Introduction

Employee Retention
Employee retention is not a question or debate but rather it¶s a most important thing for any concern if it¶s serious in long term business. What¶s a business without people and now is it going to work if the required people aren¶t there. The only and the most important resource for any company is its people. Some people might have this misconception that this resource is less important than the other resource like money, materials and machinery. But we have all learned from all successful companies around the world that their success was and is due the most important M of all the other M¶s and that¶s the manpower. Well if we all know that people are the most important resource then why do we have this question that is Employee Retention required or not. I guess this question aroused all around the world because of a very high figure of employee turnover. So if we are able to stop this or at least know the answer to why there is such a high employee turnover we would know what it takes to retain the required employees. I would like to put a lot of stress in the word required. This word needs to be understood by lot of people and especially the people in the top management believe who believe that there is not much differences in manpower requirement and materials requirement and the irony is that in the later case, more emphasis is given to details and specifications. The reason I think why they are particular about material specifications is because they can calculate the losses if they do not get the required material. Unfortunately and sadly they are unable to figure out the deep negative impact if they do not get the required people.

Well that can be very tricky and difficult thing for the HR dept. Are we willing to share with him the companies¶ clear vision and mission and the long term company strategies. Are trained and equipped with lot of tools to know the career aspirations of a candidate. And the most important of all that. What is the minimum desired output? Is it long term or short term? Are we capable of meeting his expectations or rather that his takeaway is above or below market rates? Are we ready to spend time and energy in grooming him and including him in the family? Yes. I believe that the employees of a company are like a family and it would benefit a lot of companies if they too agree.So how do you specify the required people? I think we can start with answering a few questions. There are three types of organizations The Organization that: y Change by themselves y Change. are we willing to be transparent enough for him to understand the company and its people. is competent enough to match the candidate¶s long term career aspirations to the companies¶ requirement. would not find it difficult to find the required and right person. when told by others y Do not change even when told by others . And with the present tremendous gap between demand and supply the HR dept. With the answers to the above questions we would be in a position to specify the required people to the HR dept. Well that¶s assuming that the HR dept. But we all know that the HR depts. Now that we have the right and required person there is no doubt we need to retain him. We need to know our organization and the type it belongs to.

They focus on strengthening fundamentals and mobilize the entire organization with people. . Also these organizations are low profile. These Organizations encourage people to accept ownership and responsibility to solve problems. In these organizations people are empowered to act and openly share knowledge and experience. They govern their own future and not are merely victims of circumstances. have unified theory about transformation and are holistic in approach. General Electric (GE) is one of the finest examples worldwide and back home we have much talked about Infosys & Wipro. They have a clear vision of where they want to be in the future & all their actions are aimed towards it.The excellent organizations belong to the category of µchange by themselves¶. These Organizations have their concepts right regarding people development.

Studies suggest that not only is Human resource the most values asset of a company. but there also proof that investing in HR does produce returns. culture and organization building. ³Employee-involvement practices such as information sharing. which is impacting the environment within an organization. It¶s all about how you invest in your human capital. . Increased global competitiveness has given way to uncertainty. Thus it¶s obvious that employees form an integral part.) Both these functions have always been considered ³soft´ roles.Significance of Human Resource Management in Corporate World HR has always been seen as the ³cost centre´ of an organization. This is where the role of a HR manager is becoming even more crucial. skills training rewards programs. However studies reveal that in today¶s business world. employee relations and statutory compliance¶s) and a human developmental role (comprising people development. Traditionally the HR department has played dual roles an operational function (such as recruitment personnel and performance management. Companies who have followed the employee involvement practices have produced a 13% higher return on equity. HR practices does churn revenues. How do you select and retain talented people? How can you create an environment. and empowerment efforts ± all of which fall squarely into HR¶s domain ± show a significant bottom-line return´. which helps people thrive at work? Many such questions form an integral part of a company¶s HR policy.

