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PROJECT TOPIC

EMPLOYEE ATTRITION AND RETENTION

SUBMITTED IN THE PARTIAL FULFILLMENT OF THE AWARD OF THE DEGREE OF

BACHELOR OF MANAGEMENT STUDIES

SUBMITTED TO K.M.AGRAWAL COLLEGE OF ARTS, COMMERCE AND SCIENCE

SUBMITTED BY MISS. TEJASHREE ASHOK PAGARE SEAT NUMBER : 00000

SUPERVISED BY PROF. KHUSHBOO BHATIA


NOVEMBER 2013

DECLARATION

I hereby declare that the project entitled, Employee attrition and retention, submitted to K.M.Agrawal College of Arts, Commerce and Science in partial fulfillment of award of Master of Management Studies of University of Mumbai is my original work and does not form any part of previously conducted projects. This information is purely for academic purpose.

TEJASHREE ASHOK PAGARE

B.M.S ( BACHELOR OF MANAGEMENT STUDIES)

DATE :

PLACE : KALYAN

CERTIFICATE

This is to certify that the project entitled, Employee Attrition And Retention, submitted by Miss. Tejashree Ashok Pagare, in partial fulfillment for the award of Master in Management Studies of University of Mumbai is original work and does not form any part of the projects undertaken previously. Also it is certified that the project represents the original work on the part of the candidate.

Place

: Kalyan

Date

External Examiner

Principle (Drs. Miss. Anita Manna)

Guide (Prof.Khushboo Bhatia)

Co-Ordinator (Prof. Sujeet Singh)

ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards to my guide PROF..KHUSHBOO BHATIA for her exemplary guidance, monitoring and constant encouragement throughout the course of this thesis. The blessing, help and guidance given by her time to time shall carry me a long way in the journey of life on which I am about to embark. I also take this opportunity to express a deep sense of gratitude to PROF. SHALINI VENKATESH , for her cordial support, valuable information and guidance, which helped me in completing this task through various stages. Lastly, I thank almighty, my parents, sisters and friends for their constant encouragement without which this assignment would not be possible.

TEJASHREE ASHOK PAGARE

INDEX

EXECUTIVE SUMMARY
This project is done on human resource management topic in the area of EMPLOYEE ATTRITION AND RETENTION. The most challenging job for any present manager is to retain their employees. 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 problem in employee retention these days. Hiring knowledgeable people for the job is essential for an employer. Employee attrition and retention are one of the major issues facing the corporates today. But retention is even more important than attrition. There is no end of opportunities for talented person. There is ample number of choice around employees. In olden days salary was all that matters, but today its just one among the components. Some of the other elements are like work environment, relationship, freedom to work etc. Due to high level of attrition it is important to know whether the employees are satisfied with their job and organization, if not the reason for leaving. This project will specify the effectiveness of various retention practices used retain the employees. The study include various trends of practice followed by the organizations and its effect on the problem of attrition. Retention is a top business priority for more than one third of the organizations. More than one third of HR professionals in views retention as one of their pressing issues. It is not very often that the management would be aware of the true reason as to why an employee would be leaving their organization. To be successful in knowing the reason, an effective exit interview procedure is very essential. This would help the organization to an extent to get a clear picture of what is going wrong. Thus, this study is conducted to find out directly from the employees the factor that does not motivate them to continue employment with their organization. With help of a self developed questionnaire few factors are taken into consideration for the study. With the help of the study, An attempt is made to find out the effectiveness of the practices and how practical is it to retain the employees.

1.1 SUMMARY

Employee attrition is the rate at which organizations and/or company's hiring and fire employees to either represent their firm or leave their firms. It it also referred to the employee turnover rate. Simple ways to describe it are "how long employees tend to stay" or "the rate of traffic through the revolving door". Turnover is measured for individual companies and for their industry as a whole. If an employer is said to have a high turnover relative to its competitors, it means that employees of that company have a shorter average tenure than those of other companies in the same industry. High turnover may be harmful to a company's productivity if skilled workers are often leaving and the worker population contains a high percentage of novice workers Labour turnover is equal to the number of employees leaving, divided by the average total number of employees, multiplied by 100 (in order to give a percentage value). The number of employees leaving and the total number of employees are measured over one calendar year. Employee retention refers to the ability of an organization to retain its employees. Employee retention can be represented by a simple statistic (for example, a retention rate of 80% usually indicates that an organization kept 80% of its employees in a given period). However, many consider employee retention as relating to the efforts by which employers attempt to retain employees in their workforce. In this sense, retention becomes the strategies rather than the outcome. In a business setting, the goal of employers is usually to decrease employee turnover, thereby decreasing training costs, recruitment costs and loss of talent and organisational knowledge. By implementing lessons learned from key organizational behavior concepts employers can improve retention rates and decrease the associated costs of high turnover. However, this isn't always the case. Employers can seek "positive turnover" whereby they aim to maintain only those employees who they consider to be high performers.

1.2 INTRODUCTION
In the recent decades the Indian industry has changed its outlook. The employment scene has changed its appearance. The factors like skill sets , job satisfaction drive the employment and not just the money. The employer hence faces the heat of continuous employee turnover. Continuous efforts are made by organizations to control the employee turnover rate as it directly affects the performance of the organization as many key people leave the organizations for various reasons at crucial points. This turnover is normally known as ATTRITION. Employee attrition refers to the loss of employees through a number of circumstances, such as resignation and retirement. The cause of attrition may be either voluntary or involuntary, though employer-initiated events such as layoffs are not typically included in the definition. Each industry has its own standards for acceptable attrition rates, and these rates can also differ between skilled and unskilled positions. Due to the expenses associated with training new employees, any type of employee attrition is typically seen to have a monetary cost. It is also possible for a company to use employee attrition to its benefit in some circumstances, such as relying on it to control labor costs without issuing mass layoffs. There are many different ways for a company to lose employees, most of which are typically taken into account to ensure that the organization is able to operate efficiently. Attrition refers to the loss of employees due to reasons other than firing and other employer-initiated events. This means that an employer has no direct control over how many personnel are lost to employee attrition. Retirement is one major cause of employee attrition, and since people tend to retire around a specific age this is a factor that can be accounted and planned for. Other causes of employee attrition, such as personnel who quit due to prolonged illness, dissatisfaction with the company, or other reasons, can be more difficult to estimate.

1.3 MEANING OF EMPLOYEE ATTRITION

Employee attrition is the rate at which organizations and/or company's hiring and fire employees to either represent their firm or leave their firms. It also referred to the employee turnover rate. Employee attrition refers to the loss of employees through a number of circumstances, such as resignation and retirement. The cause of attrition may be either voluntary or involuntary, though employer-initiated events such as layoffs are not typically included in the definition. Each industry has its own standards for acceptable attrition rates, and these rates can also differ between skilled and unskilled positions. Due to the expenses associated with training new employees, any type of employee attrition is typically seen to have a monetary cost. It is also possible for a company to use employee attrition to its benefit in some circumstances, such as relying on it to control labor costs without issuing mass layoffs. There are many different ways for a company to lose employees, most of which are typically taken into account to ensure that the organization is able to operate efficiently. Attrition refers to the loss of employees due to reasons other than firing and other employer-initiated events. This means that an employer has no direct control over how many personnel are lost to employee attrition. Retirement is one major cause of employee attrition, and since people tend to retire around a specific age this is a factor that can be accounted and planned for. Other causes of employee attrition, such as personnel who quit due to prolonged illness, dissatisfaction with the company, or other reasons, can be more difficult to estimate.

