EMPLOYEE RETENTION IN PRIVATE SECTOR DISSERTATION REPORT2010 Submitted for the partial fulfillment of the requirement for the

award Of POST GRADUATE DIPLOMA IN MANAGEMENT SUBMITTED BYANANYA DUBEY8007 UNDER THE SUPERVISION OFINTERNAL: NIKUNJ AGARWAL DEPARTMENT OF MANAGEMENTINSTITUTE OF MANAGEMENT EDUCATION,SAHIBABAD

CERTIFICATE This is to certify that the dissertation entitled (employee retention in publicsector) and submitted by (Ananya Dubey) having roll no. 8007 for the partialfulfilment of the requirements of PGDM (batch), IME, embodies the bonafidework done by her supervision.Signature of guidePlace: Date:

ABSTRACT Employee retention is a process in which the employees are encouraged toremain with the organization for the maximum period of time or until thecompletion of the project. Employee retention is beneficial for the organizationas well as the employee. Employees today are different. They are not the oneswho don’t have good opportunities in hand. As soon as they feel dissatisfiedwith the current employer or the job, they switch over to the next job. It is theresponsibility of the employer to retain their best employees. If they don’t, theywould be left with no good employees. A good employer should know how toattract and retain its employees.Most employees feel that they are worth more than they are actually paid. Thereis a natural disparity between what people think they should be paid and whatorganizations spend in compensation. When the difference becomes too greatand another opportunity occurs, turnover can result. Pay is defined as the wages,salary, or compensation given to an employee in exchange for services theemployee performs for the organization. Pay is more than "dollars and cents;" italso acknowledges the worth and value of the human contribution. What peopleare paid has been shown to have a clear, reliable impact on turnover innumerous studies.Employees comprise the most vital assets of the company. In a work placewhere employees are not able to use their full potential and not heard andvalued, they are likely to leave because of stress and frustration. In a transparentenvironment while employees get a sense of achievement and belongingnessfrom a healthy work environment, the company is benefited with a stronger,reliable work-force harbouring bright new ideas for its growth Blog Online AndEarn Money.

ACKNOWLEDGEMENT I am very grateful Mrs. Nikunj Agarwal for giving me the opportunity of working in this project and give me useful instruction .I extend my regards and sincere thanks to Dr. Taruna Gautam with who support& effort, I completed my project.Also I am thankful to the management and my fellow colleges for making my project duration a memorable and fruitful one. Ananya Dubey (Post graduation diploma in management) HR & I.T

CONTENTS 1. Introduction •Need of the study •Scope of the study 2. Research methodology •Objective of the study • Research methodology (Sample size, Instrument used, Methods of datacollection) • Scope of the study • limitations 6. Descriptive work 7. Data Analysis 8. Suggestion and Conclusions 9. Bibliography 10. References 11.Appendices 12. Checklist of the items in the project

Introduction Employee turnover is one of the largest though widely unknown costs anorganization faces. While companies routinely keep track of various costs suchas supplies and payroll, few take into consideration how much employeeturnover will cost them: Er nst & Young estimates it costs approximately$120,000 to replace 10 professionals. According to research done by Sibson &Company, to recoup the cost of losing just one employee a fast food restaurantmust sell 7,613 combo meals at $2.50 each. Employee turnover costs companies30 to 50% of the annual salary of entry-level employees, 150% of middle-levelemployees, and up to 400% for upper level, specialized employees. Now that somuch is being done by organizations to retain its employees.Why is retention so important? Is it just to reduce the turn over costs ?Well, the answer is a definite no. It’s not only the cost incurred by a companythat emphasizes the need of retaining employees but also the need to retaintalented employees from getting poached.Retention involves five major things:

Compensation

Environment

Growth

Relationship

Support

Compensation: Compensation constitutes the largest part of the employee retention process.The employees always have high expectations regarding their compensation packages.Compensation packages vary from industry to industry. So an attractivecompensation package plays a critical role in retaining the employees.Compensation includes salary and wages, bonuses, benefits, prerequisites, stock options, bonuses, vacations, etc. While setting up the packages, the followingcomponents should be kept in mind:

Salary and monthly wage : It is the biggest component of thecompensation package. It is also the most common factor of comparisonamong employees. It includes • Basic wage • House rent allowance • Dearness allowance • City compensatory allowanceSalary and wages represent the level of skill and experience an individual has.Time to time increase in the salaries and wages of employees should be done.And this increase should be based on the employee’s performance and hiscontribution to the organization. Bonus: Bonuses are usually given to theemployees at the end of the year or on a festival. Economic benefits: It includes paid holidays, leave travel concession, etc. Long-term incentives: Long termincentives include stock options or stock grants. These incentives help retainemployees in the organization's start up stage.

Health insurance : Health insurance is a great benefit to the employees. Itsaves employees money as well as gives them a peace of mind that they have somebody to take care of them in bad times. It also shows the employee that theorganization cares about the employee and its family.

After retirement : It includes payments that an Employee gets after heretires like EPF (Employee Provident Fund) etc.

Miscellaneous compensation

: It may include employee assistance programs (like psychological counselling, legal assistance etc), discounts oncompany products, use of a company cars, etc. • Employers And Their Key Drivers To Attract And Retain Talent • Employers Key Drives To Attract And Retain Talent

Procter and Gamble India • Early responsibilities in career • Flexible and transparent organizational culture • Global opportunities through a variety of exposure and diverseexperiences • Performance Recognition

American Express (India) • Strong global brand • Value-based environment • Pioneer in many people practices

NTPC

• Learning and growth opportunities Competitive rewards • Opportunity to grow, learn and implement • Strong social security and employee welfare performance- orientedculture.

