Employee Attrition Project 2

AN EMPIRICAL ANALYSIS OF EMPLOYEE ATTRITION AND
RETENTION STRATEGIES IN INFORMATION TECHNOLOGY

(IT) INDUSTRY, PUDUCHERRY
A Thesis submitted to Pondicherry University in partial fulfillment of the
requirements for the award of the degree of
DOCTOR OF PHILOSOPHY
IN
COMMERCE
By
Mrs. G. ARUNMOZHI
Under the Guidance of
Dr. P. NATARAJAN
Professor and Research Supervisor
DEPARTMENT OF COMMERCE
SCHOOL OF MANAGEMENT
PONDICHERRY UNIVERSITY
PUDUCHERRY – 605014
JANUARY-2018
Dr. P. Natarajan Department of Commerce
School of Management
Professor and Research
Pondicherry University
Supervisor
Puducherry-605 014
CERTIFICATE
This is to certify that the thesis entitled “AN EMPIRICAL ANALYSIS OF
EMPLOYEE ATTRITION AND RETENTION STRATEGIES IN INFORMATION
TECHNOLOGY (IT) INDUSTRY, PUDUCHERRY” submitted for the award of the
degree of Doctor of Philosophy by Mrs. G. ARUNMOZHI is based on the original
work done by her in the Department of Commerce, Pondicherry University,
Puducherry, India and that the work has not previously formed the basis for award of
any Degree, Diploma, Associateship, Fellowship or any other similar title.
Place: Puducherry
Date: (Dr. P. NATARAJAN)
Countersigned
Dean Head
School of Management Department of Commerce
i
MRS. G. ARUNMOZHI
Doctoral Research Scholar
Department of Commerce
School of Management
Pondicherry University
DECLARATION
I hereby state that the thesis entitled “AN EMPIRICAL ANALYSIS OF
EMPLOYEE ATTRITION AND RETENTION STRATEGIES IN
INFORMATION TECHNOLOGY (IT) INDUSTRY, PUDUCHERRY”,
submitted to the Department of Commerce, Pondicherry University, for the award of
degree of Doctor of Philosophy in Commerce is my original work under the supervision
and guidance of Dr. P. NATARAJAN, Professor, Department of Commerce,
Pondicherry University. It has not previously formed the basis for the award of any
degree, Diploma, Associateship, Fellowship or any other similar title.
Place: Puducherry
Date: (G.ARUNMOZHI)
ii
ACKNOWLEDGEMENT
“If each of my words were drop of water, you would see through and glimpse
what I feel: gratitude, acknowledgement” - Octavio Paz
This research work has given me an immense sense of satisfaction. This is
because of learning so many things and developing many skills during my research work.
I express my sense of gratitude to the Department of Commerce, School of
Management, Pondicherry University for giving me an opportunity to pursue my
research work.
I wish to express my sincere thanks to Dr. P. Natarajan, Professor, Department
of Commerce, Pondicherry University, who throughout this journey of research acted as a
friend and philosopher as being a guide. Who not only agreed wholeheartedly to be my
guide for my research work, but also provided me all necessary direction and motivation
to keep me spirited up throughout the execution of this research. His dynamism and
enthusiasm motivated me and energized me in pursuing this work with its all ups and
down.
I would like to wholeheartedly be grateful to my Doctorial Committee members
Dr. Y. Venkata Rao, Professor & Head, Department of Tourism Studies, Pondicherry
University, and Dr. M. Banumathi, Associate Professor, Department of International
Business, Pondicherry University for their help and valuable suggestions in completing
my work.
iii
I extend my sincere thanks to Dr. Malabiko Deo, Professor and Head,
Department of Commerce, Pondicherry University, for her continuous support
throughout my research work.
I extend my thanks to all Faculty members and Office staff of department of
commerce for their moral support and encouragement in completing my research work.
I express my gratitude to the Principals, Dr. W.V.Balaji, Perunthalaivar
Kamarajar Arts College, Madhagadipet, and to the former principals Dr.V. Ramasamy,
Dr.P. Nallasamy, Dr. Cheryl-Ann Gerardine Shivan, Perunthalaivar Kamarajar Arts
College, Madhagadipet, who have encouraged me and extended their helping hands for
completing my research work.
My sincere and heartfelt thanks to Dr.A.Senthamizhraja, HOD, Department of
Commerce, Perunthalaivar Kamarajar Arts College, Madhagadipet and my dear
colleagues Dr. V.Veeraperiyanayagi, Mr. C.Chandrakasan, and Mr.A.Albert
Joseph Raj, who had been extremely considerate, co-operative and encouraging me
throughout my research work.
The pace of research work gets accelerated only in a sustained research
environment. I must be very thankful to my scholar friends, Dr.P. Nalini, Mr.D. Sadish
Kadhane, Ms. R.Bhuvaneswari, Mr.P. Nikhil and Mrs.M. Gowri, for creating a
research environment of information, knowledge and experience sharing.
Success is impossible without the warmth and loving family. I am indebted to my
parents who wished me to be doctorate. I pay my sincere appreciation to my life partner
Mr.S.Pushparaj, without whose motivation, co-operation and moral support, it is
iv
impossible to complete the work. I thank my loveable kids P.Geetika and
P.Neerthikan for tolerating with me all along the research work and during the
preparation of this report.
Last but not least I thank my students particularly I batch B.Com.(PKAC)
students Gunasekar, Elango and Thulasi who helped me during my data collection
process and wished me to complete the research as earlier as possible.
(G.ARUNMOZHI)
v
Table of Contents
Certificate
Declaration
Acknowledgement
Table of Contents
List of Tables
List of Figures
Abbreviations used
CHAPTER TITLE PAGE No

I INTRODUCTION AND DESIGN OF THE STUDY 1-14
II REVIEW OF LITERATURE 15-36
III EMPLOYEE ATTRITION AND EMPLOYEE 37-61
RETENTION: A CONCEPTUAL OVERVIEW
IV EMPLOYEE PREFERENCE TOWARDS AN 62-97
ORGANIZATION
V EMPLOYEE ATTRITION: CAUSES AND 98-113
MEASUREMENT
VI EFFECTS OF EMPLOYEE ATTRITION AND RETENTION 114-138
STRATEGIES: EMPLOYER’S PERCEPTION
VII SUMMARY OF FINDINGS, SUGGESTIONS 139-152
AND CONCLUSION
BIBILIOGRAPHY
APPENDIX
v
List of Tables
Table No Title Page No
1.1 Reliability Test for Employees Interview Schedule 7
1.2 Reliability Test for Employers Interview Schedule 7
1.3 Demographic Profile of the Employees of IT Industry 8
1.4 Demographic Profile of the Employers of IT Industry 10
1.5 Kolmogrov-Smirnov Test for data analysis for employees 12
Interview Schedule
1.6 Kolmogrov-Smirnov Test for data analysis for employers 12
Interview Schedule
4.1 Variable descriptions of Employee Preference towards an 63
Organization
4.2 Descriptive Statistics of Employee’s perception about 65
Nature of Job
Working Condition
Motivation
Company Policies
Remuneration
4.7 Descriptive Statistics of Employee’s perception about Inter- 69
Personal Relationship between Employees
Interpersonal Relationship between Employee and Superior
4.9 Descriptive Statistics of Employee’s perception about HRD 70
practices
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4.10 Descriptive Statistics relating to overall ranking of factors of 71
Employee Preference towards an Organization
4.11 Perceptional difference of employees preference towards an 73
organization with regard to their Age, Education and
Experience
4.11.1 Age and Motivation 74
4.11.2 Age and Remuneration 74
4.11.3 Education and HRD practices 77
4.12 Perceptional difference of Employees Preference towards an 79
Organization with regard to their Gender and Marital Status
4.13 Model fitness for Measurement Model 90
4.14 Model fitness for Path Model 95
4.15 Results of Employee Preference Model 96
Avoidable Causes of Attrition
Unavoidable Causes of Attrition
5.3 Descriptive Statistics of Avoidable Causes vs. Unavoidable 100
Causes
5.4 Association between Demographic Variables of Employee 101
and Causes for Employee Attrition
5.5 Perceptional difference of Employees on Causes of 104
Employee Attrition with regard to their Age, Education and
Experience
5.5.1 Age and Unavoidable Causes 104
5.5.2 Education and Avoidable Causes 105
5.6 Perceptional difference of Employees with regard to their 106
Gender and Marital Status
vii
5.7 Employees details of IT industry Puducherry 108
5.8 Attrition rate in IT Industry, Puducherry 108
5.9 IT Industry Category Wise Employee Attrition Rate 109
5.10 IT Industry Category Wise and Employee Category Wise 110
Employee Attrition Rate
5.11 Attrition rate among Gender Category in IT Industry 111
6.1 Descriptive Statistics of Employer’s perception about 115
Positive Effects of Employee Attrition
Negative Effects of Employee Attrition
6.3 Association between Demographic Variables of Employer 116
and their perception about Effects of Employee Attrition
6.4 Perceptional difference of Employers on the Effects of 118
Attrition with regard to their Age
6.5 Perceptional difference of Employers on the Effect of 119
Employee Attrition with regard to their Gender and Marital
Status
6.6 IT firm having Separate Retention Policy 120
Importance of Employee Retention
Remuneration
Organizational Environment
Growth and Career
6.11 Descriptive Statistics of Employer’s perception about Inter- 125
Personal Relationship
viii
6.12 Descriptive Statistics of Employer’s perception about Moral 126
Support
6.13 Descriptive Statistics of Employer’s perception about the 127
factors influencing Retention
6.14 Perceptional difference on factors influencing Retention 128
with regard to their Age
6.15 Perceptional difference of employers on factors influencing 129
Employee Retention with regard to their Gender and
Marital Status
6.16 Descriptive Statistics relating to Retention Strategy at Entry 132
Level Professionals
6.17 Descriptive Statistics relating to Retention Strategy at Mid- 133
Level Professionals
6.18 Descriptive Statistics relating to Retention Strategy at Senior 133
Level Professionals
6.19 Perceptional difference of Employers on the Retention 135
Strategy with regard to their Age
6.20 Perceptional difference of Employers on Retention strategy 136
with regard to their Gender and Marital Status
ix
List of Figures
Fig. No Title Page No