DEFINITION
1.The reduction in staff and employees in a company through normal means, such as retirement and resignation. This is natural in any business and industry. 2.Attrition is the abandonment of a position due to retirement, resignation or other similar reasons. Therefore, attrition decreases the workforce, because there are no immediate replacements. 3.The employee attrition rate is the number of exits during the period divided by the average number of employees

1.5. FACTORS OF EMPLOYEE ATTRITION

1.6 FACTORS AFFECTING EMPLOYEE BEHAVIOUR


Organizational culture The overall culture of a company impacts how employees conduct themselves with coworkers, customers and suppliers. More than just a work environment, organizational culture includes management amp;#039;s attitudes towards employees, company growth plans and autonomy/empowerment given to employees. "Tone at the top" is often used to describe the organizational culture of a company. A positive tone can help employees be more productive and happy. A negative tone can lead to employee dissatisfaction, absences and even theft or vandalism. Local economy An employee amp;#039;s view of his job is impacted by the state of the local economy. If jobs are plentiful and the economy is booming, employees are happier overall and their behavior and performance mirror that. On the other hand, when times are tough and unemployment is high, employees can become fearful and anxious about holding their job. This anxiety leads to lower performance and lapses in judgment. In some employees, however, fear of job loss can be a motivating factor to perform better. Reputation of company in community Employees amp;#039; perceptions of how their company is viewed by the local community can impact behavior. If an employee is aware that her company is considered to be underhanded or cheap, her actions may also be that way. It is a case of living up to expectations. However, if a company is seen as a pillar of the community with lots of goodwill, employees are more likely to exhibit similar behavior because customers and suppliers expect that from them. Competition in industry The degree of competitiveness in an industry can impact the ethics of both management and employees, especially in situations where compensation is based on revenues. In a highly competitive environment, ethical behavior towards customers and suppliers may slip downward as employees scramble to bring in more work. In a stable industry where attracting new customers is not an issue, employees are not motivated to lay their internal ethics aside to chase money.

1.7 OBJECTIVES OF EMPLOYEE ATTRITION


To find out employees annual as well as average turnover rate. To ascertain the cause of Employees turnover. To determine the effect of employee turnover. To measure the satisfaction level of employees in the organization. To identify factors which would trigger attrition To know the major reasons for employees to leave their jobs. To evaluate how an employee is valued as a part of this office. To study whether the promoting respect and fair treatment among all staff is a high priority To find whether the communication between staff and management is effective. To study whether the workload in this office is distributed equitably. To evaluate whether the employee know exactly what is expected of him/her as an employee.

1.8 ADVANTAGES OF EMPLOYEE ATTRITION

A new employee may bring a new enthusiasm to the tasks that make up a job; this new blood can provide a nice balance of motivation. Employee turnover can lead to different points of view which may result in innovative ideas Retaining employees reduces training costs. It builds a team of skilled and experienced employees. Retaining experienced staff creates a positive impact on customer services. Retention activity fosters loyalty towards the organization amongst employees. Encourages friendly environment and fosters bonding amongst employees. It facilitates smooth workflow of internal processes. It increases the quantity of work delivered. It enhances the quality of the work produced. While employees bring knowledge with them, on the flip side people often get locked into a particular mindset and sometimes see things from a pretty limited perspective. New and fresh ideas often leads to innovation and businesses who have high turnover often find themselves able to come up with new products, services and ways of doing things.

1.9 DISADVANTAGES OF EMPLOYEE ATTRITION

One of the most significant disadvantages of high employee turnover is the loss of fully trained employees. A loss of points of contact is another drawback. There is a good chance that the experienced employees rolodex will not transfer to the new employee and a lot of time will be spent building or re-building those relationships When your most experienced person departs for retirement or greener pastures, there is a vacuum of intellectual knowledge that goes with them It promotes groupism amongst old employees which creates an insecure environment for new employees. Improper mixing of staff affects productivity and ensures poor quality of work. Excessive liberty to staff just to maintain work flow affects quantity and quality both. Flexible work timings rarely justify the work delivered. Retaining non-delivering staff kills the productivity and creativity of knowledgeable employees. Retaining spoon-fed and complaining employees add to the cost of the organization. Affluent employees who do not require a job, rarely add value to the employee strength. High costs are one of the biggest drawbacks to high employee turnover. It takes a lot of efforts and resources in the application process to advertise positions, recruit, interview and hire. The time invested in the training process is a considerable con of high employee turnover.

1.10 TYPES OF EMPLOYEE ATTRITION


At first glance, the phrase "employee turnover" has a negative connotation -- a stigma associated with an employer's obligation to reduce turnover at all costs. However, there are different types of turnover and all turnover isn't negative. Turnover occurs for a variety of reasons, ranging from termination for poor performance to the departure of highly-skilled employees who resign after they help grow start-up businesses to sustainable levels. Involuntary Involuntary turnover occurs when employers terminate an employee or ask an employee to resign. The latter may ultimately be considered voluntary turnover; however, the initial decision is to effect an involuntary turnover. When employees are terminated for violating workplace policies, poor performance or business slowdown, the departure is considered involuntarily. Some instances of involuntary turnover may cause trepidation among remaining employees. Employees who witness regular involuntary turnover or terminations might be concerned about their own job security. Other employee terminations may come as a relief to remaining employees, whose morale and productivity suffer when poor performers affect the workplace climate.

Voluntary Voluntary turnover occurs when employees leave of their own volition. Employees who resign, retire or simply leave the organization for other reasons are counted in turnover analyses as voluntary turnover. Attrition is often part of the turnover analysis. Human resources experts define attrition as a decrease in the workforce for voluntary departures. The difference between attrition and voluntary turnover is that employers do not replace employees who leave by virtue of attrition. While some instances of voluntary turnover may occur because employees are dissatisfied, a number of employees resign for reasons unrelated to working conditions. Examples of voluntary turnover for nonwork-related reasons are employees who leave their jobs to travel with spouses, or students who leave the workplace to return to school.

Positive Desirable -- or positive -- turnover occurs when the workforce experiences change due to new employees bringing fresh ideas and perspectives to the company replace workers who are terminated for poor performance. Infusing new talent in an organization can re-energize the workplace, catapult productivity and boost profitability. Employers may initially be apprehensive about this type of turnover, simply because the word turnover has a negative connotation. Replacing a stagnant workforce can be costly.

Negative Negative turnover is often referred to as undesirable turnover. It's easy to understand why turnover is considered negative or undesirable when employees leave under a cloud of circumstances such as suggested wrongful termination, mass exodus of disgruntled workers or workplace conflict. Mass layoffs, business closure and plant shutdowns might also be classified as negative or undesirable turnover -- layoffs have a devastating impact on workers and the surrounding community. The negative effects of losing jobs in certain areas can create a downward spiraling effect to economic conditions for employees of other nearby companies. For example, when employees suffer job loss from a plant shutdown, surrounding companies that provide services such as meals and other lunchtime and break-time services also suffer from lost revenue.

Another types of employee attrition are: Market Driven based on the demand for a particular skill or ability in temporarily low supply(self-correcting in normal markets). The typical initial reaction by employers to market driven attrition is to increase wages, offer better benefits, escape the market by relocation or site migration or relax hiring standards. Workload or Stress Driven on the actual capacity to perform the work required. This is when there are not enough of the right people. Process Driven variables associated with job design and/or the organization. In some industries and organizations there is a belief that attrition has always been there and always will be there. Addressing this scenario produces the most lasting results.

1.11 ATTRITION CYCLE AND DRIVERS


Typically, in organizations experiencing systemic or chronic attrition, a cycle develops as: Attrition normally brings decreased productivity. People leave causing others to work harder. This contributes to more attrition, which contributes to increasing costs, lowe revenue. This often forces additional cost reductions and austerity measures on an organization. This in turn makes working more difficult, causing the best performers with the most external opportunities, to leave. There are two primary drivers of voluntary attrition. These are, no one likes to feel inadequate and, in most organizations, it is easier to leave than stay and try to alleviate the problem. People feel inadequate when communication is either incomplete or unreliable. Choices are either absent or insufficient. Often, the challenges in these situations are unclear, unsatisfying or overwhelming. People will give up trying to change things when promises are not specific, not kept or are not fulfilled in a timely manner. Additionally, when expectations are thwarted, changed arbitrarily or unfulfilled, people will lose motivation. Other common demotivators are when commitments are unacknowledged, vague or incompatible. Rarely do organizations create environments where employees can meaningfully participate in activities, which will reduce turnover. Attrition is commonly thought of as peopleterminating employment. Another form of classifying types of attrition are: Empty Chair Attrition: Employees quit and leave Warm Chair Attrition: Employees quit and stay.

1.12 DIAGRAM RELATED TO EMPLOYEE ATTRITION

1.13 HOW TO CALCULATE EMPLOYEE ATTRITION RATE

1.14 ROLE OF HR DEPARTMENT IN EMPLOYEE ATTRITION


Attrition Rate is good for the organization as long as the rate is at normal level. This will help the organization to get new blood into the organization and for the organization to develop. But it becomes a problem when the attrition rate is abnormal. Therefore, HR Department has the most crucial role to play in any organization. At the time of conducting interviews, the HR personnel try to bring right candidate to the right job. Similar is true even when the attrition rate is abnormal, so they have a very crucial role to play. Following are some of the tips to reduce attrition rate:

1.Hiring
The individuals who are truly fit to succeed in the position for hire will dramatically increase the chances of that employee being satisfied with his or her work, and remaining with the company for an extended period of time. Employees should not only be selected on the basis of communication skills and educational qualifications.