Johnson & Johnson • Strong values of trust, caring fairness, and respect within the organization • Freedom to operate at work • Early responsibility in career • Training and learning opportunities • Visible, transparent and accessible leaders • Competitive rewards • Innovative HR programs and practices

Glaxo Smith Kline Consumer Healthcare

• Performance-driven Rewards • Its belief in “Growing our own timber” • Comprehensive development and learning programs • Flat organization, where performance could lead to very quick progression • Challenging work context • Competitive rewards • Exhaustive induction and orientation program

Tata Steel • Organization philosophy and culture • Job stability • Freedom to work and innovate

Colgate Palmolive India

• Company brand • Open , transparent, and caring organization • Management according to the managing with respect to guiding principles • Training ad development programs • Structured career planning process • Global career opportunities

Wipro • Company’s brand as an employer • Early opportunities for growth • High degree of autonomy • Value compatibility • Innovative people program

Indian Oil Corporation • Company brand image • Work ethics • Learning and growth opportunities • Challenging work assignments • Growing organization

TCS • The group brand equity • Strong corporate governance and citizenship • Commitment to learning and development Best in people practices • Challenging assignments • Opportunity to work with fortune 500 clients •

Organization EnvironmentIt is not about managing retention. It is about managing people. If anorganization manages people well, employee retention will take care of itself.Organizations should focus on managing the work environment to make better use of the available human assets. People want to work for an organizationwhich provides • Appreciation for the work done • Ample opportunities to grow • A friendly and cooperative environment • A feeling that the organization is second home to the employeeOrganization environment includes • Culture • Values • Company reputation • Quality of people in the organization • Employee development and career growth • Risk taking • Leading technologies •

TrustTypes of environment the employee needs in an organization Learning environment : It includes continuous learning andimprovement of the individual, certifications and provision for higher studies, etc. • Support environment : Organization can provide support in the form of work-life balance. Work life balance includes:

Flexible hours

Telecommuting

Dependent care

Alternate work schedules

Vacations

Wellness • Work environment : It includes efficient managers, supportive co-workers, challenging work, involvement in decisionmaking, clarity of work and responsibilities, and recognition. Lack or absence of suchenvironment pushes employees to look for new opportunities. Theenvironment should be such that the employee feels connected to theorganization in every respect.Growth and Career Growth and development are the integral part of every individual’s career. If an employee can not foresee his path of career development in his current organization, there are chances thathe’ll leave the organization as soon as

he gets an opportunity. Theimportant factors in employee growth that an employee looksfor himself are: • Work profile : The work profile on which the employee is workingshould be in sync with his capabilities. The profile should not be too low or toohigh. • Personal growth and dreams : Employees responsibilities in theorganization should help him achieve his personal goals also Organizations can not keep aside the individual goals of employees andfoster organizations goals. Employees’ priority is to work for themselvesand later on comes the organization. If he’s not satisfied with his growth,he’ll not be able to contribute in organization growth. • Training and development : Employees should be trained and givenchance to improve and enhance their skills. Many employers fear that if the employees are well rained, they’ll leave the organization for better jobs. Organization should not limit the resources on which organization’ssuccess depends. These trainings can be given toimprove many skillslike:

Communications skills

Technical skills

In-house processes and procedures improvement related skills or customer satisfaction related skills

Special project related skills Need for such trainings can be recognized from individual performancereviews, individual meetings, employee satisfaction surveys and by being inconstant touch with the employees.Importance of Relationship in Employee Retention ProgramSometimes the relationship with the management and the peers becomes thereason for an employee to leave the organization. The management issometimes not able to provide an employee a supportive work culture

andenvironment in terms of personal or professional relationships. There are timeswhen an employee starts feeling bitterness towards the management or peers.This bitterness could be due to many reasons. This decreases employee’sinterest and he becomes demotivated. It leads to less satisfaction and eventuallyattrition. A supportive work culture helps grow employee professionally and boosts employee satisfaction. To enhance good professional relationships atwork, the management should keep the following points in mind.Respect for the individual: Respect for the individual is the must in theorganization. • Relationship with the immediate manager: A manger plays the role of a mentor and a coach. He designs and plans work for each employee. It ishis duty to involve the employee in the processes of the organization. Soan organization should hire managers who can make and maintain goodrelations with their subordinates. • Relationship with colleagues : Promote team work, not only amongteams but in different departments as well. This will induce competitionas well as improve the Relationship among colleagues. • Recruit whole heartedly : An employee should be recruited if there is a proper place and duties for him to perform. Otherwise he’ll feel uselessand will be dissatisfied.Employees should know what the organization expects from them and whattheir expectation from the organization is. Deliver what is promised. Promote anemployee based culture: The employee should know that the organization isthere to support him at the time of need. Show them that the organization caresand he’ll show the same for the organization. An employee based culture mayinclude decision making authority, availability of resources, open door policy,etc. • Individual development : Taking proper care of employees includesacknowledgement to the employee’s dreams and personal goals. Createopportunities for their career growth by providing mentorship programs,certifications, educational courses, etc. • Induce loyalty

: Organizations should be loyal as well as they should promote loyalty in the employees too. Try to make the current employeesstay instead of recruiting new ones.

