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I.J.E.M.S., VOL.

4 (3) 2013: 361-368 ISSN 2229-600X

EMPLOYEE RETENTION PRACTICES IN INDIAN CORPORATE – A
STUDY OF SELECT MNCs
1
Sultana Nazia & 2Bushra Begum
1
Department of Commerce, Osmania University, Hyderabad-500095
Department of Commerce, University College for Women, Koti, Hyderabad-500095

ABSTRACT
Employee Retention has gained importance in recent years, particularly as part of talent management programs, and its
relevance can be seen so much that the HR practitioner who integrates it into a talent program may grow bewildered by the
huge volume of research about it. Employee retention is more than just keeping employees on the job. It is also about
sustaining employees, primarily by enhancing their job satisfaction. This paper tries to document the practices followed by
a select Indian MNCs in retaining their employees and also highlights the opinions of the employees about such retention
practices mass.

KEYWORDS: Retention, Competence, Productivity, Satisfaction, Reward, Recognition.

INTRODUCTION These include interesting work, which was rated as the
Employee retention is an effort by a business to maintain a strongest factor in attracting and retaining employees in
working environment which supports current staff in both public and private sector organisations. The research
remaining with the company. Many employee retention outcome showed that employees expect management to
policies are aimed at addressing the various needs of make personnel decisions based on merit and also
employees to enhance their job satisfaction and reduce the demonstrated that extrinsic rewards (such as pay,
substantial costs involved in hiring and training new staff. promotion & job security) play a role in both employee
It is a process in which the employees are encouraged to retention and turnover management. The research further
remain with the organization for the maximum period of suggested that management lent support to the idea of
time or until the completion of the project. Retention good relationships with co-employees and supervisors.
Strategies helps organizations provide effective employee Lockwood and Anari (1997) concluded the following
communication to improve commitment and enhance factors as crucial retention strategies for IT professionals
workforce support for key corporate initiatives. in the USA and U.K. In order of their importance, the
Definition study revealed money (base salary plus bonus and stock
According to Get Les McKeon, employee retention is options); the chance to learn new skills (i.e. those that the
defined as "A systematic effort by employers to create and market values); the reputation of the organization in
foster an environment that encourages current employees technology; and working conditions (e.g. physical,
to remain employed by having policies and practices in colleagues & boss, casual dress) as some of the important
place that address their diverse needs. The costs associated factors. Among retention strategies that were particularly
with turnover may include lost customers, business and successful in maintaining a low turnover rate, one of the
damaged morale. In addition, there are the hard costs of solutions suggested was an increase in salary.
time spent in screening, verifying credentials, references, According to Samuel and Chipunza (2009), the main
interviewing, hiring and training the new employee just to purpose of retention is to prevent the loss of competent
get back to where you started.” employees from leaving the organisation as this could
Also of concern are the costs of employee turnover have adverse effect on productivity and profitability.
(including hiring costs& productivity loss). Replacement However, retention practices have become a daunting and
costs usually are 2.5 times the salary of the individual. highly challenging task for managers and Human
Therefore, employee retention is effort by a business to Resources (HR) practitioners in a hostile economic
maintain a working environment which supports current environment. One of the traditional ways of managing
staff in remaining with the company. employee retention and turnover is through organisational
reward system.
REVIEW OF LITERATURE William and Werther (1996) explain reward as what
There are pertinent studies on how companies should employees receive in exchange for their contributions to
retain their current manpower. Some excerpts from the the organisation. This reward could come in form of
review of literature are as follows: salary, promotion, bonuses and other incentives. When the
Boxall, Macky and Rasmussen (2003) have conducted reward system is effectively managed, it helps in
a study of retention variables for New Zealand employees achieving organizations corporate objectives, and
in which they state that the variables are multidimensional. maintains and retains a productive workforce. If

