life balance:

Employees who believe that the work environment is not family-supportive may fear that the use of benefits will have a deleterious effect on their future career prospects within the organization (Allen, 2001). Managers should focus on their employees and provide them work life balance to reduce stress as well as turnover (Shahzad, Rehman, Shad, Gul, & Khan, 2011). Reduced work hours can have beneficial effects on employee creativity, work quality, satisfaction, and retention. Employee willingness to opt for reduced hours schedules is not a simple matter of scheduling. Redesigning work arrangements entails changing organizational cultures and careers. Possible reduced-hours career options require associated changes in the areas of compensation, assignments, and promotions (Barnett & Hall, 2001) Today a major concern in business is Workplace flexibility. The one thing becomes very clear that money alone is not enough; employees are willing to trade a certain amount of money for reduced work hours in their schedules (Shoaib, Noor, Tirmizi, & Bashir, 2009). The flexible work schedule is increasingly being an important issue in the efforts to retain an organizations critical employees (Ramlall, 2003). Work Environment: Work environment and ineffective leadership are reasons why the employees leave. Work environment referred to the level of respect for each other and the ability to seek and attain support from supervisors and colleagues (Ramlall, 2003). Healthy work environment and supportive organizations and co-workers lead to lower administrative and human costs associated with mental and physical health problems and retention (Zeytinoglu & Denton, 2005). An independent study conducted by ASID demonstrated that physical/work environment contributes as a major factor effecting the decision of employees whether to stay or leave the job. It has been identified that light is a possible determinant of job performance, noise sometimes create a snag in office environments and is harmful to employee corporal and psychological welfare, inspiration, and at times, productivity. The most numerous audio grievances are, be short of speech seclusion i.e. eavesdrop people conversation and getting same sentiments as well. Access to nature helps to lessen stress and apprehension; it is beneficial for health environment as well.

People are strive to work and to stay in those corporation that provide good and positive work environment, where employee feel that they are valued and making difference (Ramlall, 2003).