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INTRODUCTION TO “RETENTION”
“High performers are like frogs in a wheelbarrowThey can jump out at any time” -Mc Kinsey & Company Study.
“Genius begins and labor finishes” is an old saying that would be profoundly significant if interpreted in the context of corporate and large employers. Concepts, visions and decisions do take shape within the four walls of corporate boardrooms. However, it is only the employees that implement and give tangibility to the corporate’s mission. In other words if it is the highest rung in the corporate hierarchy that has ideas, it is the employees’ rung that has the chisel to bring the vision to life. In the best of worlds, employees would love their jobs. Like their co-workers, work hard for their employers; get paid well for their work, ample chances of advancement and flexible schedules so they could attend to personal or family needs when necessary. And never leave. But then there’s the real world. And in the real world, employees, do, leave, either because they want more money, hate the working conditions, hate their co-workers, want a change, or because their spouse gets a dream job in another state. Unlike inanimate products and systems that subject themselves to fine tuning without any reaction, employees would not subject themselves to any measure taken without reaction and analysis. Hence managing human resources, particularly retaining them, is an art that calls for special skills and strategies.
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 problems in employee retention these days. Hiring knowledgeable people for the job is essential for an employer. But retention is even more important than hiring. There is no dearth of opportunities for a talented person. There are many organizations which are looking for such employees. If a person is not satisfied by the job he’s doing, he may switch over to some other more suitable job. In today’s environment it becomes very important for organizations to retain their employees. The top organizations are on the top because they value their employees and they know how to keep them glued to the organization. Employees stay and leave organizations for some reasons. Employee retention is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until the completion of the project. Employee retention is beneficial for the organization as well as the employee. 2
The picture states the latest statement that corporate believes in “Love them or lose them”
The reason may be personal or professional. These reasons should be understood by the employer and should be taken care of. The organizations are becoming aware of these reasons and adopting many strategies for employee retention. Employees today are different. They are not the ones who don’t have good opportunities in hand. As soon as they feel dissatisfied with the current employer or the job, they switch over to the next job. It is the responsibility of the employer to retain their best employees. If they don’t, they would be left with no good employees. A good employer should know how to attract and retain its employees. Retention involves five major things:
Employee retention would require a lot of efforts, energy, and resources but the results are worth it.
IMPORTANCE OF EMPLOYEE RETENTION
Now that so much is being done by organizations to retain its employees, why is retention so important? Is it just to reduce the turnover costs? Well, the answer is a definite no. It’s not only the cost incurred by a company that emphasizes the need of retaining employees but also the need to retain talented employees from getting poached. The process of employee retention will benefit an organization in the following ways: 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 fully calculate the cost of turnover (including hiring costs, training costs and productivity loss), industry experts often quote 25% of the average employee salary as a conservative estimate. 2. Loss of Company Knowledge: When an employee leaves, he takes with him valuable knowledge about the company, customers, current projects and past history (sometimes to competitors). Often much time and money has been spent on the employee in expectation of a future return. When the employee leaves, the investment is not realized. 3. Interruption of Customer Service: Customers and clients do business with a company in part because of the people. Relationships are developed that encourage continued sponsorship of the business. When an employee leaves, the relationships that employee built for the company are severed, which could lead to potential customer loss. 4. Turnover leads to more turnovers: When an employee terminates, the effect is felt throughout the organization. Co-workers are often required to pick up the slack. The unspoken negativity often intensifies for the remaining staff. 5. Goodwill of the company: The goodwill of a company is maintained when the attrition rates are low. Higher retention rates motivate potential employees to join the organization. 6. Regaining efficiency: If an employee resigns, then good amount of time is lost in hiring a new employee and then training him/her and this goes to the loss of the company directly which many a times goes unnoticed. And even after this you cannot assure us of the same efficiency from the new employee.
WHAT MAKES EMPLOYEE LEAVES?
Employees do not leave an organization without any significant reason. There are certain circumstances that lead to their leaving the organization. The most common reasons can be: Job is not what the employee expected to be: Sometimes the job responsibilities don’t come out to be same as expected by the candidates. Unexpected job responsibilities lead to job dissatisfaction. 1. Job and person mismatch: A candidate may be fit to do a certain type of job which matches his personality. If he is given a job which mismatches his personality, then he won’t be able to perform it well and will try to find out reasons to leave the job. 2. No growth opportunities: No or less learning and growth opportunities in the current job will make candidate’s job and career stagnant. 3. Lack of appreciation: If the work is not appreciated by the supervisor, the employee feels de-motivated and loses interest in job. 4. Lack of trust and support in co-workers, seniors and management: Trust is the most important factor that is required for an individual to stay in the job. Nonsupportive co-workers, seniors and management can make office environment unfriendly and difficult to work in. 5. Stress from overwork and work life imbalance: Job stress can lead to work life imbalance which ultimately many times lead to employee leaving the organization. 6. Compensation: Better compensation packages being offered by other companies may attract employees towards themselves. 7. New job offer: An attractive job offer which an employee thinks is good for him with respect to job responsibility, compensation, growth and learning etc. can lead an employee to leave the organization.
EMPLOYEE RETENTION STRATEGIES
The basic practices which should be kept in mind in the employee retention strategies are: 1. 2. 3. 4. 5. 6. 7. 8. 9. Hire the right people in the first place. Empower the employees: Give the employees the authority to get things done. Make employees realize that they are the most valuable asset of the organization. Have faith in them, trust them and respect them. Provide them information and knowledge. Keep providing them feedback on their performance. Recognize and appreciate their achievements. Keep their morale high. Create an environment where the employees want to work and have fun.