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the the tools which may lead to the development of the probability of either party ending the relationship organization remain outside the purview of the study. IBM. constructs. identification. Top and lower level communications improve employee identification with management employees remain outside the purview of the their agency and build openness and trust culture. Sources of data through the most credible sources (e. employees are no longer having the sense of organization Data collection instrument loyalty towards the organization. INGRAM. The implication of this therefore is that sub objectives management should not rely only on intrinsic variables to • To examine the retention practices of Indian MNCs in influence employee retention. (1998) and also studies by employees Maertz and Griffeth( 2004) have. Recognition and Rewards on satisfaction some cases. advancement from the selected organizations. commitment. On the other hand. rather. which ought • Organizational efforts do not have any impact on the to be managed congruently: organizational culture retention of their employees. employers have a used to test the hypothesis. Respect. This is true because of the great 362 . and changes companies chosen are Oracle.g. a combination of the light of their impact on the organization both intrinsic and extrinsic variables should be considered • To examine and analyse the tools available for as an effective retention strategy.e. 10 MNCs are selected for opportunities and time off. Respect. (2001) practices adopted by Indian MNCs in retaining their and by Meudell and Rodham. decreases because of high termination costs. are working to provide information that communication. Dell and Intel. and career • The three R’s i.e. and repurchase intentions. employees are now making strategic Analysis of the data has been done by using the career moves to guarantee employment that satisfy their frequencies and ratios and Chi-Square and Anova test are need for security. pay and benefits philosophy. or in R’s i. articles and websites. that may affect employees’ enthusiasm. As a result. Null Hypotheses: readiness to recommend. such differences may reflect the purpose of the study and from each of these 10 stages in the career plan or generation differences. HP. do not have an impact on the retention of employees. generated from the employees of select organizations by Rucci et al (1998) Bansal explain the importance of high using data analysis tools as discussed below employees involvement and how it could enhance their Sample method retention. Recognition and Rewards development systems. need to keep their stuff from leaving or going to work for other companies. organizations Scope often look beyond the concept of satisfaction to The study revolves round the analyses of employee developing trust and ensure long term relationships with retention practices of select organizations and how it their employees. organizations provide information on values.. work and they are haunted by concerns of overall job Data analysis and tools security. Therefore principle that once trust is built into a relationship. study because retention applies more specifically to the Increasingly. good interpersonal The broad objective of this study is to examine and relationships. leave the country. this suggestion is based on the impacts the development of these organizations. The ten mission. variables that influenced their retention in the The above broad objective is divided into the following organisations. contemporary corporate life in India wherein many journals. strategy. Increasing number of Data is collected by administering questionnaire that organizational mergers and acquisitions have left contains 22 questions of which 18 are closed end and 5 are employees feeling displeased from the companies that they open end questions. retaining employees Stauss etal (2001) have suggested a more detailed • To examine the impact of three R’s on the retention of and recent definition for the concept of retention which is the employee and development of the organization customer liking. and the last two being behavioral intentions. revealed that extrinsic Objectives factors such as competitive salary. According to Morgan and Hunt (1994). As earlier studies indicated that young Convenience sampling method is adopted to collect data employees are more interested in payment. trust. and job analyse the employee retention practices adopted by security were cited by employees as key motivational Indian MNCs. companies 10 employees are selected at random from the According to Gopinath and Becker (2000). • Employees do not plan their further career in the A study done by Fitzenz (1990) has indicated that current organization. it expenses associated with hiring and retraining new is often likely that they will leave and replacement can be employees. with • Recognition of the work done well does not lead to the first four being emotional-cognitive retention better performance and employee retention. This study of factors have been articulated in order to explain the attempts to fulfill the gaps by anlysing the impact of three reason employees leave one organisation for another. employees at middle level of management. CEO and top Primary data has been collected by administering management strategies) on a timely and consistent basis. friendly working environment. CICSO. Further. Accenture. level of the employees and by examining the various Empirical studies by Kinnear and Sutherland.A number there are gaps in the existing literature. retention is driven by following key factors. The above review of literature suggests that costly and in most cases not readily available . SAP. effective middle level of management. Analysis is also done in the light of the responses Numerous studies by Anderson and Sullivan (1993). strategies. Employee Retention Practices in Indian Corporate – A Study of Select MNCs employees perceive that they are inadequately rewarded. questionnaires to the employees of the selected companies The above mentioned studies explain many situations in and secondary data has been collected from books. competitive performance. Many companies Microsoft.

