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INTRODUCTION

Success today requires a good bit more than good attendance. Yet, multiple studies
in different countries and across industries show that employees who are
passionate about their jobs and the organizations in which they work are in the
minority. Some of the Survey conducted by little organization revealed that
approximately 19% of the employees are highly engaged The Corporate Executive
Board, looking at levels of retention across 50,000 employees around the world,
placed only 11 percent in what they dubbed “true believer” category. Towers
Perrin’s recent “Talent Report” is slightly more optimistic, finding just 17 percent
of the 35,000 employees surveyed to be highly engaged. 40 to 70 percent of
employees can be classified as neutral, middle of the road, or agnostic. Worse yet,
an alarming 10 to 20 percent of employees are actively “disengaged”—just putting
in their time or, worse yet, undermining or badmouthing their organizations and
bosses. The economic impact of low retention can be staggering. The global survey
shows that 34 per cent of the employees in India are fully engaged and 13per cent
disengaged. As many as 29 per cent are ‘almost engaged’.

What makes these numbers especially discouraging is that, supposedly, we have


evolved from the dark ages of “personnel management.” On one hand, for the past
two decades we have been trying to realize the benefits of empowerment,
teamwork, recognition, people development, performance management, and new
leadership styles. Evidently, there is a big difference between putting in place
initiatives that have the overall goal of increasing employee retention and truly
seeing the payoffs. And, on the other hand, one might easily attribute low retention
to persistent downsizing, which leads to an erosion of loyalty and commitment.

Definition of Employee Retention

Employee retention can be defined as an employee putting forth extra discretionary


effort, as well as the likelihood of the employee being loyal and remaining with the
organization over the long haul. Research shows that engaged employees: perform
better, put in extra efforts to help get the job done, show a strong level of
commitment to the organization, and are more motivated and optimistic about their
work goals. Employers with engaged employees tend to experience low employee
turnover and more impressive business outcomes.

Employee retention is more than just the current HR 'buzzword'; it is essential. In


order for organizations to meet and surpass organizational objectives, employees
must be engaged. Research has proven that wholly engaged employees exhibit,
 Higher self-motivation
Confidence to express new ideas
Higher productivity
Higher levels of customer approval and service quality
Reliability
Organizational loyalty; less employee turnover
Lower absenteeism

Need of Employee Retention

The general principles of employee retention have been around for decades.
During the past five years, though, there has been a surge in the popularity of
employee retention.
There are four primary drivers.

1. People have become the primary source of competitive advantage.


The Brookings Institute (2003) examined the primary source of market value
in today’s organizations and how it has changed over time. In 1982, 62
percent of an organization’s market value came from tangible assets and 38
percent from intangible assets. Tangible assets include things like
machinery, products, facilities, etc. Intangible assets, on the other hand,
include factors such as brand, intellectual property, and, most important, the
quality of the workforce. By 2002, 20 years later, the source of value had
almost totally flipped. Almost 80 percent of market value today comes from
the intangible with a scant 20 percent coming from tangible assets. As we all
have heard before, products can easily be copied, a technological edge can
prove fleeting, and more facilities can be built, but the quality of an
organization’s talent, its passion and commitment, is nearly impossible to
replicate. Retention is the fuel that drives the value of intangible assets.

2. Retention and the war for talent.


The landmark 1998 McKinsey study, The War for Talent, was among the
first to talk about the potential for workforce shortages due to the aging
population. The study’s authors called upon organizations to take more
seriously their efforts to attract and retain talent, to assure that they would be
able to survive and thrive in the future. In the late 1990s and early 2000s, the
slump in the global economy quickly took the spotlight off of the anticipated
talent shortage. And some predict that a portion of today’s aging workers
will delay their retirements out of necessity, attenuating the expected talent
shortage. Since 2003 the picture is once again changing, albeit not as quickly
as expected.
For example, the Society for Human Resources Management reported that 48
percent of the employees it polled are actively seeking new jobs. Additionally, the
workforce is getting older, with many of the baby boomers hitting 60 in 2006 and
ready to retire. Over and above the workforce cost of increased retirements,
companies are beginning to take heed of the enormous financial costs of turnover
and increasingly viewing employee retention as an imperative for keeping their key
employees— and attracting new ones—as the war for talent heats up once again.

3. Popular appeal. Remember the reengineering wave? Even those who used it as
more than just a guise for massive layoffs found it painful. Six Sigma
implementations are invaluable to business performance, but most companies are
finding them too complex to implement well.
Retention is a different matter altogether. While it still takes patience to
implement, retention gets to the “hard stuff” by focusing on the “softer stuff.” As
one manager said:
“It’s about appealing to the head and the heart.” Retention is about creating
passion, it’s about focusing on what people do well, and it’s about development
and recognition. Some have called employee retention a form of positive
psychology which, on the whole, is an easy pill for organizations and their
employees to swallow.

4. Overwhelming impact. The human resources function has been under pressure
for decades to prove that it makes a difference. While CEOs may espouse the
importance of their workforces in their annual reports, when times get tough, HR is
among the first to get the budget axe. A lack of convincing evidence on the value
of HR initiatives. HR professionals are scrambling, according to a recent
Conference Board report, to prove that their activities and investments are both
efficient and positively influential to business strategy. The positive relationship
between retention and performance (documented in hundreds of studies, with the
evidence mounting every day) provides a way for HR to prove its contribution. It’s
a fact: The higher the level of retention, the higher the performance of the business.
The research is not inconclusive, not limited to one country or industry, and not
contained to a few hundred people—it’s overwhelming.

How to Employee retain in organisation

Growth
 and development - An exciting position, with plenty of opportunity for
growth, learning, and advancement for employees is always helpful in retaining
employees.
 Support and recognition - Giving those rewards and recognition. In many
instances, employee retention start just as soon as an employee is hired. If a
company sees an unusual amount of potential in a new hire, management could
make them feel appreciated right off the bat. In a way, this practice can be
considered a combination of recruitment and retention tools.
Employee Participation in decision making is also a very effective retention
activity in the organization.
Aligning
 effort with strategy—Retention begins with employees’ clear
understanding of what they should be doing on the job. Each employee needs a
solid job description and a clear set of performance expectations.
Empowerment—Empowerment
 is a feeling of job ownership and commitment
brought about through the ability to make decisions, be responsible, be measured
by results, and be recognized as a thoughtful, contributing human being rather than
a pair of hands doing what others say.
Teamwork
 and Collaboration - In the context of retention, teamwork and
collaboration require good relationships both within the work group and across
work groups. Many organizations have strong teams with members who work well
with each other.