Support Lack of support from management can sometimes serve as a reason for employee retention. Supervisor should support his subordinates in a way so thateach one of them is a success. Management should try to focus on its employeesand support them not only in their difficult times at work but also through thetimes of personal crisis. Management can support employees by providing themrecognition and appreciation. Employers can also provide valuable feedback to employees and make them feel valued to the organization The feedback from supervisor helps the employee to feel more responsible,confident and empowered. Top management can also support its employees intheir personal crisis by providing personal loans during emergencies, childcareservices, employee assistance Programs, conseling services, etcEmployers can also support their employees by creating an environment of trustand inculcating the organizational values into employees. Thus employers cansupport their employees in a number of ways as follows: • By providing feedback • By giving recognition and rewards • By counseling them • By providing emotional support

RESEARCH METHODOLOGYResearch Design :The research design indicates the type of research methodology under taken tocollect the information for the study.The researcher used both descriptive and analytical type of research design for his research study. The main objective of using descriptive research is todescribe the state of affairs as it exits at present. It mainly involves surveys andfact finding enquiries of different kinds. The researcher used descriptiveresearch to discover the characteristics of customers. Descriptive research alsoincludes demography characteristic of consumer who use the product.The researcher also used analytical research design to analyze the existing factsfrom the data collected from the customer Area of study

:

The area of study is confined to employees of GEMINI COMMUNICATIONLTD,Chennai. Research instrument: The Structured questionnaire is used as the research instrument for the study. Questionnaire Design: The questionnaire framed for the research study is a structured questionnaire inwhich all the questions are predetermined before conducting the survey. Theform of question is of both closed and open type.The scales used to evaluate questions are: • Dichotomous scale (Yes or No) • Likert 5 point scale (Highly satisfied, satisfied, Neither Satisfied nor dissatisfied, Dissatisfied, Highly dissatisfied) • Category scale (Multiple items) • Ranking type (R1, R2, R3…)The questionnaire for the research was framed in a clear manner such that itenables the respondents to understand and answer the question easily. The

questionnaire was designed in such a way that the questions are short andsimple and is arranged in a logical manner. Pilot study :It is appropriate to conduct pilot survey to check the reliability of thequestionnaire. So pilot study was conducted on 5 respondents which is a 10% of the sample. Sampling design

:A Sample design is a definite plan for obtaining a sample from a given population. It is the procedure used by the researcher in selecting items for thesample. Sample size :Sample size=125 samples, variance and confidence methods are used for determining sample size. Sampling Technique :The researcher adopted simple random sampling for the study. DATA COLLECTION METHODPrimary data: Primary data is the new or fresh data collected from the respondents throughstructured scheduled questionnaire. Secondary data: The secondary data are collected through the structured questionnaire, literaturereview and also from the past records maintained by the company. STATISTICAL TOOLS AND TECHNIQUESPERCENTAGE ANALYSIS :

Percentage = (No. Of respondents / total no. Of respondents)*100 WEIGHTED AVERAGE METHOD :Formula:Mean score = total score/no of respondents.Where total score = no of respondents*weighted average CHI – SQUARE TEST : 1. Null Hypothesis (Ho): There is no difference in attributes 2. Alternate Hypothesis(H1): There is a difference in attributes3 . Level of significance

α = 0.054 . Degrees of freedom = (r-1)(c-1)5. Expected frequency :E = R.T × C.T6. Calculation of : Σ = Σ (O-E)27. The tabulated value of at given level of significance with (r-1)(c-1) ONE RUN TEST : Null hypothesis (H0): There is a no significant relationship between the variables Alternate hypothesis (H1): There is significant relationship between the variablesμr = 2 n1 n2 + 1n1 + n2

2 n1 n2- n1- n1σr = 2 n1n2(n1+ n2)2 (n1+ n2-1 )Lower limit = μr + (2.58) σUpper limit = μr + (2.58) σ KENDALL’S COEFFICIENT OF CONCORDANCE : Null hypothesis (H0): There is a difference in attributes Alternate hypothesis (H1): There is no difference in attributesΣ Rj = (Rj-Rj)2S= Rj = Σ Rj LIMITATIONS OF THE STUDY 1. The findings of the study are subjected to bias and prejudice of therespondents.2. Area of the study is confined to the employees in Chennai only.3. Time factor can be considered as a main limitation.4. The findings of the study are solely based on the information provided by therespondents.5. The accuracy of findings is limited by the accuracy of statistical tools usedfor analysis.6. Findings of the research may change due to area, demography, age conditionof economy etc

Analysis and Interpretation of data 1.PERCENTAGE ANAYLSIS2.AWARENESS OF HR POLICIES Chi-Square Test To find whether there exists a significant relationship between Work Culture of the Company and interpersonal relationship between employees. H0 : There is a no significant relationship between Work Culture of theCompany and interpersonal relationship between employees. H1 : There is a significant relationship between Work Culture of the Companyand interpersonal relationship between employees.Calculated value is more than table value therefore accept H0

Result: There is a significant relationship between overall satisfaction and aspects of job. KENDALL’S COEFFICIENT OF CONCORDANCENull hypothesis (H0): There is a no significant difference in the rank assigned by respondents towards the attributes that gives them satisfaction in thecompany. Alternate hypothesis (H1): There is a significant difference in the rank assigned by respondents towards the attributes that gives them satisfaction inthe company. Ranking Based on SatisfactionK=20: Salary, Superior Role, Team Coordination, Work responsibilities, Rules andPolicies, Physical work environment Training Calculated value : S = 5815.714 Table value : 1158Calculated value is more than table value therefore reject H0

Result: There is a significant difference in the rank assigned by respondents towards theattributes that gives them satisfaction in the company. ONE RUN TEST:

Null hypothesis (H0): The samples are not taken randomly.Alternate hypothesis (H1): The samples are taken randomly.

