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Employee turnover is one of the largest though widely unknown costs an organization
faces. While companies routinely keep track of various costs such as supplies and payroll, few take
into consideration how much employee turnover will cost them: Ernst & Young estimates it costs
approximately $120,000 to replace 10 professionals. According to research done by Sibson &
Company, to recoup the cost of losing just one employee a fast food restaurant must sell 7,613
combo meals at $2.50 each. Employee turnover costs companies 30 to 50% of the annual salary of
entry-level employees, 150% of middle-level employees, and up to 400% for upper level,
specialized employees. Now that so much is being done by organizations to retain its employees.
Why is retention so important? Is it just to reduce the turn over costs ? Well, the
answer is a definite no. It’s not only the cost incurred by a company that emphasizes
the need of retaining employees but also the need to retain talented employees from
getting poached.

Retention involves five major things:

 Compensation
 Environment
 Growth
 Relationship
 Support

 Compensation:
Compensation constitutes the largest part of the employee retention process. The employees
always have high expectations regarding their compensation packages.

Compensation packages vary from industry to industry. So an attractive compensation

package plays a critical role in retaining the employees.
Compensation includes salary and wages, bonuses, benefits, prerequisites, stock options,
bonuses, vacations, etc. While setting up the packages, the following components should be
kept in mind:
 Salary and monthly wage: It is the biggest component of the compensation package. It
is also the most common factor of comparison among employees. It includes
• Basic wage
• House rent allowance
• Dearness allowance
• City compensatory allowance

Salary and wages represent the level of skill and experience an individual has. Time to time
increase in the salaries and wages of employees should be done. And this increase should be based
on the employee’s performance and his contribution to the organization. Bonus: Bonuses are
usually given to the employees at the end of the year or on a festival. Economic benefits: It includes
paid holidays, leave travel concession, etc. Long-term incentives: Long term incentives include
stock options or stock grants. These incentives help retain employees in the organization's start up

 Health insurance: Health insurance is a great benefit to the employees. It saves

employees money as well as gives them a peace of mind that they have somebody to take
care of them in bad times. It also shows the employee that the organization cares about the
employee and its family.

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

 Miscellaneous compensation: It may include employee assistance programs (like

psychological counselling, legal assistance etc.), discounts on company products, use of a
company car, etc.

Effective employee retention is a systematic effort by employers to create and foster an
environment that encourages current employees to remain employed by having policies and
practices in place that address their diverse needs. A strong retention strategy becomes a powerful
recruitment tool.
Retention of key employees is critical to the long-term health and success of any organization. It
is a known fact that retaining your best employees ensures customer satisfaction, increased product
sales, satisfied colleagues and reporting staff, effective succession planning and deeply imbedded
organizational knowledge and learning.

Employee retention matters as organizational issues such as training time and investment; lost
knowledge; insecure employees and a costly candidate search are involved. Hence failing to retain
a key employee is a costly proposition for an organization. Various estimates suggest that losing a
middle manager in most organizations costs up to five times of his salary.

Intelligent employers always realize the importance of retaining the best talent. Retaining talent
has never been so important in the Indian scenario; however, things have changed in recent years.
In prominent Indian metros at least, there is no dearth of opportunities for the best in the business,
or even for the second or the third best. Retention of key employees and treating attrition troubles
has never been so important to companies.

In an intensely competitive environment, where HR managers are poaching from each other,
organizations can either hold on to their employees tight or lose them to competition. For gone are
the days, when employees would stick to an employer for years for want of a better choice. Now,
opportunities abound.

It is a fact that, retention of key employees is critical to the long-term health and success of any
organization. The performance of employees is often linked directly to quality work, customer
satisfaction, and increased product sales and even to the image of a company. Whereas the same
is often indirectly linked to, satisfied colleagues and reporting staff, effective succession planning
and deeply embedded organizational knowledge and learning.

Employee retention matters, as, organizational issues such as training time and investment, costly
candidate search etc., are involved. Hence, failing to retain a key employee is a costly proposition
for any organization. Various estimates suggest that losing a middle manager in most
organizations, translates to a loss of up to five times his salary. This might be worse for BPO
companies where fresh talent is intensively trained and inducted and then further groomed to the
successive stages. In this scenario, the loss of a middle manager can often prove dear.

In fact, some reports suggest that attrition levels in IT companies are as high as 40 per cent. The
only way out is to develop appropriate retention strategies.
Though BPO industry shoots ahead at 40 to 50 per cent a year, it is now losing 35 to 40 per cent
of its 350,000-odd employees as well.
In India there are few sectors where the attrition level is much larger compared to other sectors.
For example: IT sector and BPO. Whereas there are organizations like Air India, HAL, DRDO,
BARC where the attrition is nearly 5% or less than that.

Employee Retention Strategies helps organizations provide effective employee communication to

improve commitment and enhance workforce support for key corporate initiatives.

Importance of Employee Retention

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 costs
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.

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.

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.

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.
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.
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 Leave? 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

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.

No growth opportunities: No or less learning and growth opportunities in the current job will
make candidate’s job and career stagnant.

Lack of appreciation: If the work is not appreciated by the supervisor, the employee feels de-
motivated and loses interest in job.

Lack of trust and support in coworkers, seniors and management: Trust is the most important
factor that is required for an individual to stay in the job. Non-supportive coworkers, seniors and
management can make office environment unfriendly and difficult to work in.

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.

Compensation: Better compensation packages being offered by other companies may attract
employees towards themselves.
New job offers: 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
Managing Employee Retention:

The task of managing employees can be understood as a three-stage process:

1. Identify cost of employee turnover.
2.Understand why employee leave.
3.Implement retention strategies
The organizations should start with identifying the employee turnover rates within a particular
time period and benchmark it with the competitor organizations. This will help in assessing the
whether the employee retention rates are healthy in the company. Secondly, the cost of employee
turnover can be calculated. According to a survey, on an average, attrition costs companies 18
months’ salary for each manager or professional who leaves, and 6 months’ pay for each hourly
employee who leaves. This amounts to major organizational and financial stress, considering that
one out of every three employees plan to leave his or her job in the next two years.

Understand why employees leave:

Why employees leave often puzzles top management. Exit interviews are an ideal way of recording
and analyzing the factors that have led employees to leave the organization. They allow an
organization to understand the reasons for leaving and underlying issues. However, employees
never provide appropriate response to the asked questions. So, an impartial person should be
appointed with whom the employees feel comfortable in expressing their opinions.

Implement retention strategy:

Once the causes of attrition are found, a strategy is to be implemented so as to reduce
employee turnover. The most effective strategy is to adopt a holistic approach to dealing
with attrition.

An effective retention strategy will seek to ensure:

Attraction and recruitment strategies enable selection of the ‘right’ candidate for
each role/organization New employees’ initial experiences of the organization are positive
Appropriate development opportunities are available to employees, and that they are kept aware
of their likely career path with the organization
The organization’s reward strategy reflects the employee drivers
How to Increase Employee Retention Companies have now realized the importance of retaining
their quality workforce. Retaining quality performers contributes to productivity of the
organization and increases morale among employees/ Four basic factors that play an important
role in increasing employee retention include salary and remuneration, providing recognition,
benefits and opportunities for individual growth. But are they really positively contributing to the
retention rates of a company? Basic salary, these days, hardly reduces turnover. Today,
employees look beyond the money factor. Retention Bonus

Higher attrition rates within a particular industry have forced companies to use some innovative
strategies to retain employees. Retention Bonus is one of the important tools that are being used
to retain employees. Retention bonus is an incentive paid to an employee to retain them through a
critical business cycle. Retention bonuses are becoming more common in the corporate world
because companies are going through more transitions like mergers and acquisitions. They need
to give key people an attractive incentive to stay on through these transitions to ensure
productivity. Retention bonuses have proven to be a useful tool in persuading employees to stay.
A retention bonus plan is not a panacea. According to a survey, non-management employees
generally receive about 10 percent of their annual salaries in bonuses, while management and top-
level supervisors earn an additional 50 percent of their annual salaries. While bonuses based on
salary percentages are the generally used, some companies choose to pay a flat figure. In some
companies, bonuses range from 25 percent to 50 percent of annual salary, depending on position,
tenure and other factors. Employees are chosen for retention bonuses based on their contributions
to management and the generation of revenue. Retention bonuses are generally vary from position
to position and are paid in one lump sum at the time of termination. However, some companies
pay in instalments as on when the business cycle completes. A retention period can run somewhere
between six months to three years. It can also run for a particular project. A project has its own
life span. As long as the project gets completed, the employees who
have worked hard on it are entitled to receive the retention bonus. For example, the implementation
of a system may take 18 months, so a retention bonus will be offered after 20 months. Although
retention bonuses are becoming more common everywhere, some industries are more likely than
others to offer them.
Retail/wholesale companies are the most appropriate to implement stay-pay bonuses,
followed by financial service providers and manufacturing firms. Companies of all sizes use
retention bonus plans to keep knowledge employees retained in the company. To retain its
key senior employees post-merger with EDS Corporation, Mphasis is providing cash
component based retention bonus plan for its employees. This is mainly to retain good
employees and provide them a cash incentive to keep them motivated.