The Benefits of Employee Retention


The power of employee retention is that it is closely connected to business results.
When employees work in an environment in which they can focus their attention
on their work and have a drive to do their best, organizations experience higher
levels of productivity and profitability. Engaged employees look for better ways to
do their work, spend less time on wasted activities, and make effective use of
resources. In the end, companies deliver better products or services and have more
resources left to invest in further improvements. Although it is an important
consideration, high financial compensation is not the only driver of increased
employee retention. As addressed previously, employees decide to stay with
organizations for other reasons, such as growth and development opportunities,
strong leadership, and meaningful work. Turnover costs organizations millions of
dollars each year, and retention has a proven relationship to employee retention.
No one likes going into a store where the sales clerks are sullen, absent, or
uncooperative. It’s easy to see why customers notice engaged employees and are
more satisfied and willing to purchase again.
Employees whistle and smile, they approach customers, and the store gives off that
elusive approachable feeling that customers appreciate.” Organizations with
engaged employees have more satisfied customers, but it’s not just because
employees have better interactions with customers. Engaged employees are more
likely to improve other critical factors affecting customer satisfaction, such as
responsiveness, product quality, thought leadership, innovation, etc. Finally, higher
retention translates into higher and faster revenue growth.
Engaged employees are more innovative and place more emphasis on meeting
customer needs. The “what can I do better or differently” attitude of engaged
employees versus the “it’s not in my job description” attitude of the unengaged
simply leads to better financial performance.

ASSESSING RETENTION
Over the past eight years, The Gallup Organisation has been conducting exhaustive
studies of employee retention to try and answer these fundamental questions. One
of a handful of retention evangelists, Gallup has promoted the value of measuring
employee retention through a series of books, seminars and programmes; it has
also taken the lead in identifying and managing the factors that impact retention
levels. In order to rate the retention of a workforce, first Gallup assesses employees
to determine whether they are engaged, not engaged or actively disengaged.
Engaged employees are the stars in a company. Passionate about what they do,
they feel a strong connection to their company and perform at high levels every
day while looking for ways to improve themselves and the company as a whole.
Not engaged employees, according to Gallup, are the company zombies who show
up every day and put in just enough effort to meet the basic requirements of their
jobs. Without passion or innovation, these employees neither commit to the
company’s direction, nor do they work against it.
Actively disengaged employees are those who present a big problem for
businesses. Negative by nature, these people are unhappy in their work and they
compound their lack of productivity by sharing this unhappiness with those around
them. They are the proverbial bad apples who revel in their discontent while
undermining the accomplishments of others; as a result, not only do they achieve
little themselves, they also prevent others from being productive too.

2.2 HISTORICAL BACKGROUND OF EMPLOYEE RETENTION


Over the past decade, the way in which people are managed and developed at work
has come to be recognized as one of the primary factors in achieving improvement
in organizational performance. This is reflected by popular idioms such as “people
are our most important assets”.
Back in the good old days of corporate world, things were pretty simple.
Companies put people on career tracks straight out of college; they gave
employees a job for life and waved them goodbye with a gold watch at retirement.
The promise of the stable life as a company employee kept both morale and
productivity high.
Then things changed. Competition increased, margins shrank and shareholders got
more demanding. Suddenly, company staff were finding the very job security
they’d counted on was disappearing, and at speed. This upheaval meant companies
had to find new ways to motivate their employees in order to make them more
productive since, without stability, employees were looking for something else
from their employers. And thus, Retention was born.
In itself, retention isn’t really a new idea; owners and managers have been talking
about retention, in one form or another, for centuries… they just used different
words to express it. In former times, retention focused more on productivity and
achieving results through threat of punishment or by means of reward. But
common sense - and good communication - eventually won out and, today,
organizations everywhere are spending serious money on all forms of employee
retention. Boiled down, it simply means ‘developing a happy and loyal workforce’.
Enlightened managers now realize that any company as a whole will benefit when
its employees know what’s going on and they feel part of the team. The tricky part
is in defining what makes a workforce happy, and in understanding how this good
will translates into company success.
From the extant literature review, it is acknowledged that successful organizations
share a fundamental philosophy of valuing and investing in their employees. In fact
many research studies have described human resource management as a means of
achieving competitive advantage. Consistent with this it is an equally important
issue for the organization to retain their critical (core) employees. Most
organization today continues to struggle with retention because they are relying on
salary increases and bonuses to prevent turnover. Essentially more organizations
are now realizing that retention is a strategic issue and continues to be a
competitive advantage.
The term “retention” stems from the work of Kahn (1990) who distinguished
between being engaged and disengaged at work. Putting the humanistic factors
together, Beer, Specter, Lawrence, Quinn-Mills and Walton (1984) created the
‘Harvard Business School’model of HRM which focused on people in an
organization to be the key resource. In light of such critical emphasis being placed
on human capital, Paula Ketter has aptly noted,
“Retention is all about creating a culture where people do not feel misused,
overused, underused or abused.”
At a very basic level, employee retention draws from the tenets of the ‘Hierarchy
of Needs’ as conceptualized by Maslow, the highest stage of which is self-
actualization; the pinnacle of an individual’s fulfilment of talent and potential. This
theory of ‘higher order needs’ was largely overlooked in the heydays of scientific
‘assembly line’ manufacturing.
2.3 EMPLOYEE RETENTION IN INDIA
The recent WorkAsia research study by Watson Wyatt Worldwide indicates that
India has the highest percentage of highly engaged workers at 78% in Asia as
compared to Japan, which has the lowest employee retention level at 39%.
Head to head with China, the retention level of the Indian worker is 20% more than
his Chinese counterpart.
The challenges faced by organizations in India are around attrition,
communication, career development and retention while trying to keep pace with
the explosive growth. Outsourcing outfits have the highest attrition rates losing
staff at a rate of between 100% and 200% a year. It is widely believed that
organizations spend an average of 36% of their revenues on their employees but do
not have a tangible way to measure its impact.
A Mercer study – ‘What’s Working’ – a series of national research on worker
insights, highlights factors that make a difference to employee retention. The
survey’s 125 questions elicit views in the areas defined by Mercer’s Human
Capital Strategy Model and cover training and development, work environment,
leadership, performance management, work/life balance, communication,
compensation, benefits, and retention.
The India study throws up some fascinating directions for HR and internal
communication professionals. Employee retention is no more just about the
employee’s intent to leave.
The employee’s commitment to the organization and motivation to contribute to
the organization’s success plays a significant role. The top three drivers in India
are trust in senior management, how the organization is perceived for customer
service and fair pay. Surprisingly, from an Indian context, the least valued factors
in the continuum were benefits, compensation and performance management.
In India, having a long-term career is considered positive and stable.
Frequent job changes are viewed negatively and therefore the high scores around
the commitment count are in line with the mindset. Internal communication and
HR professionals need to take note of the employee’s need for giving feedback and
to observe action taken from this. Employees seem to be getting very little
information on the organization’s vision and future plans, a cause of concern.
Other areas for action include the organization’s reputation in the market –
congruent to other research in this space which believes that organization’s which
are socially responsible are considered better places to work. In the talent
management bracket, managers fare poorly for their involvement, understanding
and support as well as for merit based appraisals.
In India, with a large number of global players entering the market, the talent pool
has now a plethora of choices and even these multinationals are finding it tough to
retain staff. The Canadian HR Reporter writes that employees want to know where
their careers are heading and that is a critical component of the talent retention
strategy organizations need to focus on. Softer styles of leadership have a better
impact in India and China leaving organizations to develop or seek leaders who
can fill this need.