4.1 Confirmatory Factor Analysis for Nature of Job 83
4.2 Confirmatory Factor Analysis for Working Condition 83
4.3 Confirmatory Factor Analysis for Motivation 84
4.4 Confirmatory Factor Analysis for Company Policies 84
4.5 Confirmatory Factor Analysis for Remuneration 84
4.6 Confirmatory Factor Analysis for Employee-Employee 85
Relationship
4.7 Confirmatory Factor Analysis for Employee-Superior 85
Relationship
4.8 Confirmatory Factor Analysis for HRD practices 86
4.9 Relationship between nature of job, working 87
condition, company policy and remuneration
4.10 Relationship between HRD practices, Employee- 89
Employee and Employee Superior Relationship and
Motivation
4.11 Overall Relationship model for Employee Preference 90
towards an Organization
4.12 Impact of Nature of Job on Working Condition, 92
Company Policy and Remuneration
4.13 Impact of HRD practices on Employee-Employee 93
Relationship, Employee-Superior Relationship and
Motivation
4.14 Overall Structural Equation Model for Employee 95
Preference towards an Organization
x
Abbreviations Used
ACER A Computer Entrepreneurial Revolution
AMOS Analysis of a Moment Structures
ANOVA Analysis of Variance
BPM Business Process Management
BPO Business Process Outsourcing
CFA Confirmatory Factor Analysis
CFI Comparative Fit Index
CP Company Policy
DIC Directorate of Industries and Commerce
EER Employee-Employee Relationship
ESR Employee-Superior Relationship
F value Fisher Snedecor Distribution value
FY Financial Year
GDP Gross Domestic Product
GFI Goodness of Fit Index
GPRO Group Procurement
HCL Hindustan Computers Limited
HITEC Health Information Technology Economic and Clinical Health Act
HP Hewlett- Packard
HR Human Resource
HRD Human Resource Development
H0 Null Hypothesis
H1 Alternative Hypothesis
xi
IT Information Technology
ITes Information Technology enabled services
IT IS Information Technology Infrastructure Services
LV Latent Variable
MNC Multi National Company
MOT Motivation
NASSCOM National Association of Software and Services Companies
NFI Normed Fit Index
OV Observed Variable
PG Post Graduate
P value Probability value
RMR Root Mean Square Residual
RMSEA Root Mean Square Error of Approximation
SEM Structural Equation Model
SPSS Statistical Package for Social Sciences
TCS Tata Consultancy Services
TLI Tucker-Lewis Index
UG Under Graduate
US United States
USP Unique Selling Proposition
Vs Versus
WC Working Condition
WIPRO Western India Products
Y2K Year 2000
xii
CHAPTER I
INTRODUCTION AND DESIGN OF THE STUDY
1.1 INTRODUCTION
1.2 EMPLOYEE ATTRITION
1.3 EMPLOYEE RETENTION
1.4 STATEMENT OF THE PROBLEM
1.5 SIGNIFICANCE OF THE STUDY
1.6 SCOPE OF THE STUDY
1.7 OBJECTIVES OF THE STUDY
1.8 HYPOTHESES OF THE STUDY
1.9 RESEARCH METHODOLOGY
1.9.1 PILOT STUDY
1.9.2 MAIN STUDY
1.9.2.1 DEMOGRAPHIC PROFILE OF THE EMPLOYEES OF IT INDUSTRY
1.9.2.2 DEMOGRAPHIC PROFILE OF THE EMPLOYERS OF IT INDUSTRY
1.9.3 SAMPLE SELECTION

1.9.4 DATA SELECTION
1.9.5 DATA ANALYSIS
1.10 LIMITATIONS OF THE STUDY
1.11 CHAPTERIZATION
CHAPTER I
INTRODUCTION AND DESIGN OF THE STUDY
“The key to growth is the introduction of higher dimensions of consciousness into our
awareness”. - Lao Tzu
1.1 INTRODUCTION
Without efficient professionals an organization cannot build a good team of work

force1. This can be possible when the organization provides all the facilities and
competitive salary to its employees then the employees will be committed to the
organizational goals and motivated to organizational success when they have an
enhanced sense of their own wellbeing. Otherwise employees will be dissatisfied and
move on in search of new job.
Attrition is a critical issue and pretty high in all the industries nowadays,
particularly in the IT sector. Many corporate in India face a formidable challenge in
recruiting and retaining talents2. Attrition takes place when employees leave his or her
current job due to various reasons. It means employees reduction in an organization for
various reasons such as marriage, sickness, retirement, death or resignation. Attrition
happens in an organization when the employees are dissatisfied with the facilities and
amenities provided by the organization in return to their services provided to the concern.
There are many factors that play an important role in attrition in any industry and these
can arise from either from the management or from the employees or from the both3.
Retention of employees involves steps to motivate employees to be remained in
an organization for a longer period of time. Nowadays companies face more problems in
retaining their employees, selecting the right person for the job is crucial for an
organization, but compare to recruiting an employee, retaining an employee is even more
essential. There are wide opportunities for the efficient people.They might switch to some
other suitable jobs4.
Among the Information Technology Capitals in the world, India is the one among
the biggest IT capital. IT industry provides a large number of employment opportunities
in India. It is the biggest job provide in India. More than 10 millionpeople directly or
1
indirectly involved in this sector. IT business in India is the biggest support for the
nation’s development5.
BPO in India is first started in started in 1980’s. Cheap labor and fluency in
English are the main attractions in India. This industry grew in spite of Y2K problems
and dot boom. When compared to other countries, business outsourced to India has cost
advantage. India has highly qualified professionals and cheap labor compared to other
countries. Due to these reasons MNCs were attracted to run their business in India and
there has been a consistent growth in the Indian IT sector and IT professionals.
Many colleges and universities are producing more number of IT professionals

every year. The demand ofhas heavily affected the IT industry in India. Due to this crisis
companies started to reduce their employees, decrease their remuneration and reduce
employee amenities. This circumstance creates high level dissatisfaction among
employees that result in a job changing scenario.
“Disengagement and job search behavior of the employees are on the rise” (Mark
and Andrea, 2005), and the attrition rate of employees that happens is serious and great
concern. The fact is that, this problem crates a great upset in various industries such as
the cost of losing efficient professional is greatly high and the organization strength and
firms success have been deeply affected. It becomes essential that the organization
should understand the reason for employee attrition and to find out the ways to retain
their efficient work force6.
In India, IT industry is playing a significant role in in the economic development

and has changed India’s image from slow moving bureaucratic economy to a land of
innovation7. “The sector has increased its contribution to India’s GDP from 1.2% in 1998
to 7.5% in 2012. The sector has aggregated a revenueof US$147 billion in 2015. The
sector has also led to massive employment generation. The industry continues to be a net
employment generator that add 2,30,000 jobs in fiscal year 2012, thus providing direct
employment to about 2.8 million and indirectly employing 8.9 million people
(NASSCOM), making it a dominant player in the global outsourcing sector”8.
2
“Though the picture seems to be bright, people-related issues continue to be the
most critical in almost all technology-driven organizations in the country. The rate of
turnover of IT professionals has been historically high” (Cannoly, 1988), “which is about
twice the average of business managers and professionals”(Ludhlum, 1988) “and is in
the range of 20 to 40 % in some organizations in India”(Atlas. 2005). Employee attrition
is one of the chronicle busters in IT industry9.
Blessed with unexploited nature and being a famous exotic tourist destination,
Puducherry has been credited as a rapidly growing Union Territory in India. Home of
several big IT software and Hardware giants, ithas attained significant growth in theIT,
ITes and BPO industry. IT hardware giants like Lenevo, HCL, ACCER, HP and WIPRO
have set up their units in Puducherry. The top IT software companies include Webby
logic solutions, GPRO Technology, Prapthi Technology services, Effinidi Technology
etc10.
1.2 EMPLOYEE ATTRITION
Employee Attrition means the proportion of number of employees that leave
anorganization for various reasons such as illness, dissatisfaction with job or wages,
marriage, retirement, death during a given period when compared to average number of
employees on payroll during the same period. In other words it means the inflow and
outflow of labor employed by an enterprise11.
In today’s competitive environment, the attrition in a business can affect both the
operation of the business as well as morale of employees. To some extent employee
attrition may be allowable, but beyond a certain limit it involves more expense in
replacing the employees who left the organization, which includes selection and
recruitment costs and training and development costs. It is a great loss for the
organization which losses its key performers and it is difficult to replace such key
employees.

Organizations are strongly striving or struggling for retaining manpower in all
possible ways. It is a great botheration among employers to design and implement a
retention policy. Employee retention is a continuous effort made by employers that create
and promotes an environment and frame policies and practices that fulfills the employees
3
diverse needs that stimulates present employees to stay in their organization for a longer
period12.
Employees are the assets of an organization, they are considered as the heart and
soul of every concern. Employee attrition may cause more problems to a concern, in the
form of costs, operational disturbances and loosing efficient employees which affects the
morale of other employees. To overcome such problems arising in a concern, employee
retention becomes very important one for the organization. It describes the ways to attract
and retain innovative, efficient and dedicated employees in the concern. It is not about
managing the retention, but managing the human resource of a concern which will
automatically take care of employee retention.
1.4STATEMENT OF THE PROBLEM

“India witnessed attrition rates of up to 25 per cent in 2015. Fresher level attrition
was around 12-14 per cent while at senior-level employees it was in the range of 8-10
per cent. The sectors that were severely impacted were IT, ITES and software as these
segments are witnessed attrition of 25 per cent or more at entry-level positions as per the
survey”( survey by Job Portal Wisdom Jobs)13.
There are 37 IT firms under different categories, Hardware, Software and BPO
functioning at Puducherry. From the observation and personal interview with the officials
of Directorate of Industries and Commerce and Department of Labor Welfare,it has
beennoticed that employee attrition is increasing in IT firms in Puducherry. No
comprehensive study has been under taken so far as to look into this issue and redress it
in this union territory. Hence, an attempt is being made to study the issue in depth and to
prescribe workable solutions to solve this chronic problem in Puducherry.
1.5 SIGNIFICANCE OF THE STUDY

Most of the engineering students opt for jobs in IT sector. This study gives a
better understanding to the society about employee attrition and employee retention in IT
industry. This will be helpful for the young graduates in choosing the right career.
The organization’s success mostly depends on the human resources, who are
deemed to be an asset and backbone of the industry. The present study was carried out to
4
find out the various causes of employee attrition. Once these factors have been identified
then it necessitates the organization to take appropriate steps to reduce the attrition rate in
their concern.
Employee Retention is considered to be very essential for any organization. The
study gives various retention strategies followed by the IT industry. This will be helpful
for firms not having separate retention policy to implement their own strategy to retain
their employees.
This study also paves way for the future researchers to choose their research area
on measurement of employee attrition rate and effects of employee attrition as there are
very few research articles based on these areas.
1.6 SCOPE OF THE STUDY
The study covers the topics of employee preference towards an organization,

employee attrition and employee retention and includes the various causes of employee
attrition, measurement of attrition rate, effects of employee attrition, factors influencing
employee preference towards an organization, importance of employee retention, factors
influencing employee retention and retention strategies followed by the organization.
The study area is IT units in and around the union territory of Puducherry. The
study covers a period of seven years from 2010 to 2017.
1.7 OBJECTIVES OF THE STUDY
The Specific Objectives of this study are:
 To explore the factors that influence employee’s preference towards an

organization.
 To identify the causes of employee attrition and to measure employee attrition in

the IT industry in Puducherry.
 To trace out the effects of employee attrition, factors facilitating and influencing
employee retention and retention strategies followed by employers to mitigate this
issue.
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1.8 HYPOTHESES OF THE STUDY
The following hypotheses were framed on the basis of objectives:
H1: There is no significant difference in the employee preferences towards an
organization with respect to demographic variables of the employees.
H2: There is no association between causes of employee attrition and
demographic variables of the employees.
H3: There is no significant difference in the causes of employee attrition with
respect todemographic variables of the employees.
H4: There is no association between the perception of employer about the effect of
employee attrition anddemographic variables of the employer.
H5: There is no significant difference in the effect of employee attrition with

respect to demographic variables of the employer.
H6: There is no significant difference in the factors influencing employee

retention with respect to demographic variables of the employer.
H7: There is no significant difference in employee retention strategy with respect

todemographic variables of the employer.
1.9 RESEARCH METHODOLOGY

This study is an empirical research based on both primary and secondary data. IT
units of Puducherry comprises of hardware firms, software firms and BPO firms which
were identified as sampling units taking into account the serious issue of employee
attrition in the IT companies.
1.9.1 Pilot Study