2.Communication
Communication of employee's roles, job description and the responsibilities within the organization, new policies will help to retain employees.

3. Participative decision making


It is incredibly important to include employees in the decision making process, especially when decisions are related to employees. This can help to generate new ideas and perspectives that top management might never have thought of.

4. Sharing knowledge with others


Allow the members to share their knowledge with others. This helps in retention of information. This also lets a team member know that he is a valuable member of the organization. Similarly, facilitating knowledge sharing through an employee mentoring program can be equally beneficial.

5. Shorten the feedback loop


This helps the employees to know the feedback to their work within a short period. This also helps to keep performance levels high and reinforce positive behavior among employees.

6. Pay package
Any employee wants to be appropriately paid and fairly for the work he or she does. For this, conduct a research to find out the pay package in other similar type of organizations at regional as well as at national levels.

7. Balance Work & Personal Life


No doubt family is exceptionally important to employees. When work begins to put pressure on one family, no pay package will keep an employee in the organization. Therefore, there should be a balance between work and personal life. Small gestures like allowing an employee to take an extended lunch once a week to watch his son's cricket game will result in loyalty and helps to retain the employee.

8. Organizational Culture
Try to select the candidates who believe in the organization culture and adopt with ease to organization culture.

9. Exit Interview
Taking interview with the employees who are leaving the organization will help the organization to find out the reasons why the employees are leaving the organization. This will also help to find out any drawbacks in the organization. 10. Another method to reduce attrition rate is that they should find out why employees are leaving the organization from the employees who are working for the past so many years.

11. Motivational Training


It is sure that motivational training helps to retain the employees. One of the crucial aspects to motivate employees is to ensure that they have ample growth opportunities which can be provided through training.

12. Multi-Tasking
One of the ways to retain the employees in the organization is try to get people with different qualities like smart, adaptable, and capable of multi-tasking.

13. Referrals
Another technique is to try to get the employees hired through referrals. This makes them stick with the organization.

14. No Favoritism
One of the surest ways to create animosity and resentment in an organization is to allow favoritism and preferential treatment towards an employee. Be sure to treat all employees equally and avoid favoritism at all costs.

15. Support and communicate.


Employees want to know what is expected of them. Be clear about job descriptions and responsibilities and give continual feedback. Reward performance with words of praise as well as the systems, tools, and technology that people need to do deliver their best performances.

16. Train and promote.


It is far cheaper to develop internal talent than to recruit, hire, and train outsiders. Keep an eye out for potential in the raw and offer professional development as a way to inspire diamond-in-the-rough employees while also preparing and fueling your own succession pipeline.

17. Compensate cooperation.


When some workers are carrying the load for many others, they are obviously your greatest assets. But they will soon leave because that kind of system is unfair to them. Get rid of the dead weight and those who spread negativity within the ranks, using the money you save by shedding lackluster employees to financially compensate those who distinguish themselves through positive teamwork. 18. Listen and learn. One of the biggest reasons employees are dissatisfied is because of a disconnect between themselves and upper management. Lead from the trenches, get to know everyone in the organization, and learn to value their input, however insignificant it may seem. Otherwise your own leadership will suffer because leaders are only capable and powerful when they have loyal followers

DIAGRAM SHOWING MAJOR REASONS FOR TERMINATION OF EMPLOYEES

EFFECTS OF EMPLOYEE ATTRITION 1.Decreased Performance


One of the simplest but highly impacting negative effects of turnover is decreased performance in the workplace. In their December 2007 Harvard Business School article "Managing the Impact of Employee Turnover on Performance: The Role of Process Conformance," Zeynep Ton and Robert S. Huckman cite a 48-month study conducted in a large United States retail chain that revealed that both profit margin and customer service were adversely affected by turnover. Less experienced workers are less likely to sell higher value solutions and deliver optimized service.

2.Unfulfilled Daily Performance


Many of the negative effects of turnover relate to performance quality, but the "Encyclopedia of Business" points out companies with higher turnover may struggle to complete all necessary or important daily functions. For instance, if it takes 10 workers to a complete a given work task or function in a day, and only seven workers are currently employed in that area, the company has to figure out how to deal with the unfulfilled daily work requirement.

3.Costs
High costs are one of the more discussed negatives of high turnover. Every time an employee leaves and is replaced, there are costs associated with the process of losing the first employee and hiring and training the new one. The Rain Maker Group indicates that it can cost about one-half of an unskilled worker's salary to replace a lost employee. Replacing a technically skilled employee or a high level manager can cost as much as three to five times the annual salary. Training costs are commonly discussed, but many people forget costs to complete exit interviews, market new openings and complete necessary background, reference and drug checks.

4.Lower Knowleadge Base


In organizations with high turnover, constant change in employee ranks means average years of experience and background of employees are low. This means employees are generally less familiar with work tasks they complete and working effectively with customers. The "Business Link" website indicates that the more valuable the positions being turned over are to the company, the more impact the turnover will have on current and future performance.

1.17 REASONS FOR EMPLOYEE ATTRITION

Good employees quit for many reasons. The following is a list of what might be considered 12 reasons for employee turnover.

1. RUDE BEHAVIOUR Studies have shown that everyday indignities have an adverse affect on productivity and result in good employees quitting. Rudeness, assigning blame, back-biting, playing favorites and retaliations are among reasons that aggravate employee turnover. Feeling resentful and mistreated is not an enticement for a good work environment.

2. WORK-LIFE IMBALANCE Increasing with economic pressures, organizations continue to demand that one person do the work of two or more people. This is especially true when an organization downsizes or restructures, resulting in longer hours and weekend work. Employees are forced to choose between a personal life and a work life. This does not sit well with the current, younger workforce, and this is compounded when both spouses or significant others work.

3. JOB DID NOT MEET THE EXPECTATIONS It has become all too common for a job to significantly vary from the initial description and what was promised during the interviewing stage. When this happens it can lead to mistrust. The employee starts to think, What else are they not being truthful about? When trust is missing, there can be no real employee ownership.

4. EMPLOYEE MISALIGNMENT Organizations should never hire employees (internal or external) unless they are qualified for the job and in sync with the culture and goals of the organization. Managers should not try to force a fit when there is none. This is like trying to force a size-nine foot into a size-eight shoe. Neither management nor employee will be happy, and it usually ends badly. 5. FEELING UNDERVALUED Everyone wants to be recognized and rewarded for a job well done. Its part of our nature. Recognition does not have to be monetary. The most effective recognition is sincere appreciation. Recognizing employees is not simply a nice thing to do but an effective way to communicate appreciation for positive effort, while also reinforcing those actions and behaviors 6. COACHING AND FEEDBACK WAS LACKING Effective managers know how to help employees improve their performance and consistently give coaching and feedback to all employees. Ineffective managers put off giving feedback to employees even though they instinctively know that giving and getting honest feedback is essential for growth and building successful teams and organizations. 7. DECISION MAKING ABILITY WAS LACKING Far too many managers micromanage to the level of minutia. Micromanagers appear insecure regarding their employees ability to perform their jobs without the manager directing every move. Organizations need employees to have ownership and be empowered! Empowered employees have the freedom to make suggestions and decisions. Today empowerment seems to be a catch-all term for many ideas about employee authority and responsibility. However, as a broad definition, it means an organization gives employees latitude to do their jobs by placing trust in them. Employees, in turn, accept that responsibility and embrace that trust with enthusiasm and pride of ownership.