THE LITERATURE REVIEW


Employee retention continues to remain a top priority at many organizations and
one that companies increasingly view as a driver of business strategy. Business-
critical knowledge can walk out the door when an employee leaves the company.
While employee retention figures have long been used by companies as a measure
of their performance in developing an effective organization, this view of
employee retention is not only outdated, but these figures may not be
comprehensive enough to truly determine the organization's effectiveness.

The concept of employee retention is more complex than simply evaluating


employee turnover from one year to the next. These figures of employee retention
can be somewhat misleading — it isn't necessarily the number of employees an
organization loses, it's the number of top-performing employees that leave the
company that should be of concern. For example, management is one of the key
reasons employees decide to stay or leave an organization. If there is high turnover
among the management ranks, employees may also feel unstable in this ever-
changing environment. Yet, on the other hand, it may not be the best business
strategy to retain a manager that is disliked by employees.
The business strategy of employee retention actually lies with employee retention;
retention is an outcome of retention. What most organizations fail to realize is that
employee retention is the biggest retention factor they have control over. Engaged
employees not only stay longer with the organization, they are more productive,
more conscientious, make fewer errors, and take better care of customers. The
business strategy of employee retention must incorporate methods that achieve a
high level of employee retention among the organization's top performers, not
necessarily the entire workforce.
The Importance of Retaining Top Performers
Many organizations ponder the questions, "What should the goal be for retention?"
and
"What is an appropriate level for employee turnover?" Yet, in asking these
questions, many organizations don't realize that there are no set answers. If, for
example, an organization loses five percent of its top performers every year, the
results from this turnover could be potentially devastating to the company. On the
other hand, if the company is losing 20 percent of its least productive employees,
this could actually be very beneficial for the organization and an opportunity to
increase the strength of its workforce each year.
In other words, it's not just about retention anymore — it's about retaining the very
best people at each level within the organization. The key to effective retention of
top performers is to determine the factors that currently do, and will, keep them
engaged.
The Starting Point an organization must first determine who the top performers and
high potentials are within their workforce. Of the many ways this can be
accomplished, some include involving management at every level to create a list of
those employees who are performing at levels that exceed expectations and those
who exhibit the potential to become top performers, or utilizing the results from
employee performance reviews to separate those who scored the highest from
those who scored the lowest.
This method of gaining a clear understanding of who the top performers are within
an organization is called employee segmentation. Once an organization has
segmented it workforce, it can then start to measure retention among its highest
potential and highest rated, or most productive, employees. By viewing each
segment separately, organizations are creating a more appropriate benchmark to
measure employee retention, i.e., is the organization retaining or losing a high
percentage of its best people?

Understanding Employee Retention


Employee retention can be defined as an employee putting forth extra discretionary
effort, as well as the likelihood of the employee being loyal and remaining with the
organization over the long haul. Research shows that engaged employees: perform
better, put in extra efforts to help get the job done, show a strong level of
commitment to the organization, and are more motivated and optimistic about their
work goals. Employers with engaged employees tend to experience low employee
turnover and more impressive business outcomes.
Employee retention is more than just the current HR 'buzzword'; it is essential. In
order for organizations to meet and surpass organizational objectives, employees
must be engaged.
Research has proven that wholly engaged employees exhibit,
§ Higher self-motivation.
§ Confidence to express new ideas.
§ Higher productivity.
§ Higher levels of customer approval and service quality.
§ Reliability.
§ Organizational loyalty; less employee turnover.
§ Lower absenteeism.
Current studies show that organizations are focusing on the meaning of employee
retention and how to make employees more engaged. Employees feel engaged
when they find personal meaning and motivation in their work, receive positive
interpersonal support, and operate in an efficient work environment. What brought
retention to the forefront and why is everyone interested in it? Most likely, the tight
economy has refocused attention on maximizing employee output and making the
most of organizational resources. When organizations focus attention on their
people, they are making an investment in their most important resource. You can
cut all the costs you want, but if you neglect your people, cutting costs won’t make
much of a difference. Retention is all about getting employees to “give it their all.”
Some of the most successful organizations are known for their unique work
environments in which employees are motivated to do their very best. These great
places to work have been recognized in such lists as Fortune’s 100 Best Companies
to Work For.
The concept of retention is a natural evolution of past research on high-
involvement, empowerment, job motivation, organizational commitment, and trust.
All of these research streams focus on the perceptions and attitudes of employees
about the work environment. In some ways, there are variations on the same
fundamental issue. What predicts employees “giving their all?” Obviously, all
organizations want their employees to be engaged in their work.