Two separate interview schedules were prepared both for employees and
employers. Pilot study was conducted and information was elicited from 30 employees
and 10 employers of IT industry in Puducherry. The purpose of this pilot study was to
test the reliability of the interview schedule and to confirm the feasibility of the study.
Cronbach’s Alpha reliability test was applied to test the reliability of the interview
schedule. An Alpha value of more than or equal to 0.70 is considered to be
significant14(Nunnally, 1978). The result of reliability test shows that the p values are
6
more than 0.7 and it shows that the interview schedules for both employees and
employers were highly reliable and it paved the way collecting the data in full range. The
result of Cronbach’s Alpha test is given below.
Table 1.1 Reliability Test for Employee’s Interview Schedule

Variables Alpha value
Nature of job 0.753
Working Condition 0.785
Motivation 0.911
Company Policies 0.774
Remuneration 0.871
Employee- Employee Relationship 0.851
Employee-Superior Relationship 0.914
HRD Practices 0.933
Avoidable causes 0.870
Unavoidable causes 0.751
Source: Author’s calculation from primary data.
Table 1.2 Reliability Test for Employer’s Interview Schedule

Variables Alpha value
Positive consequences 0.803
Negative consequences 0.904
Retention strategy at entry level professionals 0.945
Retention strategy at mid-level professionals 0.955
Retention strategy at senior level professionals 0.962
Remuneration 0.904
Organization environment 0.945
Growth and career 0.944
Inter-personal relationship 0.947
Moral support 0.932
Importance of employee retention 0.885
Source: Author’s calculation from primary data
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1.9.2 Main Study
The primary data were collected for the study from the employees and employers
of IT Industry in Puducherry using a well-structured interview schedule. Interview
schedules for employees and employers were divided into two sections. The I section is
designed as objective type to get demographic profile of the respondents. The II section is
designed usingLikert’s 5 point scale ranging from 5-strongly agree, 4-agree, 3- neither
agree nor disagree, 2-disagree and 1-strongly disagree.
1.9.2.1 Demographic Profile of the Employees of ITIndustry
To understand more about the respondents, demographic profile of the IT

employees were collected from the study area of Pondicherry.
Table 1.3 Demographic Profiles of the Employees of IT Industry
No of
S.No. Personal Profile Attributes Percentage
Respondents
18-25 years 142 47.3
26-35 years 112 37.3
1. Age
36 years &above 46 15.4
Male 185 61.7
2. Gender
Female 115 38.3
Married 130 43.3
3. Marital status
Unmarried 170 56.7
Under graduate 154 51.3
4. Education Post graduate 113 37.7
Technical education 33 11.0
Up to 2 years 92 30.7
2-5 years 138 46.0
5. Experience 6-10 years 48 16.0
Above 10 years 22 7.3
No. of 1 159 53.0
6. organizations 2-5 104 34.7
worked earlier 6-10 37 12.3
Source: Primary Data
8
The Table 1.3 shows the demographic profile of the respondents with regard to
their age, gender, marital status, education and the number of organization worked
earlier. It is clear that out of the sample size 300, 142 respondents (47.3%) fall in the age
category 18 to 25 years. It was not surprising as the industry was characterized by the
young lot as their primary work force. Both the environment and job description suit the
young professionals who are primaryfeatures of the IT industry. 112 respondents (37.3%)
are in the category 26 to 35 years and 46 respondents are in the category of 36 years and
above. Although the instrument had other age categories like 46 to 55 years and above 55
years but none of them fell in those categories, thus the category was reduced to 3 i.e.,
18-25, 26 -35 and 36 to 45.
Male and female employees have different views on employee attrition. With this
view in mind, the entire sample was divided into male and female category. Gender
classification given in table 1 shows that among the total respondents 185 (61.7%) are
male respondents and only 115(38.3%) are female respondents. It shows that majority of
the workforce of IT industries comprises of male category.
Since marital status plays an important role in employee attrition, marital status of
the respondents was also collected for the study. It was categorized into two i.e., married
and unmarried. Since majority of the respondents fell in the age group18- 25years, 170
(56.7%) respondents were unmarried and only 130 (43.3%) respondents were married.
Educational qualification influences the requirement of the employees and hence

it may lead to different opinion in the perception about the employee attrition and
employee preference towards an organization. So it is considered as one of the most
important socio-economic factor and hence it was collected. Classification based on the
educational qualification shows that 154 (51.3%) respondents are under graduates, 113
(37.7%) respondents have post graduates and only few i.e., 33 (11%) were technically
qualified. It indicates that majority of the respondents were possessed UG degree.
Employee perception regarding attrition may differ due to period of his stay in the
organization i.e., the number of years of experience of the respondents.It was also
collected for the study. Out of 300 respondents majority i.e., 138(46%) respondents are
having 2 to 5 years of experience, 92 (30.7%) respondents are having less than 2 years of
9
experience, 48 (16%) respondents are having 6 to 10 years of experience and only few
22(7.3%) respondents are having experience more than 10 years. Since most of the
respondents belong to young age group, experience is also less.
Out of the total sample, 159 (53%) respondents have worked only in one
organization, that is, in the present job, 104 ( 34.7%) respondents have worked in 2 to 5
organizations and only few i.e., 37 (12.3%) respondents have worked in 6 to 10
organizations. This demographic profile show that nearly one third of the respondents has
frequently changed their job due to some reason.
1.9.2.2 Demographic profile of the employers of IT Industry
Employers and employer’s representatives in the organizations either

administrative officer or HR manager were approached to elicit their views on the chosen
problem. To have better understanding about the respondents, demographic profile of the
respondents were collected and education.
Table 1.4 Demographic profiles of the employers of IT Industry

S.No. Personal Profile Attributes Respondents Percentage
26-35years 17 56.7
36-45years 10 33.3
1. Age
46-55 years 3 10.0
Male 24 80.0
2.
Gender Female 06 20.0
Married 25 83.3
3. Marital status
Unmarried 05 16.7
Post graduate 23 76.7
4. Education
Technical education 07 23.3
The table 1.4 vividly shows the demographic profile of the respondents with
regard to their age, gender, marital status thatout of the sample size of 30, 17 respondents
(56.7%) fall in the age group of 26 to 35 years and this was not surprising as the industry
was characterized by young professionals who are the salient featuresof the IT industry.
10 respondents (33.3%) are in the category 36 to 45 years and 3 respondents are in the
category 46 to 55 years. Although the instrument had other age categories like 18- 25
10
years 55 years and above but none of them fell in those categories, thus the category was
reduced to 3 i.e., 26 -35, 36-45 and 46 to 55.
Male and female managers have different views about employee retention. With
this point in view, the sample was divided into male and female category. Gender
classification given in the table 1 shows that among the total respondents 24 (80%) are
male respondents and only 6 (20%) are female respondents. It shows that majority of the
managers of IT industries belong to the male category.
Marital status of the respondents was also collected for the study. It was
categorized into two i.e., married and unmarried. 25 (83.3%) respondents were married
and only 5 respondents were unmarried. It shows that majority of the managers were
married.
Classification based on the educational qualification shows that 23 (76.7%)
respondentscompleted post-graduation, rest of them only 7 (23.3%) were technically
qualified. Although the instrument has another category called undergraduate, none of the
respondent fell in this category. This indicates that managers need higher qualification.
1.9.3 Sample Selection

Non-probability convenient sampling method is used to collect primary data from
employees of IT industry, Puducherry, and census survey method was used to collect
information from employers.The sample size of employees is 300 and sample size for
employers is 30, who belong to different IT firms in Puducherry.
1.9.4 Data Analysis

This study was based on primary and secondary sources of data. The primary data
were collected through interview schedule. The secondary data were collected from
books,registers, magazines,journals, etc. The data collected from both the sources were
scrutinized, edited and tabulated. Further the processed data were analysed using
Statistical Package for Social Sciences (SPSS). Kolmogrov-Smirnov
15
Test (Chakravarti, Laha and Roy, 1967) is applied to find out whether the data falls
under normal distribution. Since the p value of all the variables are more than 0.5 for both
employees and employers, it paved way for applying parametric test for analysis of data.
The tests results were given below.
11
Table 1.5 Kolmogrov-Smirnov Testfor employee’s Interview Schedule
Variables One sample Kolmogrov-
Smirnov p value
Nature of job 2.022
Working Condition 2.223
Motivation 2.157
Company Policies 2.416
Remuneration 2.835
Employee- Employee Relationship 3.169
Employee-Superior Relationship 1.579
HRD Practices 1.675
Avoidable causes 1.097
Unavoidable causes 1.914
Source: Authors calculation from primary data
Table 1.6 Kolmogrov-Smirnov Test for employer’s Interview Schedule

Variables One sample Kolmogrov-
Smirnov p value
Positive consequences 0.771
Negative consequences 0.803
Retention strategy at entry level professionals 1.230
Retention strategy at mid-level professionals 1.229
Retention strategy at senior level professionals 1.309
Remuneration 0.948
Organization environment 1.312
Growth and career 1.052
Inter-personal relationship 1.420
Moral support 0.927
Importance of employee retention 0.948
Source: Authors calculation from primary data
12
The following are the various statistical tools used for the study:
i) Percentage Analysis wasconducted for the items in demographic profile of
the respondents
ii) Descriptive statistics viz., mean, standard deviation along with rank was
found out for variables.
iii) Chi-square is used to find out the association between demographic profile
of the respondents and other variables.
iv) One way Analysis of Variance (ANOVA) was used to find out the
significant difference in the opinion of the respondents with regard to
demographic profile of the respondents and other variables.
v) Independent Sample t test was applied to find out the significant difference
in the opinion of the respondents with regard to demographic profile of the
respondents and other variables.
vi) Structural Equation Modeling (SEM) has been used for analysis.
Confirmatory Factor Analysis (CFA), Measurement model and Path model were
used to find the relationship between the variables of employee preference towards
an organization and to find the impact of job on working condition, company
policy and remuneration and the impact human resource practice on employee-
employee relationship, employee-superior relationship and motivation.
1.10 LIMITATIONS OF THE STUDY