8. PEOPLE SKILLS ARE INADEQUATE Many managers were promoted because they did their jobs very well and got results. However, that doesnt mean they know how to lead. Leaders arent bornthey are made. People skills can be learned and developed, but it really helps if a manager has a natural ability to get along with people and motivate them. Managers should lead by example, reward by deed. 9.ORGANISATIONAL INSTABILITY Managements constant reorganization, changing direction and shuffling people around disconnects employees from the organizations purpose. Employees dont know whats going on, what the priorities are or what they should be doing. This causes frustration leading to confusion and inefficiencies. 10.RAISES AND PROMOTION FROZEN Over the years, studies have shown that money isnt usually the primary reason people leave an organization, but it does rank high when an employee can find a job earning 20 to 25 percent more elsewhere. Raises and promotions are often frozen for economic reasons but are slow to be resumed after the crisis has passed. Organizations may not have a goal to offer the best compensation in their area, but if they dont, they better pay competitive wages and benefits while making their employees feel valued! This is a critical combination. 11.FAITH AND CONFIDENCE SHAKEN When employees are asked to do more and more, they see less evidence that they will ultimately share in the fruits of their labor. When revenues and profits increase along with workload, organizations should take another look at their overall compensation packages. Employees know when a company is doing well, and they expect to be considered as critical enablers of that success. Organizations need to stop talking about employees being their most important asset while treating them as consumables or something less than valuable. If an organization wants empowered employees putting out quality products at a pace that meets customer demand, they need to demonstrate appreciation through actions. 12.GROWTH OPPORTUNITIES NOT AVAILABLE A lot of good talent can be lost if the employees feel trapped in dead-end positions. Often talented individuals are forced to job-hop from one company to another in order to grow in status and compensation. The most successful organizations find ways to help employees develop new skills and responsibilities in their current positions and position them for future advancement within the enterprise. Employees who can see a potential for growth and comparable compensation are more inclined to stay with an organization.

1.13 EMPLOYEE TURNOVER V/S. ATTRITION


"Turnover" and "attrition" are business and human-resource terms that often are confused. There are several types of turnover, but attrition usually can be described as a reduction in workforce. Using these terms interchangeably or incorrectly can affect your workforce data and skew measurements that are necessary for workforce planning.

DEFINITION
Employee turnover and employee attrition both occur when an employee leaves the company. Turnover, however, may result from a number of employment actions, such as discharge, termination, resignation or job abandonment. Attrition occurs when an employee retires or when the company eliminates his job. The major difference between the two is that when turnover occurs, the company seeks someone to replace the employee. In cases of attrition, the employer leaves the vacancy unfilled or eliminates that job role.

INVOLUNTARY
Turnover or attrition can be involuntary. Involuntary turnover typically refers to an employment decision to terminate the employee. Reasons for involuntary turnover include poor performance, excessive absenteeism or violation of a workplace policy that is considered a terminable offense. Attrition due to layoff, reduction in force or job elimination is typically involuntary because the employment relationship ends based on the employer's circumstances, not the employee's decision to leave. Pennsylvania State University professor education Erling Boe and colleagues differentiate between turnover and attrition in their article "Teacher Turnover: Examining Exit Attrition, Teaching Area Transfer, and School Migration." They indicate that, when a teacher decides to leave the teaching profession, it is called attrition, which they consider to be a component of turnover.

VOLUNTARY
Voluntary termination occurs when an employee resigns to pursue another career opportunity, relocate with a spouse or simply leave the workforce for personal reasons, such as raising a family. In this case, the employer starts the recruitment and selection process to find a suitable candidate to fill the vacant position. Retirement is a form of voluntary turnover; however, if the employer decides against filling the position left vacant, it is considered attrition. Nevertheless, in the case of retirement, the reason the job is vacant is the employee's decision to retire -- classifying it as a voluntary action.

LAYOFFS AND REDUCTION IN FORCE A business facing closure, shutdown or a work slowdown develops a strategy for laying off workers or reducing its workforce. This is attrition, not turnover, because the employer does not plan to fill positions. Once the layoff or reduction in force occurs, the positions that employees once held no longer exist. COMPENSATION AND BENEFITS Compensation and/or final pay are factors that distinguish turnover from attrition, but there is a compensation-related distinction between the two. Turnover, whether involuntary or voluntary, typically does not include pay or compensation beyond that to which the employee is entitled, such as accrued vacation or a final paycheck. Employment that ends due to attrition may include pension payments, continued benefits for retirees or severance payments to employees being laid off or separated from employment due to job elimination. CONSIDERATION When turnover occurs, it is not always the undesirable talent that leaves. Turnover can help an organization to infuse new talent into the company by replacing former employees with candidates with innovative ideas and better skills and qualifications. Attrition, due to retirement or death, depletes the organization of valuable expertise and talent because no employees are replaced after the employment relationship ends.

1.14 STRATEGIES TO EMPLOYEE ATTRITION


Employees leave organizations for many reasons; oftentimes these reasons are unknown to their employers. Employers need to listen to employees needs and implement retention strategies to make employees feel valued and engaged in order to keep them. These retention methods can have a significant and positive impact on an organizations turnover rate. Here well take a look at some of these strategies. According to strategic planning consultant Leigh Branham, SPHR, 88% of employees leave their jobs for reasons other than pay: However, 70% of managers think employees leave mainly for pay-related reasons. Branham says there are seven main reasons why employees leave a company: 1. 2. 3. 4. 5. 6. 7. Employees feel the job or workplace is not what they expected. There is a mismatch between the job and person. There is too little coaching and feedback. There are too few growth and advancement opportunities. Employees feel devalued and unrecognized. Employees feel stress from overwork and have a work/life imbalance. There is a loss of trust and confidence in senior leaders.

TURNOVER FACTS AND FIGURES Turnover is costly. According to Right Management, a talent and career management consulting firm, it costs nearly three times an employees salary to replace someone, which includes recruitment, severance, lost productivity, and lost opportunities. Life Work Solutions , a provider of staff retention and consulting services, provides the following turnover facts and rates:

Over 50 % of people recruited in to an organization will leave within 2 years. One in four of new hires will leave within 6 months. Nearly 70% of organizations report that staff turnover has a negative financial impact due to the cost of recruiting, hiring, and training a replacement employee and the overtime work of current employees thats required until the organization can fill the vacant position. Nearly 70 % of organizations report having difficulties in replacing staff. Approximately 50% of organizations experience regular problems with employee retention.

From these statistics its clear that its important to develop a retention plan to retain employees and keep turnover low.

Having current employees offer referrals could help minimize confusion of job expectations. Current employees can realistically describe a position and the environment to the individual he/she is referring. Another way an employer can lessen the impact of turnover is to hire from within, since current employees have already discovered that they are a good fit in the organization (Branham, 2005). Coaching/feedback . Its important for companies to give feedback and coaching to employees so that their efforts stay aligned with the goals of the company and meet expectations. During an employees first few weeks on the job, an employer should provide intensive feedback. Employers should also provide formal and informal feedback to employees throughout the year (Branham). Provide growth opportunities. An organization should provide workshops, software, or other tools to help employees increase their understanding of themselves and what they want from their careers and enhance their goal-setting efforts (Branham). Its important to provide employees with adequate job challenges that will expand their knowledge in their field (Levoy, 2007). According to Right Management, employees are more likely to stay engaged in their jobs and committed to an organization that makes investments in them and their career development. Make employees feel valued. Employees will go the extra mile if they feel responsible for the results of their work, have a sense of worth in their jobs, believe their jobs make good use of their skills, and receive recognition for their contributions (Levoy). Employees should be rewarded at a high level to motivate even higher performance. The use of cash payouts could be used for on-the-spot recognition. These rewards have terrific motivational power, especially when given as soon as possible after the achievement. Its important for employers to say thank you to employees for their efforts and find different ways to recognize them. Even something as simple as a free lunch can go a long way towards making employees feel valued. Listen to employees and ask for their input as to what rewards might work best at your organization. Conduct meetings and surveys to enable employees to share their input (Branham). Most team members will work harder to carry out a decision that theyve helped to influence.

Lower stress from overworking and create work/life balance. Its important to match work/life benefits to the needs of employees. This could be in the form of offering nontraditional work schedules (such as a compressed work week, telecommuting, and flextime) or extra holidays. When work-life balance is structured properly, both the employee and employer come out ahead. For example, the employer will experience more productivity in the workplace because employees will be less stressed, healthier, and thus, more productive (Wingfield). Encouraging employees to set work/life goals, such as spending more time with their children, communicates that you really do want them to have a life outside of work and achieve a healthy work/life balance. Foster trust and confidence in senior leaders . Develop strong relationships with employees from the start to build trust (Stolz, 2008). Employees have to believe that upper management is competent and that the organization will be successful. An employer has to be able to inspire this confidence and make decisions that reinforce it. An employer cannot say one thing and do another. For example, an employer shouldnt talk about quality and then push employees to do more work in less time. In addition, employers need to engage and inspire employees by enacting policies that show they trust them, such as getting rid of authoritarian style of management (Branham)

1.15 SIX STRATEGIES TO REDUCING EMPLOYEE TURNOVER Employee turnover is costly and disruptive to any organisation. While no business can realistically expect zero employee attrition, there are strategies that you company can implement to retain the best employees and reduce the likelihood of your employees joining the proverbial revolving door.