These practices can be categorized in 3 levels: Low, medium and high level. <Low> <Medium > <High>
It has been recognized by both employers and employees that some common areas affect employee retention. If certain organizational components are being provided, than other factors may affect retention. Surveys of employees consistently show that better compensation package and better career opportunity are the two most important determinates of retention. Finally, job design and fair and supportive employee relationship with others inside the organization contribute to retention. Following are the components that affect employee retention: Career opportunities 1. Training Continuity. 2. Development & Rewards 1. Competitive pay & benefits. 2. Performance reward differentiation. 3. Recognition. 4. Special benefit & perks. Organizational Components Values and Culture. Strategies & Opportunities. Well managed & resultsoriented. Job continuity & security.
Job design & work 1. Job responsibility & autonomy. 2. Work flexibility. 3. Working conditions. 4. Work/Life balancing.
Employee Relationship 1. Fair/nondiscriminatory treatment. 2. Supervisory/management support.
These were the determinants of retention. An affective leadership assumed by the top management would be a very important feature that keeps the work force intact and loyal. In fact, the approach to the task of formulation of strategies for employee retention should be comprehensive and the honest intention of the employer to implement every stipulation in the package of appointment should be evident. However, there would, in each employing corporate, be a section of so-called ‘good employees’, whom it would be unwise to loose. Special strategies and special kind of efforts are required in the task of retaining them. Probably it would be the hardest task for the employer to retain them as persons and rivals would be making relentless bids to woo this section of employees. To counter these onslaughts from peers, special efforts are called for.
MANAGER ROLE IN RETENTION
When asked about why employees leave, low salary comes out to be a common excuse. 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 who respect 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 team leaders play an active and vital role in employee retention by creating a motivating team culture and improving the relationships with team members. This can be done in a following way: 1. Creating a Motivating Environment: Team leaders who create motivating environments are likely to keep their team members together for a longer period of time. Motivation does not necessarily have to come through fun events such as parties, celebrations, team outings etc. They can also come through serious events e.g. arranging a talk by the VP of Quality on career opportunities in the field of quality. Employees who look forward to these events and are likely to remain more engaged. 2. Standing up for the Team: Team leaders are closest to their team members. While they need to ensure smooth functioning of their teams by implementing management decisions, they also need to educate their managers about the realities on the ground. When agents see the team leader standing up for them, they will have one more reason to stay in the team. 3. Providing coaching: Everyone wants to be successful in his or her current job. However, not everyone knows how. Therefore, one of the key responsibilities will 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. 4. Delegation: Many team leaders and managers feel that they are the only people who can do a particular task or job. Therefore, they do not delegate their jobs as much as they should. Delegation is a great way to develop competencies. 5. Extra Responsibility: Giving extra responsibility to employees is another way to get them engaged with the company. However, just giving the extra responsibility does not help. The manager must spend good time teaching the employees of how to manage responsibilities given to them so that they don’t feel over burdened. 6. Focus on future career: Employees are always concerned about their future career. A manager should focus on showing employees his career ladder. If an employee 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 counselors as well. 9
The process of retention is not as easy at it seems. There are so many tactics and strategies used in retention of employees by the organizations. The basic purpose of these strategies should be to increase employee satisfaction, boost employee morale hence achieve retention. But some times these strategies are not used properly or even worse, wrong strategies are used. Because of which these strategies fail to achieve the desired results. There are many myths related to the employee retention process. These myths exist because the strategies being used are either wrong or are being used from a long time. These myths prevent the employer from successfully implementing the retention strategies. Let us have a look on some of these myths: 1. Employees leave an organization for more pay: Money may be the motivating factor for some but for many people it is not the most important factor. Money matters more to the low-income-employees for whom it’s a survival issue. Money can make an employee stay in an organization but not for long. The factors more important than money are job satisfaction, job responsibilities, and individual’s skill development. The employers should understand this and work out some other ways to make employees feel satisfied. When employees leave, management tries to retain them by offering more money. But instead they should try to figure out the main reason behind it. Issues that are mainly the cause of dissatisfaction are organization’s policies and procedures, working conditions, relationship with the supervisor and salary, etc. For such employees, achievement, growth, respect, recognition, is the main concern. 2. Incentives can increase productivity: Incentives can surely increase productivity but not for long term. Cash incentives, volume work targets and speed awards are old management beliefs. They can generate work speedily and in volumes but can’t boost employee commitment. Rather speed can hamper the quality of work produced. What really glues employees to their work and organization is quality work, meaningful responsibilities, recognition, respect, growth opportunities and friendly supervisors. 3. Employees run away from responsibilities: It is a myth that employees run from responsibilities. In-fact employees feel more responsible if they are given extra responsibilities apart from their regular job. Employees look for variety, greater control on the processes and authority to take decisions in their present job. They want opportunities to learn and grow. Management can assign extra responsibilities to their employees and appreciate them on the completion of these tasks. This will induce a sense of pride in the employee and will improve the relationship between the management and the employee.
4. Loyalty is a thing of the past: Employees can be loyal but what they need is an employer for whom they can be loyal. There is no reason for the employee to hop jobs if he’s satisfied with the employer. 5. Taking measures to increase employee satisfaction will be expensive for the organizations: The things actually required improving employee satisfaction like respect, career growth and development, appreciation, etc. can’t be bought. They are free of cost. An employer or management that reacts well to the employee’s ideas and suggestions is enough for the employees to be retained.