The following were the limitations of the study:
 The study focuses on employee attrition and retention strategies in IT industry
located in the union territory of Puducherry only.
 The study is based on employees’ and employers’ perception and these
perceptions are subject to change in the days to come.
 The dynamics of job market plays a crucial role in the effectiveness of factors
discussed in this research work. Hence any change in the job market has its
impact on the findings and conclusions of this study.
 The study suffers from the limitation of primary data that is, it is time consuming
and the respondents are not prepared for an interview.
13
1.11 CHAPTERIZATION
The report is structured into seven chapters
Chapter I: Introduction and Design of the study deals with Introduction, Statement of
the problem, Significance of the study, Scope of the study, Objectives of the study,
Hypotheses of the study, Research methodology, Limitations and Chapter arrangement.
Chapter II: Review of Literaturecovers the reviews under various heads related to
employee attrition and retention strategies viz. causes of employee attrition, impact of
employee attrition, measurement of employee attrition, and retention strategies.
Chapter III: Employee Attrition and Employee Retention:AConceptual overview

covers conceptual framework of employee attrition and retention strategies, origin and
growth of IT sector in Puducherry, status of employee attrition and employee retention in
IT industry.
Chapter IV: Employee Preference towards an Organizationhighlights the factors

which influences employee preference towards an organization.
Chapter V:Employee Attrition:Causes and Measurement describes the causes of

employee attrition and the measurement of employee attrition rate in IT industry.
Chapter VI: Effects of Employee Attrition and Retention Strategies: Employer’s

perception highlights the effects of employee attrition and retention strategies followed
in IT industry at Puducherry to retain the employees.
Chapter VII:Summary of Findings, Suggestions and Conclusionsummarizes the

findings and conclusions of the study and suggestions to the employers to manage
employee retention effectively.
14
Chapter End References
1. www. Konkonworld.com
2. Lavanya Latha, K., “A Study on Employee Attrition and Retention in Manufacturing
Industries”, www.bvimsr.com., 5(1), (2013).
3. Shine David, Saakshi Kaushik, Harshita Verma and Shivani Sharma, “Attrition in IT
sector”, International Journal of Core Engineering and Management”, 2(1), 236-246,
Apr.(2015).
4. Mohan, S. and Muthuswamy, P.R., “A Study on Employees Retention in BPO sector
with special reference to Coimbatore city”, International Journal of Informative and
Futuristic Research, 2(6), 1609-1615, Feb. (2015).
5. www.dqweek.com
6. George A.P and Joji Alex.N,“Turnover intentions - perspectives of it
professionals in Kerala”, The IUP Journal of Organizational Behavior, X(1), (2011).
7. www.crscendoworldwide.org
8. NASSCOM
10. www.dqweek.com, Software companies boost IT growth in Pondicherry
11. www.investopedia
12. Ramanaiah G and Lavanya L, “A study on the level of commitment towards retention
practices in IT and non – IT companies in Chennai”, Advances in Management,
4(12), 53-56, Dec. (2011).
13. Job Portal Wisdom Jobs
14. www. Analytictech.com, Nunnally on Reliability
15. Chakravarti, Laha and Roy (1967), Handbook of Methods of Applied Statistics,
Volume 1.
1
CHAPTER II
REVIEW OF LITERATURE
2.1 STUDIES ON CAUSES OF EMPLOYEE ATTRITION
2.2 STUDIES ON IMPACT OF EMPLOYEE ATTRITION
2.3 STUDIES ON MEASUREMENT OF EMPLOYEE ATTRITION
2.4 STUDIES ON MODELS OF EMPLOYEE ATTRITION
2.5 STUDIES ON EMPLOYEE RETENTION
2.6 STUDIES ON EMPLOYEE ATTRITION AND EMPLOYEE RETENTION
2.7 RESEARCH GAP

CHAPTER II
REVIEW OF LITERATURE
“Freedom from desire for an answer is essential to the understanding the problem”. –
JidduKrishnamurti
The objective of this chapter is to review various research studies related to

employee retention management. This study has been undertaken after critically
reviewing as many as 65 related research articles and projects. Out of 65 reviews 30
articles belonged to Indian context and remaining 35 to foreign context. Of the total, 20
articles were related to IT industry and remaining articles are on other areas like
manufacturing, retail business, marketing and other sectors. The reviewed research
articles and projects are broadly grouped and prescribed here under six heads viz., causes
of employee attrition, impact of employee attrition, measurement of employee attrition,
employee retention, employee attrition and retention and models of employee attrition..
2.1 STUDIES ON CAUSES OF EMPLOYEE ATTRITION
Changes are inevitable and it is costly to the organization. Employee attrition is an

element of change that directly affects the very foundation of the organization. So, it is
necessary to find the motives of employees leaving the job and devise an effective
retention strategy. This part of the chapter covers the various reviews that are related to
the causes of employee attrition of various sectors viz., manufacturing, information
technology etc. The following were the summary of the reviews collected for the study.
Sunil Kumar Dhal and AmareshNayak (2015)1 traced the factors that are
responsible for employee attrition in BPO industries. Authors found various factors
responsible for employee attrition they were the BPO Company operates 24 hours a day
and 365 days a year. Graveyard shifts and odd hours which suit the foreign clients create
problems to the employees. Symptoms of Insomnia and even depression werefound due
to change in the 24 hour biological rhythm of the body, and also loss of employees’
personal life.
15
Batty DoranceJeen (2014)2 analyzed the impact of employee attrition intention on
organizational outcomes. From the analysis it was found that various factors that causes
attrition were inconvenient working hours, personal reasons, dissatisfied working
environment and wages, lack of welfare facilities, lack of career development and poor
inter-personal relation with co-workers.
SnehaMankikar (2013)3tried to understand the cause and effect relationship

between infant attrition and employee satisfaction. It also considers the other dimensions
like leadership style of the management, job discrepancies and stress of employee. It
found that IT industry has the problem of infant attrition and the causes for such attrition
were employee’s stress, job discrepancies, organizational culture, employee
discrimination etc. Among these factors job discrepancies has the major influence on
infant attrition.
PushpendraPriyadarshi (2011)4 aimed to find out whether affective commitment,

turnover and satisfaction determines the employee brand image. The dependent variable
is turnover and independent variables are variety in job and work settings. The result
shows that the variety in job and work setting attributes are the factors positively
contributing to intention to quit. The author concluded that the employee’s perception
about the brand image of their employer depends upon their personal and professional
experiences and hence it determines the behavior and attitude of the employer.
George andJoji Alex (2011)5tried to analyze the importance of Internal Career

Anchors (ICA) and External Career Opportunities (ECO) in determining employee
Intention to Quit (turnover intentions) (ITQ) from an organization. IT employees formed
the sample of the study. The study is restricted to the state of Kerala. The finding shows
that there exists a negative relationship between ECO and ITQ and there is a positive
relationship between ICA and ITQ. The respondents were Information Technology
(IT) professionals working in the state of Kerala. The study revealed negative
relationship between the degree of ECO and ITQ and positive relationship between ICA
and ITQ. The relationship is negative and significant for two ICAs, namely, job security
and technical-functional competence. Among the demographic variables, experience of
the employee showed significant effect on ITQ. The author suggested that the IT firms in
16
Kerala should give special importance to ICA factors and provide ECO on the basis of
employee performance to reduce employee attrition.
Michael Davidson, Nils Timo and Ying Wang (2009)6 aimed to present the
findings of an extensive survey of employee attrition in the Australian accommodation
sector. The study is focused particularly on attrition rate and attrition costs. The finding
reveals that huge loss for the organization is due to attrition. These expenses or losses
should be carefully examined by the organization. It also indicates that there is a great
impact of attrition on level of service, consumer experience and value. Employees at
different levels expects for good working environment, better and competitive pay,
opportunities for career development and these factors can reduce attrition level to a
greater extent.
SaketJeswani and SourenSarkar (2009)7 attempted to identify the strength of
relationship among organizational citizenship behavior and psychological empowerment
within the employees of Bhilai Steel Plant Ltd.(BSP). Entry level employees and middle
level managers of BSP form the sample of the study. Results indicate that manager who
perceives psychological empowerment towards the organization, exhibit organizational
citizenship behavior. The research extends the theoretical framework and draws
implications for the employees enjoying psychological empowerment and exhibiting
organizational citizenship behavior having intention to stay or quit.
Chandreseker (2007-08)8 in his project analyzed the causes for attrition at Net
worth Stock Broking Ltd. with reference to sales department. Exit interview forms and
telephonic interview method is used for collecting data and weighted average method is
used for analysis The study concludes that expectations of the employees regarding their
salary, opportunity for promotion does not match with reality these factors induced
employees to move out of the job.
Abraham Vinoj (2007)9discussed the various determinants and types of employee
attrition. The data for the study was collected by survey method.It shows a high degree of
employee attrition in the industry. Logit approach is used for analyses to find the quitting
behavior of employees in the software industry. The result shows that while skill up-
gradation and informal learning are most influencing factors that affect the employee’s
decision to quit organization or not to quit and not the educational level of employees.
17
Higher salary in general prevents the employees moving form one firm to another firm.
But it is also up to a certain level.
John Hope and Patrick Mackin (2007)10tried to find out the relationship between
employee attrition and firm size as it relates to compensation. National Longitudinal
Survey of Youth (NLSY) is used for data collection. The objective of the study is to find
whether there is any difference in wage benefits between small and big firms and to find
which is prone to attrition either small or big firm. It was found the employee of large
firms stay in their firm for a longer period than employees of small firms.
Win Van Breukeler, Rene’Van der Vlist and Herman Steensma (2004)11has aimed
to find out answer for the question about the three predicators of planned behavior
theory., that whether the organization provides satisfactory explanation for the behavior
and intention of the employees in voluntary attrition. It was also analyzed the factors
such as organizational commitment, age, job satisfaction and tenure were able to explain
the turnover intentions and voluntary turnover. The study is based on longitudinal
method, sample size is 296 and professionals in Royal Netherlands Navy werethe
respondents. The result shows that the behavioral intentions are proved to be the best
indicator of attrition. Tenure and job satisfaction showed variance in intentions after the
effect of predicators of theory of planned behavior.
Peter Elias (1994)12 conducted research within six local markets within Great
Britain, Abeerden,, Coventry, Kirkcaldy, Northampton, Rochdale and Swindon and the
sample size of the study is 1000 and data is collected through survey method. Interesting
results were found from the analysis that about job related training provided by employer
and attrition. It was found that employees provided job related training certainly helps in
retaining employees. It is particulary for female employee and it has negative effect on
male employees.
Andreas Diekmann and Peter Preisendoerfer (1988)13 analyzed the employment
fluctuation of blue-collar workers in West Germany engineering company during the
period 1976 to 1984. The authors emphasize on two aspects one is the time pattern of the
rate of leaving and the other is the determinants of the rate of leaving the firm. The time
pattern of the rate of leaving is shown by a risk function, i.e., the conditional probability
18
of an employment change, decreases with tenure and under certain conditions a non-
monotonic, a reverse U-shape of the tenure- dependent rate of turnover may arise. With
regard to the determinants of rate of leaving, contrary to the expectation, women’s job
tenure is longer on average than job tenure for men. The result supports the hypothesis
that increasing wage scales might act as a barrier to employment fluctuation.
George Lucas, Parasuraman, Robert Davis and Ben Eris (1987)14 focused to
investigate the relationship of employee characteristics and job attitudes of turnover. The
sample size is 2,357 respondents. The statistical tools used for analysis were regression,
MANOVA and discrimant analysis. Explores that tenure and age are the influencing
factor for sales force turnover and turnover are influenced by external factors than
internal factors.
Lawrence Peter, Ellen Jackofsky and James Salter (1981)15 predicted turnover
reasons of full and part time workers. The sample size is 71. Mean, S.D., point biserial
correlation were the statistical tools used. The study concludes that among full time
employees turnover is predicted from two variables viz., thought of quitting and job
satisfaction and within part time employees, none of the five variables viz. satisfaction,
thought of quitting, expectation for better job, job search behavior and intention to leave
were significantly related to actual withdrawal.
Dan Dalton and William Todor (1979)16analyzed the turnover from the view point
of economic, social, psychological and organizational theories. The variables affecting
turnover were the level of pay, communication, centralization and integration.
From the organizational view point, attrition enhances organizational