Occasional parties like diwali, holi, dushera, etc

Organize get together for watching football, hockey, cricket matches

Organize picnics and trips for movies etc

Sports outings like cricket match etc

Indoor games

Occasional stress relievers·

“Casual dress” day

“Green is the color” day

Handwriting analysis

Tatoo, mehandi, hair braiding stalls on weekends

Mini cricket in office

Ice cream Fridays

Holi-Day breakfast

Employee support in tough time or personal crisis·

Personal loans for emergencies

Childcare and eldercare services

Employee Assistance Programs ( Counseling sessions etc)

Emergency childcare services • Medium Level Strategies for Employee Retention

Appreciating and recognizing a well done job

Special bonus for successfully completing firm-sponsored certifications

Benefit programs for family support

Child adoption benefits

Flexible benefits

Dependents care assistance

Medical care reimbursement

Providing conveniences at workplace·

Gymnasiums·

Athletic membership program·

Providing training and development and personal growth opportunities·

Sabbatical programs

Professional skills development

Individualized career guidance

• High Level Strategies

Promoting Work/Life Effectiveness·

Develop flexible schedules·

Part-time schedules·

Extended leaves of absence·

Develop Support Services·

On-site day care facility etc.· • Understand employee needs : This can be done through proper management style and culture·

Listen to the employee and show interest in ideas·

Appreciate new ideas and reward risk-taking

Show support for individual initiative

Encourage creativity

• Encouraging professional training and development and/or personalgrowth opportunities : It can be done through:·

Mentoring programs

Performance feedback programs

Provide necessary tools to the employees to achieve their professionaland personal goals

Getting the most out of employee interests and talents

Higher study opportunities for employees

Vocational counselling

Offer personalized career guidance to employees • Provide an environment of trust: Communication is the most importantand effective way to develop trust.·

Suggestion committees can be created

Open door communication policy can be followed

• Regular feedbacks on organization’s goals and activities should betaken from the employees by :

Management communications

Intranet and internet can be used as they provide 24X7 access to theinformation Newsletters, notice boards, etc. • Hire the right people from the beginning : employee retention is not a process that begins at the end. The process of retention begins right fromthe start of the recruitment process.The new joinees should fit with the organization’s culture. The personality,leadership characteristics of the candidate should be in sync with the culture of the hiring organization.Referral bonus should be given to the employees for successful hires. They arethe best source of networking. Proper training should be given to the managerson interview and management techniques. An internship program can befollowed to recruit the fresh graduates. Retention Success Mantra

Quality Of Work The success of any organization depends on how it attracts, recruits, motivates,and retains its workforce. Organizations need to be more flexible so that theydevelop their talented workforce and gain their commitment. Thus,organizations are required to retain employees by addressing their work lifeissues. The elements that are relevant to an individual’s quality of work lifeinclude the task, the physical work environment, social environment within theorganization, administrative system and relationship between life on and off the job. The basic objectives of a QWL program are improved working conditionsfor the Employee and increase organizational effectiveness. Providing quality work life involves taking care of the following aspects:Occupational health care : The safe work environment provides the basis for the person to enjoy working. The work should not pose a health hazard for the person. The employer and employee, aware of their risks and rights, couldachieve a lot in Their mutually beneficial dialogue.

Suitable working time : Organizations are offering flexible work options totheir employees wherein employees enjoy flexitimings for dedicating their efforts at work. Appropriate salary : The appropriate as well as attractive salary has always been an important factor in retaining employees. Providing employees salary at par with the other counterparts of above that what competitors are paying

motivates them to stick With the company for long. QWL consists of opportunities for active involvement in group working arrangements or problemsolving that are of mutual benefit to employees or employers, based on labor management cooperation.People also conceive of QWL as a set of methods, such as autonomous work groups, job enrichment, and high-involvement aimed at boosting the satisfactionand productivity of workers. It requires employee commitment to theorganization and an environment in which this commitment can flourish.Providing quality at work not only reduces attrition but also helps in reducedabsenteeism and improved job satisfaction. Not only does QWL contribute to acompany's ability to recruit quality people, but also it enhances a company'scompetitiveness. Common beliefs support the contention that QWL will positively nurture a more flexible, loyal, and motivated workforce, which areessential in determining the company's competitiveness. Supporting EmployeesOrganizations these days want to protect their biggest and most valuable assetand they want to do this in a way that best suits their organizational culture.Retaining employees is a difficult task. Providing support to the employees actsas a mantra for retraining them. Employers can also support their employees bycreating an environment of trust and inculcating the organizational values intoemployees.The management can support employees directly or indirectly. Directly, they provide support in terms of personal crises, managing stress and personaldevelopment. Management can support employees, indirectly, in a number of ways as follows: Manage employee turnover : Employee turnover affects the wholeorganization in terms of productivity. Managing the turnover, hence, becomes

an important task. A proactive approach can be adopted to reduce attrition.Strategies should be framed in advance and implemented when the timesarrives. Turnover costs should also be taken into consideration while framingthese strategies. Become employer of choice:

What makes a company an employer of choice?Is the benefit it offers or the compensation packages it gives away to itsemployees? Or is it measured in terms of how they value their employees or interms of customer satisfaction? Becoming an employer of choice involvesfollowing a road map which tells where to go as a brand. Engage the new recruits: The newly hired employees are said to be leastengaged in the organization. Keeping them engaged is an important task. Thefresh talent should be utilized to maximum before they start feeling bored in theorganization. Optimize employee engagement: An organization’s productivity is measurednot in terms of employee satisfaction but by employee engagement. Employeesare said to be engaged when they show a positive attitude toward theorganization and express a commitment to remain with the organization.Employee satisfaction also comes with high engagement levels. So,organizations should aim to maximize the engagement among employees.Coaching and mentoring: Employees whose work performance suffers due to poor interpersonal relationships or because of lack of interpersonal skills should

• It builds trust and enhances communication between manager andemployee. • It gives managers and employees a way to identify and discuss skills andstrengths. • Positive feedback leads to employee retention and Retention. • It helps in identifying performance areas that need improvement andspecific ways to improve them. It acts as an opportunity to enhance performance by identifying resources for skill development. It is anopportunity for managers and employees to assess and identify career andadvancement opportunities. It helps employees to understand theeffectiveness of their performance and contributes to their overallknowledge about the work Managers have tendency to ignore good performances of their employees. Providing no feedback may demotivateemployees and may lead to employee absenteeism. Input from manager’sside is necessary as it help employees to improve their performance andincrease productivity. •

Communication Between Employee and Employer Communication is a process in which a message is conveyed to the receiver bythe sender. The message may be or may not be in a common format or languagethat both the sender and receiver understand. So there is a need to encode anddecode the message in the process. Encoding and decoding also helps in thesecurity of the message. The process of communication is incomplete withoutthe feedback. Communication is the solution to almost everything in this world.Same applies to employee retention also.

Straight-from-the-shoulder communication is what the employees need fromtheir employers. Employees look for organizations where communication and process are transparent. Nothing is hidden and shared with the employees.There are 3 categories of employees: A : Who will leave their current employer in 3 years of their employment B : Who have a probability of leaving their current employer in next 3 years C : Who will stay with their current employer in the next 3 years Category A: These are the employees who lack communication with their employers. Category C: These are the employees who have proper, well structuredcommunication with their employers. Communication is also the way to win theemployees trust in the organization. Employees trust the employers who arefriendly and open to them. This trust leads to employee loyalty and finallyretention.Employers also feel that the immediate supervisors are the most authenticatedand trusted source of information for them. So the organizations should hiremanagers who are active communicators. Communication mediums. Open door policy: Organizations should support open door policies so that theemployees feel comfortable and are able to express their doubts and feeling totheir employers. Frequent meetings and Social gatherings Emails, Newsletters,Intranet and many more. So there should be effective communication across the

organization and this communication should be two-way. Communication alonecan lead to unimaginable heights of employee retention. Importance Of Employee Retention The process of employee retention will benefit an organization in the followingways: 1. The Cost of Turnover: The cost of employee turnover adds hundreds of thousands of money to a company's expenses. While it is difficult to fullycalculate the cost of turnover (including hiring costs, training costs and productivity loss), industry experts often quote 25% of the average employeesalary as a conservative estimate. Loss of Company Knowledge: When an employee leaves, he takes with himvaluable knowledge about the company, customers, current projects and pasthistory (sometimes to competitors). Often much time and money has been spenton the employee in expectation of a future return. When the employee leaves,the investment is not realized. Interruption of Customer Service: Customers and clients do business with acompany in part because of the people. Relationships are developed thatencourage continued sponsorship of the business. When an employee leaves, therelationships that employee built for the company are severed, which could leadto potential customer loss. Turnover leads to more turnovers: When an employee terminates, the effectis felt throughout the organization. Co-workers are often required to pick up theslack. The unspoken negativity often intensifies for the remaining staff.

Goodwill of the company: The goodwill of a company is maintained when theattrition rates are low. Higher retention rates motivate potential employees to join the organization.

The organizations should start with identifying the employee turnover rateswithin a particular time period and benchmark it with the competitor organizations. This will help in assessing the whether the employee retentionrates are healthy in the company. Secondly, the cost of employee turnover can be calculated. According to a survey, on an average, attrition costs companies18 months’ salary for each manager or professional who leaves, and 6 months’ pay for each hourly employee who leaves. This

amounts to major organizationaland financial stress, considering that one out of every three employees plans toleave his or her job in the next two years. Understand why employees leave : Why employees leave often puzzles top management. Exit interviews are anideal way of recording and analyzing the factors that have led employees toleave the organization. They allow an organization to understand the reasons for leaving and underlying issues. However employees never provide appropriateresponse to the asked questions. So an impartial person should be appointedwith whom the employees feel comfortable in expressing their opinions. Implement retention strategy : Once the causes of attrition are found, a strategy is to be implemented so as toreduce employee turnover. The most effective strategy is to adopt a holisticapproach to dealing with attrition. An effective retention strategy will seek to ensure: Attraction and recruitment strategies enable selection of the ‘right’ candidate for