BENEFITS OF ATTRITION
Attrition is not bad always if it happens in a controlled manner. Some attrition is always desirable and necessary for organizational growth and development. The only concern is how organizations differentiate “good attrition” 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 in considered being healthy. Attrition rates are considered to be beneficial in some ways: 1. 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. 2. When certain employees leave, whose continuation of service would have negatively impacted productivity and profitability of the company, the company is benefited. 3. New employees bring new ideas, approaches, abilities & attitudes which can keep the organization from becoming stagnant. 4. 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. 5. 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: • It removes bottleneck in the progress of the company • • It creates space for the entry of new talents It assists in evolving high performance teams
6. There are people who are not able to balance their performance as per expectations, lack potential for future or need disciplinary action. Furthermore, as the rewards are limited, business pressures do not allow the management to over-reward the performers, but when undesirable employees 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.
RETENTION SUCCESS MANTRAS
1) Transparent Work Culture
In today’s fast paced business environments where employees are constantly striving to achieve business goals under time restrictions; open minded and transparent work culture plays a vital role in employee retention. Companies invest very many hours and monies in training and educating employees. These companies are severely affected when employees check out, especially in the middle of some big company project or venture. Although employees most often prefer to stay with the same company and use their time and experience for personal growth and development, they leave mainly because of work related stress and dissatisfactions. More and more companies have now realized the importance of a healthy work culture and have a gamut of people management good practices for employees to have that ideal fresh work-life. Closed doors work culture can serve as a deterrent to communication and trust within employees which are potential causes for work-related apathy and frenzy. A transparent work environment can serve as one of the primary triggers to facilitate accountability, trust, communication, responsibility, pride and so on. It is believed that in a transparent work culture employees rigorously communicate with their peers and exchange ideas and thoughts before they are finally matured in to full-blown concepts. It induces responsibility among employees and accountability towards other peers, which gradually builds up trust and pride. More importantly, transparency in work environment discourages work-politics which often hinders company goals as employees start to advance their personal objectives at the expense of development of the company as a single entity. Employees comprise the most vital assets of the company. In a work place where employees are not able to use their full potential and not heard and valued, they are likely to leave because of stress and frustration. In a transparent environment while employees get a sense of achievement and belongingness from a healthy work environment, the company is benefited with a stronger, reliable work-force harboring bright new ideas for its growth.
2) 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 they develop their talented workforce and gain their commitment. Thus, organizations are required to retain employees by addressing their work life issues. The elements that are relevant to an individual’s quality of work life include the task, the physical work environment, social environment within the organization, administrative system and relationship between life on and off the job.
The basic objectives of a QWL program are improved working conditions for the employee and increase organizational effectiveness. Providing quality work life involves taking care of the following aspects: 1. 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, could achieve a lot in their mutually beneficial dialogue. 2. Suitable working time: Organizations are offering flexible work options to their employees wherein employees enjoy flexi-timings for dedicating their efforts at work. 3. 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 problem solving 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 satisfaction and productivity of workers. It requires employee commitment to the organization and an environment in which this commitment can flourish. Providing quality at work not only reduces attrition but also helps in reduced absenteeism and improved job satisfaction. Not only does QWL contribute to a company's ability to recruit quality people, but also it enhances a company's competitiveness. Common beliefs support the contention that QWL will positively nurture amore flexible, loyal, and motivated workforce, which are essential in determining the company's competitiveness.
3) Supporting Employees
Organizations these days want to protect their biggest and most valuable asset and 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 acts as a mantra for retraining them. Employers can also support their employees by creating an environment of trust and inculcating the organizational values into employees. The management can support employees directly or indirectly. Directly, they provide support in terms of personal crises, managing stress and personal development. Management can support employees, indirectly, in a number of ways as follows: 1. Manage employee turnover: Employee turnover affects the whole organization 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 times arrives. Turnover costs should also be taken into consideration while framing these strategies. 2. 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 its employees? Or is it measured in terms of how they value their employees or in terms of customer satisfaction? Becoming an employer of choice involves following a road map which tells where to go as a brand. 3. Engage the new recruits: The newly hired employees are said to be least engaged in the organization. Keeping them engaged is an important task. The fresh talent should be utilized to maximum before they start feeling bored in the organization. 4. Optimize employee engagement: An organization’s productivity is measured not in terms of employee satisfaction but by employee engagement. Employees are said to be engaged when they show a positive attitude toward the organization 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. 5. Coaching and mentoring: Employees whose work performance suffers due to poor interpersonal relationships or because of lack of interpersonal skills should be provided proper coaching by their superiors. Planed coaching sessions help an individual to work through issues, maximize his potential and return to peak performance.
Feedback acts as a channel of communication between the employee and his manager. The amount of information employees receive about how well or how poorly they have performed is what we call feedback. It is a dialog between a manager and an employee which acts as a way of sharing information about the performance. It suggests where the employee performance is effective and where performance has to improve. Managers can provide either positive feedback or negative feedback to employees. This feedback helps the employee assess his performance and identify the improvement areas. Positive feedback communicates managerial satisfaction. Positive recognition for good performance boosts up morale of employees and results in performance improvement to a higher productivity level. It is believed that positive feedback is the only type of feedback that generates performance above the minimum acceptable level. Negative feedback obviously communicates manager’s dissatisfaction. However, negative feedback sometimes make employee to put more efforts to improve his performance. But such times are very rare. Moreover this improvement is short term.