Hire Right Talent

employee retention starts with recruitment. Early departures arise from the wrong recruitment
process. Here are a few ways to ensure how to hire the right talent for a particular job. Hire
appropriate· candidates. Hire candidates who are actually suitable for the job. For this the employer
should understand the job requirements clearly. Don’t hire under qualified or clearly overqualified

Provide realistic job preview at the time of hiring: Mostly employees leave an organization
because they are given the real picture of their job responsibilities at the time of joining. Attrition
rate can be reduced if a right person is hired for a right job. Realistic preview of the job
responsibilities can be given to the employment seekers by various methods like discussions, trial
periods, internships etc.

Clearly discuss what is expected from the employee: Before joining the organization,
tell the candidate what is expected from him. Setting wrong expectations or hiding
expectations will result in early leaving of employees.

Discuss what the expectations of the employees are: Ask employees what they expect from the
organization. Be realistic. If their requirements can be fulfilled only then promise them.
Or tell them beforehand that their requirements cannot be fulfilled.
Don’t show them an unrealistic picture Culture fit: Try to judge individual’s capability to adapt
to the organization’s culture. A drastic change in the culture may give a culture shock to the
Referrals: According to· the research, referred candidates stay longer with the organization.
There is a fear of hampering the image and reputation of the person who referred the candidate.

Manager Role in Retention

When asked about why employees leave, low salary comes out to be a 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.
Managers and team leaders can reduce the attrition levels considerably by creating a motivating
team culture and improving the relationships with team members. This can be done in a following

Creating a Motivating Environment: Team leaders who create motivating environments are
likely to keep their team members together for a longer period of time. Retention 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.
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.

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.
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.
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 overburdened.

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 counsellors as well.

How to Improve Employee Retention?

People want to enjoy their work so make work fun and enjoyable.
Understand that employees need to balance life and work so offer flexible starting times and core
hours. Provide 360 feedback surveys and other questionnaires to foster open communication.
Consider allowing anonymous surveys occasionally so employees will be more honest and candid
with their opinions. Provide opportunities within the company for career progression and cross-
training. Offer attractive, competitive benefits.

Organizations should target job applications for employees who have characteristics that fit well
with the organizational culture. Upon conducting an interview, seek out traits, such as loyalty.
Also, ask the potential employee what motivates them on the job. Having more information about
the potential employee’s expectations can help retain them, should they get hired into the company.
Rewards and Recognition

Employees want to be recognized for a job well done. Rewards and recognition respond to this
need by validating performance and motivating employees toward continuous improvement.
Rewarding and recognizing people for performance not only affects the person being recognized,
but others in the organization as well. Through a rewards program, the entire organization can
experience the commitment to excellence. When the reward system is credible, rewards are
meaningful; however, if the reward system is broken, the opposite effect will occur. Employees
may feel that their performance is unrecognized and not valued, or that others in the organization
are rewarded for the wrong behaviors. Unrecognized and no valued performance can contribute to
turnover. Recognition for a job well done fills the employees' need to receive positive, honest
feedback for their efforts.

Need for Rewards and Recognition

Recognition should be part of the organization's culture because it contributes to both

employee satisfaction and retention. Organizations can avoid employee turnover by
rewarding top performers. Rewards are one of the keys to avoiding turnover, especially
if they are immediate, appropriate, and personal. A Harvard
University study concluded that organizations can avoid the disruption caused by employee
turnover by avoiding hiring mistakes and selecting and retaining top performers.

One of the keys to avoiding turnover is to make rewards count. Rewards are to be immediate,
appropriate, and personal. Organizations may want to evaluate whether getting a bonus at the end
of the year is more or less rewarding than getting smaller, more frequent payouts. Additionally, a
personal note may mean more than a generic company award. Employees should be asked for
input on their most desirable form of recognition. Use what employees say when it comes time to
reward for performance.

Designing a Rewards and Recognition Solution

In designing a rewards and recognition program, the following guidelines should be considered.
• Rewards should be visible to all members of the organization.
• Rewards should be based on well-defined, credible standards that have been developed
using observable achievements.
• Rewards should have meaning and value for the recipient.
• Rewards can be based on an event (achieving a designated goal) or based on a time frame
(performing well over a specific time period).
• Rewards that are spontaneous (sometimes called on-the-spot awards) are also highly
motivating and should also use a set criterion and standard to maintain credibility and
• Rewards should be achievable and not out of reach by employees.
• Nonmonetary rewards, if used, should be valued by the individual. For example, an avid
camper might be given a 10-day pass to a campsite, or, if an individual enjoys physical
activity, that employee might be given a spa membership. The nonmonetary rewards are
best received when they are thoughtfully prepared and of highest quality. Professionalism
in presenting the reward is also interpreted as worthwhile recognition.

Rewards should be appropriate to the level of accomplishment received. A cash award of $50
would be inappropriate for someone who just recommended a process that saved the organization
a million dollars. Determining the amount of money given is a delicate matter of organizational
debate in which organizational history, financial parameters, and desired results are all factors.
Recognition for a job well done can be just as valued and appreciated as monetary awards. Formal
recognition program can be used with success. First Data Resources, a data processing services
company that employees more than 6,000 individuals in Omaha, Nebraska, uses a formal
recognition program (Adams, Mahaffey, and
Rick,2002). Rewards are given on a monthly, quarterly, and yearly basis, and range from Nebraska
football tickets, gift certificates, pens, plaques, mugs, and other items.

One of the most popular awards at First Data is called the "Fat Cat Award" that consists of:
$500 gift check Professional portrait of the employee
• Appreciation letter from the CEO and senior management
• E-mails, phone calls, and notes from peers
In addition to nonmonetary rewards, employees can be rewarded using money in numerous
ways. Cash is a welcome motivator and reward for improving performance, whether at formal
meetings or on the spot. Variable bonuses linked to performance are another popular reward
strategy. Profit sharing and pay-for-skills are monetary bonus plans that both motivate
individuals and improve goal achievement. Small acts of recognition are valuable for employee
daily Retention. Sometimes a personal note may mean more than a generic company award.

In one survey, employees cited the following as meaningful rewards (Moss, 2000):
• Employee of the month awards Years of service awards
• Bonus pay (above and beyond overtime) for weekend work
• Invitations for technicians to technical shows and other industry events
• Meaningful and Retention Rewards

What gives meaning to rewards and recognition? What makes them effective? First, rewards and
recognition should be based on a clear set of standards, with performance verifiable or observable.
The standards for the reward should also be achievable. If the reward is based on an unachievable
result, such as a production goal that is beyond employees' power, then those employees will not
be motivated. Meaningful rewards and recognition that are achievable have the greatest impact.

The Importance of Retaining Employees

The challenge of keeping employees: Its changing face has stumped managers
and business owners alike. How do you manage this challenge? How do you
build a workplace that employees want to remain with … and outsiders want to
be hired into?

Successful managers and business owners ask themselves these and other
questions because—simply put—employee retention matters:
➤ High turnover often leaves customers and employees in the lurch;
departing employees take a great deal of knowledge with them. This
lack of continuity makes it hard to meet your organization’s goals and
serve customers well.

➤ Replacing employee’s costs money. The cost of replacing an employee is

estimated as up to twice the individual’s annual salary (or higher for
some positions, such as middle management), and this doesn’t even
include the cost of lost knowledge.

➤ Recruiting employees consumes a great deal of time and effort, much of

it futile. You’re not the only one out there vying for qualified
employees, and job searchers make decisions based on more than the
sum of salary and benefits.

➤ Bringing employees up to speed takes even more time. And when

you’re short-staffed, you often need to put in extra time to get the work


The main objective of doing this study was to understand the nature of work, employment, and
labour relationships in IT Industries and its impact on workers. This effort aims at identifying and
exploring the shared interests to counter the preexisting belief that employees (the human resource)
and the human resource management bodies in both the developing and developed world are

One of the biggest challenges companies are facing is the attraction and retention of good
employees and top performers. The purpose of this project study was also to prove how employee
retention is essential in this day and age, and if the organizations are not awake to the situation and
immediate actions are not taken to that effect, what repercussions lay ahead and how they would
affect the organization and the industry.


The steps in which the project was carried out was by collecting both the primary and the secondary
data. The secondary data was collected first. This collection of data was done by means of reading
various materials such as books, journals, magazines, newspaper articles, etc.; looking for similar
content online (i.e., on the Internet).

The project work was, therefore, carried out on the basis of the data collected therefore.