each role/organization New employees’ initial experiences of the organizationare positive Appropriate development opportunities are available to employees,and that they are kept aware of their likely career path with the organizationThe organization’s reward strategy reflects the employee driversHow To Increase Employee Retention Companies have now realized theimportance of retaining their quality workforce. Retaining quality performerscontributes to productivity of the organization and increases morale amongemployees/ Four basic factors that play an important role in increasingemployee retention include salary and remuneration, providing recognition, benefits and opportunities for individual growth. But are they really positivelycontributing to the retention rates of a company? Basic salary, these days,hardly reduces turnover. Today, employees look beyond the money factor.Retention BonusHigher attrition rates within a particular industry have forced companies to usesome innovative strategies to retain employees. Retention Bonus is one of theimportant tools that are being used to retain employees. Retention bonus is anincentive paid to an employee to retain them through a critical business cycle.Retention bonuses are becoming more common in the corporate world becausecompanies are going through more transitions like mergers and acquisitions.They need to give key people an attractive incentive to stay on through thesetransitions to ensure productivity. Retention bonuses have proven to be a usefultool in persuading employees to stay. A retention bonus plan is not a panacea.According to a survey, non management employees generally receive about 10 percent of their annual salaries in bonuses, while management and top-levelsupervisors earn an additional 50 percent of their annual salaries. While bonuses based on salary percentages are the generally used, some companies choose to pay a flat figure. In some companies, bonuses range from 25 percent to 50 percent of annual salary, depending on position, tenure and other factors.

Employees are chosen for retention bonuses based on their contributions tomanagement and the generation of revenue. Retention bonuses are generallyvary from position to position and are paid in one lump sum at the time of termination. However, some companies pay in instalments as on when the business cycle completes. A retention period can run somewhere between sixmonths to three years. It can also run for a particular project. A projecthas its own life span. As long as the project gets completed, the employees whohave worked hard on it are entitled to receive the retention bonus. For example,the implementation of a system may take 18 months, so a retention bonus will be offered after 20 months. Although retention bonuses are becoming morecommon everywhere, some industries are more likely than others to offer them.Retail/wholesale companies are the most appropriate to implement stay-pay bonuses, followed by financial service providers and manufacturing firms.Companies of all sizes use retention bonus plans to keep knowledge employeesretained in the company. To retain its key senior employees post merger withEDS Corporation, Mphasis is providing cash component based retention bonus plan for its employees. This is mainly to retain good employees and providethem a cash incentive to keep them motivated. Hire Right Talent employee retention starts with recruitment. Early departures arise from thewrong recruitment process. Here are a few ways to ensure how to hire the righttalent for a particular job. Hire appropriate· candidates. Hire candidates who areactually suitable for the job. For this the employer should understand the job requirements clearly. Don’t hire under qualified or clearly overqualifiedcandidates. Provide realistic job preview at the time of hiring: Mostly employees leavean organization because they are given the real picture of their jobresponsibilities at the time of joining. Attrition rate can be reduced if a right person is hired for a right job. Realistic preview of the job responsibilities can be given to the employment seekers by various methods like discussions, trial periods, internships etc Clearly discuss what is expected from the employee : Before joining theorganization, tell the candidate what is expected from him. Setting wrongexpectations or hiding expectations will result in early leaving of employees. Discuss what the expectations of the employees are: Ask employees whatthey expect from the organization. Be realistic. If their requirements can befulfilled only then promise them. Or tell them beforehand that their requirements cannot be fulfilled. Don’t show them an unrealistic picture Culture fit : Try to judge individual’scapability to adapt to the organization’s culture. A drastic change in the culturemay give a culture shock to the candidate.Referrals: According to· the research, referred candidates stay longer with theorganization. There is a fear of hampering the image and reputation of the person who referred the candidate.

Manager Role in Retention

When asked about why employees leave, low salary comes out to be a commonexcuse. However, research has shown that people join companies, but leave because of what their managers’ do or don’t do. It is seen that managers whorespect and value employees’ competency, pay attention to their aspirations,assure challenging work, value the quality of work life and provided chances for learning have loyal and engaged employees. Therefore, managers and teamleaders play an active and vital role in employee retention.Managers and team leaders can reduce the attrition levels considerably bycreating a motivating team culture and improving the relationships with teammembers. This can be done in a following way: Creating a Motivating Environment: Team leaders who create motivatingenvironments are likely to keep their team members together for a longer periodof time. Retention does not necessarily have to come through fun events suchas parties, celebrations, team outings etc. They can also come through seriousevents. e.g. arranging a talk by the VP of Quality on career opportunities in thefield of quality. Employees who look forward to these events and are likely toremain more engaged. Standing up for the Team: Team leaders are closest to their team members.While they need to ensure smooth functioning of their teams by implementingmanagement decisions, they also need to educate their managers about therealities on the ground. When agents see the team leader standing up for them,they will have one more reason to stay in the team. Providing coaching: Everyone wants to be successful in his or her current job.However, not everyone knows how. Therefore, one of the key responsibilitieswill be providing coaching that is intended to improve the performance of employees. Managers often tend to escape this role by just coaching their