Some managers do not provide any kind of feedback to their employees. Due to no feedback, employees may assume that they are performing productively or they may feel that the manager is satisfied with their performance. Studies reveal the performance tends be same or even decreases if no feedback is provided. Thus, feedback is necessary because: 1. It builds trust and enhances communication between manager and employee. 2. It gives managers and employees a way to identify and discuss skills and strengths. 3. Positive feedback leads to employee retention and motivation. 4. It helps in identifying performance areas that need improvement and specific ways to improve them. 5. It acts as an opportunity to enhance performance by identifying resources for skill development. 6. It is an opportunity for managers and employees to assess and identify career and advancement opportunities. 7. It helps employees to understand the effectiveness of their performance and contributes to their overall knowledge about the work Managers have tendency to ignore good performances of their employees. Providing no feedback may de-motivate employees and may lead to employee absenteeism. Input from manager’s side is necessary as it help employees to improve their performance and increase productivity.
5) Communication between Employee and Employer
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 from their employers. Employees look for organizations where communication and process are transparent. Nothing is hidden and shared with the employees. Communication is also the way to win the employees trust in the organization. Employees trust the employers who are friendly and open to them. This trust leads to employee loyalty and finally retention. Employers also feel that the immediate supervisors are the most authenticated and trusted source of information for them. So the organizations should hire managers who are active communicators. Communication mediums 1. Open door policy: Organizations should support open door policies so that the employees feel comfortable and are able to express their doubts and feeling to their employers. 2. Frequent meetings and Social gatherings 3. Emails, Newsletters, Intranet and many more. So there should be effective communication across the organization & this communication should be two-way. Communication alone can lead to unimaginable heights of employee retention.
Employee’s turnover has always been a sensitive issue for all organizations. Calculating employee turnover rate is not that simple as it seems to be. No common formula can be used by all the organizations. A formula had to be devised keeping in view the nature of the business and different job functions. Moreover, calculating attrition rate is not only about devising a mathematical formula. It also has to take into account the root of the problem by going back to the hiring stage.
Employees Turnover rate or Attrition rate means: In terms of numbers:
Total number of resigns per month (whether voluntary or forced) divided by (Total Number of employees at the beginning or the month plus total number of new joiners minus total number of resignations) multiplied by 100.
If calculating in monetary terms, it includes the following: Costs Due to a Person Leaving
1. Calculate the cost of the person(s) who fills in while the position is vacant. Calculate the cost of lost productivity at a minimum of 50% of the person’s compensation and benefits cost for each week the position is vacant, even if there are people performing the work. Calculate the lost productivity at 100% if the position is completely vacant for any period of time. 2. Calculate the cost of conducting the exit interview to include the time of the person conducting the interview, the time of the person leaving, the administrative costs of stopping payroll, benefit deductions, benefit enrollments. 3. Calculate the cost of the manager who has to understand what work remains, and how to cover that work until a replacement is found. 4. Calculate the cost of training your company has invested in this employee who is leaving. 5. Calculate the impact of departmental productivity because the person is leaving. Who will pick up the work, whose work will suffer, what departmental deadlines will not be met or delivered late. 6. Calculate the cost of lost knowledge, skills and contacts that the person who is leaving is taking with them out of your door. Use a formula 50& of the person’s annual salary for one year of service, increasing each year of service by 10%. 7. Subtract the cost of the person who is leaving for the amount of time the position is vacant. 17
1. The cost of advertisements; agency costs; employee costs; Internet posting costs. 2. The cost of internal recruiter’s time to understand the position requirements, develop and implement a sourcing strategy, review candidates backgrounds, prepare for interviews, conduct interviews, prepare candidate assessments, conduct reference checks, make the employment offer and notify unsuccessful candidates. This can range from a minimum of 30 hours to over 100 hours per position. 3. Calculate the cost of the various candidate pre-employment tests to help assess candidates’ skills, abilities, aptitude, attitude, values and behaviors.
1. Calculate the cost of orientation in terms of the new persons’ salary and the cost of the person who conducts the orientation. Also include the cost of orientation materials. 2. Calculate the cost of departmental training as the actual development and delivery cost plus the cost of the salary of the new employee. Note that the cost will be significantly higher for some positions such as sales representatives and call center agents who require 4-6 weeks or more of classroom training. 3. Calculate the cost of the person(s) who conduct the training. 4. Calculate the cost of various training materials needed including company or product manuals, computer or other technology equipment used in the delivery of training.
Lost productivity costs
As the new employee is learning the new job, the company policies and practices, etc. they are not fully productive. Use the following guidelines to calculate the cost of this lost productivity: 1. Upon completion of whatever training is provided, the employee is contributing at a 25% productivity level for the first 2-4 weeks. The cost therefore is 75% of the new employees’ full salary during that time period. 2. During weeks 5-12, the employee is contributing at a 50% productivity level. The cost is therefore 50% of full salary during that time period. 3. During weeks 13-20, the employee is contributing at a 75% productivity level. The cost is therefore 25% of full salary during that time period. 4. Calculate the cost of mistakes the new employee makes during this elongated indoctrination period. 18
New Hire Costs
1. Calculate the cost of bring the new person on board including the cost to put the person on the payroll, establish computer and security passwords and identification cards, telephone hookups, cost of establishing email accounts, or leasing other equipment such as cell phones, automobiles. 2. Calculate the cost of a manager’s time spent developing trust and building confidence in the new employee’s work.