Scope of the study

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

Types of environment the employee needs in an organization

• Learning environment: It includes continuous learning and improvement of the
individual, certifications and provision for higher studies, etc.
• Support environment: Organization can provide support in the form of work-life balance.
Work life balance includes:
 Flexible hours
 Telecommuting
 Dependent care
 Alternate work schedules
 Vacations
 Wellness
• Work environment: It includes efficient managers, supportive co-workers, challenging
work, involvement in decision-making, clarity of work and responsibilities, and
recognition. Lack or absence of such environment pushes employees to look for new
opportunities. The environment should be such that the employee feels connected to the
organization in every respect.
Growth and Career Growth and development are the integral part of every individual’s
career. If an employee can not foresee his path of career development in his current
organization, there are chances that he’ll leave the organization as soon as he gets an
opportunity. The important factors in employee growth that an employee looks
for himself are:
• Work profile: The work profile on which the employee is working should be in sync with
his capabilities. The profile should not be too low or too high.
• Personal growth and dreams: Employees responsibilities in the organization should help
him achieve his personal goals also. Organizations cannot keep aside the individual goals
of employees and foster organizations goals. Employees’ priority is to work for themselves
and later on comes the organization. If he’s not satisfied with his growth, he’ll not be able
to contribute in organization growth.
• Training and development: Employees should be trained and given chance to improve
and enhance their skills. Many employers fear that if the employees are well rained, they’ll
leave the organization for better jobs. Organization should not limit the resources on which
organization’s success depends. These trainings can be given to improve many skills like:
 Communications skills
 Technical skills
 In-house processes and procedures improvement related skills or customer satisfaction
related skills
 Special project related skills
Need for such trainings can be recognized from individual performance reviews, individual
meetings, employee satisfaction surveys and by being in constant touch with the employees.
Importance of Relationship in Employee Retention Program
Sometimes the relationship with the management and the peers becomes the reason for an
employee to leave the organization. The management is sometimes not able to provide an
employee a supportive work culture and environment in terms of personal or professional
relationships. There are times when an employee starts feeling bitterness towards the
management or peers.
This bitterness could be due to many reasons. This decreases employee’s interest and he becomes
demotivated. It leads to less satisfaction and eventually attrition. A supportive work culture helps
grow employee professionally and boosts employee satisfaction. To enhance good professional
relationships at work, the management should keep the following points in mind.
Respect for the individual: Respect for the individual is the must in the organization.
• Relationship with the immediate manager: A manger plays the role of a mentor and a
coach. He designs and plans work for each employee. It is his duty to involve the employee
in the processes of the organization. So, an organization should hire managers who can
make and maintain good relations with their subordinates.
• Relationship with colleagues: Promote team work, not only among teams but in different
departments as well. This will induce competition as well as improve the Relationship
among colleagues.
• Recruit whole heartedly: An employee should be recruited if there is a proper place and
duties for him to perform. Otherwise he’ll feel useless and will be dissatisfied. Employees
should know what the organization expects from them and what their expectation from the
organization is. Deliver what is promised. Promote an employee based culture: The
employee should know that the organization is there to support him at the time of need.
Show them that the organization cares and he’ll show the same for the organization. An
employee based culture may include decision making authority, availability of resources,
open door policy, etc.
• Individual development: Taking proper care of employees includes acknowledgement to
the employee’s dreams and personal goals. Create opportunities for their career growth by
providing mentorship programs, certifications, educational courses, etc.
• Induce loyalty: Organizations should be loyal as well as they should promote loyalty in
the employees too. Try to make the current employees stay instead of recruiting new ones.
Support Lack of support from management can sometimes serve as a reason for employee
retention. Supervisor should support his subordinates in a way so that each one of them is a success.
Management should try to focus on its employees and support them not only in their difficult times
at work but also through the times of personal crisis. Management can support employees by
providing them recognition and appreciation. Employers can also provide valuable feedback to
employees and make them feel valued to the organization.

The feedback from supervisor helps the employee to feel more responsible, confident and
empowered. Top management can also support its employees in their personal crisis by providing
personal loans during emergencies, childcare services, employee assistance Programs,
counseling services, etc
Employers can also support their employees by creating an environment of trust and
inculcating the organizational values into employees. Thus, employers can support their
employees in a number of ways as follows:
• By providing feedback
• By giving recognition and rewards
• By counseling them
• By providing emotional support

The Three Rs of Employee Retention

To keep employees and keep satisfaction high, you need to implement each of the
three Rs of employee retention: respect, recognition, and rewards.


Respect is esteem, special regard, or particular consideration given to people. As
the pyramid shows, respect is the foundation of keeping your employees.
Recognition and rewards will have little effect if you don’t respect employees.

Recognition is defined as “special notice or attention” and “the act of perceiving

clearly.” Many problems with retention and morale occur because management is
not paying attention to people’s needs and reactions.

Rewards are the extra perks you offer beyond the basics of respect and
recognition that make it worth people’s while to work hard, to care, to go beyond
the call of duty. While rewards represent the smallest portion of the retention
equation, they are still an important one.

You determine the precise methods you choose to implement the three Rs, but in
general, respect should be the largest component of your efforts. Without it,
recognition and rewards seem hollow and have little effect—or they have negative
effects. The magic truly is in the mix of the three.




When you implement the “three Rs” approach, you will reduce turnover and
enjoy the following:

➣ Increased productivity
➣ Reduced absenteeism

➣ A more pleasant work environment (for both employees and you!)

➣ Improved profits

Furthermore, an employer who implements the three Rs will create a hard-toleave

workplace, one known as having more to offer employees than other
employers. You become a hard-to-leave workplace—one with a waiting list of
applicants for any position that becomes available—purposefully, one day at a
A steadfast philosophy that sets Employee Retention Strategies apart:

• Uses only research-based, theory-supported approaches to improving employee

engagement. Avoided are gimmicks such as employee of the month, suggestion boxes, prizes or
other “carrots.” While commonly used, these short-term fixes fail to produce genuine employee
loyalty (more than 60 years of research tells us so!).
• Employs an easy-to-understand systems approach to ensure the root causes of turnover are
addressed and the potential for lasting change unleashed.
• Customizes all activities to your organization’s unique history, current practices and
strategic objectives. Also considered are challenges unique to your industry sector, competitive
marketplace issues and talent shortages.
• Involves those responsible for implementing change in actually creating the change,
ensuring input and improved shared understanding and support of all initiatives.
• Integrates hands-on, action-oriented approaches that enable organizations to move forward
quickly and effectively
• Recognizes the research-proven role of no-cost strategies in developing the “glue” that
builds employee loyalty and commitment.
• Brings to your organization leading-edge organization-development best practices to
effectively and quickly build a retention-rich culture.


The first step to improving your employee retention is to understand why employees stay with
their current employer. Many "experts" dwell on the reasons employees leave, which is not as
important or revealing as the reasons they stay. Companies have tried many different programs
and perks to hold onto good employees. However, studies show that these efforts are not enough
to retain good employees when the support that is needed to achieve job success is not adequate.

Don't Waste Your Money on Things That Don't Make a Difference...

Among the countless inducements offered, only those identified in the center of KEi's Employee
Retention Wheel™ are truly what give employees a consistent reason for saying "no thank you"
when tempted with a "sweeter offer." After years of study and experience, KEi has determined,
and presented in the Retention Wheel, what factors do have the greatest impact on keeping

KEi has used this information to give employers the tools to meet the core needs that keep
employees successful at their jobs, thus reducing the high costs associated with unwanted
employee turnover.
Using the Wheel to Improve Employee Retention

KEi's Employee Retention Strategy is based upon two primary beliefs:

(1) It is difficult for employers to retain good employees if they don't have a process to hire
the right people in the first place.
(2) Retention processes must directly support the reasons that successful, satisfied employees

KEi's concentration on the center of the Employee Retention Wheel provides employers with
Internet-based tools that give employees systematic, ongoing support to be successful in their work
and satisfied with their employment.

The Center of KEi's Employee Retention Wheel: EIGHT FACTORS

Definition of successful: my job is helping me to grow personally, professionally and financially.

Definition of satisfied: my employer is providing what I need to perform my job successfully.

These eight central processes of the Employee Retention Wheel are the factors that are most
critical to an employee's job performance success.

A process to clearly define the way supervisors are expected to interact with employees;
a process to give employees a way to express what is most important to achieve job
success; and a process to give employers a way to demonstrate "Employing Values"
through employment policies.
This "Employer Mission Statement" is about how and who you hire, how you treat them,
and the organization's values as an employer. It is about making sure that the Values for
Employing™ are communicated to your employees and consistently implemented
throughout your organization. It is about the total employment package that goes beyond
salary and traditional benefits.


A process that gives employers a comprehensive way to communicate to job seekers

what it takes to achieve short-term and long-term job success, and to attract the
candidates who fit this criteria.


A process that gives employers a way to confirm whether the attitudes and behaviors of
job seekers are a match for their work environment.


A process that gives employers a way to define the specific interview questions that prove
job seeker abilities to successfully perform the target skills; and a process that gives
employers a way to verify the accuracy of resume/application data and interview


A process that provides a way for new employees (before performing the job) to
understand "why the employers business exists;" "what makes the business organization
successful;" "why the employee's job exists;" and "what it will take for the employee to
achieve job success."