Strategy One Hire Right Much like a divorce, the best time to avoid turnover is before engagement. Use an employee retention tool designed to help accurately identify skill gaps and workloads, and implement your recruitment plans accordingly. Some of the components of hiring right include:

Behaviour-based testing Competency screening Background checking Organisational fit Capacity for learning Motivation Future Goals

You need to discover whether the employee has the right skills, competency, and character. Are they are good fit for your organisation and culture? Do they have a capacity to keep learning in the role? Do they have a sufficient degree of motivation? What are their long term career goals?

Strategy Two Design the Best Compensation Package Tailor compensation packages individually where possible (especially for line manager and executive positions) and review them at least annually. Keep up to date with market salary rates or make sure the HR department is up to speed. Not surprisingly, there is a clear relationship between benefits and turnover rates. Ensure that you provide standard industry benefits, such as disability insurance, flexible hours, or life insurance where appropriate. Always be open to negotiation with valuable employees, and tie pay to performance.

Strategy Three Effective Communication and Morale As the owner or manager, you set the tone for employee morale. Dont set up repetitive meetings unless they are truly productive and you are open to suggestions from your employees. For maximum employee engagement, ensure that communication is not a oneway cycle in your company. Make an effort to listen to feedback, such as one-on-one meetings, or anonymous feedback through an effective employee engagement survey, and be ready to act on the feedback you receive. True employee engagement can be a long-term goal and not necessary achieved overnight.

Strategy Four Career Development and Training Provide plenty of training opportunities to keep employees interested and in line with professional development standards in the market. Allow for multiple roles or allocate different tasks to encourage variety and motivation. Set goals for employees or involve them by sitting down with them and asking them about their future aspirations with in the organisation. Base promotions on your employees performance and cultivate a perception of fairness in career progression. If there are ample opportunities for growth and career progression in your organisation and you have demonstrated to employees that they have long term prospective, then your employees will be more likely to stay on. Strategy Five Provide a Great Work Environment Provide an attractive, healthy, and safe work environment for your employees. Make sure furniture and equipment observe occupational health and safety requirements and set up amenities and rest spaces where employees can take time out. Make your office a pleasant place to be. Strategy Six Culture and Respect Looking beyond the physical work environment to less tangible factors such as organisational culture, managers and owners should cultivate a culture of respect, teamwork, and mutual collaboration. Encouraging healthy competition between employees may help with morale and motivation. However, this should not be done at the expense of a supportive organisational culture. Line managers should be trained to value and encourage culture and respectfulness.

1.16 TECHNIQUES TO PREVENT EMPLOYEE ATTRITION

Organizations that experience attrition quickly find themselves without an effective and productive workforce, resulting in reduced profits. Employees typically leave a company because of the way it handles its staff members. Focusing on the needs of your employees will not only prevent attrition, it will enable you to recruit high-performing workers. 1. EXIT INTERVIEW When an employee resigns, attempt to conduct an exit interview. Exit interviews serve two purposes. They offer you insight into why the employee is leaving and save you from legal repercussions should the employee file a lawsuit because of the way he was treated or because of working conditions. Ask him thorough and open-ended questions as to why he is leaving. Ask him for suggestions for improving the workplace. Employees do not have to agree to exit interviews and may decline one for any reason. 2.MANAGEMENT Poor management techniques result in attrition. Managers and supervisors who rule with an iron fist and push employees too hard can prompt employees to leave for greener pastures. A drop in employee performance serves as a major sign of overzealous managers and supervisors. When management comes down excessively hard on employees, those employees often lack the motivation to perform at a high level and they exhibit fear of taking risks and accomplishing their goals because of the punishment they could face from failing. Meet with managers and supervisors to explain the effects of overly strict management styles. Coach them to adjust their management styles to become more personable and friendlier. 3.EMPLOYEE BENEFIT Employees who feel that theyre underpaid in comparison to their industry peers experience a drop in morale and an urge to leave the company for a better-paying employer. In addition, a lack of benefits, especially health insurance, can cause your workforce to dwindle because of other employers who offer some kind of insurance benefits. Offer a wealth of benefits and provide regular raises so that employees feel that you care about them and appreciate the jobs that they do.

4.COMMUNICATION Employees need communication for numerous reasons. Communication provides employees with an idea of whats going on with the company, future plans and what the company expects of them. Almost all successful businesses communicate effectively with employees. Managers and supervisors must talk to employees daily by acknowledging their accomplishments, helping them overcome problems and explaining what they need to work on.

5.WORKPLACE An unfit workplace, such as one thats grimy, noisy and dark, causes employees to look for new jobs and prevents your company from pulling in additional employees. No one wants to work in an environment that doesnt cater to success and achievement. Improve your workplace by ensuring that it provides proper lighting and amenities and is clean. 6.DONT HIRE OUT OF DESEPERATION Do not just hire an employee because you needed someone to fill the position yesterday. That is what temporary employees are for. If you are looking for someone to fill the position long term, it is best to take some time to do your research. Gather as much information as you can about a job applicant. Information you would need is contact information for personal and business references, a list of past and present employers, social security number, birth date and more. These items will help you complete reference checks and to perform background checks to find out about any past criminal activity. Call on a reference. You are never too busy for that. 7.OFFER SKILL TESTING If you want to decrease employee turn-around, you can perform skill tests on your job applicants. You can either do this directly through your human resource department or you can contract this responsibility out to a job placement agency. This is one of the tools that will help you determine whether you have found the best fit for each position your company has open. Not only that, but it also cuts down on your new applicant recruitment costs. Every company has some form of testing or verification. Have a competition with it or an incentive.

8.PROFILE FOR TEMPERAMENT Each job description should include a consideration of the social aspects of the job. Is the job task oriented or people oriented? Does the job require much interaction with the public? With other co-workers? Temperament profiles can predict which people are best suited for different types of work. Placing people with the right temperament for a particular job can go a long way toward creating stability 9.PAY COMPETITIVE If you've gone through the trouble of finding great candidates, you want to make sure you can persuade them to come on board and have them stay. Money is not the number one reason people come to a company or leave a company.

1.17 DIFFERENCE BETWEEN EMPLOYEE ATTRITION AND TURNOVER Every business that hires employees has to deal with the fact that employees will always be coming and going. "Attrition" and "employee turnover" are both terms that companies use regarding this phenomenon. Companies and human resources departments tend to use both terms interchangeably, but in certain cases, recognizable distinctions may exist. Causal Differentiation

One way in which human resources departments may view attrition and employee turnover as two different things is in regard to how they're caused. When employees leave a company, it may be due to reasons over which the company has no direct control --- such as retirement due to old age --- or it might be due to an avoidable reason, such as conflict in the workplace. Companies may differentiate between attrition and turnover by defining attrition as the number of employees who leave a company due to unavoidable reasons, and turnover as the total number of employees who leave a company, regardless of whether the reasons causing them to leave are avoidable or not.

Positive/Negative Differentiation

Another way of differentiating between employee turnover and attrition is to identify one as a positive force on the total number of employees and the other as a negative force. In this way, when a company wishes to measure fluctuations in its total number of employees for a certain period, it can do so by viewing attrition as the number of employees leaving the company during that period, and turnover as the number of employees hired during that period to replace those who have left.

Measuring Attrition and Turnover

To measure a company's attrition or turnover rate for a particular period, take the total number of employees hired or lost --- but not both --- within a certain time frame and divide that by the total number of employees in the company. Express this figure as a percentage.

1.18 NEED FOR DIFFERENTIATION

If you take the differentiation between the two into account, you may find that the numbers are slightly different. For instance, if a company has trouble finding replacements for employees it has lost, the total number of employees lost within a certain period --- attrition --- may be larger than the total number of employees hired, or turnover. Typically, though, the difference is miniscule, and even when it does exist, it's only a matter of time between losing a worker and finding someone to replace him.

1. People and Communication It is often said that employees dont leave organizations; they leave people. This is a commom reason for resignations. Friction or frustration can result from conflicting communication styles or misunderstandings between managers and employees or among coworkers. Is this happening in your organisations? Do you have more attrition from a particular engineering group? Organisational communication styles can also contribute to attrition, particularly if communication with employees and developing employee relationships are not priorities. Attrition can be with price paid for lack of communication with employees. Its important to remember that your best and brightest will leave for organization.

