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International Journal of Management and Social Sciences Research (IJMSSR)

Volume 2, No. 2, February 2013

ISSN: 2319-4421

Retention Management: A Strategic Dimension of Indian IT


Companies
N. Suhasini, Assistant Professor, Dept. of MBA, KSR Memorial College of Engineering, Kadapa, Andhra
Pradesh.
T. Naresh Babu, Assistant Professor, Dept. of MBA, KSR Memorial College of Engineering, Kadapa,
Andhra Pradesh.

ABSTRACT
The hyper competitive business environment is
experiencing a fierce competition for skilled employees.
Increase in productivity and quality rests on implementing
different ways and means to retain key performers in the
organization. The problem is highly persisted in IT
industry. The IT industry facing the critical challenges of
recruitment and retention of best talent. There are many
factors which influence retention and it is required to
understand employee expectations, that can made them to
stay long back and perform well. Global explosion in
business creates more opportunities and people are highly
mobile not restricting to particular job. The objective of
this paper is to find out the factors which influence
employee retention and reasons for employee leaving the
organization. Based on analytical study researcher
suggest some recommendations for employee retention in
IT sector with special reference to study of selected IT
companies in Hyderabad, Andhra Pradesh.

Keywords
Global explosion, Recruitment, Employee Retention, IT
Sector.

INTRODUCTION
The IT sector is playing prime role in generating revenue
as well as in providing direct employment to around 2.3
million people in India. According to the industry body
NASSCOM, Indian IT sector is estimated to provide direct
employment to around 10 million by 2020. In FY 2010 IT
sector has contributed around 5.6% to Indias GDP.
Indias human capital advantage has been one of the prime
reasons for the rapid growth of the IT sector. Post
recession, the IT sector has seen tremendous growth and
today the market has become extremely competitive.
Talent attraction and talent retention has become a major
challenge for the employers.

IT sector has been the most attractive sector to work which


provides an admirable work environment, attractive
compensation and rewards along with good career growth
opportunities. The economic downturn shows impact on
IT companies in the form of huge salary cuts, downsizing,
and reduction of incentives. . The attrition rate for IT
companies was in the range of 14-25 percent for the fiscal
year 2010-2011. Recruitment and selection of right
employees is critical challenge for employers. Motivation
and retention of valuable employees leads to the success of
business in turbulent environment. The present scenario is
quite complex where employers are facing the difficulty of
attracting and retaining talent due to availability of more
job opportunities. High recruitment costs, loss of
expertise, decrease in productivity and lower quality are
the results of employee turnover.
According to a study conducted by MyHiringClub.com,
the IT and ITES sectors saw the highest attrition rate of 23
per cent in the first quarter of 2010-11. Beside pay
packages, career level growth and relationships with
supervisors are the other reasons for higher job
attrition,MyHiringClub.com Founder and CEO Rajesh
Kumar said. The main reason for switching a job is pay
packages (21 per cent), followed by career level growth
(16 per cent), dissatisfaction with supervisors (15 per cent)
and work pressure (14 per cent). Some of the common
reasons for attrition in IT industry are as follows:
1. Compensation
2. Role
3. Location Preference
4. On Site (Overseas)

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International Journal of Management and Social Sciences Research (IJMSSR)


Volume 2, No. 2, February 2013

5.

6.
7.

HR Policies affecting the career (Promotion,


probation, performance appraisals, organizational
culture, etc)
Work related issues (Shifts, overtime, project
facilities)
Personal (Health, family, etc)

LITERATURE REVIEW
Ganesh, (1997) identified two types of factors that
encourage an employee to leave the present job are push
factors and pull factors. Push factors pertain to the
dissatisfaction
causes
are
work
environment,
compensation, low employee benefits, inconsistent HR
policies, incorrect work assignments, lack of challenge,
lack of career development schemes, fear of being found
out and level of competence. Pull factors that lure an
employee are higher compensation package and greater
technical challenge.
Persis Mathias (2001) states that it is hard work engaging
Indian software talent by the Software industry, which is
spawning ground for I.T professionals. Retention of
employees is a major task before HR professional
managers. AMR (attract, motivate, retain) is a big concern
IT industry.
In developed and emerging countries, Attraction and
retention of employees is of the most desired practice and
competence of the high performance organizations. Search
for best talent will be very difficult in coming years.
Retention can be possible by many ways but one of the
most used in organizations is paying more than they are
earning. Lawler III (2005) stated that in these days
organizations are competing for talent rather than counting
employees loyalty. They are focusing on attracting, hiring
and retaining the required talented persons. For this
purpose organizations must utilize those practices which
are in favor of both employees and employers leading
them towards higher performance levels. It is important to
recruit strategy driven and shrewd employees because it
creates sense of alignment between employee and
organizational values and goals.
Gentry et al., (2007) argued that employees feel connected
with the organization if they get support from their
supervisors which lead them to return the favor to the
supervisors and organization through retention.
B.K. Punia and Priyanka sharma (2008) highlighted that in
current economic scenario the variables like induction
programme, scientific job analysis and fair & skill based
distribution of work assignments are the key factors in
influencing the employees retention intentions in industrial
organizations in general and the IT sector in particular
study highlighted the influence of age on employees
position as significant factors in employee retention. The