employees. However, coaching is followed by monitoring performance and providing feedback on the same. Delegation: Many team leaders and managers feel that they are the only peoplewho can do a particular task or job. Therefore, they do not delegate their jobs asmuch as they should. Delegation is a great way to develop competencies.Extra Responsibility: Giving extra responsibility to employees is another way toget them

engaged with the company. However, just giving the extraresponsibility does not help. The manager must spend good time teaching theemployees of how to manage responsibilities given to them so that they don’tfeel over burdened. Focus on future career : Employees are always concerned about their futurecareer. A manager should focus on showing employees his career ladder. If anemployee sees that his current job offers a path towards their future career aspirations, then they are likely to stay longer in the company. Therefore,managers should play the role of career counsellors as well. How to Improve Employee Retention? People want to enjoy their work so make work fun and enjoyable.Understand that employees need to balance life and work so offer flexiblestarting times and core hours. Provide 360 feedback surveys and other questionnaires to foster open communication. Consider allowing anonymoussurveys occasionally so employees will be more honest and candid with their opinions. Provide opportunities within the company for career progression andcross-training. Offer attractive, competitive benefits Organizations should target job applications for employees who havecharacteristics that fit well with the organizational culture. Upon conducting aninterview, seek out traits, such as loyalty. Also, ask the potential employee whatmotivates them on the job. Having more information about the potentialemployee’s expectations can help retain them, should they get hired into thecompany. Rewards and Recognition Employees want to be recognized for a job well done. Rewards and recognitionrespond to this need by validating performance and motivating employeestoward continuous improvement. Rewarding and recognizing people for performance not only affects the person being recognized, but others in theorganization as well. Through a rewards program, the entire organization canexperience the commitment to excellence. When the reward system is credible,rewards are meaningful; however, if the reward system is broken, the oppositeeffect will occur. Employees may feel that their performance is unrecognizedand not valued, or that others in the organization are rewarded for the wrong behaviours. Unrecognized and no valued performance can contribute toturnover. Recognition for a job well done fills the employees' need to receive positive, honest feedback for their efforts. Need for Rewards and Recognition Recognition should be part of the organization's culture because it contributes to both employee satisfaction and retention. Organizations can avoid employee

turnover by rewarding top performers. Rewards are one of the keys to avoidingturnover, especially if they are immediate, appropriate, and personal. A HarvardUniversity study concluded that organizations

can avoid the disruption caused by employee turnover by avoiding hiring mistakes and selecting and retainingtop performers.One of the keys to avoiding turnover is to make rewards count. Rewards are to be immediate, appropriate, and personal. Organizations may want to evaluatewhether getting a bonus at the end of the year is more or less rewarding thangetting smaller, more frequent payouts. Additionally, a personal note may meanmore than a generic company award. Employees should be asked for input ontheir most desirable form of recognition. Use what employees say when itcomes time to reward for performance.Designing a Rewards and and Recognition SolutionIn designing a rewards and recognition program, the following guidelinesshould be considered. • Rewards should be visible to all members of the organization. • Rewards should be based on well-defined, credible standards that have been developed using observable achievements. • Rewards should have meaning and value for the recipient. • Rewards can be based on an event (achieving a designated goal) or basedon a time frame (performing well over a specific time period). • Rewards that are spontaneous (sometimes called on-the-spot awards) arealso highly motivating and should also use a set criteria and standard tomaintain credibility and meaning. • Rewards should be achievable and not out of reach by employees.

• Nonmonetary rewards, if used, should be valued by the individual. For example, an avid camper might be given a 10-day pass to a campsite, or,if an individual enjoys physical activity, that employee might be given aspa membership. The nonmonetary rewards are best received when theyare thoughtfully prepared and of highest quality. Professionalism in presenting the reward is also interpreted as worthwhile recognition.Rewards should be appropriate to the level of accomplishment received. A cashaward of $50 would be inappropriate for someone who just recommended a process that saved the organization a million dollars. Determining the amount of money given is a delicate matter of

organizational debate in whichorganizational history, financial parameters, and desired results are all factors.Recognition for a job well done can be just as valued and appreciated asmonetary awards. Formal recognition program can be used with success. FirstData Resources, a data processing services company that employees more than6,000 individuals in Omaha, Nebraska, uses a formal recognition program(Adams, Mahaffey, and Rick,2002). Rewards are given on a monthly, quarterly,and yearly basis, and range from Nebraska football tickets, gift certificates, pens, plaques, mugs, and other items the hiring process, in-ternal labor market and career, motivation and performance, and finally culture and leader-ship. These four categories areinitially based on Leigh Branham?s book: ?Keeping the people who keep you in business: 24 ways to hang on to your most valuable talent? (Bran-ham, 2001).In our conducted case study, at Auditing Company X, we have been able toconclude that the firm’s retention practices are to a great extend in line with thetheoretical framework. There are some areas that need further attention from thecompany, such as an individualized reward system and communication betweenmanagers and employees. Even though there are some parts to work on the mostimportant aspects of retention, such as having a holistic and long-termorientation, Auditing Company X seems to have incorporated this into their practices successfully. 3. Retention: An explanatory study of Swedish employees in the financial sector regarding leadership style, remuneration and elements towards job satisfactionUniversity essay from Vaxjo universitet/Ekonomihogskolan Author: SannaPaulsson; Linda Lindgren; [2008] Abstract: Introduction: Companies today are forced to function in a world fullof change and complexity, and it is more important than ever to have the rightemployees in order to survive the surrounding competition. It is a fact that a toohigh turnover rate affects companies in a negative way and retention strategiesshould therefore be high on the agenda. When looking at this problem area wefound that there may be actions and tools that companies could use to come toterms with this problem. Research told us that leadership, remuneration andelements like participation, feedback, autonomy, fairness, responsibility,development and work-atmosphere is important for job satisfaction andretention.