A brief explanation of these models is community. relationship. Employees need to both engage in and experience healthy well being. value. development. energy. visibility. significance of one's personal contributions.I. • Work can be made stimulating by giving variety of In some cases connection is synonymous with assignments. To applied organizational experience indicating three primary achieve results. organization. Fig 1. They should celebrate successes in order to build self Good employee retention should foster star performers. Employee retention must be authentic and retention of • Motivational Leadership also helps retain employees competent employee requires powerful recognitions. mental. and transform their work connections into results. and retention can help companies excel at performance.4 (3) 2013: 361-368 ISSN 2229-600X Models on Employee Retention Zinger Model: Employee retention is the art and science There are two important models on employee retention. emotional. esteem and enhance camaraderie and team work. resources engagement.E. Powerful retention involves mastery of physical. roles. sustain. and engagement. there . Effective Employee retention helps to serve customers a lot.J. A therefore leaders should champion change and must role is a set of behaviors. Thos model behavior s that reflects organization values.A central key of employee retention is connection. team. opportunity to measure or a steady state. follows: and well-being as companies leverage. VOL. or individual wants to achieve. and organizational energy. Engagement is not a one time survey and support provided to do good work. of engaging people in authentic and recognized one of them is a) Zinger Model and the other is 2) ERC’s connections to strategy. Work should contribute to employee well-being.M. and engagement. The model comments that employees should experience both personal and professional development through work ranging from courses and learning to develop their own strengths.S. customers. Companies want employees to serve their customers and this is a very strong relationships between employee engagement and employee retention. employee retention is ERC's Retention Model directed towards achieving results of the organization that Employee Retention Connection's model concentrates on the department. An organization’s results are dependent upon the health and productivity of individual employees. autonomy to make decisions. rights and obligations at work be open to new ideas. The employee should also align with the organization so as to build up the esteem of the organization and there should not be a disconnect between employee and organization.0 Zinger Model According to the Zinger Model. relationships.. performance. Retention Model. They should inspire a shared companies must guard against too many roles or role vision of organization direction. emphasizes that employee retention can contribute to • Companies should recognize and reward a job that is effective performance management and performance done well and should reinforce desired behaviours demonstrates company‘s engagement while engagement and create an emphasis and focus on recognition. To engage is to fully experience learn. feedback on result and understanding the and contribute to the dynamic elements of work. spiritual. 363 . companies need to craft a strategy to get drivers of employee retention. develop the overload while also fully being in the roles that contribute capabilities of others and become a model for a to results.