A process that gives employers a way to provide essential information (from five critical
information sources) that is needed by employees to make daily work decisions.


A process that gives supervisors and employees a way to work together to build
personalized plans for improving each employee's priority job skills; and a process that
gives the employer a way to "deliver skills-improving training curriculum" and to
"measure the learning effectiveness" from the training experiences.


A process that gives employers a way to define and communicate exactly how individual
employee salaries are determined; and a process that gives employers a way to provide
employees with extra incentive income that is earned through the achievement of cash
generating business goals.

Retaining key personnel is critical to long term success of an organization. A Retention Strategy
has become essential if your organization is to be productive over time and can become an
important part of your hiring strategy by attracting the best candidates who know of your track
record for caring for employees. In fact, some companies do not have to recruit because they
receive so many qualified unsolicited submissions due to their history of excellence in employee

How do you get your employees to "fall in Love" with your organization? This is a great
question. Some recently conducted research lists these Top Ten Strategies:

1. Treat your employees like you treat your most valuable clients.
It is cheaper to keep your good employees than it is to hire and train new ones. Your top
20-25% should be courted as you would court and then service your top customers.

2. Get your employees to "Fall in Love" with your organization.

Communicate your vision in a compelling way. Show everyone the role they have to
contribute to this vision. Create opportunities for people to connect with each other for
support and to improve communication in work teams.
 Capture the Hearts of your workforce with: Compelling

 Open Communication: Internal listening is a priority, multiple lines of

communication (various channels.) This is essential for managing change in a
positive way with less sabotage, anger, resistance, and fear.

 Create partnerships: Squash status barriers/Open the books/pay for performance

(not titles), share the "bad" times the "good" times.

 Drive Learning: "Guarantee Employability," Encourage Life Long Learning (Train

outside of job description). Loyalty comes from trusting your employees to develop
their skills for the good of the company and for their needs for personal growth and
 Emancipate Action: Freedom to Fail, reduce bureaucracy, challenge the "status
quo." Breathe life into your organization. Do not let your employees stagnate.

3. Strong retention strategies become strong recruiting advantages.

4. Retention is much more effective when you put the right person into the right job.
Know the job! Know the employee and their motivations.
Half of the Fortune 500 companies are now using assessments to more fully understand
each job and the soft skills that are required for top production within their specific
company culture. These benchmarked skills are then compared against qualified applicants
to help determine who will be successful in the position and fit well within their company's
culture. These assessments are also used as a powerful professional development tool to
enhance the training of continuous life-long learning (which is another powerful retention
strategy.) Advanced Fibre Communication is beginning to use this assessment process in

5. Money is important but it is not the only reason people stay with an organization.
If your compensation plan is in the top 20-30% of your industry, then money will often
not be the reason why people leave.
6. Employee committees to help develop retention strategies is a very effective strategy.
Get their input! Ask, what do people like about working here? What would you like
changed to make your company a better place to work?

Some companies, such as Advance Fibre Communication (AFC), have recognized that the
special engineers and technical experts that are the cornerstones of their business, require
special attention. Victoria Perrault, VP of Administrative Services for AFC, says that her
company has identified the top 25% of their staff and caters to these special people by
meeting their financial requirements and looking for the best package of benefits that these
people will find most positive
as incentives to stay. They even have employee committees that work as "focus groups" to
determine why people stay at AFC and what they might want to see
changed to make AFC an even better place to work.

7. Leadership must be deeply invested in retention.

Management must be skillful communicating company policies in a way that creates "buy-
in" from their staff and be open to employee input. Help create "ownership" in your
The companies with the best retention percentages are the same companies that are actively
committed to retention. They know that is costs less to keep good people than to
continuously must replace unsatisfied employees and managers.

8. Recognition, in various forms, is a powerful retention strategy.

It does not have to cost a lot. US Dept. of Labor - 46% of people leave their jobs because
they feel unappreciated.
9. Remember, the "Fun Factor" is very important to many employees.
Greg Peters, Past President and CEO of Mahi Networks in Petaluma, is one of many
executives who reported that retention is often related to interpersonal connections and
amount of FUN in work teams. The FUN Factor is part of the generation of workers that
use activities as stress management in highly charged production environments where long
hours are required. Greg has encouraged Ping-Pong tournaments and basketball leagues
for interpersonal interaction, fun, and stress management. Though not everyone can
participate in physical activities, this sets the tone in a culture based on competition,
health/well-being, and interactions that are inclusive beyond work.

10. Know the trends in benefit packages. Do your best to offer the ones your employees
Consider offering the best of the rest.

Myths about Employee Morale Prevent Companies from Achieving Retention Success

Despite years of research that point to far different solutions, many companies use the wrong
tactics when trying to improve employee morale, satisfaction and retention. These myths prevail,
in part, because businesses have used these methods, however wrong, for a very long time and
have become used to trying the same ideas.

Myth #1: People most often leave a company for more pay.

Exit interviews, conducted to learn why people leave an organization, contain some of
America’s greatest fiction. People frequently say they’re leaving for more money because it’s the
easiest reason to give. More often the causes leading to departure are related to issues that were
unsatisfying in the job or the company.

Typical issues that cause dissatisfaction are company policies and procedures, quality of
supervision, working conditions, relationship with the immediate supervisor and salary.

Yes, pay does matter. While research shows most people don’t actually leave a job for more
money, there are two important facts: Very-low-income workers will leave for more money
because it’s a survival issue. For the rest of workers, the issue of money actually is about fairness.
People become dissatisfied with pay when they feel it is unfair within the company, within the
industry or when pay doesn’t seem to match the amount or type of work required.

To increase employee satisfaction and retention, companies make more gains by working to
improve whether people feel a sense of achievement, recognition, competence and growth,
whether there are choices about how work gets done and whether employees feel respected by

Myth #2: Incentive programs produce long-term profits and improve productivity and

So, who doesn’t like free stuff? However, incentives such as gifts and cash bonuses for meeting
speed and volume goals don’t affect employee commitment. They’re really a throwback to
outdated management beliefs that workers must be coerced in order to work hard. All the extras
don’t add up to the real glue that creates employee commitment: the chance to learn and grow,
meaningful work, good supervisors and respect and appreciation for a job well done.

Incentives have been over-used particularly in the past decade, as management books touted
the importance of improving recognition of excellent work. Yet, studies show that carrot-and-stick
motivation actually does not pay off in long-term company profitability or employee satisfaction
or retention. To the contrary, incentives can harm quality when employees aim for speed or other
goals rather than quality.
Myth # 3: People don’t want more responsibility.

They don’t want more work if they’re already overloaded due to lean staffing; but people indeed
want the opportunity to grow and develop their skills, advance their careers and have the
opportunity for greater variety. Keep in mind what the research confirms: People do want to try
new things, to feel skillful and to experience the personal satisfaction of higher levels of

People don’t need a job promotion in order to gain more responsibility. The same job can be
broadened to include more variety, more contact with different parts of the organization and greater
control over decisions on accomplishing work tasks.

Myth #4: Loyalty is dead.

Not at all, though it is ailing in many organizations. People are seeking greater work-life balance
than in the past, and employers have made great strides in providing more flexible hours and dress
codes. Still, people seek to make a contribution, and organizations that provide healthy doses of
the main satisfiers enjoy significantly lower turnover and higher morale. Profits are higher, too,
according to recent research studies.

Things have changed, indeed. Today’s workers will, in fact, change careers and jobs much more
often. When the economy is good, people have become much more at ease in changing companies,
are more likely to acquire new skills and move to companies that offer greater chance to use more
of their knowledge and more willing to take the risks of starting anew at another organization.

What has emerged in current management studies are that the same qualities that hold
employees are the ones that best serve the customers: Employees who can make quick decisions
on behalf of the customer and the company; employees who have a broader scope of responsibility
that allows them some freedom and leverage to solve customer problems; learning opportunities
that give employees the skillfulness to address customer issues; and supportive management and
supervisors who use any mistakes that occur as teaching opportunities.

Myth #5: Improving employee satisfaction is expensive.

Research tells us the true satisfiers can’t even be bought: career growth, meaningful work,
respect and appreciation and being able to influence how work gets done. In these leaner times
employers have the same opportunity to gain true loyalty despite lowered budgets.

The trinkets and prizes given in recognition and rewards programs aren’t necessary ingredients
for developing an engaged workforce. The “glue” that holds people is made of much different
stuff: Management that listens and responds to employees’ ideas about improving service,
supervisors who support people’s growth and initiative, training in how to do the job successfully,
good relationships with coworkers and genuine appreciation for a job done well. There are no costs
incurred to build or enhance these motivators.

Myth #6: Employee satisfaction is “fluff.”

