“Retention of Employees in Recessionary Period”

Paper Prepared and Submitted

By

Dr. Afatb Anwar Shaikh (Ph.D., M.Com., M.B.A.)

Principal

Poona College of Arts, Science and Commerce

Pune – 411001.

And

Prof. Rakesh Mittal (M.Com; M. Phil., DTL, GDC&A)

Principal

Poona College of Arts, Science and Commerce

Pune – 411001.

Email: - rakeshmmcc1981@rediffmail.com

Retention of Employees Paper Prepared and Presented by Dr.Aftab Anwar Shaikh

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 Paper Presentation on Retention of Employees

Meaning Of Recession

The standard text book definition of a recession is:

"Negative Economic Growth for two consecutive quarters". This means there
must be a fall in real output for a period of 6 months.

In US, a recession is said to occurs, whenever the National Bureau of

Economic Research NBER says so. There definition is:
..... a significant decline in economic activity spread across the economy,
lasting more than a few months, normally visible in real GDP, real income,
employment, industrial production, and wholesale-retail sales.
NBER further tells us that:
"There is no fixed rule about what weights are assigned to the various
indicators, or about what other measures contribute information to the
process."

Recession Impact:

1) Savings In a recession, private sector savings tend to rise. This is because

people become more nervous to spend. The spectre of unemployment encourages
people to save more and spend less. However, the rise in private sector saving may be
offset by a fall in public sector saving (i.e. government borrowing increases to try and
stimulate the economy)

2) Consumption Consumption will tend to fall because people are worse off.

3) Investment Investment will fall. Usually investment is highly cyclical.

Therefore, a recession causes a bigger % fall in investment than consumption.
Confidence is very important to investment so in a recession, investment tends to dry
up.

Retention of Employees Paper Prepared and Presented by Dr.Aftab Anwar Shaikh

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4) Government Spending Automatic fiscal stabilisers will cause government
spending to rise. e.g. in recession, government have to spend more on unemployment
benefits. Also the government may pursue expansionary fiscal policy to try and
increase aggregate demand e.g. spending on infrastructure projects.

5) Aggregate Demand Aggregate demand is falling in a recession

Even though it’s an “employer’s market” with millions of capable people looking
for work due to the recession, many employers are making these five costly
employee retention mistakes.

Mistake #1: Assuming employees “won’t dare leave now due to the recession.”

Mistake #2: Assuming other employers aren’t hiring or making strategic job
offers.

Mistake #3: Not talking with your best employees about how they’re coping.

Mistake #4: Not paying enough attention to the relationships between employees
and their immediate bosses.

Mistake #5: Assuming employees will stay once the recession’s over.

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Attrition Cost

Cost of any organization comprises of there elements viz., Material Cost,

Labour Cost and other expenses. It is possible to control the expenses and material

cost by employing well qualified and experienced managers, what becomes a problem

in the management of organization is control over labour and labour cost.

In the part it was the tendency to obtain long term job and remain in the same

organization. Permanently of job was the main concern. However with the

development of industries, in recent times craze for permanent job has faded out. Job

seekers are not concerned with permanent jobs but the jobs that suits than

requirement.

Requirement of individual differs from each other. So if one individual is not

satisfied with what the company offers or if it does not matches with his / her

requirement the quit.

The individuals are no longer at the mercy of the organization. In fact, they lay

down conditions for their employment and ready to leave, if the conditions are not

agreed. So, there is a reverse how wherein no the organization tries to find out the

reasons as to why the employee is leaving the organization and try to find a solution

to retain him / her. This is very much necessary because if not only affects the routine

work of the organization, but also increases the cost of acquisition of new employee.

The cost of acquisition may be for advertisement, conducting interview, training the

new employee, wastage & scrap in the initial phase of working of that employee.

Under there circumstances the organizations think fit to retain its employees.

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Retention Strategy

1) Pay: There is no doubt that money in the one of money one of the most

significant motives for walking into or out of any organization. Candidate may give

various reasons at the tune of interview for joining an organization. But the basic

consideration in pay.

Initially, a fresher may compromise on salary in order to gain experience, once

to acquire it; he shall be in no mood to compromise and expects more. A good

employee knows his worth and will not settle for less especially when jobs are plenty.

Pay plays an important role. It is the starting point for commitment and

loyalty. It is so as it fulfills all the wants, pays bills, helps to buy house and so on.

2) Position: Organization has a hierarchy from lower level to higher level.

Candidate approaches the organization to fit himself to the position on the basis of

qualification he has. He / She shall like to work to at a level / position to which his /

her qualification matches.

Again it can be stated that at the initial stage a candidate may compromise to

work at a lower level or a departmental at which he actually does not aim at. But due

to any situation, circumstances or conditions he may take up the job. But he / she shall

definitely not continue to remain in the organization. Because of main need they

continue to serve at the given level / position, but simultaneously they continuously

try to find job surfing their requirements.

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3) People: - A large part of an adult’s life is spent in the work place. Though we /

she work for his family, majority of the time is spent away from it. In such

circumstance the work place should be such that he feels himself home. This means

that the people which include his colleagues, superiors and the sub ordinates should

create a feeling of family. This feeling is necessary as the person does not feel alone

away from family. Moreover he gets emotional support whereby he is motivated to

contribute towards the organizational goal. This feeling can be lamented or developed

by trust in one another.