84).00 -15. Table 2. . A grievance if not handled Hypothesis 1: Employees do not plan their further career in the current organization is tested using Chi-Square.00 15. .e.00 2 34 50.00 Total 100 Test Statistics VAR 023 Chi-Square 10. Sig. The following analysis is made organization. .00 (Source: Compiled from primary data) The calculated value of 2 is 10. DATA ANALYSIS AND FINDINGS 100 employees are selected from 10 MNCs.24 df 1 Asymp. Respondents opinion was sought regarding the workload given by the company 51% respondents opine that the workload is high while 45% respondents feel that the workload correspondents to the position and the responsibilities that are attached therein. Stress The Employee Retention Connection transforms the generated at work place is managed by employees by organization culture and enhances the competitive edge resorting to the options such as change of location. taking through the following five-phased approach: career breaks. The survey revealed that 51% of the respondents’ employees feel that the grievance handling system is efficient while 49% are of the opinion that the grievance handling system is inefficient. Employee Retention Practices in Indian Corporate – A Study of Select MNCs Integrated System for Retaining Employees effectively becomes a barrier in employee retention. resorting to yoga and indulging in other ERC begins by analyzing the organization’s motivation recreational activities. Sig.84.00 16.24 as is seen in the table in the organization and are willing to remain in the whereas the table value at df=1 is 3. that is the motivating and demotivating aspects of the culture. one of the last resorts to managing and retention culture through surveys and focus groups stress is quitting the job. As the calculated organization value is greater than the table value (i.24 >3. Table 1.00 2 35 50. 60% of who are in the age group of 26-35 years and out of the total sample 60% are male and 48% of respondents have an annual income above Rs 100000.00 Total 100 Test Statistics VAR 010 Chi-Square 9.10.00 (Source: Compiled from primary data) . ERC concentrates on designing high-involvement job and work assignments and trains supervisors and managers in proven methods of motivational leadership.00 -16. This implies that the employees are satisfied for testing this hypothesis. Chi square for planning to stay in the company VAR 023 Observed N Expected N Residual 1 66 50. Chi square for Recognition of the work done well VAR 023 Observed N Expected N Residual 1 65 50. the Hypothesis 2: Recognition of the work done well does hypothesis is rejected and it can be concluded that the not lead to better performance and employee retention is employees do plan their further career in the current tested using Chi-Square.00 df 1 Asymp.0 Chi-Square Statistics for Hypothesis 1 NPAR TEST/CHISQUARE= VAR023.0 Chi-Square Statistics for Hypothesis 2 NPAR TEST/CHISQUARE= VAR010.

47 .S. VOL.28 11.09 3.72 .71 .78 .09 3.85 .08 3. given based on performance iv) Retention Strategies leads to improvement in efficiency v) Work Environment vi) Interpersonal Relations.11 3.68 1 4 Total 3.06 3.07 3.24 3.68 .09 3.89 4.82 1 5 Training Program 2 3.06 3.03 3.66 .76 .64 .64 .85 3 5 VAR019 1 4.07 2.70 .71 4.64 2 5 Efficiency Total 3.00 as is seen in the table Hypothesis 3: Organizational efforts do not have any whereas the table value at df=1 is 3.07 1.11 3.32 1 5 Interpersonal 2 3.00 Improvement in Efficiency Within Groups 36.21 3.00 >3.49 3. Table 3.81 .53 Total 52.e. the ANOVA.11 .15 3.I.92 .68 .84 3.86 .88 .69 .94 1 5 Rewards 2 3.49 3.27 Training Program Within Groups 49.70 3.59 .73 .41 .92 3.62 .66 .83 2 5 VAR018 1 3.58 .M.36 .03 VAR016 Rewards Within Groups 54.51 Total 50.79 1 5 VAR017 1 3.14 2.07 1 5 (Source: Compiled from primary data) Table 4.91 3 5 Work Environment 2 3.0 Descriptive Statistics for Hypothesis 3 95% Confidence Interval for Mean Std.84).99 3 5 Improvement in 2 3.04 VAR017 Between Groups 4.17 3.58 3.00 365 .77 1 5 relations Total 3.26 3.4 (3) 2013: 361-368 ISSN 2229-600X The calculated value of 2 is 9.68 .07 3.84.8415 ..68 4.42 3. As the calculated impact on the retention of their employees is tested using value is greater than the table value (i.59 3.49 1 5 VAR015 1 3. Organisational efforts that have an impact on hypothesis is rejected and it can be concluded that the the retention of their employees are listed as i) Work-life MNCs in India recognize the efforts of their employees balance supported by the organisation ii) Linkage of and work that is executed well by the employees is training programs with career growth iii)Rewards are appreciated which leads to retention of the employees.74 .68 2.59 1 5 Work Life Balance 2 3.0 ANOVA Statistics for Hypothesis 3 F F Sum of Mean (Calculated (Table Significance Squares Square Value) Value) VAR014 Between Groups 1.21 3.62 1.74 .42 .64 .8415 .47 .70 2 4 Total 3. Error Minimum Maximum Deviation Bound Bound VAR014 1 3.8415 .8415 .86 3 5 Total 3.72 .57 3.08 3.89 .75 VAR015 Between Groups .14 3.55 Total 57.72 1 5 VAR016 1 3.J.35 .08 3.76 .21 . 9.44 3.74 .37 Total 41.64 .13 3.53 .18 3.46 3.36 Between Groups 2.72 .49 1 4 Total 3.11 3.57 3.07 3.41 .16 Work Life Balance Within Groups 51.E.28 4.09 3. Lower Upper Mean Std.