Does having engaged workers make a difference in the bottom line? Studies now show that
lower turnover and greater levels of employee satisfaction have a definite positive impact on
customer satisfaction and profitability, which are the key factors in company growth and
sustainability. Consider these facts:

• A strong link was found in a study by PricewaterhouseCoopers between employee

retention and the quality of service as rated by companies’ customers.

• According to the American Society of Training & Development, organizations that

invested the most in training had higher gross margins and income per employee.

• The cost of replacing an employee who leaves has been estimated by various studies to be
between 70 and 200 percent of that worker’s annual salary.
• The Council on Competitiveness found that a 10-percent increase in education has a more
positive impact on productivity than a 10-percent increase in work hours.

The bottom line on the bottom line? Investing in people and using the most effective management
practices increases profits.

Myth #7: Supervisors are the problem.

Many senior leaders express dismay about the quality and actions of their middle managers and
front-line supervisors. The “blame game” is old, yet the solutions are strikingly similar to those
required to build an engaged workforce.

In most organizations today, supervisors have more people reporting to them than in the past,
more demanding customers than ever and greater amounts of change – all occurring at the same
time. Yet, the amount of training provided to managers and supervisors in many organizations is
minimal. More importantly, the amount of time that senior managers spend in dialogue with
middle and line managers also is minimal.

Middle managers and supervisors can appear resistant to improvement efforts. However, the
true failure exists in our understanding of their world, the challenges they face and the support they
need in order to be successful.

Successful organizations seek to build teamwork between senior leaders and middle managers
and line supervisors (which is a key ingredient in creating teamwork throughout the company).
Myth # 8: My company/industry/people are different!

Yes, every company is unique, and every industry has its own set of unusual challenges.
However, a very costly mistake is made when we believe information from other sectors doesn’t
apply to us or our organization.

Retention research studies cross all industries, all types of work settings and in varied economic
conditions. Still, the same results come up time and again. We build employee loyalty – and,
indirectly, customer loyalty – through providing people with growth and learning opportunities,
minimizing red tape, allowing people to think and make good choices, supporting middle managers
and front-line supervisors and appreciating the efforts that people give to help our customers.
It’s downright dangerous to ignore these findings – risky to the bottom line and the
organization’s future.

Barriers to Success

? Lack of support from management team.

? Inability to provide hard numbers.
? Company culture does not support change.
? Back lash from single workers.
? Failure of other programs due to low utilization.
? Managers do not view work/life initiatives as business tools that impact employee

10 Factors That Affect Employee Retention

Most managers understand the importance of employee retention and its impact on the overall
health and vitality of an organization. The importance of retaining top organizational talent will
only increase over the coming years as the massive cohort of baby boomers begin to reach
retirement age making it easy for younger employees to find work.

In a previous article we identified some useful tips to help improve employee retention in your
organization. Given the importance of employee retention, we have compiled another list of 10
important factors that can affect employee retention in your organization.

• Shorten the feedback loop –

Do not wait for an annual performance evaluation to come due to give feedback on how an
employee is performing. Most team members enjoy frequent feedback about how they are
performing. Shortening the feedback loop will help to keep performance levels high and will
reinforce positive behavior. Feedback does not necessarily need to be scheduled or highly
structured; simply stopping by a team member's desk and letting them know they are doing a good
job on a current project can do wonders for morale and help to increase retention.

• Offer a competitive compensation package –

Any team member wants to feel that he or she is being paid appropriately and fairly for the work
he or she does. Be sure to research what other companies and organizations are offering in terms
of salary and benefits. It is also important to research what the regional and national compensation
averages are for that particular position. You can be sure that if your compensation package is not
competitive, team members will find this out and look for employers who are willing to offer more
competitive compensation packages.

• Balance work and personal life –

Family is incredibly important to team members. When work begins to put a significant strain on
one's family no amount of money will keep an employee around. Stress the importance of
balancing work and one's personal life. Small gestures such as allowing a team member to take an
extended lunch once a week to watch his son's baseball game will likely be repaid with loyalty and
extended employment with an organization.

• Beware of burnout –
Staff adequately to reduce the amount of unwanted overtime a team member must work. Some
employees enjoy the extra money that accompanies overtime hours, while others would rather
spend their time with their families or doing other activities they enjoy. Burnout can be a leading
cause of turnover. Recognize the warning signs and give employees a break when they need it.

• Provide opportunities for growth and development –

Offer opportunities for team members to acquire new skills and knowledge useful to the
organization. If an employee appears to be bored or burned out in a current position offer to train
this individual in another facet of the organization where he or she would be a good fit. Nobody
wants to feel stuck in their position will no possibility for advancement or new opportunities.

• The ability to provide input and be taken seriously –

Everybody has opinions and ideas, some are better than others. However, every team member
wants to feel that their input is welcome and will be taken seriously without ridicule or
condescension. Some of the greatest ideas can come from the most unlikely of places and people.
Creating a culture where input is welcome from all level of the organizational chart will help your
organization grow and encourage employee retention.

• Management must take the time to get to know team members –

It's not a big surprise that one of the greatest complaints that employees express in exit interviews
is a feeling that management didn't know they existed. Nobody wants to feel like just another spoke
in a big wheel. Managers are very busy - everybody is busy, but it is crucial that managers and
supervisors take the time get to know the team members who work under them. Learn and
remember a team member's name, what skills and talents they bring to the table, and what their
business interests are. The time spent by management getting to know team members is well
invested and can eliminate the headaches caused by having to continually hire and re-train new

• Provide the tools and training an employee needs to succeed –

Nothing can be more frustrating to an employee than a lack of training or the proper tools to
successfully complete his or her duties. You wouldn't try to build a house without a hammer, so
why should an office job be any different? Providing a team member with the tools and training
she needs to be successful shows a commitment and investment in that employee and will
encourage the team member to stay with the organization.
• Make use of a team member's talents, skills, and abilities –
All team members have knowledge, skills, and abilities that aren't directly related to their job
description, but are still useful to an organization. Utilizing a team member's talents in areas other
than their current position will indicate to an employee that management appreciates and
recognizes all that an employee has to offer to the organization. This can also provide work variety
and helps to break up the everyday grind of work.

• Never threaten a team member's job or income –

While threatening an employee with termination or demotion might seem like a surefire way to
get the results needed from him or her, doing so will likely cause the employee to leave the
organization. Put yourself in the employee's shoes, what is the first thing you would do if your job
was threatened? Odds are you would probably update your resume and start checking for open job
postings expecting the worst. If a team member's performance is not what you had hoped it would
be, work with that team member on ways to improve his performance, saving termination only as
a last resort.

Take some time and seriously evaluate what your organization is doing to encourage a high
retention workforce. Having a seasoned and well-trained workforce can deliver a competitive
advantage that is difficult to replicate. The best part is most of your efforts to retain your employees
come free or with little charge and offer huge returns on a manger's investment in time and

At The Rainmaker Group we are committed to helping organizations achieve a high retention
workforce where team members truly enjoy coming to work each day. We can help your
organization develop the strategies and programs to make this happen. Give us a shout today; we'd
love to hear from you!


 Pay,
 Location,
 Benefits,
 Advancement Possibilities,
 Job Security,
 Nature of Work,
 Personal/Family Time.


 Confidence Factor-they believe in potential success/leadership strategies

 Emotional Factor- (Huge) contribution, recognition, appreciation
 Trust Factor- 2 ways- promises/commitments kept (strong link to loyalty)
 Fit Factor- Values/ethics are a good fit
 Listening Factor- Are they heard and valued?



Have a survey among employees to find the reasons for attrition. If possible, have exit interviews
to know the reasons for resignations. If a key employee resigns, it should be taken up on a priority
basis and the senior management should meet the employee to discuss his reasons for leaving and
evaluate whether his issues bear merit and whether they can be resolved. Steps can be taken to
avoid similar reasons from occurring in the case of others, in similar positions.
What can be done?

Though, it is impossible to scrap problems totally, there are certain ways by which BPO
managements can tackle attrition. Since the every organization is unique, these companies need to
develop innovative ways to tackle their problems. Human Resources department of companies
must address these issues, and along with the management need to evolve strategies to retain
employees at all levels.

At the time of Recruitment

 Select the right people through competency screening.

 Use psychometric tests to get people who can work at night and handle the monotony.
 Offer an attractive, competitive, benefits package.
 Make clear of performance enhanced incentives and other benefits. Keep these promises,
 BPOs can set up offices in smaller towns, or recruit from there, where opportunities are

At the office

 An employee’s work must be communicated to him clearly and thoroughly. The details of
the job, its importance, the way it should be done, maximum time that can be allotted to
complete it etc., must be made clear. If there are changes to any of these, let the employee
know at the earliest

 Give the employees necessary tools, time and training. The employee must have the tools,
time and training necessary to do their job well - or they will move to an employer who
provides them.
 Have a person to talk to each employee at regular intervals. Listen and solve employee
complaints and problems, as much as possible. Fairness and impartial treatment by seniors
is important. Help employees manage stress, both at work and if possible, off work too.
Give them special concessions, when in need. Treat the employees well & provide dignity
of job.