ISSN: 2319-4421

corporate has to strengthen their induction programmes,


during scientific job analysis before selecting the
employees and resorting to fair and skill based work
distribution practices.
Srivastava, Vinay k. and Shailesh Rastogi (2008) the
reasons of employee attrition are growth, family problems,
dissatisfaction. Causes of dissatisfaction are not having
objectivity in job allocation, employee recognition and
fairness in career advancements. Management control
system is fully capable of bringing objectivity in the
organization and managing employee dissatisfaction
which leads to high employee retention and better
productivity and better organizations.
Vos & Meganck (2009) indicated that career development
plan for the employees play a vital role in the retention of
employees. Providing these career development
opportunities restrict employees from leaving the
organization and increase in loyalty.

RESEARCH METHODOLOGY
Objectives of the study:

To identify and analyze turnover intentions of


personnel in IT Industry.
To measure the influence of job related and
organizational factors towards retention.
To suggest measures for effective retention and
organizational performance.

Methodology and Sample design:


For this research, we choose the descriptive research
which carried out with specific objective and hence it
results in definite conclusions. This research tries to
explore the underlying factors which are important for
talent retention in the IT sector by conducting survey to
the employees. The researcher targeted online survey by
administering a structured questionnaire for 100. Each of
the attribute in questionnaire was measured on 5 point
scale. The data was analyzed with the help of SPSS 17.
The tools used to analyze the data included Factor
Analysis, Cronbachs Alpha for testing the reliability of
scales and Weighted average method.
The questionnaire consists of both open ended and closed
ended questions. It consists of different parts. PartDemographic information, Part-B Reasons for employee
leaving the organization, Part-C Job and Organizational
factors. Convenience sampling method was used to collect
the data.

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International Journal of Management and Social Sciences Research (IJMSSR)


Volume 2, No. 2, February 2013

DATA ANALYSIS AND RESULTS:


Variable
%

Age

21-30

54

30-40

25

40 - Above

70

Female

30

Software Engineers

40

Gender

Job Title

Senior Software Engineers

35

Technical Leads

25

Table 1: Demographic Profile of the respondents


The sample size was 100 employees from selected IT
companies.
Out of this 40 percent were software
engineers; 35 percent were senior software engineers; 25
percent were technical leaders. 70 percent of respondents
were males and 30 percent were females. Around 54
percent of employees belonged to the age group of 21 to
30 years and 25 percent of employees belonged to the age
group of 30-40 and 21 percent belonged to the age group
of 40 above.

RELIABILITY OF SCALES
The reliability for each of the scales was assessed by
computing the coefficient of alpha (a). All coefficient of
alpha (a) were found to be greater than 0.5 and therefore,
were considered reliable and accepted (Nunnally.J, 1978)
.Table 2 gives a summarized view of a value for each of
the scale.
Table 2: Cronbachs Alpha Values for Reliability
Analysis
Parameters
Cronbachs Alpha
Reasons for employee leaving
0.715
Influence of job and
0.783
organizational factors
FACTOR ANALYSIS
Reasons for Employee Leaving
Table 3: KMO and Factor Loading
Parameters

KMO

14

was applied for these 15 variables. The variables were


clubbed into 6 factors.

21

Male

ISSN: 2319-4421

Factor
loading

Reasons for
.651
63.025
employee leaving
The total variance shown in table.3 accounted for by all of
the 6 components explains nearly 63 percent of the
variability in the original 15 variables. Varimax rotation

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Table 4: Rotated Component Matrix


Component
Mismatch
between
job and
person
Lack of
recognition
Limited
career
advanceme
nt
Unfair
compensati
on
Lack of
training and
development
opportunities

Poor
interperson
al
relationship
s
Inadequate
flexible
work
practices
Lack of
work life
balance
Dysfunctio
nal work
culture
Poor
manageme
nt practices
High job
demands
Lack of
challenging
job
environme
nt
Stress at
work place
Ineffective
leadership
Insufficient
rewards

.332

.363

.346

.177

.007

.408

.017

.068

.675

.349

.198

-.048

.054

.111

.789

.252

.050

.156

.141

.810

.067

.050

.061

-.045

.034

.155

-.030

.853

.108

.120

.719

.021

.088

.026

.212

.022

.289

.289

.232

.333

.338

.264

.694

.180

.409

.010

.195

.002

.669

.238

-.310

.013

.017

.091

.123

.115

.010

.490

.517

-.188

.083

.722

.041

.203

.177

-.025

.267

.088

.095

.402

.125

.607

.012

.246

.161

.543

.292

.038

.109

.036

.800

-.015

.061

.146

.002

.005

.833

.042
.045
.077

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International Journal of Management and Social Sciences Research (IJMSSR)