366 . Review of literature suggests that good The third variable that is chosen under organizational interpersonal relations also leads to retention of efforts is rewards given based on performance and its employees. it is observed that training programs As the calculated value is less than the table value. As the pyramid shows.42 which is greater than the table value 3.24 3.10 . don’t respect employees.8415. you need to is not paying attention to people’s needs and reactions. Table 5. Recognition improve the efficiency of employees that leads to retention and Rewards do not have an impact on the retention of of employees. organization to strike work-life balance for employees Hence.06 11. hence the null greater than the table value 3.e.00 -15.06 9.16 VAR019 Between Groups 9.06 .88 3. To keep effective with retention and morale occur because management employees and keep satisfaction high.e. Similarly.815 while the implement each of the three Rs of employee retention: calculated value is 65.03 while the table value is 3.00 Total 100 Test Statistics VAR 013 Chi-Square 65.10 . the null hypothesis is hypothesis is rejected and it is concluded the good rejected and it is concluded that rewards given based on interpersonal relations do have an impact on retention of performance has an impact on retention of employees.79 (Source: Compiled from primary data) Table 1. employees. It is seen that the The calculated value of F for this variable is 11.3 reveals that initiatives taken up by the is 11. impact on employee retention.8415.73 .00 (Source: Compiled from primary data) The table value for Chi-Square at df=3 is 7. Employee Retention Practices in Indian Corporate – A Study of Select MNCs VAR018 Between Groups .00 Interpersonal relations Within Groups 74. special regard. employee retention.88 which calculated value of F for this variable is 4.84 df 3 Asymp. Recognition and Rewards has significant impact on respect is the foundation of keeping your employees.8415 .00 2 38 25. .8415).8415 . The fourth variable chosen is initiatives by the company to Hypothesis 4: The Three R’s i.00 13. that organizational efforts that improve employee ANOVA test is applied and the table value of F at df =1 is efficiency leads to employee retention. The calculated work life balance initiatives do not impact retention of value of F is 0.24 while the table value is 3. This variable is also analysed using ANOVA.8415. The Three Rs of Employee Retention • Recognition is defined as “special notice or attention” Employee retention consists of 3 R’s which helps in and “the act of perceiving clearly.3 reveals the calculated value of F employees is tested using Chi-Square.63 Work Environment Within Groups 40.00 -24. MNCs. F value is 2.21 < 3. 3.00 26.” Many problems retaining effective employees. rewards have Recognition and rewards will have little effect if you the maximum impact on retaining employees.8415. consideration given to people.00 4 10 25. Amongst the three R’s.8415. the null that are linked with career growth also do not have an hypothesis is rejected and it is concluded that a congenial impact on retention of employees (calculated value of F work environment helps to retain employees in Indian 1. employees. Sig. As the calculated value is greater Respect.8415 at df=1.84. Table 1. and Rewards than the table value the null hypothesis is rejected and it • Respect is esteem. Respect.0 Chi-Square Statistics for Hypothesis 4 NPAR TEST/CHISQUARE= VAR013 Chi square for Three R’s VAR 013 Observed N Expected N Residual 1 1 25.00 3 51 25. Work environment as a variable affecting retention of which implies that the null hypothesis is accepted and employees is also analysed using ANOVA. the null hypothesis is rejected and it is concluded does not have an impact on retention of employees. or particular can be concluded that the three R’s i.84 which is is greater than the table value 3. Recognition. Respect.76 Total 83.41 Total 40.