 The quality of the supervision an employee receives is critical to employee retention.

Frequent employee complaints arise on this issue.

 Provide the employees a stress-free work environment. People want to enjoy their work.
Make work and work place cheerful and fun-filled as possible.

 Make sure that employees know that their work is important for the organization. Feeling
valued by their employer is key to high employee motivation and morale. Recognize their
strengths and help them to improve those they lack.

 Employees must feel rewarded, recognized and appreciated. Giving periodical raise in
salary or position helps to retain staff.
 Offer excellent career growth prospects. Encourage & groom employees to take up higher
positions/openings. If they don’t get opportunity for growth within the organization, they
will look elsewhere for it.

 Work-life balance initiatives are important. Innovative and practical employee policies
pertaining to flexible working hours and schemes, granting compassionate and urgency
leave, providing healthcare for self, family and dependents, etc. are important for most
people. Work-life balance policies would have a positive impact on retaining skilled
employees, as well as on attracting high-caliber recruits.

 Implement competency models, which are well integrated, with HR processes like
selection & recruitments, training, performance appraisal and potential appraisal.
Night shifts

1. Have doctors to advise them about health problems and the ways and means to deal with
them. Provide dietary advice: - Dos and don’ts. Help them to maintain their health.

2. Organize programmed where people from other professions, who have night shifts talk to
BPO employees about their experiences. Other organizations like Army, Railways,
Hospitals and various government services etc., also have night shifts.

3. Organize training, counselling and development programmed for employees. Tell them
that their work is important. Encourage the best performers to share their experiences with
others and guide others. The emphasis is to create the desire to
learn, enjoy and be passionate about the work they do.

4. If needed, provide special lights in the office/workplace to ensure that their bodies get
sufficient vitamin D.

One distinct disadvantage of night shifts is the sense of disorientation with friends and family
members. Concentrate on this problem and develop innovative solutions and ways to deal with
it. Additional holidays for work on national holidays and festivals, holidays for family
functions etc., can go a long way.
Employee Recognition Increases Retention

It seems that now more than ever employee recognition is limited at best in many organizations.
Unfortunately, many managers don't understand the importance of recognizing a team member's
hard work and a job well done. Many might even ask why they should recognize their employees
when they are "just doing their job."

The truth is that recognizing employees for their hard work is one of the least expensive and
easiest ways to improve the level of employee retention in your organization. The return on
investment for a manager's time and limited expenses can be incredible.

Recognizing an employee's performance reinforces positive behavior and encourages additional

positive behavior. If a team member feels that he or she is appreciated they will be much more
likely to repeat their behaviors in the future and even put out more effort than before. When a
business leader understands the power of recognizing his or her employees the culture of an
organization reacts to this recognition and moves in a positive direction helping to retain more

Employee recognition can be as simple or as extravagant as one desire. The following is a short
list of simple ways to recognize team members for a job well done and improve retention in your

• A simple "thank you" or "nice job" given in regular frequency can significantly boost team
morale. Often times a team member will greatly appreciate the time you spent to find him at his
desk and deliver the message in person.
• Send a thank you card or e-card. Also photocopy the thank you and document the reason
for the recognition in the employee's file. Let the employee know you did this - it will let her know
that her hard work will not be forgotten.

• Movie tickets, gift certificates, or an engraved gift are excellent rewards for an employee
who has excelled or put in the extra effort to make a project happen.

• Recognize the team member's contribution in front of members of management. This can
reduce the tendency for employees to feel that their supervisors take all the credit for their hard

• Recognize loyalty and exceeding expectations. Mention the team member's hire
anniversary, large contract won, or surpassing of a sales goal in the company newsletter or at a
staff meeting.

• Know how to recognize your staff. Not all staff members want to be singled out at a
gathering of hundreds of fellow team members, while for others it would make their week. The
approach to recognizing team members can vary greatly by generational cohort. You might
seriously embarrass a baby boomer by having them stand up in front a
Group of their peers and discuss their recent success, while a Gen X-er will relish this opportunity.
Retention Strategies Help to Drive Revenue Growth

Employee satisfaction is essential to any effective employee retention strategy - any good HR
manager knows that. However, few managers think of the impact that employee satisfaction has
on their customers and ultimately company profits. One can assume that happier, more productive
employees will make more sales, treat customers better, and ultimately make more money for the
company, but few companies have analyzed this assumption to the extent that Sears, Roebuck and
Company has. Sears has put this common assumption to the numbers test and the results are
intriguing to say the very least.

1992 was the worst year on record for Sears, losing almost 4 billion dollars on over 52 billion
dollars in retail sales. The early and mid-1990s were truly trying times for the retail giant and tested
the will and resolve of managers and employees alike. During this time the company was in near
shambles, morale was low, revenues were suffering, and the bottom line was hemorrhaging red
ink. This was in stark contrast to nearly a century of stellar results that Sears had comfortably
enjoyed. For Sears, something needed to be done, and fast!

Sears began their turnaround by identifying three key objectives: Creating a compelling place to
work, a compelling place to shop, and lastly creating a compelling place to invest. One of the tools
used to establish these objectives was the employee-customer-profit chain. The employee-
customer-profit chain is essentially a flow chart that diagrams revenue creation starting with
employee attitudes and satisfaction, followed by its effect on customer satisfaction, and ultimately
the effect on revenue and bottom line profit generation.
One thing Sears realized it needed to do was exert a greater effort focusing on the customer. This
is often times easier said than done for many organizations. However, Sears took an innovative
approach to increasing customer focus. Based on the employee-customer-profit chain, it realized
that it could not better focus on the customer without first focusing on its employees.

For Sears 70% of its workforce was part-time status and turnover among its part-time workforce
had become alarmingly high. Sears suspected that low morale and poor employee attitudes towards
the company were to blame. Sears began a rigorous process of measuring employee attitudes and
satisfaction via a 70-question employee survey. The results of this survey were then juxtaposed to
customer satisfaction surveys and ultimately compared to revenue and profit trends for the
company. The correlations drawn from the data were greater than Sears could have ever imagined.

Undoubtedly Sears expected to see some positive correlation between employee and customer
satisfaction and ultimately revenue and profit generation; however, they were amazed to see just
how great an impact employee satisfaction levels had on the bottom line. The data revealed that
for each five-point improvement on the employee attitude scale, there was a subsequent 1.3%
improvement in customer satisfaction, and a 0.5% increase in revenue growth.

A 0.5% increase in revenue might sound miniscule, however when it is based on revenues of over
50 billion dollars it adds up quickly and significantly. For Sears this would equate to a 250 million
dollar increase in revenues a year! This revenue increase does not require investments into
advertising, new facilities, or improved operations, only an investment into the satisfaction and
happiness of employees.

There are also cost savings that can be attributed to improved levels of employee satisfaction. It
should come as no surprise that happy employees stay in their jobs longer than unhappy employees.
By focusing on increasing employee satisfaction Sears was able to concurrently increase revenues
and reduce the costs associated with employee turnover. Sears was also able to determine that
employees with greater levels of satisfaction and a favorable attitude towards the company were
more likely to speak positively about the company and recommend shopping there to friends and
family members.

By increasing employee satisfaction Sears was able to generate free word of mouth advertising
spread by its employees, thus in a way reducing the reliance on paid advertising to generate
revenue. Sears realized the importance of its employees and their levels of satisfaction and made
it a corporate goal to increase levels of employee satisfaction throughout the company.
Sears feels that employee satisfaction levels are so important to the company's health and vitality
that it treats attitude and satisfaction numbers the same as "hard" financial numbers. Sears is so
committed to these numbers that it has them audited by an accounting team to ensure validity and
reliability just as it does with all of its internal financial measures.

For Sears its turnaround did not take place overnight. It took several years of hard work and
dedication from managers and employees at all levels. Improving levels of employee satisfaction
was not the sole contributing factor to Sears' remarkable turnaround. However, it is fair to assume
that without the focus on the employee as a base to better focus on the customer the turnaround at
Sears would not have been as quick or amazing as it was.

As business leaders we should all pay careful attention to the approach that Sears took to improving
its bottom line. The urge to drastically cut costs through outsourcing, layoffs, reducing benefits,
and streamlining operations might well be overly complex solutions to a relatively simple problem.
In lieu of cost cutting initiatives to preserve profit margins, a customer focused approach might be
a better solution. As we can learn from Sears focusing on the customer ultimately begins by
focusing on the employees who serve the customer. Give it a shot, your employees, your
customers, and ultimately your shareholders will thank you for it!
Study Suggests Employees Leave Bosses, Not Jobs

Careful selection of employees and managers can have a huge impact on your employee retention
efforts and employee turnover costs at your organization.

It has been said more than once, and for good reason, that employees leave their bosses - not their
jobs. A Florida State University study scheduled for full release in the Fall 2007 issue of
Leadership Quarterly confirms this. The study shows that 40% of employees work for bad bosses
based on survey results. The reasons that employers score poorly are varied and many:

• 39% of workers said their supervisor failed to keep promises.