Experts point out that if you create an environment where people truly participate. The HR department plays a key role in understanding of the business. Some Key points to remember The organization has to ensure that communication is timely and open to retain employee trust. You don¶t need control. The focus of HR today is to create an agile organization. mission. Lastly personal touch plays an important factor for creating a sense of belonging with the company. communication and commitment. values and is given ample freedom to bring processes in place to get people aligned to these values and goals. control. He should be able to delegate responsibility.There has to be a common theme built relating to vision participation.Today the equation has changed. This also means that there is continuous feedback from employees. the organization. The employees do what needs to be done. rather than just managing people. their skill sets and emotional intelligence which will help in goal setting and finally achieving the desired results. The person should be very effective at understanding people. while always retaining the accountability. . which can innovate rapidly and exceed client expectation constantly. The basic trait required in an efficient HR manager is his ability to gauge the strengths of his employees and put them to best use. which helps in better productivity . measurement of work processes. Be a supportive manager and create an environment where employees feel assured that they can fall back for support in difficult situations. its vision.

Crude turnover figures are used by all the major surveys of employee¶s turnover. Costing Employee Turnover Estimating the cost of employee turnover is a useful starting point when seeking to persuade line managers and Finance Directors that money needs to be invested in order to improve retention rates.Employee Turnover Measuring Employee turnover Most organization simply tracks their crude turnover rates on a month by month or year by year basis. . even people who left involuntarily due to dismissal. it is also useful to calculate a separate figure for voluntary turnover and to consider some of the more complex employee turnover indices. The formula is simply: Total number of leavers over period x 100 Average total number employed over period The total figure includes all leavers. redundancy or retirement. It is possible to compute the not less than figure very easily by working out what it costs on average to replace a leaver with a new starter in each of the major employment categories. It also makes no distraction between functional (i. This figure can then be multiplied by the crude turnover rate for that staff group to calculate the total annual cost of turnover.e. beneficial) turnover and that which is dysfunctional. At present surprisingly few (7%) HR departments calculate the cost of turnover. However. So they are necessary for effective benchmarking purposes. which take account of characteristics such as seniority and experience.

A widely quoted method involves estimating the relative productivity of new employees during their first week¶s or month in a role and that of resigns during the period that they are working their notice.The major categories of costs to take account of are: y y y y y y Administration of the resignation Recruitment costs Selection costs Cost of covering during the period in which there is vacancy Administration of the recruitment and selection process Induction training for new employees Many of these costs consist of management or administrative staff¶s time (opportunity cost) but direct costs can also be substantial where advertisements. More complex approaches to turnover costing give a more accurate and invariably higher estimate of total costs. . agencies or assessment centers are used in the recruitment process.

but its significance can be masked as a result of the difficulties associated with exit interviews . even when offered higher pay elsewhere. motivation and satisfaction reported by employees. Recent research strongly suggests that push factors are a great deal more significant in most resignations than most managers appreciates.Why do people Leave Organization y Sometimes it is the attraction of a new job or y The prospect of a period outside the workforce which pulls them on other occasions they are pushed due to dissatisfaction in their present jobs to seek alternative employment. It is relatively rare for people to leave jobs in which they are happy. y For a fourth group reasons and leaving are entirely explained by domestic circumstances outside the control of any employer. colleagues or the organization generally. It is important to appreciate that the reason people give for their resignations are frequently untrue or partly true. They are reluctant to voice criticism of their managers. The use of exit interviews is widespread yet they are notoriously unreliable. A poor relation with the line managers can be an important reason for individuals leaving the organization. as is the case when someone relocates with their spouse or partner. y Sometimes it is mixtures of both pull and push factors. Most staff has a preference for stability. Recent research highlights the importance of front line managers and how their behavior relates directly to the levels of commitment. preferring to give some less contentious reason for the departure. partially for the departing employee.