effectiveness and creativity, assists in the efficient management and interim co-operation
and rapid technological change. And also the cost of reducing turnover exceeds the
attrition cost. From the economic viewpoint, mobility of labor increases net national
product and contributed to the long-term growth rate of the economy. It helps to reduce
the wage differentials of individuals. Sociologically, mobility may serve to reduce
inequity and inequality in social exchange; also it helps to reduce ecological pressure.
19
It is concluded that turnover of an employee forms a role model for others and
when the effort is made to stop the attrition process it may give way for irregularity,
detachment, unauthorized absence and other non-productive behaviors. If it is allowed
then it automatically rectifies the error in the process of job searching.
Wolfgang Teckenberg (1978)17 analyzed the functional theory of stratification
departs from the assumption that remuneration in a job is a function of its scarcity in a
society. As long as there is division of labour and scarcity of resources, there is a socialist
‘quasi-functional’ principle, ‘equal pay for equal work’. The high rate of labor turnover
shows that the principle is not achieved and there may be great differences in pay
package for the same job. This is due to the guarantee of bonuses in different section but
by increasing structural differencesof various enterprises and their socio-economic and
cultural services. The findings shows that the high rate of labor attrition in the Soviet
Union is not only due to the attempts and possibilities of workers aims to a maximum
degree of fulfillment of their needs. More number of express their opinion with regard to
dissatisfaction with work and conflict in the firm. The workers are more likely to quit the
unsatisfying job and search for a job.
Mobley (1977)18conducted a study on the relationship between job satisfaction
and employee attrition. Even though it is clear that there is a significant and consistent
relationship betweenjob satisfaction and employee attrition, but it is not very strong. It is
suggested that there is a possibility of other variables that mediate the relationship
between these two. Among these variables behavior intentions are considered to be the
key factors.
Porter Steers, Mowday and Boulian(1974)19examined the variation in the
organizational commitment and job satisfaction. The study is based onlongitudinal
method andrecently-employed psychiatric technician trainees were the respondents.From
the study it was found that it is able to differentiate the people who stay from the quitters
during the earlier phase of the study. After some times the result proved that the better
indicator of attrition is organizational commitment and not job satisfaction.
Magnus Hedberg (1961)20 applied actuarial methods to empirical turnover-data

indicated that a more detailed and precise description can be obtained. The first step to a
better understanding of the stable patterns shown by the companies in this study could be
20
taken through detailed descriptions of the differences have to be made in psychological
and sociological categories. Comparable descriptions of the jobs to which the new hires
are assigned could also helpful in order to compare turnover patterns.
Bartholomew (1959)21 analyses labour turnover processes, with the principal

object of assessing the value of crude turnover rate as a measure of stability. The method
used is based on a straightforward application of renewal theory. The purpose of the study
is to find how turnover rates are influenced by changes in the length of service structure
of group of men. If this influence can be shown to be large then value of the crude
turnover rate is seriously reduced. This rate is greatly influenced very much by the age
and recruitment history of the group to which it applies. It cannot, therefore be used as a
valid method of comparing the stability of groups of men unless they are similar in these
respects, It is finally concluded that not only must there be an adequate supply of
manpower initially, but replacements will be required at a much higher rate than for a
long established firm.
Sillock (1954)22 categorized the characteristics of labour wastage into three heads
viz strongly marked characteristics, less prominent characteristics and the third group is
on the evidence is fragmentary The fact is that in full employment the majority of
terminations are at employees’ request may simply reflect the economic climate which
makes it profitable for the employer to retain the labor he recruits. The result shows the
wastage rate is lower for men than for women and for skilled workers compared with
semi-skilled and unskilled workers. The author suggests that what they are and how they
might be recognized would be to cross the boundary beyond which is unsafe to stay
without the collaboration of colleagues from industrial psychology and sociology.
Malar Mathi and Malathi23 interested to find the causes of attrition in IT

industries. The study was made only to the employees working in IT companies in
Chennai and the opinion of both employees and employers were collected for the
analysis. The major findings from the analysis are employee and employer has the same
opinion with respect to organizational and family related problems but their opinion
differs with HR and job related problems. It was finally concluded that the management
21
should consider the difference of opinion in order to reduce the attrition rate and increase
employee attitude in order to sustain in the organization.
To conclude the reviewed articles under the head causes of employee attritions,
the following were the commonly found reasons for employee attrition viz., inadequate
salary, lack of career growth, improper working condition, stress, job dissatisfaction, job
description discrepancies, organizational culture, organizational commitment, age, tenure,
inadequate training, communication problems, centralization, etc.
2.2 STUDIES ON IMPACT OF EMPLOYEE ATTRITION
In today’s competitive business world the effect or impact of employee attrition

on a business can be detrimental to both the basement of the organization and morale of
the employees. Employee attrition can have the loss of employees as well as loss of
customers. Both aspects over the time are a great challenge for the managers.
Gaia Garino and Christoper Martin (2005)24analyzed the impact of labor turnover
on profits. They extended the efficiency wage model of Salop (1979) by separating
incumbent and newly hired workers in the production function. The results show that
external increase in attrition can cause increase in firm’s profit. This effect varies from
one firm to another firm as it depends on other factors such as attrition costs, the
substitutability of incumbents and new hires and etc. It was concluded that replaced
employee productivity is less compared to the incumbent in the firm and suggests that
high attrition affects productivity.
Preeti Thakur (2014)25 has aimed to find out the effect of employee engagement
on job satisfaction in IT sector. Officials and Clerks of IT sector were the respondents for
the study. The findings of the study reveals that officials can be motivated by delegation
of authority, responsibility and accountability, whereas for clerical level of employees
expects sanction and rewards and recognition that are significantly associated with
employee engagement. It was finally concluded that there exists a positive relationship
between employee engagement and job satisfaction.
22
Barry Staw (1980)26 explored the impact of employee turnover in an organization.
A number of positive as well as negative consequences of turnover are discussed in the
study. Entrenched conflict, increased mobility and morale and innovation and adaptation
were the positive consequences, selection and recruitment cost training and development
cost, operational disruption and demoralization of organizational membership were the
negative consequences were identified in the study and moderators of these effects are
also proposed.
2.3STUDY ON MEASUREMENT OF EMPLOYEE ATTRITION

Calculating the employee attrition rate of an organization allows the company to
determine the percentage of employees left the organization over a specified period of
time, usually one year.
Isobel Goddard (1927)27 examined four principal methods measurement of labour

turnover, they were separation rate, accession rate, flux method and replacement rate. The
data was collected from two factories during the period 1924-25 and four methods were
applied. The choice of the method lies in the judgment of the researcher, in the face of
adaption a to factory and trade conditions. The field is open for the use of one method as
of another, and as on the whole separation rate is the best on the basis of simplicity and
suitability of general application.
To conclude there are various methods used for the calculation of employee
attrition such as replacement method, separation method, flux method, crude wastage
method etc., separation method is used mostly to calculate employee attrition rate on the
basis of simplicity and suitability.
2.4 STUDIES ON MODELS OF EMPLOYEE ATTRITION

The models of employee attrition reviewed in this chapter apply constructs,
statistics and social psychology to facilitate understanding and to redirect theory
deployment and empirical research. The various models discussed are process and
content models of turnover, model of labor demand, a dynamic model with regard to the
ability of insiders to extract rents associated with exogenous turnover costs, a model of
quits and combined with a labor demand function to produce a model of layoffs, a model
of the relationship between labor turnover and wage structure, etc.
23
Carl Maertz. and Michael Campion (2004)28 developed process and content
models of turnover, process model focused on pattern of turnover and content model on
the reasons for attrition. Effort is being made to integrate these approaches to test whether
motives relate systematically to decision processes.It has been classified 159 leavers
using four process types and measured eight content motives for leaving. The findings
show that those leave the job with no job had more negative effect.
Daniel Hamermesh and Gerard Pfann (1996)29 developed and estimated a model
of labor demand that accounts for dynamics arising from the costs of both net and gross
changes in employment. The estimates suggest that observed lags in the demand for labor
at the aggregate level rise from slow adjustment in the both the level of employment and
in replacing workers who quit. The large procyclical fluctuations in voluntary mobility
are important in describing aggregate employment fluctuations only if one imposes
symmetric adjustment.
Henrik Vetter and Torben Andersen (1994)30 presented a dynamic model with
regard to the ability of insiders to extract rents associated with exogenous turnover costs.
If the rent is high then incentives for outsiders is also high, to obtain for to retain the
present employees and to control the new comers. As a consequence there is a lower limit
to the number of insiders which can avoid entrance of outsiders but the insiders cannot
obtain a rent equal to the turnover costs for each period. The insider model never explains
a lower but may result in a higher employment level than in the case where all workers
are wage-takers.
Simon Burgess and Stephen Nickell (1990)31 constructed a model of quits and
combined with a labor demand function to produce a model of layoffs. The main feature
of this is the explicit incorporation of the interaction between quits and layoffs. A linear
approximation and a structural form are estimated on UK manufacturing data for 1965-
82. It is shown that the most important determinants of separation is the state of demand
in the labor market, with some structural factors having a minor role to play.
Ellen Jackofsky and John Slocum (1987)32 formulated a model of Job Turnover
that includes job performance as a predictor and was presented and tested longitudinally
using path analysis. The model istested in the current work is based on the assumption
that job performance is related to factors involved in the voluntary job turnover process
24
(Jackofsky, 1984), hypothesized a relationship between job performance and all types of
turnover (voluntary and involuntary). It is predicted that job performance will affect both
the individual’s desire to leave and ease of movement.
Collier and Knight (1986)33 developed a model of the relationship between wage
structure and labor turnover and in the presence of firm-specific skills which provides a
cost-reduction rationale for seniority pay even in the case of expeditious skill acquisition
on recruitment. In this model the level of seniority premium depends on counterbalancing
forces. On the one hand, larger premium to employees has an effect in quit rates that is it
increasequit rates, the larger is the premium.On the other hand, the degree of wage
compensation required by the worker on account of the marginal utility of consumption is
also greater. The relative strengths of these two factors, together with the size of the
investment in training by the firm, determine the sudden decrease in the seniority scale.
Ellen Jackofsky(1984)34 developed an integrated model of turnover and job

performance, the model includes three primary partial determinants of voluntary
turnover, they were desirability of movement, ease of movement and intentions to quit.
Performance is hypothesized to have an impact on both ease and desirability of
movement. From the results it was found that there is an indirect relationship between
performance and satisfaction. With regard to performance and ease of movement,
performance will directly affect individual perception that an alternative to the current job
can be found.
YoavVardi (1980)35 developed a multifaceted model in which the individual and

organizational factors determines mobility patterns, the author perceived organizational
career mobility conceptually as all types of mobility by employees and related attitudes
and behaviors. This approach must first finds and ensures environmental, organizational
and individual career hurdles. The author suggests that there is a need for proper
information to handle the career mobility of existing employees. As more number of
executives are involved in planning and managing organizational careers, the need for
realistic based information increases. In many cases the vacancy rumors are converted by
superiors into false promises. Career mobility then becomes a threatening, discriminating
and political game. Thus management was responsible for the dissemination and control
25
of relevant information concerning opportunities and their contingencies throughout the
organization.
Whitemore (1979)36 drafted a model of employee job attachment. The model