2. Work Assignments Work assignments are another key to retention. Turnover can result from work that is repetitive and boring to assignment that dont allow sufficient work-life balance. Among young engineers, boredom on the job is often the reason for leaving an organization. For many engineers who are expected to work exclusively on spread sheets and database, boredom develops quickly. Yet this is often a common initial assignment for engineers to learn the organization and how it works. While its importan to learn the oraganisation, the nature of the assignment can result in the intended

3. Perceived or Real Lack of Career Opportunities If engineers dont perceive or know that career opportunities exist, theyll seek them elsewhere. Some organisations assume that emplotees know how careers develop. This can be a costly assumption. Other organization believe that communicating how careers develop will be interpreted as a promise promotion; therefore, they avoid these conversations. Again, this can be a costly mistake. Its important to communicate how competitive your company is in these areas.

4. Infrastructure Organizations tend to lose employees when they dont offer competitive compensation. However, todays engineers also looking for professional development, education, and training opportunities to remain current in the field. When organisations dont invest in their

employees it becomes challenging to retain top engineering talent. You want engineers on the cutting edge, because their knowledge and skills keep your organization competitive. When investment isnt made in developing people and keeping them competitive in their field, there are other organisations that will grab this opportunity.

5. The Company Some engineers leave organizations feo reasons that they cant be changed. If someone decides that they want to work in a different industry, with a different client base, or in a different geographic location, retention becomes a bigger challenge.

1.19 ATTRITION IS NOT ALWAYS BAD Attrition is not bad always if it happens in a controlled manner. Some attritionia always desirable and necessary for organizational growth and development. The only concern is how organizations differentiate good attition 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 is considered being healthy. Attrition rates are considered to be beneficial in some ways: 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. When certain employees leave, whose continuation of service would have negatively impacted productivity and profitability of the company, the company is benefited. New employees bring new ideas, approaches, abilities, and attitudes which can keep the organization from becoming stagnant. 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. 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: o It removes bottleneck in the progress of the company. o It creates space for the entry of new talents. o It assists in evolving high performance teams.

There are people who are not able to balance their performance as per expectations, lack potential for furture or need disciplinary action. Furthermore, as the rewards are limited, business pressures do not allow the management to over-reward the oerformers, but when undesirable employes 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.

1.20 MEANING OF EMPLOYEE RETENTION Employee retention refers to the ability of an organization to retain its employees. Employee retention can be represented by a simple statistic (for example, a retention rate of 80% usually indicates that an organization kept 80% of its employees in a given period). However, many consider employee retention as relating to the efforts by which employers attempt to retain employees in their workforce. In this sense, retention becomes the strategies rather than the outcome. A distinction should be drawn between low performing employees and top performers, and efforts to retain employees should be targeted at valuable, contributing employees. Employee turnover is a symptom of a deeper issue that has not been resolved. These deeper issues may include low employee morale, absence of a clear career path, lack of recognition, poor employee-manager relationships or many other issues . A lack of satisfaction and commitment to the organization can also cause an employee to withdraw and begin looking for other opportunities. Pay does not always play as large a role in inducing turnover as is typically believed. [1] In a business setting, the goal of employers is usually to decrease employee turnover, thereby decreasing training costs, recruitment costs and loss of talent and organisational knowledge. By implementing lessons learned from key organizational behavior concepts employers can improve retention rates and decrease the associated costs of high turnover. However, this isn't always the case. Employers can seek "positive turnover" whereby they aim to maintain only those employees who they consider to be high performers.

DEFINITION

1. An effort by a business to maintain a working environment which supports current staff in remaining with the company. Many employee retention policies are aimed at addressing the various needs of employees to enhance their job satisfaction and reduce the substantial costs involved in hiring and training new staff. 2.Employee Retention is the ability of an organization to retain its employees (especially the best ones). 3.Retention is a voluntary move by an organization to create an environment which engages employees for a long term

1.22 NEED AND IMPORTANCE OF EMPLOYEE RETENTION Employee Retention refers to the techniques employed by the management to help the employees stay with the organization for a longer period of time. Employee retention strategies go a long way in motivating the employees so that they stick to the organization for the maximum time and contribute effectively. Sincere efforts must be taken to ensure growth and learning for the employees in their current assignments and for them to enjoy their work. Employee retention has become a major concern for corporates in the current scenario. Individuals once being trained have a tendency to move to other organizations for better prospects. Lucrative salary, comfortable timings, better ambience, growth prospects are some of the factors which prompt an employee to look for a change. Whenever a talented employee expresses his willingness to move on, it is the responsibility of the management and the human resource team to intervene immediately and find out the exact reasons leading to the decision. Let us understand why retaining a valuable employee is essential for an organization.

Hiring is not an easy process: The HR Professional shortlists few individuals from a large pool of talent, conducts preliminary interviews and eventually forwards it to the respective line managers who further grill them to judge whether they are fit for the organization or not. Recruiting the right candidate is a time consuming process.

An organization invests time and money in grooming an individual and make him ready to work and understand the corporate culture: A new joinee is completely raw and the management really has to work hard to train him for his overall development. It is a complete wastage of time and money when an individual leaves an organization all of a sudden. The HR has to start the recruitment process all over again for the same vacancy; a mere duplication of work. Finding a right employee for an organization is a tedious job and all efforts simply go waste when the employee leaves.

In such cases, employees tend to take all the strategies, policies from the current organization to the new one. Individuals take all the important data, information and statistics to their new organization and in some cases even leak the secrets of the previous organization. To avoid such cases, it is essential that the new joinee is made to sign a document which stops him from passing on any information even if he leaves the organization. Strict policy should be made which prevents the employees to join the competitors. This is an effective way to retain the employees.

The employees working for a longer period of time are more familiar with the companys policies, guidelines and thus they adjust better:

They perform better than individuals who change jobs frequently. Employees who spend a considerable time in an organization know the organization in and out and thus are in a position to contribute effectively.

Every individual needs time to adjust with others: One needs time to know his team members well, be friendly with them and eventually trust them. Organizations are always benefited when the employees are compatible with each other and discuss things among themselves to come out with something beneficial for all. When a new individual replaces an existing employee, adjustment problems crop up. Individuals find it really difficult to establish a comfort level with the other person. After striking a rapport with an existing employee, it is a challenge for the employees to adjust with someone new and most importantly trust him. It is a human tendency to compare a new joinee with the previous employees and always find faults in him.

It has been observed that individuals sticking to an organization for a longer span are more loyal towards the management and the organization: They enjoy all kinds of benefits from the organization and as a result are more attached to it. They hardly badmouth their organization and always think in favour of the management. For them the organization comes first and all other things later.

It is essential for the organization to retain the valuable employees showing potential: Every organization needs hardworking and talented employees who can really come out with something creative and different. No organization can survive if all the top performers quit. It is essential for the organization to retain those employees who really work hard and are indispensable for the system.The management must understand the difference between a valuable employee and an employee who doesnt contribute much to the organization. Sincere efforts must be made to encourage the employees so that they stay happy in the current organization and do not look for a change.

1.23 RETENTION STRATEGIES There are a wide range of strategies employers can use to retain valued employees with and without disabilities. Before implementing these strategies employers may find it useful to assess their current workplace culture through workplace climate surveys or exit interviews, to determine the organizational factors that may be leading to employee exit. 1. Employee Support o Ensure employees have the tools, time and training necessary to perform their job well, through: An effective orientation program or on-boarding process Realistic job previews Training

2. Management Recognition o Require managers to meet with new employees to learn about their abilities, knowledge, skills and talents to ensure that they feel welcomed and acknowledged.

3. Workplace Structures that Facilitate Communication o Provide constructive feedback to employees and solicit their input to foster an environment in which everyone is comfortable offering ideas and is committed to continuous improvement. o Develop Employee Resource Groups (ERGs) to encourage diversity and inclusion.