Hierarchy of Retention
Employee Retention at Each Level
In addition, employee segmentation is an important method to utilize when
evaluating employee retention at each level. For instance, the factors that engage
the most productive employees in an organization may not be the same as the
factors that engage the least productive employees. Those employees who receive
the highest rankings on their performance reviews may tend to express higher
levels of job satisfaction when they are presented with challenging opportunities
that allow them to grow and learn. Those that receive the lowest rankings might be
more focused on issues surrounding work/life balance and job security. While
some factors, such as good communication, are important among all employees,
the attempt to focus on the full spectrum of factors that engage the entire
workforce may cause an organization to omit some of the factors that are the most
important to the company's most productive people.
Employee Satisfaction Does Not Equal Retention
While organizations may be aware "through the grapevine" that employees are
unsatisfied, it's the reasons for the dissatisfaction that elude them. While employee
satisfaction is important, it's not the end game — it is only one piece of employee
retention. Satisfaction is imperative in that, for those individuals who are top
performers, satisfaction may be derived from their achievement orientation, their
ambition, or their sense of responsibility.
On the other hand, the attempt to satisfy an under-performer who will only be
content with a lightened workload may not be a worthy cause. Again, the focus is
on ensuring that those individuals who have been identified as top performers and
high potentials are engaged in the organization.
As stated, employee retention incorporates employee satisfaction, but also includes
the essential elements of pride, commitment and loyalty in the organization.
Engaged employees aren't concerned with meeting the minimum requirements to
complete a task, they are focused on what they can do to better the company.
Essentially, they take ownership in the company despite whether or not they
actually own a share of stock.

Drivers of retention
A two-way relationship between the employer and employee
The importance of the individual being able to align themselves to the products,
services and values of the organisation
The ability of the organisation to communicate its vision, strategy, objectives
and values to its staff so that they are clearly understood
Management give staff sufficient ‘elbow room’ and autonomy to let them fulfil
their potential
The employer is highly effective at engaging in two-way communication with
its staff, in particular encouraging upward communication
Lastly, that management from the top to the bottom of the organisation are
committed leaders’ and that the key role of the immediate line manager/supervisor
is recognised as one of the most important conduits to achieving effective
employee retention.

Elements of Retention
Some researches conclude that personal impact, focused work, and interpersonal
harmony comprise retention. Each of these three components has sub-components
that further define the meaning of retention. Personal Impact-Employees feel more
engaged when they are able to make a unique contribution, experience
empowerment, and have opportunities for personal growth. Past research concurs
that issues such as the ability to impact the work environment and making
meaningful choices in the workplace are critical components of employee
empowerment. Some research on retaining talent found that the perception of
meaningful work is one of the most influential factors determining employees’
willingness to stay with the organization. Focused Work-Employees feel more
engaged when they have clear direction, performance accountability, and an
efficient work environment. Aside from the personal drive and motivation to make
a contribution, employees need to understand where to focus their efforts.
Without a clear strategy and direction from senior leadership, employees will
waste their time on the activities that do not make a difference for the
organization’s success. Additionally, even when direction is in place, employees
must receive feedback to ensure that they are on track and being held accountable
for their progress. In particular, employees need to feel that low performance is not
acceptable and that there are consequences for poor performance.
Finally, employees want to work in an environment that is efficient in terms of its
time, resources, and budget. Employees lose faith in the organization when they
see excessive waste. For example, employees become frustrated when they are
asked to operate without the necessary resources or waste time in unnecessary
meetings.
Interpersonal Harmony-Employees feel more engaged when they work in a safe
and cooperative environment. By safety, we mean that employee trust one another
and quickly resolve conflicts when they arise. Employees want to be able to rely on
each other and focus their attention on the tasks that really matter. Conflict wastes
time and energy and needs to be dealt with quickly. Some researches also find that
trust and interpersonal harmony is a fundamental underlying principle in the best
organizations. Employees also need to cooperate to get the job done. Partnerships
across departments and within the work group ensure that employees stay informed
and get the support they need to do their jobs.

Making Use of Retention


Measurement of employee retention can have many applications in the
organization. Earlier, it is mentioned that retention could serve as a general index
of HR effectiveness in an HR scorecard. Also, retention measures serve as an easy
way to benchmark the work climate against other organizations.
Other uses include:
Needs Analysis-The fundamental issues measured in retention provide a quick
index of what leaders and HR need to do to make things better. In addition, items
in retention surveys tend to be very actionable. This means that leaders or others in
the organization can take action that will affect the score on a single item.
Evaluation-Many learning and performance interventions are designed to impact
some aspect of retention. When an retention measure is used as a pre-
implementation baseline, the impact of the intervention can be gauged by
measuring post-implementation changes in retention.
Climate Survey-Some organizations like to use retention measures as simple
indexes of the workplace culture. While more extensive surveys are valuable,
sometimes it’s easier to focus attention on a few simple and proven factors.
Leader or Department Feedback-Depending on the demographic information
collected when the retention measure is implemented, one can create breakout
reports by department or leader. This means departments and leaders can gain a
better understanding of how retention in their groups differs from the rest of the
organization. This information can be used to create development plans or plans
for larger-scale interventions.

Measuring the Impact of Employee Retention


BENCHMARKING BEST PRACTICES
HSBC Global Resourcing
The companies try to make a match of it by positioning their organisations as a
‘fun workplace’ to engage employees. Speaking to the youth in the language they
understand, companies organise ‘dress down’ days based on festival themes,
distribute soft sports
equipment which can be used inside the processing floor and organise regular trips
to movies as well as dining out. Acknowledging that recognising employees for a
job well done is a key retention tool, HSBC Global Resourcing has regular
rewards and recognition programmes where outstanding agents get to bask in the
glory of their achievements. Leadership development is taken very seriously with
first line managers getting to hone their skills in various tools required to lead a
team successfully. Empowerment is a key ingredient in engaging employees and
ensuring they stay that way. On cue almost all BPO outfits organise 26 regular
focus group discussions and interaction with the senior management to ensure
everyone is heard. Internal communication channels like intranets and message
boards are liberally used to reach out and branded goodies are regularly distributed
to foster a sense of belonging.