Lost Sales Costs
1. Calculate the revenue per employee by dividing total company revenue by the average number of employees in a given year. Whether an employee contributes directly or indirectly to the generation of revenue, their purpose is to provide some defines set of responsibilities that are necessary to the generation of revenue. Calculate the lost revenue by multiplying the number of weeks the position is vacant by the average weekly revenue per employee.
The cost of employee’s turnover or attrition is: (Total staff * employee’s turnover rate/attrition rate %) * (annual salary * 80%)
The ‘rule of thumb’ appears to be very inaccurate indeed and, while it depends upon the category of staff, it is probably better to estimate around 80% of salary as a truer rule of thumb- and this will be on the conservative side. What kind of strategies would be effective in producing the desired results of maximum ‘Employee Retention’ and minimum ‘Employee Turnover’? The answer is obvious. It should be the aim of each employee to keep his work force fully satisfied with no room for disgruntlement. Retention of employees has become a primary concern in many organizations foe several reasons. As a practical matter, with lower turnover, every individual who is retained means one less person to have to recruit, selects, and trains. Also, the continuity employees who know their job, co-workers, organizational services and products and firm’s customers enhance organizational and individual performance. One survey of supervisor and workers found that losing high performance made it more difficult for organizations to reach their business goals. Additional continuity of employees provides better “Employee image” for attracting and retaining other individuals.
WAYS TO REDUCE EMPLOYEE TURNOVER
Following are some of the ideas to reduce employee turnover: 1. Hire the best candidate. 2. Welcome new employees. Customize your induction program for new employees according to the requirements. Same induction program can not be applied to all the candidates. Make them feel welcomed. 3. Produce quality managers who can really manage employees well. 4. Provide employees with work schedules that are flexible enough to suit their needs. 5. Don’t be too demanding. You re hiring human beings who have their own life and family commitments. Respect them. 6. Provide career counseling and development. 7. Discuss your future plans regarding the candidate with the candidate. Let them know that the management is interested in retaining them and cares for them. 8. Take proper feedback from employees regarding their grievances. 9. Remember your former employees. They can be helpful to you in future. It is also a part of employee retention.
FACTS ABOUT EMPLOYEE TURNOVER
It is difficult to accept when organizations say they have zero attrition rates. Companies may have healthier turnover rates, however, there is no such thing as zero attrition. There are other such facts about turnover, about which most of us are not aware. Some of such facts have been highlighted below: 1. Turnover always happens: Companies who believe in zero attrition rates only fool themselves. This happens because employees keep on moving due to reasons like marriage or further education. Nothing can stop these employees from moving on. So, rather than achieving zero attrition companies should focus on identifying whom they want to keep so that they have healthy attrition rate. 2. Some Turnover is Desirable: Zero attrition is not desirable mainly because of two reasons. Firstly, if all employees continue to stay in the same organization, most of them will be at the top of their pay scale which will result in excessive manpower costs. Secondly, new employees bring new ideas, approaches, abilities & attitudes which can keep the organization from becoming stagnant. 3. Turnover includes costs: Turnover always includes some costs. Consider the costs of replacing the key employee who falls in to the category of high performers. This includes the costs of recruitment advertisement, referral bonuses, selection testing, training costs, etc. Moreover, turnover results in loss of time & efforts, low productivity, loss of morale, loss of knowledge and so on. 4. High salary doesn’t work: Most managers assume that a high salary package is enough to keep employees loyal to their organization. Employees may face other problems like low job satisfaction, low engagement levels, no recognition, poor working conditions, less support from superiors and so on. Salaries are not always the solution to attrition. Managers should try to identify the roots of the problem and then find a feasible solution. 5. The manager can reduce attrition: Managers should take primary responsibility for retaining their employees. Much of the employee’s perception of job satisfaction stems from the relationship they share with their immediate supervisor. Managers should try to support their subordinates and give proper feedback on performance. HR managers should work in collaboration to make the key employees last in their organization. 6. Reducing Turnover takes Commitment: Reducing turnover takes an investment in coaching, developing, motivating, mentoring & listening to people. There should be universal acceptance of the goal of reducing turnover along with top management commitment and dedication.
OBJECTIVES OF THE STUDY
OBJECTIVES OF THE STUDY
1. To study the common reasons of employee voluntarily leaving or staying in organization. 2. To suggest the strategies and steps for reducing turnover and improving retention. 3. To study efforts made by organization to retain employee. 4. To study various career development programs offered by the organization. 5. To study the impact of induction & training programs on retention of employees. 6. To determine the organizational climate.
REVIEW OF LITERATURE
1. Research on “The impact of the Health Insurance Portability and Accountability Act on Participant Recruitment and Retention”
Deidre D. Wipke-Tevis University of Missouri-Columbia Melissa A. Pickett University of Missouri-Columbia Recruiting and retaining an adequate sample is critical to the success of any research project involving humans. Recent reports indicate that the Health Insurance Portability and Accountability Act (HIPAA) privacy rule has adversely affected research. Few resources are available to help researchers navigate the challenges to recruitment and retention after HIPAA privacy rule implementation. This article addresses obstacles to recruitment in prospective clinical research studies related to the HIPAA privacy rule, as well as HIPAAcompliant strategies to enhance recruitment and retention. Recruitment challenges discussed include evolving interpretations of the HIPAA regulations, inability to directly contact potential participants, complexity of HIPAA-required documents, increased costs of recruitment, and an expanding administrative burden. Among the strategies addressed are preparatory research reviews, using clinical collaborators and staff liaisons, pre-screening potential participants, minimizing participant burden during the consent process, enhancing participant follow-up, facilitating recruitment for future studies, and streamlining compliance training for staff.