implies a defective inverse Gaussian distribution form for employee service times. It is
shown that the model provides a useful basis for formulating and testing hypotheses
about turnover phenomena. Finally, intra- and inter-industry studies of turnover rates and
related labor statistics are set on a firmer conceptual base with the model. For example,
Lancaster’s successful application of an inverse Gaussian model to strike duration data
(Lancaster, 1972) suggests that the model may provide a significant theoretical link
between work stoppages and labor turnover experience.
Clowes (1972)37 developed a two stage model to represent the process of labour
turnover. Labor turnover in this model is defined in terms of primary and secondary
termination processes separated by an induction period. The rates of the two termination
processes vary markedly between firms; firms with low initial labor turnover rates do not
necessarily have low secondary labor turnover and vice versa. The rates at which recruits
adapt to the ways of different firms are markedly similar. The parameters controlling the
turnover process seem to have a realistic significance in terms of quantifying some of the
factors involved in the interaction of personnel and organizations.
A better understanding about the models of employee attrition is derived from the
above reviews. The findings show that those who quit with no job alternative had more
negative effect than users of decision types, the estimates suggest that observed lags in
the demand for labor at the aggregate level rise from slow adjustment in the both the level
of employment and in replacing workers who quit, there is a lower limit to the number of
insiders which can avoid entrance of outsiders but and the insiders cannot in each period
obtain a rent equal to the turnover costs. With regard to performance and ease of
movement, performance will directly affect individual perception that an alternative to
the current job, etc.
26
2.5 STUDIES ON EMPLOYEE RETENTION
Employee retention refers to an effort made by a business to maintain the working

environment which makes the existing employees to stick on to the same organization.
Most of the retention strategies are focusing the fulfillment of various needs of
employees to increase their job satisfaction and to avoid the substantial costs involved in
recruiting and training the new staff.
BodjrenouKossivi, Ming Xu and BombomaKalgora (2016)38 focused on

reviewing the findings of previous studies conducted by various researchers with the aim
to identify the determinant factors of employee retention. The research had a look on the
factors like compensation, development opportunities, work-life balance, management,
social support, work environment, autonomy and training and development. The authors
concluded that further investigation need to be carried out regarding employee retention
to better comprehend the complex field of human resource management.
Antony Joe Raja and AnbuRanjith Kumar (2016)39 tried to understand the opinion
and attitudes of the various categories of employees of education institutions towards
employee retention. The primary objective of the study is to analyze about the employee
retention in education sector. The study revealed that job satisfaction, salary, promotion
was important among the teachers. There are intrinsic as well as extrinsic factors that
affect the academic retention process. This is because the teachers see job satisfaction as
the most important aspect; job satisfaction was regarded as an intrinsic element that
motivates staff to stay within their job.
Sultana Nazia and Bushra Begum (2013)40 examined the employee retention
practices adopted by Indian MNC’s. 10 MNCs were selected for the purpose of the study
and from each of these 10 companies 10 employees are selected at random from the
middle level management. It was concluded that steps must be taken by the organization
to relieve the employees from the workload through job rotation, change in work location
and other recreational activities. Three R’s such as reward, recognition and respect have
to be followed to retain employees. It is found that welfare measure and grievance
handling procedure is quite insufficient, employees opted either yoga or other
recreational activity to manage the employees stress.
27
ChandranshuSinha and RuchiSinha((2012)41 identified the main factors of
retention management strategies in organization. The data was collected from 100
employees holding middle managerial positions in two organizations. The study reveals 3
factors as retention management strategies followed by the organizations under study
viz., competence and relationship oriented factors, scholastic and futuristic oriented
factors and developmental and reward oriented factors.
James and Mathew (2012)42 suggested some important retention strategies. They
include rewards and recognition, training and development opportunities, mentoring and
coaching sessions, career planning, flexi work timing, annual performance appraisal, on
site and day care facilities. At graduate level flexible work timing is very important
retention strategy. Rewards and recognition are very important for retaining the
employees. Best way to enhance the employee retention is to understand what employees
want from the organization.
Ghosh and SangeetaSahney (2010)43 diagnosis the organizational, social and
technical subsystem elements that moderate the turnover of junior and middle level
managers in the company. The SAP-LAP framework has been adopted as the diagnostic
instrument of organizational analysis. The findings show that organizational socio-
technical factors have an impact on managerial retention.
NanditaChatterjee (2009)44analyzed the key factors which affect employee
performance and triedto understand the effect of organizational culture on employee
retention. In the modern organization, employee retention is the important term which
summarizes the efforts of the HR manager. Various tools are being employed in order to
ensure high employee morale and also to find employee expectation and match them in
with attrition level. The quality of employees and the organizational culture plays a major
role in determining the effectiveness of the tool. The researcher investigates the overall
satisfaction of employee with regard to organizational culture. It also examines the
expectation of employees from organization and gives a clear understanding about the
changes needed in the organizational culture to improve retention rates.
Eva Kyndt, Fillip Dochy, Maya Michielsen, BastiaanMoneyaert (2009)45 focused

on the organizational and personal factors that influence employee retention. The result
shows a large positive contribution of appreciation and simulation of the employees,
28
individual differences, leadership skill and seniority have positive relationship with
employee retention.
Bridget Riley (2009)46examined the variety of dimensions of employee

satisfaction of Direct Care Employees at Archieve (Newyork). Survey method is used for
data collection and ANOVA, correlation and multiple regression have used for analysis.
The author concludes that team building, training, conducting an organizational culture
inventory, increase recognition and implementation of 360 degree evaluations of all
employees were the factors expected by the employees for their retention.
MadihaShoaib, Ayesha Noor, Syed RazaTirmizi and Sajid Bashir (2009)47

conducted the study to find the impact of career development opportunities, supervisor
support, working environment, rewards and work-life policies on employee retention in
Telecom sector of Pakistan. The result shows that the independent variables such as
career development opportunities, supervisor support, working environment, rewards and
work-life policies have a direct and positive impact on the dependent variable employee
retention which means that enhancement of one independent variable causes the
enhancement of the dependent variable i.e., employee retention.
Michael Samuel and CrispenChipunza (2009)48evaluated and identified the key

intrinsic and extrinsic motivational variables which have been used by selected public
and private sector organizations in retaining their employees. The study adopted the
cross- sectional survey research design, exploring the extent to which selected
influencing variables influence employees’ decision to either to quit or to remain in the
firm. It examined two public and two private sector organizations in South Africa. The
result showed that employees in both public and private sector organizations were greatly
influenced to remain in the organization for both intrinsic and extrinsic motivational
factors such as training and development, freedom for innovative thinking, challenging/
interesting work and job security.
Hannay and Northam(2000)49stated that it is very important for employers to
retain their employees. For retaining the employees organization has to frame effective
retention strategies and to implement the strategy on the need basis. The strategies like
competitive pay as it builds loyalty and commitment among employees. Tailoring jobs to
29
satisfy employee’s needs for autonomy and creativity, growth opportunities,
understanding the labor market by hiring experienced persons for the organization,
providing realistic job previews to candidates at the time of during recruitment and
selection process and providing a reimbursement facilities for educational fees and
medical expenses. These were the retention strategies that contributes to improve
employee retention to a greater extent.
John Sheridan (1992)50 investigated the retention rate of 904 college graduates
hired in public accounting firms over six year period. Organizational culture values
varied significantly among firms. The variation in cultural values had a significant effect
on the rate at which the newly hired employees voluntarily terminated employment. The
relationship between employee’s job performance and the retention also varied
significantly with organizational values.
Kissan Joseph and ManoharKalwani (1992)51 aimed to examine whether the
existence of a bonus component in the sales compensation structure enhance sales force
retention and also studied the impact of total sales compensation, relative to industry
norms, on sales force retention. It was found that bonus payments enhance sales force
retention among firms whose total compensation is above industry average but not among
firms whose total compensation is below industry average.
It is understood from the reviewed articles the retention strategies followed by

most of the organizations were compensation and rewards, job security, training and
developments, supervisor support culture, work environment, organization justice, build
loyalty and commitment, freedom for innovative thinking, challenging/ interesting work,
team building, conducting an organizational culture inventory, increase recognition and
implementation of 360 degree evaluations of all employees appreciation and simulation
of the employees.
2.6 STUDIES ON EMPLOYEE ATTRITION AND EMPLOYEE RETENTION

Nowadayscommonly used terms in the competitive business world are employee
attrition and retention. These two terms create a big headache for the employers. Control
over employee attrition and successful retention are great challenge in today’s
phenomena.
30
ManjuDhillon (2016)52 explains why Indian IT sector is facing highest attrition
rate and some remedial steps to avoid or reduce the turnover rate. The author explores the
causes of attrition such as ambitions or career aspirations, personality factors, inadequate
training and ineffective management, parent and family mobility, lack of motivation etc.
The ways to retain were providing good working condition, job enlargement, flexible
working hours, rewarding employees, strengthening the team, etc.
ManishaPurohit (2016)53 aimed to find out the causes for employee turnover and
ways to reduce employee turnover. The author found that the causes of attrition were
dissatisfaction with superiors, work pressure and exhaustion, organizational climate,
emotional turmoil, personal reasons etc. The ways to reduce employee turnover were
hiring the right kind of people, effective training techniques, keep employees happy and
productive, pay attention to develop management skill, etc.
Balamurugan and Abinaya (2016)54 aimed to identify the factors of employee
attrition, to analyze the factors of employee retention and to study the most followed
retention strategy to retain employees. The findings of the study were job is not what the
employee expected, job and person mismatch, no growth opportunities, lack of
appreciation, lack of trust and support in co-workers, seniors and management, stress,
etc., were the reasons of employee attrition. The retention variables such as career
advancement and opportunities, superior support, and work environment were used to
retain the employees.
Mohan Kumar and Astalin Melba(2015)55 attempted to investigate the level of job
satisfaction, safety measures, retaining the employees, working conditions and work life
balance and the reasons for women employees’ attrition in IT Industries. The sample size
of the study is 523 respondents. It was concluded that the employer can retain the women
employees by providing safety and secured job, good working conditions, reasonable
workload, favorable work environment, positive interpersonal relationship etc.
Shine David, SashiKaushik, HarshitaVerma and Shivani Sharma (2015)56

analyzed the problem of high attrition in IT sector, the study was made in various cities
like Mumbai, Pune, Bangalore and Delhi, the sample size of the study is 73. The authors
found that the causes for employee attrition were working condition, organizational
31
culture, career growth opportunities mutual trust and work pressure. It was concluded that
the organization should have employee friendly organizational culture with positive
working conditions, low pressure and higher opportunities for career growth which will
reduce the employee attrition and increase the employee satisfaction towards which helps
to retain employees.
Mohan and Muthuswamy (2015)57 analyzed the reasons for employee turnover in
the BPO sector and suggested the ways to reduce employee turnover. The sample size of
the study is 150 respondents. It was found that reasons for employee attrition in BPO
sector were more criticism in the work place and leave facilities is not upto their
satisfaction. Finally the study was concluded that it is the responsibility of the line
managers to ensure that the employees are satisfied with their role and responsibilities
Retention factors are identified in the study such as competitive compensation,
encouragement and recognition, well equipped and safety environment, infrastructure,
potential talent and the prospective roles.
LavanyaLatha (2013)58 focused the study on the reasons for employee attrition
and to find the areas where the manufacturing industries in Nellore district is lagging
behind. The sample size of the study is 130. The selected respondents were from
manufacturing industries like automobile spare parts, metallurgical industries, chemicals,
pharmaceuticals, engineering and electrical. The findings shows that following are the
reasons for employee attrition lack of proper employee motivation, working environment,
lack of growth opportunities, expectations are not met, lack of training programmes etc.
Conclude thatto reduce attritionindustries should create growth opportunities for the
employees within the organization by adopting new innovative technological and training
programs. The company should also think to recruit people who are in the vicinity of the
industry so that the family related problems will not lead to attrition.
Ramanaiah and Lavanya (2011)59 conducted their research in both IT and Non-IT
companies. 30 samples in each category were chosen from Chennai city through
questionnaire. They found that IT companies should identify the difference between
avoidable and unavoidable departure and take measures to retain their key talent. They
should treat their employees as an asset and not as cost. Employee-centric work culture
and Performance-linked salary and bonus are the factors to be improved in Non-IT
32
segment. Finally they conclude that there is definite commitment towards retention
practices but there is a difference in commitment levels in IT and Non – IT companies.
Chandramohan and Vasanthikumari (2006)60conducted a study on attrition in