Sun Microsystems
At Sun the virtual nature is partly due to flexible working practices. While flexible
working arrangements are a plus for many employees and reduces facility costs for
the organization, that flexibility comes with some downsides like; isolation,
loneliness and an increase in personal distractions. Isolation, especially when
paired with the demands of work in an increasingly competitive environment, can
wear down the sense of connection, commitment and excitement about any job.
Thus a critical challenge for managers of virtual teams is how to keep remote
employees engaged.
At Sun, the concept of employee retention starts right from the top:
· The CEO interacts with Sun employees through WSUN, a forum on Sun’s
intranet. He uses this to sustain an active an ongoing dialogue on the corporate
goals and direction. Through this interactive on-line resource he also solicits their
feedback and opinions
· Other senior management members engages with employees on technology
directions through his personal blog
· Business Unit Heads and Executive Vice-presidents have a target of holding six
‘town halls’ with employees every year across the globe
· At the country level, Senior Management is tasked with constantly engaging
employees through various forums, communication media and events to build
excitement and passion including some that also reach out to the employees’
families.

Standard Chartered Group


They believe in the importance of building a work environment where every
employee feels highly engaged to apply their individual talents to deliver
sustainable business performance.
They have been measuring employee retention worldwide since 2000 with a
voluntary response rate consistently over 95%. In 2007, the survey covered all 57
countries with 95% of employees participating voluntarily. This is a significant
achievement and a clear indication that employees are committed to improving
individual and team performance.
They have a continuous rise in both the number of engaged employees and teams
since the survey was introduced. We provide team-specific data to each manager,
which they use to discuss and develop action plans with their teams to increase
retention.

Conclusion
The competition for talent means that we have to be very good at attracting,
motivating and retaining talent. Our talented human capital is our biggest asset and
liability and we need to measure how well it’s adding value. Retention is an
increasingly important human capital metric because:
• Retention levels correlate with business performance
• Measuring Retention tells us how well we are doing in the competition for
talent.
• Driving Retention levels higher improves our ability to attract, motivate and
retain talent and so generates value from our human capital investment.
Retention is not a simple matter. Nothing is more dangerous than measuring
retention without making the commitment to act on the feedback. Retention has to
be a leadership driven initiative from the most senior level all the way to the front
line. No one affects an employee’s retention as much as his or her immediate
leader. Engaged leaders coach proactively for success, inspire loyalty and trust,
and build an environment in which employees are motivated and engaged. To
foster an environment of retention, organizations need strong systems and
strategies that promote and support retention.
Hiring and selection systems that measure motivation and the propensity for
retention, leadership training in certain skills (coaching, influencing others,
managing change), performance management and accountability systems that
provide direction, support, and objective assessments—all work together to
provide a foundation and environment in which retention can flourish. Ultimately,
retention lies in the heart of the employee.
Measuring motivational and job fit during the hiring process ensures that you
select people who can and want to find meaning in their work. Some people have
personal characteristics that correlate with higher levels of retention, and those
characteristics can be screened for during the hiring process. Once you’ve hired the
right people, retention can be either fuelled or hampered by the work environment
and quality of leadership. In the end, the rewards are many. A fully engaged
workforce is a loyal workforce—expect turnover to drop. In addition, an engaged
workforce will give the extra effort your organization needs to remain competitive.
Employee retention is no longer just a buzzword or a management fad. It’s no
longer a fancy tool which can be taken off the shelf, dusted and pressed into
service; rather it’s a strategic imperative which can’t be taken for granted. As
customers increasingly demand enhanced levels of service and value for money,
alienating the hearts and minds of the employees is no longer possible without
organisational demise. Thus, the onus is now on the organizations to make the first
overture.
FINDINGS
1. To engage the workforce, most of the organization surveyed periodically
recognise employees and provides flexible working hours.

2. Nowadays employees are involved in decision making in the organization


and majority of the employees agreed on this fact.

3. Most of the organizations allow their employees to participate in


performance appraisals and to set their own Key Performance Areas.
4. Compensation & Benefit programs are observed as the most effective
rewards scheme.

5. For team building companies generally do small team recreational activities


and social activities.

6. Majority of the sample are loyal towards their organization and they also
recommend their friends and relatives to join the organization.

7. Stress management, Retirement plans and Work life balance surprisingly


seem to be of least effective retention strategies according to the employees.

8. Majority of the organizations agreed that the retention strategies of their


organization help in retaining the employees in the organization.

9. Majority has observed 5-10% of reduced attrition rate due to the


implementation of retention strategies in the organizations.

RECOMMENDATIONS
1. As contrary to what managers believe that decision making is the most effective
tool, the employees still prefer rewards and recognition. The Managers should
focus on the rewards and recognition schemes in their organization.
2. Practically people don’t give much importance to stress management programs,
work life balance and retirement plans so there is scope of improvement in this
area.
3. To increase employee retention, the organizations should: -

a. Provide variety: Tedious, repetitive tasks can cause burn out and boredom over
time. If the job requires repetitive tasks, look for ways to introduce variety by
rotating duties, areas of responsibility, delivery of service etc.

b. Conduct periodic meetings with employees to communicate good news,


challenges and easy-to-understand company financial information. Managers and
supervisors should be comfortable communicating with their staff, and able to give
and receive constructive feedback.

c. Indulge in employee deployment if he feels he is not on the right job. Provide an


open environment.

d. Communicate openly and clearly about what's expected of employees at every


level - your vision, priorities, success measures, etc.

e. Get to know employees' interests, goals, stressors, etc. Show an interest in their
well-being and do what it takes enable them to feel more fulfilled and better
balanced in work and life.

f. Celebrate individual, team and organizational successes. Catch employees doing


something right, and say "Thank you."

4. As we have got a very good response from employees so the companies should
have the retention strategies to retain the employees.

CONCLUSION
Employee retention continues to remain a top priority at many organizations and
one that companies increasingly view as a driver of business strategy. Business-
critical knowledge can walk out the door when an employee leaves the company.
While employee retention figures have long been used by companies as a measure
of their performance in developing an effective organization, this view of
employee retention is not only outdated, but these figures may not be
comprehensive enough to truly determine the organization's effectiveness.

The concept of employee retention is more complex than simply evaluating


employee turnover from one year to the next. These figures of employee retention
can be somewhat misleading — it isn't necessarily the number of employees an
organization loses, it's the number of top-performing employees that leave the
company that should be of concern. For example, management is one of the key
reasons employees decide to stay or leave an organization. If there is high turnover
among the management ranks, employees may also feel unstable in this ever-
changing environment. Yet, on the other hand, it may not be the best business
strategy to retain a manager that is disliked by employees.