v38. Sutherland M (2001). 1-18. therefore. to care. Respect. Asia Countries to battle rising employee retention.0 Hypotheses Result Hypotheses Test Value Result Recognition of the work done well lead to 10. Suzanne.F.. Kinnear L. retention of customers. and Mahajan. Berrett-Koehler Publishers. TX: University of Texas. v5. Academy of Allen. by the organisations to relive the employees from the workload through job rotation. K. pp.84 Accept Rewards have an impact on the retention of employees (Source: Compiled from primary data) CONCLUSION Dibble. continuance and normative commitment to the Organization. Journal of Psychology. employees.L. pp. VOL. pp. pp. Austin Desai.I. New York: Wiley. This Retrieved. paper has. Money is fine. pp. pp. Vol. Mausner B.K. The measurement and Management Journal. Barbara J. 635-72.M. San Francisco Beck. (1999). The study concludes that steps must be taken FIU Hospitality Review. What businesses are doing to attract and retain employee—becoming an employer of choice. ‘em—Getting good people to stay. The managerial and other recreational activities. March. The recreational activities and yoga/meditation to employees. Oakhill Press. Most Management.S. Inc. Incentive.. S. 25 November. Winchester. While rewards represent beyond the basics of respect and recognition that the smallest portion of the retention equation. New attempted to fill the gaps by anlysing the impact of three York R’s i.e. A. ESOPs are also considered as one of attrition rates. 34-37. J. (1999). VA stress. Vol. Snyderman B (1999). July. M. Kreisman.24 Accept better performance and employee retention Employees plan their further career in the 9. (2001). (1990).. J. Keeping good people— inefficient.309-24. (1999). change in work location Eskildsen. of the employees considered that the welfare measures and grievance handling procedure of their companies is quite Herman. Recognition and Rewards on satisfaction level of the employees and by examining the various Dyke TV. (2000).42. (1995). the best motivating factors for employee retention.3) variables improvement in efficiency and interpersonal relations The three R’s i. Kay. (1998) Strategic role of affect-based attitudes in the acquisition. Recruitment. development and Labov B (1997). and Meyer. 367 . It was also found that most of the employees Strategies for solving the #1 problem facing business opted either yoga or other recreational activity to manage today. is the bottom -line? Journal of South African Institute of People Management. Hence it is suggested that companies provide Herzberg F. It is also observed that drivers of employee satisfaction and loyalty. productivity. i2. American Lawyer Media L. and REFERENCES corporate financial performance. they are makes it worth people’s while to work hard. Respect.P. still an important one. Recognition and 65. 2007. Clarke. Total Quality implementation of three R’s will increase retention. selection and practices adopted by Indian MNCs in retaining their retention of managers in the hotel and restaurant industry.J. 11 No.J. but what 23-27. Nussler. Inspiring employees the easy way. Beverly and Jordan-Evans. John Wiley and Sons. examined and analysed the employee retention practices adopted by Indian MNCs.e. Inc. It is also seen that conducting frequent reviews and not blaming the employees for policy errors also leads to Hewitt Associates (2006). Roger E. This study most important resource.K. www. ‘Why Associates leave and Strategies to Keep Them In. V. Strick S (1990). K. Huselid. motivation to work. antecedent of affective. Keeping your valuable This paper has thrown light on how MNCs in India are employees—Retention strategies for your organization’s making strategic moves in retaining their talent. (2002).com/mtl/ap..1-9. ‘The impact of human resource management practices on turnover. of employee dissatisfaction and turnover. 171(10):114-18. Unpublished Doctoral Dissertation.hewittassociates.4 and 5. Journal of Business Research. M. Identification of the drivers Employee Benefits Journal.4 (3) 2013: 361-368 ISSN 2229-600X • Rewards are the extra perks that a company offers to go beyond the call of duty.. 19(1): 15-18. Love ‘em or lose v63. N. (2001). Table 6.00 Accept current organization Organizational efforts do not have any F Value (Refer Accept for all variables and Reject for impact on the retention of their employees Table 1.E.P.

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