2. Research on “Making Decisions in the Dark: Disconnects Between Retention Research and Middle-Level Practice”
Donald E. Larsen Woodring College of Education, Western Washington University, firstname.lastname@example.org Tariq T. Akmal Department of Teaching and Learning, College of Education, Washington State University This study of grade-level advancement/retention policies and procedures in 10 school districts shows how retention policy and procedure are disconnected from retention research. Administrators and teachers experience ethical dilemmas when district policy and prescribed practice collide with realities that underlie student failure. However, acts of discretionary insubordination offer compromises. As the study demonstrates when policy and research align and when educators acknowledge that neither retention nor social promotion is acceptable, viable alternatives and intervention programs can be explored.
3. Research on “Effect of Paced and Unpaced Practice on Skill Application and Retention: How Much Is Enough?”
Provalis Research University of Montréal This study examined the relative benefits of mastery learning, overlearning, and fluencybuilding instructions for academic performance and long-term retention. College students enrolled in introductory quantitative methods classes (n = 168) were asked to practice every week with a computerized flash-card program until they attained various mastery criteria. The results confirmed that practicing until mastery improved individual exam scores, group success rates, and long-term retention. Moreover, over learning provided additional benefits, especially in long-term retention. However, fluency-building instructions did not further increase academic achievement or long-term retention. Despite the alleged detrimental effects of drill and practice on motivation, a positive relationship was found between amount of practice and attitudes toward the course, the subject matter, and practice activities.
4. Research on “The Role of Elaboration in the Comprehension and Retention of Prose: A Critical Review.”
Lynne M. Reder Carnegie-Mellon University A review is given of recent research done in the area of prose comprehension, broadly defined. Research in the areas of educational psychology, psychology, and artificial intelligence is represented, although no pretense is made that this review is complete. This review discusses work concerned with factors that affect amount of recall, with representations of text structures, and with use of world knowledge to aid comprehension. The need for more information processing models of comprehension is stressed and an argument is made for the importance of elaboration to comprehension and retention.
5. Research on “The Effect of Service Price Increases on Customer Retention.”
John Dawes Ehrenberg-Bass Institute, University of South Australia This study examines the impact of actual price increases on customer retention in a service context and how the effect of a price increase is moderated by both tenure and breadth of the customer's relationship. The study finds that tenure is associated with lowered customer sensitivity to price increases as well as having a favorable direct effect on customer retention rates. The study also finds that relationship breadth can exacerbate the adverse effect of price increases on customer retention. The study represents a unique contribution to the service marketing literature, which to date reports little research examining the effect of actual price changes on consumer behavior. 26
6. Research on “The Discrimination, Acquisition, and Retention of Aiming Movements Made with and without Elastic Resistance.”
David I. Anderson San Francisco State University, San Francisco, California Two experiments were conducted to compare the discrimination, acquisition, and retention of movements made with and without elastic resistance. Using methods from psychophysics, Experiment 1 revealed that a discrete 800-mm movement could be discriminated equally precisely when it was performed with and without elastic resistance. Similarly, there was no difference in the spatial accuracy of a discrete aiming movement made with and without elastic resistance when extended practice with knowledge of results (KR) was provided in Experiment 2. Contrary to expectation, when KR about the outcome of the movement was removed on a retention test given 24 h after practice, the accuracy of the movements made with elastic resistance declined much more rapidly than those made without resistance. These findings question the common assumption that elastic resistance is a desirable characteristic of a control mechanism. Actual or potential applications of this research include the design of control mechanisms that facilitate performance under a variety of task and environmental conditions.
7. Research on “Retention under Chicago’s High-Stakes Testing Program: Helpful, Harmful, or Harmless?”
Melissa Roderick and Jenny Nagaoka University of Chicago In the mid-1990s, the Chicago Public Schools declared an end to social promotion and instituted promotional requirements based on standardized test scores in the third, sixth, and eighth grades. This article examines the experience of third and sixth graders who were retained under Chicago’s policy from 1997 to 2000. The authors examine the progress of these students for 2 years after they were retained and estimate the short-term effects of retention on reading achievement. Students who were retained under Chicago’s high-stakes testing policy continued to struggle during their retained year and faced significantly increased rates of special education placement. Among third graders, there is no evidence that retention led to greater achievement growth 2 years after the promotional gate. Among sixth graders, there is evidence that retention was associated with lower achievement growth. The effects of retention were estimated by using a growth curve analysis. Comparison groups were constructed by using variation across time in the administration of the policy, and by comparing the achievement growth of a group of low-achieving students who just missed passing the promotional cut-off to a comparison group of students who narrowly met the promotional cut-off at the end of the summer. The robustness of the findings was tested using an instrumental variable approach to address selection effects in estimates.
RESEARCH DESIGN: The exploratory research design is adopted for this
RESEARCH APPROACH: Research worker contacted the respondents personally
with well-prepared sequentially arranged questions. The questionnaire is prepared on the basis of objectives of the study. Direct contract is used for survey, i.e., contacting employees directly in order to collect data. • • • •
SAMPLE SIZE: The study sample constitutes 100 respondents constituting in
the research area.
SAMPLING AREA: Baddi. SAMPLING DESIGN: Stratified random sampling is used. COLLECTION OF DATA: Most of the data collected is primary data
through personal interview, where the researcher and the respondent operate face – to – face.