The business strategy of employee retention actually lies with employee retention;
retention is an outcome of retention. What most organizations fail to realize is that
employee retention is the biggest retention factor they have control over. Engaged
employees not only stay longer with the organization, they are more productive,
more conscientious, make fewer errors, and take better care of customers. The
business strategy of employee retention must incorporate methods that achieve a
high level of employee retention among the organization's top performers, not
necessarily the entire workforce.
Examples of Employee RetentionApproaches
A successful employee retention strategy helps create a community at the
workplace and not just a workforce. When employees are effectively and
positively engaged with their organisation, they form an emotional connection with
the company. This affects their attitude towards both their colleagues and the
company’s clients and improves customer satisfaction and service levels.
There's more than one way to improve the level of employee retention in a
company. In fact, there are many different things that companies not only can do,
but need to do.

Most organisations have a range of practices to improve the retention level of their
employees. One of the pitfalls of any employee retention programme is a failure –
whether real or perceived to follow through on the initial that the company is felt
by their employees if your organisation is to succeed you must look use as many
different approaches as you can. Here is a round-up of some of the best
approaches. Employee retention approaches for new employees. Best practice
recommends starting right at the selection or recruitment stage with:
· The right person and giving them a realistic job preview
· A strong induction and orientation programme
· Rigorous training and development, from technical to soft skills to leadership
development programmes.
· Regular technical/soft-skill updates.
· Certification programmes to drive people towards excellent performance
Employee retention approaches for all employees. Beyond initial recruitment and
induction, employee retention activities can be broken into a number of groups.
These include:
· Communications activities
· Reward schemes
· Activities to build the culture of the organisational
· Team building activities
· Leadership development activities

Communications activities
These help employees find out what is going on within the company outside of
their immediate team. They also help to create an environment of trust and
openness within the organisation where they are able to talk openly. Employees
who feel they are listened to are able to express dissatisfaction and work together
to resolve their causes, without it affecting their performance. Good examples of
communications approaches include:
· Communication forums to provide regular feedback to all people, including team
meetings, conferences and “away days”
· In-house magazines
· On-line communications, including discussion boards and blogs by company
personnel including senior management
· Monthly updates on corporate goals and directions
· Regular employee opinion and satisfaction surveys
· Active soliciting of employee feedback, including opinions and pet peeves
Reward schemes
Reward schemes are an important part of a company's overall employee retention
programme. Studies have long shown that, while money in itself is not a
motivating factor, the absence of financial reward can be a significant demotivator.
Thus the role of reward schemes in boosting employee retention is:
· to remove barriers to satisfaction in the organisation;
· to provide a framework for rewarding everyone in the organisation for their
performance.
· to give those who are motivated by financial gain an opportunity to achieve
this.Typical approaches include:
· Compensation and benefit programmes
· Stock ownership and profit sharing
· Recognition programmes
· Idea collection schemes linked to rewards for idea generation
· Long service and good performance awards
Activities to develop the culture of the
organisation
Giving employees a feeling of belonging is crucial in creating a thriving
organisation that people feel committed to and others want to join. Common
approaches includes:
· Clear and humane HR policies
· Pro-social corporate objectives and
Corporate Social Responsibility
· Equal opportunities policies and practices
· Initiatives to maintain the quality of worklife and a balance between
personal/professional lives
· Developing a safe, clean and inspiring work environment
· Demonstrating a commitment to employees’ well being
Team building activities
Culture-building activities are great for generating a feeling of belonging, but all
organisations are build out of smaller teams who can get on and work together.
Popular approaches include:
· Small team recreational activities, such as bowling, skating, trips to the cinema
(or the pub!)
· Social activities, such as family gatherings and barbeques
· Community outreach activities such as volunteering and fund-raising.
Leadership development activities
A great organisation needs not just a great leader,but people with leadership skills.
This stimulates good performance, boosts creativity and eases succession planning.
Good practices include:
· Effective Leadership
· Effective Performance Management
· Fair evaluation of performance
· Empowerment through effective delegation
· Coaching and mentoring activities to give honest feedback by supervisors and
peers
· An open and transparent culture to empower people and develop entrepreneurs
Employee retention inaction:
Sun Microsystems Employee retention becomes that much more critical in such a
virtual or global environment.Employee retention is imperative for an organisation
like Sun as they operate in virtual teams across the world:
At Sun the virtual nature is partly due to flexible working practises. While flexible
working arrangements are a plus for many employees and reduces facility costs for
the organisation, that flexibility comes with some downsides like; isolation,
loneliness and an increase in personal distractions Isolation, especially when paired
with the demands of work in an increasingly competitive environment, can wear
down the sense of connection, commitment and excitement about any job. Thus a
critical challenge for managers of virtual teams is how to keep remote employees
engaged.
At Sun, the concept of employee retention starts right from the top:
· Scott McNealy, the CEO, interacts with Sun employees through WSUN, a forum
on Sun’s intranet. He uses this to sustain an active an ongoing dialogue on the
corporate goals and direction. Through this interactive on-line resource he also
solicits their feedback and opinions
· Other senior management members like Jonathan Schwartz, the COO, engages
with employees on technology directions through his personal blog
· Business Unit Heads and Executive Vicepresidents have a target of holding six
‘town halls’ with employees every year across the globe
· At the country level, Senior Management is tasked with constantly engaging
employees through various forums, communication media and events to build
excitement and passion including some that also reach out to the employees’
families.

Infosys iEngage™ Employee Retention Platform


As companies grow, enabling collaboration and retention among employees
becomes increasingly difficult. Silo-ed information and inefficient methods of
communication lead to a slow pace of innovation and disengaged employees who
make the wrong decisions. Consequently, it affects the company where it hurts the
most - the bottom line.
We live in a collaborative world. By leveraging and integrating different sources of
knowledge, companies can drive innovation and ensure differentiation, resulting in
a competitive advantage.
Social media unleashes possibilities to collaborate and enhance your company's
pool of knowledge, facilitate ideation and problem-solving among employees, and
engage with external stakeholders.
Infosys iEngage™ employee retention platform helps accelerate knowledge
discovery, improve workforce productivity, deepen employee retention and foster
innovation. Our platform can be leveraged for employee retention initiatives such
as employee on-boarding, knowledge networks, new product development, sales
collaboration, and alumni networks.
Our platform is delivered in the enterprise Software-as-a-Service (SaaS) model and
offers you the convenience of single point accountability, complete ownership of
applications, infrastructure, professional services, Business Process Outsourcing
and consulting.
Benefits
Accelerates knowledge discovery
Our employee retention platform accelerates the discovery of intellectual capital
hidden across organization silos. Employees can take better decisions by locating
and discovering knowledge faster.
Improves workforce productivity
Our platform captures and shares information in new ways, enhances team work
and productivity. Employees across geographic boundaries can quickly form
groups to solve problems and meet goals.
Deepens employee retention
It helps employees engage in a more integrated way. Relationships are enhanced
through better access to corporate information, employee self-help, peer-to-peer
collaboration and multi-channel interaction.