Expectations are often raised too high during the recruitment process leading people to compete for and subsequently to accept jobs for which they are in truth unsuited. both on the part of the employee and the employer. Poor recruitment and selection decisions. over the longer term the practice is counter-productive as it leads to costly. are usually to blame with poorly designed and nonexistent programs. 40% highlighted µchange of career¶ and 37% µlack of career of developmental opportunities. Research shows that during 2003.mentioned above. However. . 20% of leavers left between 0 and 6 months¶ service. A lack of training and developmental opportunities is also major reason voluntary turnover. unavoidable turnover and the development of the poor reputation in local labor markets. Organizations do this in order to ensure that they fill their vacancies with sufficient numbers of well qualified people as quickly as possible. 44% of the respondents cited µpromotions outside the organization¶ as a main cause of labour turnover. On an average. Early Leaving In the high turnover industries in particular. Even when people stay for a year or more is often the case that the decision to leave sooner rather than later is effectively taken in the first weeks of employment. a great deal of employee turnover consists of people resigning or being dismissed in the first few months¶ employment.

turnover is likely to be problematic from a management point of view. This happens whenever a more effective employee replaces a poor performer. where the labor market is loose). In such situations when business is slack it is straightforward to hold off filing recently created vacancies for some weeks.e. By contrast. where recruitment is costly or where it takes several weeks to fill the vacancy. and can happen when a senior retirement allows the promotion or acquisition of welcome µfresh blood¶. This is especially true of situations in which you are losing staff to direct competitions or where customers have developed relationships with individual employee as is the case in many professional services organizations. it is possible to sustain high quality levels of services provision despite having a high turnover rate. Moderate levels of staff turnover can also help to reduce staff cost in organizations where business levels are unpredictable month on month.When does employee turnover become Problematic There is no set level employee turnover above which effects on the employing organization becomes damaging. Some employee turnover positively benefits organizations. Where it is relatively easy to find and train new employees quickly and at relatively little cost (i. . where skills are relatively scarce. Everything depends on the type of labor markets in which the company competes.

. For company HR departments. With business booming. and a corporate culture which values their work as experienced consultants in the area. as tempting offers from competitors seeking to correct their own labor shortage increases the likelihood of key employees heading out for greener pastures. it¶s a seller market for job seekers. retention of key employees is more important than ever.Employee Retention Retaining top talent in a competitive market successful companies develop integrated retention programs to keep top talent from leaving for the competition. They demand more intangible benefits ± stimulating work. flexible career options. So how can companies keep employees happy and retention rates high? Research says that top talents in the organizations cannot be retained merely by high salary and the wealth of perks.

employees are asking for corporate programs that reflect a more flexible business environment. The challenge for businesses is to responding to these concerns without sacrificing productivity. Solicit feedback from employees by periodically conducting anonymous satisfaction surveys. you may have more flexibility than larger companies when it comes to offering nontraditional benefits.  Publicizing Programs Accentuating out those aspects of your business that appeal most to job candidates. .Work Environment The top career concern of employees today involves balancing family and work demands ± even above earning a competitive salary according to the research study commissioned by our company. Look for those areas in which your companies excels and emphasize them when you interview applicants.  Building a worker friendly environment Reputation encourages staff to participate in developing solutions for enhancing your company¶s work environment. if your firm is small. relaxed business attire or a faster track to career advancement. Following are some strategies followed by companies for creating a friendly working environment. Increasingly. Ask not only for improvements they would like to see but also practical ways of implementing these suggestions. For example.

These programs help create a productive. as well as recruitment and training costs. the management trusts them to be responsible and empower them to make their own decisions. .  Hire for the long term The way a company hires. is kept to a minimum. Empowering the Employee Most people work harder and do a better job if they feel the company values their opinions. Hiring for aptitude and then training for career advancement goes a long way toward building loyalty and increasing retention rates. trains and rewards employees reveal a great deal about its values. Companies with worker-friendly management practices are at a distinct advantage when it comes to hiring qualified talent. satisfying workplace where employee turnover.

Sign up to vote on this title
UsefulNot useful