3.1.1 Meaning and definition
To attract and hire right talent based on competencies through an objective selection process, ensuring right person for the right job, necessary to accomplish organizational goals.

3.1.2 Recruitment process
Job Analysis Surplus

Human Resource Plan

Net Human Resource Requirements


Job Vacancies -No-type

Recruitment plan No and Type

Searching Techniques

Applicants Pool


Potential Hires

To Selection

Strategy Development Sources

Applicants Population

Evaluation And control

3.1.3 Sources of Recruitment Internal Sources Present Permanent Employee Retrenched / Retired Employees Employee referrals External Sources Campus recruitment Employment Agencies Trade unions E-Recruitment Walk-in Data Banks .

Many firms may not include attrition of fresher¶s who leave because of higher studies or within three months of joining.3. Attrition is understood as reduction in the number of employees through retirement.1 Meaning and Definition In simple terms. In some cases. Reasons of Attrition y y y y y y y y y Higher pay Work timings Career growth Higher education Relocation to other places Women leave the job after marriage to take up their house-hold duties Work pressure Work Environment Poor performance. attrition of poor performers may also not be treated as attrition.2 Attrition 3.2. . It is sometimes also referred to as Employee Turnover. resignation or death.

This indicates the ease with which people adapt to the company.y y Losing faith on merger/acquisition Verbal abuse 3. . Fresher Attrition: The number of fresher¶s who left within one year. 3. Infant Mortality: Percentage of people who left within initial year. Critical Resource Attrition: key men exit. It tells you how many are using the company as a springboard.8 Types of Attrition 1. 2. 4. Low Performance Attrition: those who left due to poor performance.

It takes into account expenses involved to replace an employee leaving an organization.3. Recruitment cost The cost to your business when hiring new employees includes the following six factors plus 10 percent for incidentals such as background screening: y y y y y Time spent on sourcing replacement Time spent on recruitment and selection Travel expenses. Additionally. if any and Training/Ramp-up time Background/reference screening. . if any Re-location costs. This can be done using the revenue factor. there is a lost opportunity cost.9 Turnover Cost/Attrition Cost Method 1 While there are many techniques for calculating the cost of turnover. the following is one of the best. for the positions that are billable. 1.

start off by looking at the cost of new hire orientation.2. If it takes a new employee six . estimate the average amount of time it takes an employee in a new position to get up to speed and produce at the average rate for the organization. etc. there may be per-employee cost to: y y y y Set up communication systems Add employees to the HR system Set up the new hire¶s workspace Set up ID-cards. 3. Administration cost Additionally. Training and development cost To estimate the cost of training and developing new employees. and can be largely classified under the following heads: y y y y Training materials Technology Employee benefits Trainers¶ time. This will mean direct and indirect costs. On the softer side. access cards. to estimate the learning curve or productivity cost.

. corporate on an average spend 36 percent of their revenue on human capital expenses. the cost can go up to 200-250 percent of the yearly salary of the employee. an average rate of employee turnover of 25 percent and the cost associated with turnover equivalent to one-time salary. using conservative estimates. For managerial and sales positions. Again.months to reach average productivity. Use your annual revenue factor result and multiply it by the productivity loss. for a company with the total compensation costs at this average. the average productivity loss is 50 percent. and other administrative costs) can give you fairly accurate calculation of turnover cost. drug screening. credit checks. The ideal methodology is: Cost of hiring employees (hard and soft costs) + Cost of training and developing new employees (hard and soft costs) = Total Cost of Voluntary Turnover Method 2 Some organizations calculate it at 150 percent of the yearly salary of the exiting employee. Method 3 Another way to estimate the cost impact of turnover on companies is to look at the total compensation costs as a proportion of a firm¶s revenue. The result of these costs (and an additional 10 percent to cover other hiring costs such as background checks. According to one study.

If the number of employees who left is 300. then they may take their base as 2. Attrition should be calculated on a monthly basis for companies that have over 50 employees for the first five years of its business. Subsequently. then the attrition figure could be 15 percent or 20 percent depending on what base you take. So if a company has 1.500 (average for the year). This can be ascribed to many factors.3.000 or as 1. The employee base changes each month.000 employees in April 2004 and 2. a quarterly index should be applied till a company¶s 10th anniversary. also. annual attrition figures should be measured and accounted for.000 in March 2005.10 Attrition Rate Ideally. . This is the optimum within the services industry as companies tend to have different challenges at different stages of their business lifecycle. maturity achieves stability around a company¶s 10th anniversary. The attrition rate remains a debatable area as there is no standard formula to calculate it. After this.

.12 The Brighter Side of Attrition A poor performer is replaced by a more effective employee.3.11 Effects of Attrition Disclosure of the figure not only has a direct impact on the business but also affects employee morale and productivity. employee morale and customer confidence. The Attrition figure has a direct impact on stock markets. There is too much at stake and therefore neither the US GAAP (Generally Accepted Accounting Principles) or SEBI requires that this be calculated in a particular way. When business is slack it is straight forward to hold off filling recently created vacancies for some weeks. A senior retirement allows the promotion or acquisition of welcome 'fresh blood'. while a lower rate will act as a retention strategy. Significantly. 3. it might also trigger a chain reaction²a high attrition rate will lead to more people leaving the organization.