Volume 2, No. 2, February 2013

The rotated component matrix reveals 6 factors. The


factors were named accordingly.
Factor 1: Includes variables like poor interpersonal
relationships, lack of work-life balance, Dysfunctional
work culture - Organizational Culture
Factor 2: Includes variables like unfair compensation,
High job demands. - Compensation
Factor 3: Includes variables like lack of recognition,
limited career advancements. - Motivation
Factor 4: Lack of training and development opportunities
Development
Factor 5:
Includes variables like Poor management
practices, Stress at work place, Ineffective leadershipWork environment
Factor 6: Includes variables like lack of challenging job
environment, insufficient rewards. Challenging job

INFLUENCE
OF
JOB
ORGANISATIONAL
FACTORS
RETENTION MANAGEMENT

AND
ON

To identify the factors influencing retention management,


a no of factors have been analyzed on the basis of mean
scores. The opinion indicated as strongly influenced has
been assigned a weight of 5, the opinion indicated as
influenced has been assigned a weight of 4, the opinion
indicated as Moderately influenced has been assigned a
weight of 3, the opinion indicated as weakly influenced
has been assigned a weight of 2, the opinion indicated as
Uninfluenced has been assigned a weight of 1.
Table 5: Mean Scores regarding influence of job and
organizational factors on employee retention
WEIGHTED
PARAMETER
MEAN
1. Effective Performance
3.38
Appraisal
3.20
2. Training Opportunities
3.48
3. Skills and abilities are
adequately utilized
3.80
4. Career development
3.24
opportunities
4.25
5. Autonomy in Job
3.10
6. Environment openness &
4.25
Trust
3.62
7. Effective Work life Balance
3.30
8. Rewards & Recognition
9. Fair & Equal treatment
10. Management support to
employees

FINDINGS AND CONCLUSION


Effective Performance appraisal: The respondents stated
that performance appraisal influencing retention because it

ISSN: 2319-4421

is a key indicator for career growth opportunities in


organization with weighted mean of 3.38.
Training Opportunities: Most of the respondents feel
(Mean 3.20) that training is important for continuous
updating of knowledge to withstand in competitive
environment.
Adequate utilization of skills and abilities: The
respondents (Mean 3.48) opined that skills and abilities
should adequately utilize to increase job fit leads to
employee engagement and effective performance.
Career Development opportunities: The respondents
stated (Mean 3.80) that provision of career development
opportunities enhance employee employability on
internal/external labor market which affects employee
retention.
Autonomy in job: Most of the respondents (Mean 3.24)
stated that autonomy and individuality in job makes them
to act freely which leads to high involvement and
commitment which leads to employee retention.
Environment of Openness and trust: The respondents
stated that (Mean 4.25) openness and trust in work
environment influence employee retention.
Effective work life balance: Most of the respondents
opined that (Mean 3.7) Work life balance influence job
satisfaction, job involvement and quality of work life.
Rewards and Recognition: The respondents revealed that
(Mean 4.25) rewards and recognition strongly influence
motivational aspects which increase employee retention.
Fair and Equal Treatment: The respondents feel that fair
and equal treatment( Mean 3.62) of superiors creates
conducive environment where to discuss job related issues
and welcomed suggestions & feedback for effective
retention.
Management Support systems: The respondents opined
that (Mean 3.30) Management policies and practices for
recognition of achievements, cooperation and promoted
diversity influences employee retention.

FINDINGS
The major findings of the study are as follows:
The most important reasons for employee leaving from
organization are dissatisfaction with organizational
culture, compensation, motivation, development and
challenging work environment.
Employees stated that factors influencing employee
retention are
1. Career development opportunities.
2. Autonomy, environment of openness and trust,
fair & equitable treatment in work environment.
3. Effective utilization of employee skills and
abilities.
4. Management policies regarding reward and
recognition of employee achievements and
developmental aspects in organization.

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International Journal of Management and Social Sciences Research (IJMSSR)


Volume 2, No. 2, February 2013

ISSN: 2319-4421

CONCLUSION
Hence it is observed that organizations should aim at
developing effective employee retention policies and
practices which increases employee commitment level,
loyalty and engagement. Employee commitment and
involvement have impact on employee productivity and
retention. Organizational culture and compensation have a
significant impact on employee retention. Organization
has aim to design integrated approach to employee
retention which includes best retention strategies like
conducive organizational culture, adequate competitive
pay package, non-monetary motivation and effective
employee development programs for attaining competitive
advantage in business environment.

REFERENCES
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retention A multilevel analysis, Journal of Management
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[3] Lawler III E. Edward. (2005), Creating high
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[4] N Srivastava, vinay k. and shailesh Rastogi(2008)
Employee Retention: By way of management control
systems, ACM. Ubiquily, 9.16 pp.22-28..
[5] Punia, B.K. and priyanka sharma(2008), Employees
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[6] Vos, D. Ans., & Meganck, A.(2009), What HR
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psychological contract perspective, Personnel Review,
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[7] http://www.thehindubusinessline.com
[8] http://www.valuenotes.com
[9] http://www.mckinsey.com/mgi/reports/pdfs/india/Soft
ware.pdf

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