ITES in India and found out that high attrition rate is a major challenge for the HR
manager as many individuals (mostly fresh graduates) take it as a time-pass job. Once
they join the sector and understand the requirement, they start leaving the organization
because many are not able to take the pressure of work. Again high percentage of females
in the workforce adds to the high attrition rate. There are various costs which incurred
due to attrition like recruitment costs, training costs, lost productivity costs, lost sales
costs and hiring costs. They suggested that pay checks alone are not enough to motivate
the employees. Apart from salaries, ITES Company should also focus on smart people,
management tools and strategies to keep their people happy. They should also focus on
how to hold on to their people by anti-poaching agreements, better perks, flexible
working hours, higher compensation levels, good career plans to retain employees, better
recruitment methods to filter right people for right places and balance between
performance expectations and growth aspiration.
Nirmala (2004-05)61 identified the reasons for employee attrition and bring out
the retention factors that help the organization to retain the employees’ particularly sales
executives. The study was conducted at ABT Maruthi, Chennai. It was found that no job
security is the main reason for the employee attrition for the sales executives. To retain
employees the management should take initiative to make employees feel a sense of
belongingness by fair pay and better growth prospects.
Mark Chen (2004)62 investigated the determinants of firms repricing policies and
consequences of such policies for executive turnover and retention. Firms that have better
internal governance, that use more powerful stock based incentives, or that face less share
holder scrutiny are more likely to maintain repricing flexibility. Firms that restrict
repricing are more vulnerable to voluntary executive turnover following stock price
declines. When share price declines are severe, restricting firm appears to award
unusually large number of new options.
33
AnamikaSahu and Meenakshi Gupta (1999)63stated that the objective is to find
out the reasons of employees intention to stay in the organization and employee turnover.
In the study the dependent variable is intention to stay and independent variables are
company image, pay satisfaction , nature of work, nature of peer group, comparison to
peer groups, inside career opportunity, outside career opportunities, expectation – reality
match and turnover perception. The sample size is 71 software professionals and the
statistical tools used for analysis were mean, standard deviation, correlation and
regression. It was concluded that expectations - reality match, length of service, turnover
perception and outside career opportunity were found to be instrumental in causing
intentions to stay/quit.
Daniel Spencer (1986)64 investigated the relationship between the extent to which
employees have opportunities to voice dissatisfaction and voluntary turnover in 111short-
term, general care hospitals. Results shows that whether or not a union is present, high
numbers of mechanisms for employee voice are associated with high retention rates.
Robert James (1949)65stated the labor turnover in industry as human waste, the
author identified the reasons for labor turnover and the ways to retain the labour in the
same firm. The reasons found were classified under two heads viz., external factors and
internal factors. The external factors may be health and domestic reasons, distance from
home etc. Internal factors may be dissatisfaction of pay, working condition, prospects,
type of work, relation with superior or workmates and size of firm. The ways to retain the
employees were suggested were pension schemes, long-service awards, a clear statement
of promotion prospects, careful explanation of wage-rates and piece prices, possibly
profit-sharing etc. Some of the non-financial incentives suggested for employee retention
were information provided by notices, news-sheets, literatures, lectures and every other
means available, about the firm’s policy, products, history, organization and finance
together with personal and informal interest such as inclusion through committees,
suggestion-schemes, discussions, interviews and a fair hearing at all times.
The reviews above cover the aspects of both employee attrition and retention in
various industries. Causes of attrition have been classified into internal and external
factors and avoidable and unavoidable causes. The external factors are health and
domestic reasons, distance from home etc. Internal factors are dissatisfaction of pay,
34
working condition, prospects, and type of work, relation with superior or workmates and
size of firm. Retention factors are identified such as competitive compensation,
encouragement and recognition, well equipped and safety environment, infrastructure,
potential talent and the prospective roles, the management should take initiative to make
employees feel a sense of belongingness by fair pay and better growth
prospects.Fostering and nurturing employee commitment,pension schemes, long-service
awards, a clear statement of promotion prospects, careful explanation of wage-rates and
piece prices, possibly profit-sharing, etc.
2.7 Research Gap
From the reviews, it was found that some articles cover causes for employee
attrition, some of the articles cover retention strategies followed by the companies to
retain their employees and a few articles cover the impact of employee attrition in the
companies and the measurement of employee attrition in the companies. The Research
gap found from the reviews is that none of the article covered all the aspects of employee
attrition and employee retention i.e., causes of employee attrition, effects of employee
attrition, measurement of employee attrition and retention strategies followed by
companies to retain their employees. No comprehensive research work has been
undertaken in union territories in general and Puducherry in particular. Union Territories
are having its own limitations to promote industrialization and faces chronic problem of
employee attrition. It gives the scope or need for this study. This study covers all the
aspects of employee attrition and retention management in IT Industry.
SUMMARY
In a nutshell this chapter describes the various research articles reviewed in this
chapter to identify the causes of alarming employee attrition in the Indian IT sector. It
have been identified that certain common factors which are responsible for triggering
attrition such as salary, career growth, working condition, stress, job satisfaction, job
description discrepancies, organizational culture, organizational commitment, age, tenure,
training, communication, centralization, etc. Employee attrition has both positive and
negative effects on an organization. When employees leave an organization it is a loss to
the company, team and individuals. Employees are the backbone of any organization and
35
departure may lead various losses to the company in different aspects, such as selection
and recruitment cost, training and development cost, operational disruption, decreased
overall performance, difficult in daily task management, lack of knowledgeable
employees, create a negative image, demoralization of organizational membership, etc.
Not all effectsare negative.It is generally felt an employee leaving the organization is
detrimental to the organization, but there is another side to it. Employee leaving an
organization may also lead to benefits. This type of attrition is called ‘healthy attrition’
and it is significant for growth and development of an organization. The positive effects
were entrenched conflict, increased mobility and morale, innovation and adaptation,
higher performance, reduction in higher manpower cost, etc.
The attrition rate is the opposite of the company’s retention rate and it also gives
the organization an indication of the health of the team, department or the organization as
a whole. Overall attrition rate can be calculated by dividing the number of individuals left
over a specified period of time, by average number of employees over that same period,
multiplied by 100. There are various methods of measurement of employee attrition such
as Replacement Method, Separation Method, Flux Method, CrudeWastage Method etc.
Crude Wastage method is widely adoptedmethodtocalculate employee attrition rate on the
basis of simplicity and suitability.
The positive effect of attrition is seen when only wrong people leave the
organization.It is of utmost importance that employees who are productive should be
retained in the organization to ensure that the organization has the efficient workforce.
There are no fixed retention strategies followed by the organization to retain the
employees since employers give different emphasis on different variables depending on
what suits their organization best. Some of the common retention strategies followed by
the organization were compensation and rewards, job security, training and
developments, supervisor support culture, work environment, organization justice, build
loyalty and commitment, freedom for innovative thinking, challenging/ interesting work,
team building, conducting an organizational culture inventory, increased recognition and
implementation of 360 degree evaluations of all employees appreciation and simulation
of the employees.
36
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58. Lavanya Latha, K., “A Study on Employee Attrition and Retention in Manufacturing
59. Ramanaiah G and Lavanya L, “A study on the level of commitment towards retention
practices in IT and non – IT companies in Chennai”, Advances in Management, 4(12),
53-56, Dec. (2011).
60.Chandramohan A and Vasnthikumari K, "Attrition: A Predicament for ITES in India",

Journal of Management Matters, 1(6), 25-31, (2006) .
61. R. Nirmala, “A Study on Retention of employees at ABT Maruti, Chennai”,

Dissertation (Master Degree in Labor Management, TNLIS, Chennai), 2004-05.
62. Mark A. Chen,” Executive Option Pricing, Incentives and Innovations”, The Journal
of Finance, 59(3), 1167-1199, June (2004).
63. Anamika Sahu and Meenakshi Gupta, “An empirical analysis of employee turnover in
a software organization”, Indian Journal of Industrial Relations, 35(1), 55-73, July
(1999).
64.Daniel G.Spencer, “ Employee Voice and Employee Retention”, The Academy of

Management Journal, 29(3), 488-502, Sep. (1986).
65. Robert James, “Human Waste: An Analysis of Labor Turnover in Industry”, The
Economic Journal, 59(233), 118-123, Mar. (1949).
CHAPTER III
EMPLOYEE ATTRITION AND
EMPLOYEE RETENTION: A CONCEPTUAL OVERVIEW
3.1 MEANING OF EMPLOYEE ATTRITION
3.2 DEFINITION OF EMPLOYEE ATTRITION
3.3 METHODS OF COMPUTING EMPLOYEE ATTRITION
3.3.1 Some Other Methods
3.4 ATTRITION COSTS
3.5 CAUSES OF EMPLOYEE ATTRITION
3.5.1 Personal Causes
3.5.2 Avoidable Causes
3.5.3 Unavoidable Causes
3.6 TYPES OF ATTRITION
3.7 EFFECTS OF EMPLOYEE ATTRITION
3.7.1 Negative Effects
3.7.2 Positive Effects
3.8 TRUTHS ABOUT EMPLOYEE ATTRITION
3.10 IMPORTANCE OF EMPLOYEE RETENTION
3.11 DETERMINANTS OF EMPLOYEE RETENTION
3.12 EMPLOYEE RETENTION STRATEGY
3.13 MANAGING EMPLOYEE RETENTION
3.14 MANAGER’S ROLE IN RETENTION
3.15 STATUS OF GROWTH OF IT INDUSTRY IN INDIA
3.16 MAJOR IT HUBS
3.17 ATTRITION IN INDIAN IT INDUSTRY
3.18 ORIGIN AND GROWTH OF IT INDUSTRY IN PUDUCHERRY
3.19 SPECIFIC REASONS FOR EMPLOYEE ATTRITION IN PUDUCHERRY