For example of person meets with an accident and is hospitalized. He has to

undergone immediate operation and is in need of funds. Here it is necessary that the

people that are his colleagues, superiors and subordinates come together and give him

a helping hand both mentally and financially.

Yet in another example let’s assume that peon is told to deposit Rs.50, 000 in

bank account of company. It goes and the way the money is stole. Against at this

moment, he should get the support from the people of the organization.

If in any of the above two cases the employee is not supported, he shall loose

faith and try to find alternative solutions.

4) Authority: - In management it is said that there cannot be responsibility

without authority and authority without responsibility is meaningless. It is definite

that when a candidate is employed he is shouldered out with certain responsibilities.

To carry out there responsibilities effectively and efficiently it is necessary that the

person has authority or power to control.

Freedom is necessary at work place. This freedom is in the freedom to control

or exercise power over ones work. This is important as it helps the candidate to put in

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his best efforts. He has the idea of what the exactly wants to do and in what manner.

He uses the power or authority to get the best as he known that he is responsible for

the act.

All organizations to give responsibility and expect good (best) result, but very

few give freedom to work. The organization which give freedom show confidence in

their employee. It means that the other organization, somewhere or the other, fears to

pose complete trust on their employees. Under such circumstances, the employees get

exhausted and even distressed. They then start fetching out new opportunities.

5) Appreciation: - It is nothing but making positive statements about a person,

his object or idea either publicity or privately. By appreciation, the value of employee

in an organization is created. It then creates a positive feeling in the employee. It is a

feeling which makes an employee feel that is important, valuable to the organization.

Appreciation is essential to lower job stress and also to increase morale of an

employee. This deduction of job stress and increase of morale goes to boost his

motivation, adds to his commitment, and increases his effectiveness and efficiency,

which ultimately adds to output. Moreover this appreciation is non lost fuel to boost

productivity.

For e.g.:- Employer gives Rs. 60000 assuming as Rs. 50,000 to an employee

to deposit in bank account of company. However while depositing the employee

comes to know that he has got additional Rs. 10000 with him. He honestly returns if

to his employee. He at this point expects a word of appreciation from his employers.

Let’s consider a situation wherein team of Sales Management puts in the

efforts to achieve the targeted sales. They not only achieve the target but makes sales

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1.5 times the targeted sales. The team shall feel unconsidered if they are not

appreciated.

6) Advancement: - Advancement can be considered as career & growth.

Individual aims at growth which can be in terms of knowledge & skill and so on. If

there is no addition to individuals mental ability while contributing towards the

organization, life becomes stagnant. Things come to a stand still and there is no space

for movement. This leads to mental frustration, dis-satisfaction, dis-appointment and

distressed to overcome this it is necessary for an organization to see that its employees

are given adequate opportunity to learn and upgrade there knowledge and skill

constantly. This can be done by conducting training sessions, refreshers programmes,

conferences and much more.

Advancement is the life blood both for an employee as well as the employer.

Advancement of an employee also signifies advancement of that company. The all

round development of an employee in then definitely contributes for all round

development of that organization.

7) Self Respect: - To matter what the organization pays and what position it

offers, more often employees leave the organization on grounds of self respect,

dignity and honour. It is absolutely true that pay attracts individual to an organization

but dignity and respect to an individual retains them from going out of an

organization. Many a times, it is observed that an employee may compromise on

various grounds but when it comes to self respect, dignity or honour then it is

impossible to compromise. Such individual consider self respect over pay. It is not

worth working is an organization where the gets handsome pay but not respected. He

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develops a sense of slavery for himself towards his employer. In such circumstances

he / she is not willing to continue with the organization.

8) Security: - Security is a factor which not only attracts individual to an

organization but also refrains he / she from leaving the organization. If individual

receives security social & health, he / she are completely free from exploitation. There

is a general fear among candidates of being exploited at there work place. If the

organization in successful in proving that the candidate is fully secured, the

organization is successful in retaining its employees. In terms of social security

candidate aims at

• Normal working hours i.e. 8 to 9 hours.

• Weekly off.

• No Night Shifts (specially in case of women)

• No harassment or abuse from colleagues or superior.

• Facilities of canteen.

• Pick up Drop facility etc.

• Other fringe Benefits

In term of health security candidate wants

• Health Insurance

• Medical & Accident Policy

• Safety equipments

• Hygienic working conditions and so on.

Where the organization fails to provide such social & health security

measures, it shall equally fail to retain its employees in the organization.

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9) Style & System: - Every organization develops a style and system of working.

Every individual in organization has to follow the set system of working. Many a

times the employees very happy with pay, position, people, security, authority, dignity

etc. but when it comes to system, they become nervous.

The system of working in an organization should not be monotonous and

rigid. There should not be repetition of job. Many a times majority of him is spent to

preparing and submitting the reports on what has been done where a candidate spends

40% to 45% of time is performing his duty, he spends the remaining time in preparing

reports for it. Does this carry sense? No, so what will happen to an employee in such

circumstances. Definitely he shall not be waiting in that organization to under utilize

his talent.

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Bibliography

 ICFAI Journals

 www.about.com

 www.hr.com

 Personnel and Human Resource Management by Suba Rao

 Human Resource Management by K.Aswathappa

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