Object: The main objective is to increase the understanding regardingemployee’s retention in relation to leadership style, remuneration and elementssuch as participation, feedback, autonomy, fairness, responsibility, developmentand work atmosphere in the Swedish financial Sector Method: We wanted to investigate how employee of the Swedishfinancial sector prefers to be retained, and how they consider and react to thechosen areas.The survey has a quantitative approach with a web based questionnaire andincludes 129 respondents from banks, insurance and finance companies.

Thetheoretical framework includes leadership and leadership style, financial as wellas non-financial remuneration and research done in later years regarding participation, feedback, autonomy, fairness, responsibility, development andwork-atmosphere connected to retention. Conclusion: The result shows that regarding leadership the respondents prefer leadership based on relations were they feel appreciation. Both appreciationsfrom the closest manager as well as the company management influencesemployee job satisfaction in a positive way. More money was the most commonreason for wanting to change jobs, and when asking how the remunerationsystem should be designed, base pay with additional bonus and benefits were preferred. But also non financial factors such as participation, feedback,autonomy, fairness, responsibility, development and work-atmosphere must betaken in consideration to satisfy since they seem to increase employees?Willingness to stay in the company. 4. What leaders can do to keep their key employees - Retention Management

University essay from Goteborgs universitet/Foretagsekonomiska institutionenAuthor: Lisa Hedberg; Maria Helnius; [2007-09-03T08:22:31Z] Abstract : Background: retention management is a highly topical subject and animportant dilemma many organizations might face in the future, if not facing italready. We believe that the leader plays a key role in employee retention andretention management. The concept of retention management can both have anarrow, and a broader significance. Both parts of its significance are generallyincluded in this thesis. The background of the thesis present a few articles thatdiscuss issues that makes it important for the organization, and the leaders, towork hard with retention management. The research is based on the leaders inthe Finnish case company Tradeka.Following key questions are intended to be answered: What are theconsequences between leaders actions and employees retention? Which is theleader’s role when it comes to retaining employees? Purpose statement: The purpose of the thesis is to investigate and analyze how company leaders todaycan retain their key employees. How can the provision of key human resourcesdevelop a long-term relationship that makes top employees stay in thecompany? The study aims to establish the procedure leaders apply to retainemployees. The purpose is to compare the qualitative study, made at the casecompany, with findings from the thesis theoretical framework

Every company should have all the normal compensation mechanisms commonto their type of employment. yet, total rewards packages go far beyond money.While money might temporarily retain employees, it does not always equatewith engagement. People want a chance to make a difference and realizethemselves. That self-realization is multi-dimensional and different for eachemployee. The total reward structure should include, in addition tocompensation, support for employees to attain their personal objectives alignedwith the goals of their organization. 3. Give feedback on employee performance on a regular basis.Most managers and employees are not enamored with the performance appraisal process in their organization. yet, an effective performance management processserves many purposes. Ongoing performance feedback allows employees to better know where they stand, gives them a formal means to provide input,indicates that their managers pay attention to them and that their performancematters. This feedback contributes to employee engagement and retention. 4. Be flexible in terms of work-life balance. Workers more and more value a balance between work and life. They want more flexible ways to engage withtheir employer. To attract and retain workers with different work and career expectations, organizations have to be more flexible in structuring work andits expectations. It calls for a different managerial mindset and practices thatinvolve letting go of old ways of controlling workers’ time and attendance infavor of result criteria such as output, productivity and quality. 5. Create a culture of engagement. Employees have become more connectedwith others in the organization (and the broader supply-and-customer chain)through project-based team work and process management activities.Employees are shifting their loyalty to people, teams and projects and away

from company loyalty. It is organizations that create the culture and climate thatallow people, processes and projects to become fully connected and engagedwith one another. Engaged employees are more likely to stay with their employer. 6. Train managers to be effective. Exit interviews consistently show that “poor and bad” management practices greatly contribute to an employee’s decision toleave a company. It is imperative to provide supervisors and managers withadequate tools to become effective managers since we cannot assume that thesecompetencies are innate. Professor Patrick Connor, recently retired after teaching 25 years at the atkinson Graduate school of Management, isfamous among MBA students and alumni for his

‘Connorisms.’He told them,“your employees do not work for you, they work for themselves.” When I teachmy students about managing organizations, I have them reflect on what reallymatters to employees and what they are constantly asking of their managers andtheir organizations. In the end, what employees expect of their managers isfairly simple: Can I trust you? are you committed to excellence? Do you careabout me? What people constantly ask of their organization is: Do you tell thetruth? Do you keep promises? Do you act fairly? Do you respect me? Managersand organizations that keep these questions in mind will have a competitiveadvantage over others in retaining their employees. BIBLIOGRAPHY BOOKS

・Human Resource Management C.B.Memoria ・Research methodology C.R.Kothari

・Journals, Newspaper and InternetFor more Notes, Presentations, Project Reports visit •a2zmba.blogspot.com •hrmba.blogspot.com •mbafin.blogspot.com