Enables faster innovation


It helps introduce products faster to the market through social media, co-creation
and testing of innovations with employees, customers and partners globally.
Networked company
Our platform helps you build a networked organization. It can be made available to
all employees and can be extended to external business partners, alumni and
customers.

Origins
Employee Retention is the extent to which workforce commitment, both emotional
and intellectual, exists relative to accomplishing the work, mission, and vision of
the organization. Retention can be seen as a heightened level of ownership where
each employee wants to do whatever they can for the benefit of their internal and
external customers, and for the success of the organization as a whole.

Employee retention was described in the academic literature by Schmidt et al.


(1993). A modernized version of job satisfaction, Schmidt et al.'s influential
definition of retention was "an employee's involvement with, commitment to, and
satisfaction with work." This integrates the classic constructs of job satisfaction
(Smith et al., 1969), and organizational commitment (Meyer & Allen, 1991).
Harter and Schmidt's (2003) most recent meta-analysis can be useful for
understanding the impact of retention.

Linkage research (e.g., Treacy) received significant attention in the business


community because of correlations between employee retention and desirable
business outcomes such as retention of talent, customer service, individual
performance, team performance, business unit productivity, and even enterprise-
level financial performance (e.g., Rucci at al, 1998 using data from Sears). Some
of this work has been published in a diversity context (e.g., McKay, Avery, Morris
et al., 2007). Directions of causality were discussed by Schneider and colleagues in
2003.

Employee retention is derived from studies of morale or a group's willingness to


accomplish organizational objectives which began in the 1920s. The value of
morale to organizations was matured by US Army researchers during WWII to
predict unity of effort and attitudinal battle-readiness before combat. In the postwar
mass production society that required unity of effort in execution, (group) morale
scores were used as predictors of speed, quality and militancy. With the advent of
the knowledge worker and emphasis on individual talent management (stars), a
term was needed to describe an individual's emotional attachment to the
organization, fellow associates and the job. Thus the birth of the term "employee
retention" which is an individual emotional phenomenon whereas morale is a
group emotional phenomenon of similar characteristics. In other words, employee
retention is the raw material of morale composed of 15 attitudinal drivers.

Studies by Consultants
Engaged employees care about the future of the company and are willing to invest
the discretionary effort.Engaged employees feel a strong emotional bond to the
organization that employs them. (Robinson)
Emotional attachment
Only 31% of employees are actively engaged in their jobs. These employees work
with passion and feel a profound connection to their company. People that are
actively engaged help move the organization forward. 88% of highly engaged
employees believe they can positively impact quality of their organization's
products, compared with only 38% of the disengaged. 72% of highly engaged
employees believe they can positively affect customer service, versus 27% of the
disengaged. 68% of highly engaged employees believe they can positively impact
costs in their job or unit, compared with just 19% of the disengaged. Engaged
employees feel a strong emotional bond to the organization that employs them.
This is associated with people demonstrating a willingness to recommend the
organization to others and commit time and effort to help the organization succeed.
It suggests that people are motivated by intrinsic factors (e.g. personal growth,
working to a common purpose, being part of a larger process) rather than simply
focusing on extrinsic factors (e.g., pay/reward).
Involvement
Eileen Appelbaum and her colleagues (2000) studied 15 steel mills, 17 apparel
manufacturers, and 10 electronic instrument and imaging equipment producers.
Their purpose was to compare traditional production systems with flexible high-
performance production systems involving teams, training, and incentive pay
systems. In all three industries, the plants utilizing high-involvement practices
showed superior performance. In addition, workers in the high-involvement plants
showed more positive attitudes, including trust, organizational commitment and
intrinsic enjoyment of the work.The concept has gained popularity as various
studies have demonstrated links with productivity. It is often linked to the notion of
employee voice and empowerment.

Commitment

It has been routinely found that employee retention scores account for as much as
half of the variance in customer satisfaction scores. This translates into millions of
dollars for companies if they can improve their scores. Studies have statistically
demonstrated that engaged employees are more productive, more profitable, more
customer-focused, safer, and less likely to leave their employer.

Employees with the highest level of commitment perform 20% better and are 87%
less likely to leave the organization, which indicates that retention is linked to
organizational performance. For example, at the beverage company of
MolsonCoors, it was found that engaged employees were five times less likely than
non-engaged employees to have a safety incident and seven times less likely to
have a lost-time safety incident. In fact, the average cost of a safety incident for an
engaged employee was $63, compared with an average of $392 for a non-engaged
employee. Consequently, through strengthening employee retention, the company
saved $1,721,760 in safety costs in 2002. In addition, savings were found in sales
performance teams through retention. In 2005, for example, low-retention teams
were seen falling behind engaged teams, with a difference in performance-related
costs of low- versus high-retention teams totaling $2,104,823.3 (Lockwood).
[edit] Life insurance industry
Two studies of employees in the life insurance industry examined the impact of
employee perceptions that they had the power to make decisions, sufficient
knowledge and information to do the job effectively, and rewards for high
performance. Both studies included large samples of employees (3,570 employees
in 49 organizations and 4,828 employees in 92 organizations). In both studies,
high-involvement management practices were positively associated with employee
morale, employee retention, and firm financial performance. Watson Wyatt found
that high-commitment organizations (one with loyal and dedicated employees) out-
performed those with low commitment by 47% in the 2000 study and by 200% in
the 2002 study.
Productivity
In a study of professional service firms, the Hay Group found that offices with
engaged employees were up to 43% more productive.