• 37% indicated their supervisor failed to give credit when due.

• 31% said their supervisor gave them the "silent treatment" during the past year.

• 27% report their supervisor made negative comments about them to other employees or

• 24% indicated their boss invaded their privacy.

• 23% said their supervisor blamed other to cover up personal mistakes or minimize

So, what does this all boil down to? The effects of having bad bosses in your organization can be
devastating. High turnover, poor employee morale, employee theft, diminished customer service,
substandard employee performance, lower production, and an organizational culture of fear and
mistrust can all be blamed in part on poor bosses and managers.
The costs of having poor managers and bosses can be incredible. Consider the cost of employee
turnover, which is different for all industries and positions, but has been roughly estimated at
$15,000 - $17,000 per employee in low to moderately skilled positions. Having a manager who
drives potentially valuable employees from your organization can have a huge impact on your
bottom line, and your customers.

Employee Retention Strategies for Reducing Employee Turnover Costs

At the Rainmaker Group we are committed to helping your organization Maximize Possibility by
identifying and retaining top performers to achieve a high retention and high performance

We understand that time is money to your organization. Every minute of every day that your
employee retention problems persist your organization is losing valuable time, energy, and

With the use of the powerful tools at our disposal, our employee retention experts will get to know
your team and organizational culture better than you ever could have imagined. By doing so we
can get down to the real causes of employee turnover in your organization and develop an
employee retention program that is right for your team.

Our employee retention programs deliver results - we guarantee it!

Our clients always see a sizable return on investment in the form of improved profitability, reduced
employee turnover, and enhanced employee morale.

Stop unwanted employee turnover dead in its tracks and get back to doing what you do best:
growing and leading your organization.


1. The findings of the study are subjected to bias and prejudice of the respondents.
2. Area of the study is confined to the employees in Chennai only.
3. Time factor can be considered as a main limitation.
4. The findings of the study are solely based on the information provided by the respondents.
5. The accuracy of findings is limited by the accuracy of statistical tools used for analysis.
6. Findings of the research may change due to area, demography, age condition of economy etc.

The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM
industry. The global IT & ITeS market (excluding hardware) reached US$ 1.2 trillion in 2016-17,
while the global sourcing market increased by 1.7 times to reach US$ 173-178 billion. India
remained the world’s top sourcing destination in 2016-17 with a share of 55 per cent. Indian IT &
ITeS companies have set up over 1,000 global delivery centers in over 200 cities around the world.
More importantly, the industry has led the economic transformation of the country and altered the
perception of India in the global economy. India's cost competitiveness in providing IT services,
which is approximately 3-4 times cheaper than the US, continues to be the mainstay of its Unique
Selling Proposition (USP) in the global sourcing market. However, India is also gaining
prominence in terms of intellectual capital with several global IT firms setting up their innovation
centers in India.
The IT industry has also created significant demand in the Indian education sector, especially for
engineering and computer science. The Indian IT and ITeS industry is divided into four major
segments – IT services, Business Process Management (BPM), software products and engineering
services, and hardware.
India has come out on top with the highest proportion of digital talent in the country at 76 per cent
compared to the global average of 56 per cent!
Market Size
The internet industry in India is likely to double to reach US$ 250 billion by 2020, growing to 7.5
per cent of gross domestic product (GDP). The number of internet users in India is expected to
reach 730 million by 2020, supported by fast adoption of digital technology, according to a report
by National Association of Software and Services Companies (NASSCOM).
Indian IT exports are projected to grow at 7-8 per cent in 2017-18 to US$ 126 billion, in addition
to adding 130,000-150,000 new jobs during the same period.
Indian IT and BPM industry is expected to grow to US$ 350 billion by 2025 and BPM is expected
to account for US$ 50-55 billion out of the total revenue.
E commerce market in India is set to grow at 30 per cent annually to hit US$ 200 billion gross
merchandise value by 2026@@.
Indian technology companies expect India's digital economy to have the potential to reach US$ 4
trillion by 2022, as against the Government of India's estimate of US$ 1 trillion.
Rise in mobile-phone penetration and decline in data costs will add 500 million new internet users
in India over the next five years creating opportunities for new businesses, as per private equity
and venture capital firm Omidyar Network.
Digital payment in India is expected to grow from 32 per cent in 2013-14 to 62 percent in 2017-
18 in terms of volume of transactions.
Employees from 12 Indian start-ups, such as Flipkart, Snapdeal, Makemytrip, Naukri, Ola, and
others, have gone on to form 700 start-ups on their own, thus expanding the Indian start-up
ecosystem.! India ranks third among global start-up ecosystems with more than 4,200 start-ups##.
Total spending on IT by banking and security firms in India is expected to grow 8.6 per cent year-
on-year to US$ 7.8 billion by 2017!
India’s Personal Computer (PC) shipment advanced 11.4 per cent year-on-year to 9.56 million
units in 2017 on the back of rise in the quantum of large projects.
The public cloud services market in India is slated to grow 35.9 per cent to reach US$ 1.3 billion
according to IT consultancy, Gartner. Increased penetration of internet (including in rural areas)
and rapid emergence of e-commerce are the main drivers for continued growth of data centre co-
location and hosting market in India. The Indian Healthcare Information Technology (IT) market
is valued at US$ 1 billion currently and is expected to grow 1.5 times by 2020^^. India's business
to business (B2B) e-commerce market is expected to reach US$ 700 billion by 2020 whereas the
business to consumer (B2C) e-commerce market is expected to reach US$ 102 billion by 2020^^^.
Cross-border online shopping by Indians is expected to increase 85 per cent in 2017, and total
online spending is projected to rise 31 per cent to Rs 8.75 lakh crore (US$ 128 billion) by 2018!!!.
Investments/ Developments
Indian IT's core competencies and strengths have attracted significant investments from major
countries. The computer software and hardware sector in India attracted cumulative Foreign Direct
Investment (FDI) inflows US$ 29.825 billion from April 2000 to December 2017, according to
data released by the Department of Industrial Policy and Promotion (DIPP).
Leading Indian IT firms like Infosys, Wipro, TCS and Tech Mahindra, are diversifying their
offerings and showcasing leading ideas in blockchain, artificial intelligence to clients using
innovation hubs, research and development centers, in order to create differentiated offerings.
Some of the major developments in the Indian IT and ITeS sector are as follows:

 India ranked ninth out of the 14 countries in the latest report of the Korn Ferry Digital
Sustainability Index (DSI), outperforming countries such as China, Russia and Brazil.
 The flexi staffing market in the information technology (IT) sector in India stood at US$
3.04 billion in FY 2016-17 and is estimated to grow at a Compound Annual Growth Rate
(CAGR) of 14-16 per cent to reach US$ 5.3 billion by 2021@.
 Private Equity (PE)/Venture Capital (VC) investments in India's IT & ITeS sector reached
US$ 7.6 billion during April-December 2017.
 Exports of software services from India increased 10.3 per cent year-on-year to reach US$
97.1 billion in FY 2016-17, according to the Reserve Bank of India's (RBI) 'Survey on
Computer Software & Information Technology Enabled Services Exports: 2016-17'.
 Spending on artificial intelligence (AI) by Indian companies is expected to increase by 8-
11 per cent over the coming 18 months backed by rising influence of AI-based solutions
across verticals, as per a report by Intel.
 India plans to create wireless Technology 5G by the end of the year 2020 which will help
India in realizing its most important goals of “Increasing the GDP rate”, “Creating
Employment” and “Digitizing the Economy”.
 The mobile wallet industry is expected to maintain its current pace of expansion and the
value of its transaction is expected to reach Rs 32 trillion (US$ 480 billion) by 2022,
growing at a rate of 126 per cent.

Government Initiatives

Some of the major initiatives taken by the government to promote IT and ITeS sector in India are
as follows:

 The Government of India is going to explore new opportunities in various sectors such as
providing BPO service from home, digital healthcare and agriculture to achieve the target
of making India a US$ 1 trillion digital economy.
 The Government of Andhra Pradesh is targeting to attract investments worth US$ 2 billion
and create 100,000 jobs in the information technology (IT) sector in the state, stated Mr. N
Chandrababu Naidu, Chief Minister, Andhra Pradesh.
 The Government of Telangana is targeting to provide broadband connection to every
household in the state by 2018, which is expected to lead to revolutionary changes in the
education and health sectors.
 Mr Manoj Sinha, Minister of Communications, Government of India, launched project
DARPAN - digital advancement of rural post office for a new India, for improving the
quality and adding value to services and achieving financial inclusion for the unbanked
rural population.
 Mr Ram Nath Kovind, President of India, has dedicated four projects, such as Andhra
Pradesh Fibregrid, Andhra Pradesh Surveillance Project, Drone Project and Free Space
Optical Communication (FSOC) to the people of Andhra Pradesh.
 The Government of India is planning to set wifi facility for around 5.5 lakh villages by
March 2019 with an estimated investment of Rs 3,700 crore (US$ 555 million) and the
government expects to start broadband services with about 1,000 megabits per second (1
gbps) across 1 lakh gram panchayats by the end of this year.