RESEARCH INSTRUMENT: The researcher has used a structured
questionnaire as a research instrument tool which consists of open ended questions, multiple choice and dichotomous questions in order to get data. All the questions in the questionnaire are organized in such a way that elicits all the relevant information that is needed for the study.
STATISTICAL TOOLS: The statistical tools used for analyzing the data
collected are percentage method, chi square, bar diagrams and pie diagrams.
ANALYSIS OF DATA: The data are collected through survey and books,
reports, newspapers and internet etc. The data collected by the researcher are tabulated and analyzed in such a way to make interpretations. Various steps, which are required to fulfill the purpose, i.e., editing, coding, and tabulating. The collected data are analyzed and interpreted using statistical tools and techniques.
DATA ANALYSIS AND INTERPRETATION
DATA ANALYSIS & INTERPRETATION
1) Since how long are you working in this organization? a) Below 3 months b) Between 3-6 months c) Above 6months Options Below 3 months Between 3-6 months Above 6 months
Response 30% 40% 30%
Below 3 months Between 3-6 months
Above 6 months
The response shows that most of the employees are working in this organization since past 3-6 months.
2) Are you satisfied with your current job? a) Yes
c) Can’t say
Options Yes No Can’t say
Response 70% 0% 30%
Yes No 70% Can’t say
The response shows that most of the employees are satisfied with their current job.
3) If no, why (please rank) a) Low salary b) No personal life c) No growth opportunities d) Policies & procedures not conductive e) Uneasy relationship with peers or managers f) Others If others please specify_______________________________________ Options Low salary No personal life No growth opportunities Policies and procedure not conductive Uneasy relationship with peers or managers Others
Response 0% 0% 0% 20% 10% 70%
No personal life
No growth opportunities
Policies and procedure not conductive
The response shows that the reason of dissatisfaction of employees is some other than above-mentioned reasons. But they also don’t want to disclose the reason for the same.
4) Are you looking/ planning for any change? a) Yes b) No
c) Can’t say
Options Yes No Can’t say
Response 10% 70% 20%
10% Yes No Can’t say 70%
The response shows that about 70% of employees are not planning for any change. It shows that they are satisfied with their job.
5) According to you what are the reasons of resigning from job? a) Low salary b) Bad employment practices c) Bad experience with peers d) Lucrative opportunities from other companies e) Lack of social life f) others If others please specify_______________________________________ Options Low salary Bad employment practices Bad experience with peers Lucrative opportunities from other companies Lack of social life Others Response 12.5% 43.2% 5.8% 12.5%
- 1 2 .5 0 % L u c ra tive o p p o rtu n itie s fro m o th e r c o m p a n ie s L a c k o f s o c ia l life 9% 71% O th e rs
The response shows that the main reason behind leaving the job is lucrative opportunities from other companies. And the minor reason is lack of social life. And rest employees don’t want to reveal the reasons for resigning the job.
6) Does organization takes initiative in retaining employees? a) Yes b) No
c) Can’t say
Options Yes No Can’t say
Response 50% 0% 50%
Res pons e
Y es 50% 50% No Can’t s ay 0%
The response shows that 50% of employees are in the favor of organization that they takes initiative to retain employees and rest 50 % can’t say anything about retaining employees.
7) If yes what efforts do they make? a) Offer salary hike b) Offer training and development programs. c) Offer a promotion d) provides flexible work hours e) Opportunities for international travel f) Provides assistance for personal problems g) Others If others please specify _______________________________________ Options Offer salary hike Response 30%
Offer T & D programme Offer promotions Provides flexible work hours Opportunities for international level Provides assistance for personal problems Others
15% 10% 25% 0% 10% 0%
Offer salary hike
11% 0% 0% 33% 28% 17%
Offer T & D programme
Provides flexible work hours
The analysis shows that organization provides salary hike to its employees to retain them.
8) How frequently you are been rewarded/ praised by your boss? a) Once in a month b) Once in 2-3 months c) More than 3 months d) Never/Rare e) On achieving the targets Options Once in a month Once in 2-3 months More than 3 months Response 10% 0% 0%
Never/Rare On achieving the targets
Response Once in a month
11% 0% 33%
Once in 2-3 months More than 3 months Never/Rare
56% On achieving the targets
The response shows that 50% of employees say that that they are either never or rare awarded/ praised by their boss. And 10% can’t say anything about this.
9) Does the organization provide you with training programs if required? a) Yes b) No
c) Can’t say
Options Yes No Can’t say
Response 60% 40% 0
0% 40% 60% Yes No Can’t say
About 60% employees say that they are provided with the training programs and 40% say no that they are not provided with any training.
10) Do you find opportunity for direct communication with management? a) Yes b) No Options Yes No Response 90% 10%
10% Yes No 90%
About 90% of employee’s finds opportunity for direct communication with management and rest don’t find it.
11) Does organization provide you career development programs? a) Yes b) No
c) Can’t say
Options Yes No
Response 60% 20%
20% Yes 20% 60% No Can’t say
About 60% response was in the favor of organization that they provide career development programs to them. And 20% of response was against the organization and rest 20% can’t say anything about it.
12) Does the organization give importance to physical fitness of an employee? a) Yes b) No Options Yes No Response 60% 30%
10% Yes 30% 60% No Can’t say
The response shows that 60% of employees say that organization give importance to physical fitness of employees.
13) According to you how much importance does organization gives to following? (Please rate 1-5) a) Work Standards b) Satisfaction of employee Options Response 43
Work standards Satisfaction of employee
W ork standards Satisfaction of employee
The response shows that much importance is given to work standards rather than satisfaction of employees.