The most striking finding is the almost 52% gaps in operating incomes between
companies with highly engaged employees and companies whose employees have
low-retention scores. High-retention companies improved 19.2% while low-
retention companies declined 32.7% in operating income during the study period.
For example, New Century Financial Corporation, a U.S. specialty mortgage
banking company, found that account executives in the wholesale division who
were actively disengaged produced 28% less revenue than their colleagues who
were engaged. Furthermore, those not engaged generated 23% less revenue than
their engaged counterparts. Engaged employees also outperformed the not engaged
and actively disengaged employees in other divisions.[1] It comes as no surprise,
then, that engaged employees have been statistically linked with innovation events
and better problem solving.

Generating retention
Recent research has focused on developing a better understanding of how variables
such as quality of work relationships and values of the organization interact and
their link to important work outcomes.84% of highly engaged employees believe
they can positively impact the quality of their organization's products, compared
with only 31 percent of the disengaged. From the perspective of the employee,
"outcomes" range from strong commitment to the isolation of oneself from the
organization. The study done by the Gallup Management Journal has shown that
only 29% of employees are actively engaged in their jobs. Those "engaged"
employees work with passion and feel a strong connection to their company. About
⅔ of the business units scoring above the median on employee retention also
scored above the median on performance. Moreover, 54% of employees are not
engaged meaning that they go through each workday putting time but no passion
into their work. Only about ⅓ of companies below the median on employee
retention scored above the median on performance.

Access to a reliable model enables organizations to conduct validation studies to


establish the relationship of employee retention to productivity/performance and
other measures linked to effectiveness.It is an important principle of industrial and
organizational psychology (i.e. the application of psychological theories, research
methods, and intervention strategies involving workplace issues) that validation
studies should be anchored in reliable scales (i.e. organized and related groups of
items) and not simply focus on individual elements in isolation. To understand how
high levels of employee retention affect organizational performance/productivity it
is important to have an a priori model that demonstrates how the scales interact.

There is also overlap between this concept and those relating to well-being at work
and the psychological contract.http://en.wikipedia.org/wiki/Employee_retention - cite_note-konrad-3

As employee productivity is clearly connected with employee retention, creating


an environment that encourages employee retention is considered to be essential in
the effective management of human capital.
Influences
* Employer retention - A company's "commitment to improving the partnership
between employees and...employer." Employers can stay engaged with their
employees by actively seeking to understand and act on behalf of the expectations
and preferences of their employees.

* Employee perceptions of job importance - According to a 2006 study by


Gerard Seijts and Dan Crim, "...an employees attitude toward the job['s
importance] and the company had the greatest impact on loyalty and customer
service then all other employee factors combined."

* Employee clarity of job expectations - "If expectations are not clear and basic
materials and equipment not provided, negative emotions such as boredom or
resentment may result, and the employee may then become focused on surviving
more than thinking about how he can help the organization succeed."

Career advancement/improvement opportunities - "Plant supervisors and


managers indicated that many plant improvements were being made outside the
suggestion system, where employees initiated changes in order to reap the bonuses
generated by the subsequent cost savings."

* Regular feedback and dialogue with superiors - "Feedback is the key to giving
employees a sense of where they’re going, but many organizations are remarkably
bad at giving it."What I really wanted to hear was 'Thanks. You did a good job.'
But all my boss did was hand me a check.

* Quality of working relationships with peers, superiors, and subordinates -


"...if employees' relationship with their managers is fractured, then no amount of
perks will persuade the employees to perform at top levels. Employee retention is a
direct reflection of how employees feel about their relationship with the boss.

* Perceptions of the ethos and values of the organization - "'Inspiration and


values' is the most important of the six drivers in our Engaged Performance model.
Inspirational leadership is the ultimate perk. In its absence, [it] is unlikely to
engage employees."

* Effective Internal Employee Communications - which convey a clear


description of "what's going on". "'If you accept that employees want to be
involved in what they are doing then this trend is clear (from small businesses to
large global organisations). The effect of poor internal communications is seen as
its most destructive in global organisations which suffer from employee annexation
- where the head office in one country is buoyant (since they are closest to the
action, know what is going on, and are heavily engaged) but its annexes (who are
furthest away from the action and know little about what is happening) are dis-
engaged. In the worst case, employee annexation can be very destructive when the
head office attributes the annex's low retention to its poor performance… when its
poor performance is really due to its poor communications.

* Reward to engage - Look at employee benefits and acknowledge the role of


incentives. "An incentive to reward good work is a tried and test way of boosting
staff morale and enhancing retention." There are a range of tactics you can employ
to ensure your incentive scheme hits the mark with your workforce such as: Setting
realistic targets, selecting the right rewards for your incentive programme,
communicating the scheme effectively and frequently, have lots of winners and
reward all achievers, encouraging sustained effort, present awards publicly and
evaluate the incentive scheme regularly. [16]

Potential red flags


• Inappropriate use of Benchmark Data - some of the more well established
Employee Retention survey companies will state that the most important
part of post survey follow up is related to comparison of internal survey data
to numerous external benchmarks. This seems to have rubbed off onto
internal sponsors who demand very specific benchmarks. Whilst some
research analysts claim that the standard comparisons by industry sector are
flawed others disagree. Is it right to compare a Bentley employee to one
from Vauxhall (GM) because they are in the same automotive sector? The
alternative argument is that both organisations would likely draw from
similar worker pools and would as such wish to better understand
expectations of workers in that industry and how they compare to competing
employers.

• A focus on data gathering rather than taking action may also damage
retention efforts. Organizations that survey their workforce without acting
on the feedback appear to negatively impact retention scores.[2
Employee Retention, Employee Retention & Talent Management Strategies
The issue of employee retention is once again becoming a major issue for many
businesses. The talent shortage that plagued employers at the height of the
economic boom has not vanished. It may be off the radar now, but it is returning
strong as ever.
What are you doing to improve employee retention?
Successful organizations realize by having an effective employee retention plan
will help them sustain their leadership and growth in the marketplace. Good
organizations make employee retention a core element of their talent management
strategy and organizational development process. Those that fail to make employee
retention a priority are at risk of losing their top talented people to the competition.
Chart Your Course International helps organizations design employee retention
programs to recruit, manage, retain and engage the best workforce available by
providing cutting-edge talent management strategies, hiring assessments,
consulting, employee retention training and talent management programs.

We help organizations design employee retention programs to reduce employee


turnover and improve productivity. Greg Smith is a leading authority on employee
retention and a former Examiner for the Malcolm Baldrige National Quality
Award--America's highest award for organizational excellence.