Road Ahead
India is the topmost offshoring destination for IT companies across the world. Having proven its
capabilities in delivering both on-shore and off-shore services to global clients, emerging
technologies now offer an entire new gamut of opportunities for top IT firms in India. US$ 150
billion Indian IT industry’s export revenue to grow at 7-8% and domestic market revenue is
projected to grow at 10-11 per cent in 2017-18.
Exchange Rate Used: INR 1 = US$ 0.015 as on March 01, 2018

Research method:
The study is a qualitative, as well as a theoretical study where empirical findings and theories has
been compared. The intention of investigating and using the Finnish company Tradeka Limited as
a case company, is to make the information from the theories more valid, and also the interest in
how retention management works in practice. Eleven qualitative interviews were conducted at
Tradeka? financial department, both with supervisors and employees to get a broader view at the
phenomenon retention management. Result: Leaders and their skill in creating a culture of
retention, has becoming a key in why people stay and what usually drives them away from a
company. The leader has become the main factor in what motivates people’s decision to stay or
leave. For organizations to keep its key employees their number one priority should be to look at
their management, because people leave managers and not companies. Characteristics in a leader
that are of importance, as the leader plays a key role in retention management is: trust builder,
esteem builder, communicator, talent developer and coach, and talent finder. The leader’s relation
to the employees plays a central role in retaining employees, because employees need to feel
involvement, and that their presence count. When retention is a core value, good things happen for
customers, employees, and the company. because employees need to feel involvement, and that
their presence count. When retention is a core value, good things happen for customers, employees,
and the company.


・ It is found out that, 40% of respondents are aware of HR Policies and 60 % of respondents are
not aware of HR Policies.
・ It is found out that, 76% of respondents are getting right amount of accurate information at
right time and 24% of respondents are not getting right amount of accurate information at right
・ It is found out that, 82% of respondents are able to meet superior’s expectation and 18%
respondents are not able to meet superior’s expectation.
・ It is found out that,57% of respondents feel that their pay is on par with compare to employee’s
handling similar responsibilities, and 39% of respondents feels that there pay is less with compare
to employee’s handling similar responsibilities.
・ It is found out that, 70% of respondents are satisfied with hygiene and cleanliness of company
infrastructure and 30% of respondents are not satisfied with hygiene and cleanliness of company
・ It is found out that, 40% of respondents are satisfied with Availability of system, storage
facilities of company and 60% of respondents are not satisfied with Availability of system, storage
facilities of company.
・ It is found out that, 78% of respondent’s skills are recognized by superiors and 22% of
respondent’s skills are not recognized by superiors.
・ It is found out that, 74% of respondents feel that superiors are taking efforts to motivate them

and 26% of respondents feel that superiors are not taking efforts to motivate them. ・ It is found
out that, 83% of respondents feel that workload is manageable and 10% of respondents feel that
workload is very hard to manage.
・ It is found out that,55% of respondents feel that the field worker are able to get updates on
internal activities, and 45% of respondents feels that the field worker are not able to get updates
on internal activities.
・ It is found out that, 89% of respondents feel that the superiors are easily accessible and
11% of respondents feel that the superiors are not easily accessible.
・ It is found out that, 51% of respondents feel that their complaints are resolved quickly and 49%

of respondents feel that their complaints are not resolved quickly. ・ From weighted Average
analysis it is found that most of the respondents are satisfied with the working hours of the
・ From weighted Average analysis it is found that roles & responsibilities are clearly defined by
the Reporting heads.
・ From weighted Average analysis it is found that employees feel that their superior's
commitment towards job is good.

・ From weighted Average analysis it is found that respondents feel that training and orientation
programs are neither good nor bad.
・ From weighted Average analysis it is found that most of the respondents are satisfied
with job.
・ From chi-square it is found that there is a significant relationship between Work Culture of the
Company and interpersonal relationship between employees.
・ From chi-square it is found that there is a no significant relationship between overall
satisfaction and Commitment towards Company.
・ From chi-square it is found that there is a significant relationship between overall satisfaction
and aspects of job.
・ From Kendall’s coefficient of concordance, it is found that there is a significant difference in
the rank assigned by respondents towards the attributes that gives them satisfaction in the
・ From One Run Test it is found that the samples are taken randomly.
• Employee should be provided with proper training.
• Employee should be appreciated for good work.
• Employee should be motivated to welcome the change.
• If any changes are brought in to software or any module is added then proper • training
should be given.

Retention is an important concept that has been receiving considerable attention from
academicians, researchers and practicing HR managers. In its essence, Retention comprises
important elements such as the need or content, search and choice of strategies, goal-directed
behaviour, social comparison of rewards reinforcement, and performance-satisfaction. The
increasing attention paid towards Retention is justified because of several reasons. Motivated
employees come out with new ways of doing jobs. They are quality oriented. They are more

Any technology needs motivated employees to adopt it successfully. Several approaches to

Retention are available. Early theories are too simplistic in their approach towards Retention.
For example, advocates of scientific Management believe that money is the motivating factor.
The Human Relations Movement posits that social contacts will motivate workers. Mere
knowledge about the theories of Retention will not help manage their subordinates. They need
to have certain techniques that help them change the behavior of employees. One such technique
is reward. Reward, particularly money, is a motivator according to need-based and process
theories of Retention. For the behavioral scientists, however, money is not important as a
motivator. Whatever may be the arguments, it can be stated that money can influence some
people in certain circumstance. Being an outgrowth of Herzberg’s, two factor theories of
Retention, job enrichment is considered to be a powerful motivator. An enriched job has added
responsibilities. The makes the job interesting and rewarding. Job enlargement refers to adding
a few more task elements horizontally. Task variety helps motivate job holders. Job rotation
involves shifting an incumbent from one job to another.


1. Develop an attractive employee value proposition.

An employee value proposition means that your company has something attractive to offer that is
perceived as valuable to an employee. as an employer, you must understand what makes your
organization attractive to potential recruits and current employees. Branding yourself as an
employer of choice is not just a slick set of marketing tactics. The best advocates for an employer’s
brand are its current employees. What messages do they send to others about their employer? Are
they honestly saying and believing that, “This is a great place to work”

2. Create a total reward structure that includes more than compensation.

Every company should have all the normal compensation mechanisms common to their type of
employment. yet, total rewards packages go far beyond money. While money might temporarily
retain employees, it does not always equate with engagement. People want a chance to make a
difference and realize themselves. That self-realization is multi-dimensional and different for each
employee. The total reward structure should include, in addition to compensation, support for
employees to attain their personal objectives aligned with the goals of their organization.

3. Give feedback on employee performance on a regular basis.

Most managers and employees are not enamored with the performance appraisal process in their
organization. yet, an effective performance management process serves many purposes.
Ongoing performance feedback allows employees to better know where they stand, gives them
a formal means to provide input, indicates that their managers pay attention to them and that
their performance matters. This feedback contributes to employee engagement and retention.

4. Be flexible in terms of work-life balance. Workers more and more value a balance between
work and life. They want more flexible ways to engage with their employer. To attract and retain
workers with different work and career expectations, organizations have to be more flexible in
structuring work and its expectations. It calls for a different managerial mindset and practices
that involve letting go of old ways of controlling workers’ time and attendance in favor of result
criteria such as output, productivity and quality.

5. Create a culture of engagement. Employees have become more connected with others in the
organization (and the broader supply-and-customer chain) through project-based team work and
process management activities. Employees are shifting their loyalty to people, teams and
projects and away from company loyalty. It is organizations that create the culture and climate
that allow people, processes and projects to become fully connected and engaged with one
another. Engaged employees are more likely to stay with their employer.

6. Train managers to be effective. Exit interviews consistently show that “poor and bad”
management practices greatly contribute to an employee’s decision to leave a company. It is
imperative to provide supervisors and managers with adequate tools to become effective
managers since we cannot assume that these competencies are innate. Professor Patrick Connor,
recently retired after teaching 25 years at the atkinson Graduate school of Management, is
famous among MBA students and alumni for his ‘Connorisms.’He told them, “your employees
do not work for you, they work for themselves.” When I teach my students about managing
organizations, I have them reflect on what really matters to employees and what they are
constantly asking of their managers and their organizations. In the end, what employees expect
of their managers is fairly simple: Can I trust you? are you committed to excellence? Do you
care about me? What people constantly ask of their organization is: Do you tell the truth? Do
you keep promises? Do you act fairly? Do you respect me? Managers and organizations that
keep these questions in mind will have a competitive advantage over others in retaining their



・ Human Resource Management C.B.Memoria

・ Research methodology C.R.Kothari
・ Journals, Newspaper and Internet
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