4. Flexible Workplace Policies o Allow employees to flex their work schedules as needed to accommodate appointments or to work from home or remotely. Flexible policies can increase an employee's productivity and morale, and the company's overall success.
o

5. Talent and Skill Development. o Offer and encourage employees to pursue training opportunities. o Create career development path. o Provide managers with the training necessary to develop high quality employee relationships.
o

6. Career Advancement o Provide opportunities for career growth o Initiate committee involvement and participation in employee resource groups o Encourage attendance in seminars and other staff development and training opportunities so employees feel valued as team members and part of the future of the organization

1.24 CALCULATION OF EMPLOYEE RETENTION

Calculating Monthly and Annual Turnover Attention all non-math majors: These calculations are easy. To ease into it though, we will start with verbal explanations. Monthly turnover is the number of employee separations in one month divided by the average number of active employees at the worksite during the same period. Well make it easy and say we have one site of operations. Written as a math formula, here is the same calculation: monthly turnover rate = no.of separation during month * 100

average number of employee during the month Now to pull numbers into our formula for monthly turnover: m = 4 *100 m = 2% monthly employee turnover rate 200 Annual employee turnover is calculated by adding up the monthly turnover for a 12-month period. Makes sense, right? Okay, the next step follows. Using the same example, if four employees leave each month, a yearly total of 48 leave. Plugging those numbers into the formula:

a = 48 * 100

a = 24% annual employee turnover rate 200

ROLE OF HR IN EMPLOYEE RETENTION: The Human Resource team plays an important role in the employee retention. Their role in the same are as follows: Whenever employee resigns from his current assignment, it is the responsibility of HR to intervene immediately to find out the reasons which prompted the employee to resign. It is the duty of HR to sit with the employee and discuss the various issues face to face. The HR person must ensure that he is recruiting the right employee who actually fits into the role. The human resource department must conduct motivational activities at the work place. The HR must launch various incentive schemes for the top performers to motivate them. Performance review are must. The HR along with the respective team leaders must monitor their team members performance to ensure whether they are enjoying the work or not.

1.24 CHALLENGES FACED BY THE BPO INDUSTRY TODAY


BPOs have proved a grand success. However, certain problems have cropped up in the process for which long-term solutions are necessary. AREAS FOR CONCERN IN BPOS

Working in a BPO, many feel is a job that does not require much skill. Any body possessing a basic education, good communication skills is employable after some training. Companies do not mind taking in people who are middle aged, and homemakers. There is no sense of accomplishment among the employees. Financial desperation on the part of some people leads them to take up jobs in BPOsPeople out of college join BPOs to earn money to finance their higher education, some as a way of improving their life styles. Some others join because they could not find anything else. In short, very few people take up employment in BPOs for the love of it. The tasks that BPOs perform are diverse: telemarketing, technical support service, customer support service, insurance processing, data entry and conversion services, bookkeeping and accounting and online researching, and form processing. The problem that this creates is that there can be no standardized training program suitable to all the BPOs that can be given to the prospective employees before they are actually absorbed into the company. High expectations from the outsourcing companies tend to de-motivate the workers. In many cases, the outsourcers think only of achieving targets. They are obsessed with quality work, business continuity, time frame, security of information. However, satisfying them is not always possible. The expectations should be realistic taking into account the work ethics of the region of the service provider, as well as, its culture and polity.

1.25 ATTRITION IN BPOS

The single largest worry of the BPO industry is attrition. In the outsourcing context, ?attrition' means a gradual reduction in the number of people working in a company due to retirement, resignation, or death. The rate of attrition in the BPO industry in India is currently nearly 50%. Attrition in individual firms varies from 15% in the larger firms to up to 40% in the smaller ones. Analysts believed that if this left unchecked, there would be a shortage of professionals. Major reasons for staff attrition in BPOs are outlined below.

BPOs do not present attractive career prospects. They are not challenging enough for the employees after a period. Most of them are stuck for good in their present placement once they start working in call centers. People join BPOs because of the lucrative salaries offered to them. They do not have the slightest hesitation in leaving their current employees for a firm offering a bigger paycheck. They do not experience a sense of obligation toward their employers. Higher education in countries like India is expensive. A lot of money has to be deposited as capitation fees in professional colleges. Young men and women just out school and graduates join BPOs as a means to earn and save money to finance their higher studies. The trend is for them to slog for 2-3 years in a BPO and get out of it for studies. BPO employees suffer from many health problems. The strain of working in changing shifts, of meeting deadlines and realizing targets take a toll on their wellbeing. Some of them end up being jittery and still others clinically depressed.

Social life eludes most BPO employees. The nature of their employment is such that they are left with little time and energy for their family and friends.

The miseries of the employees are compounded by managers who are not supportive and sympathetic towards their sub-ordinates, by policies that are unfriendly and ill advised. The employees do not feel secure in their job.

1.26 FACTSHEET UPDATED IN SEPTEMBER 2013

This factsheet was last updated in September 2013.

Employee turnover
Employee turnover refers to the proportion of employees who leave an organisation over a set period (often on a year-on-year basis), expressed as a percentage of total workforce numbers. At its broadest, the term is used to encompass all leavers, both voluntary and involuntary, including those who resign, retire or are made redundant, in which case it may be described as overall or crude employee turnover. It is also possible to calculate more specific breakdowns of turnover data, such as redundancy-related turnover or resignation levels, with the latter particularly useful for employers in assessing the effectiveness of people management in their organisations

Retention
Retention relates to the extent to which an employer retains its employees and may be measured as the proportion of employees with a specified length of service (typically one year or more) expressed as a percentage of overall workforce numbers.

Latest turnover trends


Our annual Resourcing and talent planning survey report gives a median crude or overall employee turnover rate for the UK sample collected, as well as the median turnover figure relating purely to those who left voluntarily (that is, resignations). While voluntary turnover rates have decreased recently as a result of challenging economic conditions, the flip side of this coin is that redundancy-related turnover has become more common. However, skills shortages persist for certain occupational groupings even during troubled economic times, so it is important to be aware of trends in turnover rates for different groups rather than simply focusing on headline figures. Turnover levels can vary widely between occupations and industries. The highest levels are typically found in retailing, hotels, catering and leisure, call centres and among other lower paid private sector services groups. Levels also vary from region to region. The highest turnover rates tend to be found where unemployment is lowest and where it is relatively easy for people to secure desirable alternative employment.

1.27 CASE STUDY : ZIONS FIRST NATIONAL BANK

Zions First National Bank, a subsidiary of Zions Bancorporation, manages more than $15 billion in assets and employs more than 2,300 people at 135 full-service branches and 185 ATMs throughout Utah and Idaho. Zions offers a comprehensive array of investment, mortgage, and insurance services, as well as a network of loan origination offices for small businesses nationwide.

What was the issue?


Employee turnover is extremely costly to companies with large numbers of employees. In the banking industry, employee turnover can also mean the loss of valuable customer relationships.Understanding this, Zions Bank traditionally monitored employee satisfaction using periodic paper-based surveys and by encouraging employees to manually submit comments and suggestions. Unfortunately, by the time the surveys were collected and analyzed, the results were often outdated. This made it difficult to gauge employee satisfaction or address issues in a timely manner.

How did Allegiance help?


To solve this problem, Zions Bank selected EmployeeVoice and EmployeePulse from Allegiance, Inc., the premier provider of Enterprise Feedback Management solutions that link feedback to profits. An on-demand, open communication system, EmployeeVoice facilitates continual input from employees. EmployeePulse surveys employees regularly to measure their stress levels and passion for their work. Together, these tools provide information to help improve workplace culture, create greater employee loyalty, and reduce employee turnover.

After the implementation


In April 2007, Zions Bank noticed an upswing in employee complaints submitted through the Allegiance system. Using employee satisfaction scores from EmployeeVoice, the bank found the highest percentage of complaints (17 percent) was related to employee benefits. In comparison, training, work schedule, and company policy represented only 2, 3 and 6 percent of all complaints, respectively. Additionally, monthly EmployeePulse surveys revealed that satisfaction with employee benefits consistently ranked below average. Compared to other age groups, who were either moderately satisfied or very satisfied with benefits, satisfaction scores were noticeably lower for the 25 to 34 age group (2.74 out of a possible 5), said George Myers, senior vice president of human resources for Zions Bank. In addition to filtering by age groups, EmployeeVoice helped us determine that non-officers at the bank were less satisfied with employee benefits than junior or senior employees. EmployeeVoice also flagged a relationship between tenure and satisfaction. People who had worked at the bank for less than a year had higher satisfaction scores (3.18) than those who had worked at the bank for 1-3 years (2.95) or 3-5 years (2.92). Satisfaction again increased for employees with more than five years at the bank.