14) Do you find yourself comfortable with the organizational culture? a) Yes b) No Options Response
11% Yes No 89%
The response shows that most of the employees find themselves comfortable with the organizational culture.
15) Which of the following attributes does your organizational climate has? a) Openness b) Confrontation c) Trust d) Autonomy e) Proactive f) Authentication
g) Collaboration Options Openness Confrontation Trust Autonomy Proactive Authentication Collaboration Experimentation
h) Experimentation Response 15 5% 35% 5% 15% 5% 5% 15%
The response shows that the most common attribute found in the organizational climate is trust.
1. According to analysis the main reasons for voluntarily leaving the job are: • Lucrative opportunities from other companies 47
Bad employment practices Lack of social life
2. Steps and strategies that should be taken to reduce attrition rate • Provide lucrative opportunities within organization • Implement good employment practices • Try to create a healthy environment • Provide attractive salary to its employees. 3. The main cause for reduction in number of employees is resignation. 4. Efforts made by organization to retain its employees are: • Offer salary hike. • Offer training &development programs to employees. • Offer recreational facilities. • Provides assistance in case of personal problems. • Offer a promotion. 5. Provides career development programs to retain as well as to motivate employees to work efficiently in the organization. 6. Organizational climate of Tractor Indo Firm is OCTAPACE.
As employees are the bases for company so retention of employees is a major focus for HR department. The management should identify the important factors that affect retention and should take necessary measures to improve these. Also, the management should take appropriate measure to identify the reasons of employee voluntarily leave. It is only the employees that implement and give tangibility to the corporate’s mission. In other words if it is the highest rung in the corporate hierarchy that has ideas, it is the employees’ rung that has the chisel to bring the vision to life. In the best of worlds, employees would love their jobs. Like their co-workers, work hard for their employers, get paid well for their work, have ample chances of advancement and flexible schedules so they could attend to personal or family needs when necessary. And never leave. But then there’s the real world. And in the real world, employees, do, leave, either because they want more money, hate the working conditions, hate their co-workers, want a change, or because their spouse gets a dream job in another state. Unlike inanimate products and systems that subject themselves to fine tuning without any reaction, employees would not subject themselves to any measure taken without reaction and analysis. Hence managing human resources, particularly retaining them, is an art that calls for special skills and strategies. Employee survey and exit interviews can be used for assessing the reasons of employee voluntarily leave. HR interventions such as improving selection process, effective orientation and training, better employee relation, better career development programs and planning etc should be used to improve employee retention.
1. Following steps/ efforts should organization take to retain its employees:
• • • • •
Lucrative opportunities Implement good employment practices Maintain healthy organizational climate Proper training should be provided to employees according to their skills Proper salary structure should be there.
2. Need to restructure company’s policy and follow certain process to overcome problems. 3. Should make a hierarchy for various positions. 4. Company should follow standard SDLC process.
1. Time constraint- the duration of training was short, due to which it was difficult to collect data. 2. One constraint has been regarding the cost, as study involves the collection of primary and secondary data. Therefore, the cost incurred was much more. 3. Another constraint has been geographical area, which is confined only to Baddi. 4. Normally employees hesitate to disclose the information.
1) Gupta Shashi K. & Joshi Rosy, Human Resource Management, Tata McGraw Hill, Fourth Revised & Enlarged Edition, 2007. (Page 20.9-20.14) 2) KOTHARI C.R., Research methodology, New Age Publishing House, Second Edition.
1) http://epa.sagepub.com/cgi/content/abstract/27/4/309 2) http://erx.sagepub.com/cgi/content/abstract/21/6/423
1) www.google.com 2) www.yahoo.com 3) www.jomsagepub.com
1) Since how long are you working in this organization? a) Below 3 months b) Between 3-6 months c) Above 6months 57
2) Are you satisfied with your current job? a) Yes
c) Can’t say
3) If no, why (please rank) a) Low salary b) No personal life c) No growth opportunities d) Policies & procedures not conductive e) Uneasy relationship with peers or managers f) Others If others please specify_______________________________________ 4) Are you looking/ planning for any change? a) Yes b) No
c) Can’t say
5) According to you what are the reasons of resigning from job? a) Low salary b) Bad employment practices c) Bad experience with peers d) Lucrative opportunities from other companies e) Lack of social life f) others If others please specify_______________________________________ 6) Does organization takes initiative in retaining employees? a) Yes b) No
c) Can’t say
7) If yes what efforts do they make? a) Offer salary hike b) Offer training and development programs. c) Offer a promotion d) provides flexible work hours e) Opportunities for international travel f) Provides assistance for personal problems g) Others If others please specify _______________________________________ 8) How frequently you are been rewarded/ praised by your boss? a) Once in a month b) Once in 2-3 months c) More than 3 months d) Never/Rare e) On achieving the targets
9) Does the organization provide you with training programs if required? a) Yes b) No c) Can’t say 10) Do you find opportunity for direct communication with management?
11) Does organization provide you career development programs? a) Yes b) No
c) Can’t say
12) Does the organization give importance to physical fitness of an employee? a) Yes b) No 13) According to you how much importance does organization gives to following? (Please rate 1-5) a) Work Standards b) Satisfaction of employee 14) Do you find yourself comfortable with the organizational culture? a) Yes b) No 15) Which of the following attributes does your organizational climate has? a) Openness b) Confrontation c) Trust d) Autonomy e) Proactive f) Authentication g) Collaboration h) Experimentation Comments, if any __________________________________________________________________________ ______________________________________________________________________