Allegiance Case Study


During the honeymoon period everyone was happy, but sometime after their first year something changed, Myers observed. In fact, by matching demographics and satisfaction levels with EmployeeVoices turnover intent scores, it became clear that employees with 1 to 5 years of service were more likely to be looking for a new job than any other category. Armed with the data from EmployeeVoice and EmployeePulse, as well as other sources, Zions Bank invited representatives from the target demographic categories to participate in focus groups. During the discussions, Myers and his team explained their ideas for improving employee benefits and listened to suggestions from the employees. The focus groups were an important next step in the process of raising overall satisfaction, because they enabled us to reach out to individuals and groups who were least satisfied, Myers said. Though these people represented a small number of employees, they were pulling overall morale down by sharing their concerns with their peers. Once we addressed their concerns, word spread throughout the bank. Within a month, we saw a favorable change in the EmployeeVoice employee satisfaction and turnover intention scores. Since then, satisfaction scores have continued to rise. The result By using EmployeeVoice to quickly identify the downtrend in employee satisfaction and correlate that information with demographics and turnover data, Zions Bank was able to address an issue before it turned into a major problem. If we hadnt used the Allegiance system to pull the data together, it is likely that the downward trends related to benefits would have continued, Myers noted. Were confident that the satisfaction numbers will continue to improve as more of our 2,300 employees learn about the benefits and enroll in the new programs. The findings indicate that by providing a forum for capturing feedback, communicating with the target demographic and listening to their suggestions, Zions helped resolve concerns that triggered a change in employee satisfaction. For Zions, the end result is lower employee turnover. With the average voluntary turnover rate in the U.S. near 23 percent , and the average cost of turnover in the U.S. roughly 25 percent of a persons salary, the benefits of reducing turnover are substantial.

1.28 CASE SUMMARY The Organization


Zions First Nations Bank, subsidiary of Zions Bancorporation (Nasdaq: ZION) Salt Lake City, Utah www.zionsbank.com

The Challenge
To accurately know the intentions of Zions 2,300 employees as it relates to job satisfaction and turnover. Zions traditionally conducted paper-based surveys to discover this information, but this provided results too late to impact change and reduce turnover, costing the company money in lost productivity, replacement and retraining costs.

The Allegiance Solution


Deployed Allegiance EmployeeEngage solutions, including Employee Pulse and EmployeeVoice, to better collect real-time, actionable data and use the information to adjust policies, benefits packages and other offerings. Combined with focus groups and benefits changes, Zions succeeded in fixing the problem early on, before it became a real issue that significantly impacted revenues.

The Results
Eliminated feedback lag-time; collected employee feedback in real-time Identified at-risk employee target group Introduced new programs to address the issues Satisfaction scores rose dramati

IT, ITES sectors witnessing highest attrition rate in India

NEW DELHI: The information technology (IT) and healthcare sectors are witnessing the highest attrition rates among talented employees, making retention of critical manpower resources a key challenge, says a survey. According to a study conducted by MyHiringClub.com, the IT and ITES sectors saw the highest attrition rate of 23 per cent in the first quarter of 2010-11. In contrast, the banking and financial services sector witnessed an attrition rate of 18 per cent, followed by healthcare (12 per cent), FMCG (11 per cent) and automobiles and manufacturing (11 per cent). "Attrition is a major problem with India Inc and it suddenly got increased in the first quarter of the current fiscal year. The major reason behind (this) was that firms had started paying more to newly hired employees. "Beside pay packages, career level growth and relationships with supervisors are the other reasons for higher job attrition," MyHiringClub.com Founder and CEO Rajesh Kumar said. The main reason for switching a job is pay packages (21 per cent), followed by career level growth (16 per cent), dissatisfaction with supervisors (15 per cent) and work pressure (14 per cent). Employees with experience of up to five years had the highest attrition rate of 39 per cent, while it was 27 per cent for those with 5-10 years of experience and 22 per cent in the 10-15 years' experience bracket.

Interestingly, senior-level employees (experience more than 15 years) had a very low attrition rate of 15 per cent. "Entry level and young blood employees want to reach on higher pay packages as soon as possible to fulfill there need and avail good facilities of life. "If they continue with the same job, they can get a 10-20 per cent salary hike, but if they switch jobs, they can easily get somewhere around a 25-40 per cent salary hike from current CTC. A higher attrition rate causes panic among employers and the direct impact of a higher attrition rate comes in hiring costs," Kumar added. The survey was conducted by MyHiringClub -- an Asia and Gulf/Middle East recruitment tendering platform -- among 11,800 employees and 249 employers between May and June this year.

1.29 CONCLUSION

Study of HR practices and employee attrition in the organization was a great learning experience. It helped in understanding the intricacies of HR role in an organization. The study helped in finding out the most critical reasons responsible for employee attrition in the organization. It brought various concerns of the employees to the forefront. Apart from the project there was also a lot of on -the-job training which helped enhance HR s k i l l s a n d g a i n a b e t t e r u n d e r s t a n d i n g o f t h e f u n c t i o n i n g o f H R . I t w a s a n e f f e c t i v e learning in combining the theoretical and practical aspects relating to project. There has been immense learning in the field of employee retention. The basics about a t t r i t i o n a n d r e t e n t i o n , a t t r i t i o n c a l c u l a t i o n , c o s t o f a t t r i t i o n , c o n s e q u e n c e s o f h i g h attrition rate and reasons for attrition. The study helped in understanding the relative importance of various factors responsible for employee attrition, also revealed the fact that that opportunity for development and g r o w t h i s m o s t i m p o r t a n t f o r t h e e m p l o ye e s o f t h e o r g a n i z a t i o n . T h e r e i s a c r i s i s i n human capital management. We need fundamen tal reform in order to address this crisis a n d e n s u r e l o n g - t e r m a b i l i t y t o h i r e a n d m a n a g e a h i g h - q u a l i t y, h i g h - p e r f o r m i n g workforce. Most employees are not motivated solely by money. Historically, firms have used money and financial rewards to retain employees. High tech employees are enjoying t h e f a s t e s t s a l a r y p r o g r e s s i o n o f a l m o s t a n y p r o f e s s i o n , ye t t h e y a r e c h a n g i n g j o b s c o n s t a n t l y . T o d a y s e m p l o ye e s s e e k m o r e t h a n m o n e t a r y c o m p e n s a t i o n . R e s e a r c h conducted in the company revealed that opportunity for development, salary, job content, relationship with supervisor are important reasons for employee attrition. The myth thatsalary is the most important reason for employee attrition was clarified as employees are m o r e concerned about opportunity for development. Salary is also important, s a l a r y needs to be competitive with the market rates, otherwise there is a high risk of losing your employees to your competitors. I also learned that even though the salary might be high, an employee would be willing to change job for better development opportunity. L&T can retain employees and reduce attrition rate by dealing with the two important factors behind attrition, Opportunity for development and growth and Salary. More focus on employee training and employee recognition is required. Salary needs to be made more competitive. To retain employees it is important to provide sufficient opportunities for development and growth, competitive salary, challenging jobs that use employee skills efficiently and good managerial guidance, among other things.

We are in a time of manpower shortages that will not abate in the near term. Employers have to work smarter and permit employees to work smarter.

1.31 EXIT INTERVIEW QUESTIONS


Listed below are samples of the types of exit interview questions that employers commonly ask departing employees. Exit Interview Questions - Samples Listed below are samples of the types of exit interview questions that employers commonly ask departing employees.

What is your primary reason for leaving?

Did anything trigger your decision to leave?

What was most satisfying about your job?

What was least satisfying about your job?

What would you change about your job?

Did your job duties turn out to be as you expected?

Did you receive enough training to do your job effectively?

Did you receive adequate support to do your job?

Did you receive sufficient feedback about your performance between merit reviews?

Were you satisfied with this company's merit review process?

Did this company help you to fulfil your career goals?

Do you have any tips to help us find your replacement?

What would you improve to make our workplace better?

Were you happy with your pay, benefits and other incentives?

What was the quality of the supervision you received?

What could your immediate supervisor do to improve his or her management style?

Based on your experience with us, what do you think it takes to succeed at this company?

Did any company policies or procedures (or any other obstacles) make your job more difficult?

Would you consider working again for this company in the future?

Would you recommend working for this company to your family and friends?

How do you generally feel about this company?

What did you like most about this company?

What did you like least about this company?

What does your new company offer that this company doesn't?

Can this company do anything to encourage you to stay?

Before deciding to leave, did you investigate a transfer within the company?

1.32 BIBLIOGRAOHY & WEBLIOGRAPHY

HUMAN RESOURCE MANAGEMENT Vipul Prakashan. EMPLOYEE ATTRITION Peter W. Hom. www.google.com www.scribed.com Academic.edu.com www.ehow.com Studymode.com Scholararchieve.om www.bms.co.in