CHAPTER III
EMPLOYEE ATTRITION AND EMPLOYEERETENTION:
A CONCEPTUAL OVERVIEW
“Great vision without great people is irrelevant” – Jim Collins
The term employee attrition has been a matter of concern in most of the
organization nowadays. It is a critical issue and it is highly detrimental to both the
organization and the employees1. Another term related to employee attrition is employee
retention.It is one of the critical issues faced by the HR managers of many organizations
these days. Employees are an important asset to every concern which cannot afford to
lose its key performers. Key employees are the catalyst for altogether growth and
development of the organization. Effective retention strategies can minimize employee
attrition and increases retention rate of the industry.
This chapter deals with the conceptual framework of employee attrition and
employee retention. The topics such as meaning of employee attrition, causes of
employee attrition, impacts of employee attrition, types of employee attrition,
measurement of employee attrition, meaning of employee retention, importance of
employee retention, determinants of employee retention, retention strategies, managing
employee retention, status and IT growth in India, Employee attrition in IT industry and
origin and growth of IT industry in Puducherrywere covered in this chapter;.
3.1 MEANING OF EMPLOYEE ATTRITION
Employee attrition means the proportion of number of employees that leave an

organization during a period to the number of employees on the payroll during the same
period. The reasons of attrition may be personal, avoidable or unavoidable. It refers to
scaling down of employee in an organization. In other words it means the inflow and
outflow of employees employed by an enterprise.
37
3.2 DEFINITION OF EMPLOYEE ATTRITION
Some of the definitions given by the authors are given below:
According to Hom and Griffeth, Employee Attrition is “Voluntary termination of
members from organization2”.
Kossen defined “Turnover as the amount of movement in and out of employees in
an organization3”.
According to Loquericio, “Staff turnover is the proportion of staff leaving in a
given time period but prior to anticipated end of their contract4”.
According to Sing, “Staff turnover is the rate of change in the working staffs of a
concern during a defined period5”.
3.3 METHODS OF COMPUTING EMPLOYEE ATTRITION
Attrition rate is the rate the number of employees left an organization to the
average number of employees during the same period. Attrition rate is generally
calculated and reported as a percentage and the rate can be computed for different
periods. The following are the various methods of computing employee attrition
Separation method, Replacement method and Flux method6.
1.Separation method: Attrition rate can be calculated by Separation method on
the basis of employees discharged during a period and it can be calculated by the
following formula.
No.of employees left from an organization during a period
Employee Attrition= ×100
Average No.of employees during the same period
2. Replacement method: Attrition rate can be calculated by Replacement method

on the basis of employees joined during the period and it can be calculated by the
following formula.
No.of employees joined during a period
Employee Attrition= ×100
3. Flux method:Flux method of attrition can be calculated on the basis of number
of employees left the organization and number of employees joined the organization
during the same period.
No.of employee left+No.of employee joined

Employee Attrition = ×100
38
3.3.1 Some other methods of calculating Employee attrition (Wastage Rates)
The following are the other methods used to calculate Employee attrition, Crude
Wastage Rates,Resignation Rates, Vacancy Rates, Stability Index, Cohort analysis,
Wastage and Survival Curves7.
1. Crude Wastage Rates
Normally, Crude Wastage method is used by the organizations for

measuring attrition. This method is based on number of employees left during a period as
a percentage of the average number of employees during the same period. The average
number of employees is derived by adding number of employees at the beginning of the
period and number of employees at the end of same period and it is divided by two.It has
its limitations because it includes only involuntary leavers.
No.of leavers in a given period (involuntary leavers)

Crude Wastage Rate = ×100
2. Resignation rates
Resignation Rate is another method of measuring attrition and it is based on voluntary

leavers. Voluntary leavers are those who leave the job due to personal reason and it does
not include the attrition due to other reasons.
No.of voluntary leavers

Resignation Rates = ×100
Average No.of employees
3. Vacancy rate
Vacancy Rate is the attrition rate that fives emphasis on the number of employees need to
be fulfilled created by vacancy.
No.of vacancy need to be filled in a year

Vacancy Rates = ×100
Average number of employees
4. Stability Index
This method gives a signal to the organization about the number of experienced
employees to be retained. It can be used to calculate the stability of the whole concern or
of a specific group of employees.
39
5. Cohort analysis
This tool helps the company to know about the service related design by finding
the leaving rates of homogeneous group of employees joined at the same time. The
derived leaving rates are plotted on a survival or wastage curve. It is a useful technique
for organizations that cares about high attrition costs such as selection, recruitment, and
training costs.
6. Wastage and survival curves
Under this method the number of leavers is plotted against their length of service. This
pattern shows a high level of fresher decreases with the length of service. It serves as a
measure of retention instead of attrition showing the number of employees staying in the
organization against their service.
3.4 ATTRITION COSTS
Employee attrition cost is usually termed as the cost to hire a new employee and
to replace the employee who left the organization and train the new employee. These
costs include both direct costs and indirect costs and these costs increases as the attrition
rate increases. These expenses are recruitment cost, training and development cost and
administration cost8.
1. Recruitment Cost: It refers to the cost of replacing new employees in the place
of old employees who left the job. It includes the cost in finding the source,
background or reference, cost of recruitment and selection, advertisement costs
and travel expenses if any.
2. Training and Development Cost: It refers to the costs of training and developing
replaced employees in the place of old employees. This includes both direct and
indirect costs such as training material costs, trainer’s remuneration, expenses on
employees for food and accommodation and teaching aid expenses.
3. Administration Cost: This refers to the costs incurred for administering the new
recruits in the organization. This includes the expenses incurred for issuing ID
cards and access cards and the expenses incurred for including the new employees
in the existing communication and HR system.
40
3.5 CAUSES FOR EMPLOYEE ATTRITION9
Employee attrition is expensive. According to the US Bureau of Labor Statistics,

attrition can cost an organization 33 percent of employee’s total compensation, including
wage and benefits. However the impact of attrition is not only financial, but also affects
adversely employee morale. So, it is very important for every organization to reduce the
attrition rate. In order to reduce the attrition rate, they must first understand the causes for
attrition. The causes for employee attrition can be broadly classified under three heads,
viz., Personal Causes, Unavoidable Causes and Avoidable Causes.
3.5.1 Personal Causes
Some of the employees may leave the organization on account of personal reasons
as given below:
a) Family Circumstances
Family circumstances are the factors or conditions that play an important role in
determining an outcome of the family. For example marriage of a family member,
partition of the assets, death of a person. Sometimes the circumstances of family may be
the reason for employee attrition.
b) Employee Retirement
Retirement means is a point where employees stops theiremployment or ends
their service. This may be voluntary or superannuation. Some employee prefer to retire at
the time of eligibility of pension, gratuity and other benefits and some employees choose
to get voluntary retirement due to illness, personal reasons, for monetary benefit or for
better job.
c) Change in the marital status
A change in marital status forces an employee particularly the women employee
to leave the present job and to change the work place where the spouse is working.
d) Dislike for the job or place
An employee one who hates the job, or company or boss, then he will not like to
work at the same place and this situation makes him or her to quit from the present job.
41
e) Death of the employee
Due to sudden death of the employee makes the company to lose the employee
and it necessitates the employer to replace a person in the place of deceased employee.
f) Better job
The employee may leave the present job in search of better job which gives more
salary and other benefits.. This is also one of the reasons for employee attrition.
g) Permanent disability
Permanent disability is a condition where the employee is unable to work in the
job which is suited by education, training and experience due to illness or injury caused
by an accident11. This condition makes the employee to leave the job.
h) Moral turpitude
Moral turpitude is an act or behavior that gravely violates the sentiment or
accepted standard of the community12. An employee, who commits such an act in the
organization, makes him to quit from the organization.
Attrition sometime happens due to some unavoidable reasons. Reasons that are
beyond the control of the employees are referred as unavoidable reasons. The following
are the reasons which are unavoidable.
a) Insubordination or inefficiency of employees

Insubordination is the term refers to the act of disobeying superior’s order or
instruction. Inefficiency refers to the lack of ability to do some activity or to produce
something without wasting materials or time13. Insubordination and inefficiency of
employees will cause employer to terminate the employee from the job.
b) Irregularity or long absence
Irregular to the job or long absenceof the employees become a burden to the
organizationand to the other staff. It involves financial burden to the company due to
drop in productivity. Such employees are terminated from the job.
c) Retrenchment
Retrenchment refers to the reduction in the number of employees due to some
economic difficulty in the organization. This process will make the organization to
42
revamp them from the financial burden. Sometimes it may be mutual or sometimes it
may be forced by the employer by offering compensation to the employees.
d) Acquisition or merger of a company
It refers to thecompany’s strategy to deal with acquiring or blending with other

companies. This is may be due to economies of operation, financial constraints and for expertise
management. This situation in the firm makes some employees to lose their job in their present
organization14.

Attrition sometimes occurs due to some reasons which are avoidable in nature. It
refers to the reasons which can be avoided by the employees if they satisfied with present
condition of the job.
a) Career aspirations
Every employee in an organization has the aspiration to have growth and

development opportunities. This includes aspiration related to the economic, family and
professional.It is better to appreciate the growth and mobility of the employees and take
attrition as a natural phenomenon15.
b) Dissatisfaction with incentive schemes
Employee incentive means a system of providing rewards for the employees on

the basis of their performance and efficiency. This may include awards, rewards,
appreciation, recognition, etc. One of the important tasks of the manager is making
employees feel valued and be more productive. When employees feel valued, they tend to
stay with the company longer. In such incentives are not provided properly and it makes
the employees to be unmotivated and move out of the organization.
c) Unhappy with remuneration
Remuneration is the monetary benefit received by what employee receives in

exchange for their contribution to the organization. Adequate remuneration helps the
organization obtain, retain and maintain productive workforce. Without adequate
remuneration, current employees are likely to leave.
43
d) Mismatch of job and the person
The reasons for underperformance of employees are a poor fit between skills,
interests and the needs of the organization and not clearly defined manager’s expectations
and requirements of the role. These reasons can lead to an employee feel
stumbleindelivering what is required from him/her. This leads to employee attrition.
e) Unhappy with working conditions
It is the responsibility of the employer to provide good working condition to

employees which includes health, safety and working hours. Poor working condition can
harms the health of the employees and for a long period if this prevails lead to employee
attrition.
f) Inadequate accommodation, health and recreational facilities
The organization should provide proper accommodation i.e., rent free house or
concessional rent house or adequate HRA for the employees. They should also be
provided with health measures such as ESI benefits, medical leave, health insurance or
medical reimbursement and provided with recreational facilities such as clubs, fitness
centers etc. which motivates them to work for the organization. If such facilities were not
provided by the employer and it may cause employee attrition.
g) Lack of stability/Job transfers

If the employees are frequently transferred from one job to another job, they will
feel dissatisfied and will not perform with their full potential leading to non-achievement
of the organizational objectives. The employees get vexed at certain point and come out
of the organization.
h) Stress role / Increased responsibility

Stress referred to the response to the perceived relationship between the demands
on the employee and ability to cope16. If the employee’s role in the organization is very
stressful that he/she could not manage or cope up with the role that what was expected
from them, makes them unmotivated and depressed this paves the way the employee to
quit from the organization.
44
i) Lack of proper communication
Effective communication in an organization has a great impact on the motivation

of the employees. This improves satisfaction level of employees that leads to enhanced
efficiency, creativity, and productivity of the employees. In absence of proper
communication has the negative effect such as dissatisfaction among employees, create
disputes and this lastly leads to attrition.
j) Lack of job satisfaction
Dissatisfied employees are a great problem for the organization, as it has the
negative effect on their performance, behavior and attitude18. For a longer period this job
dissatisfaction makes the employee to quit from the present job.
k) Lack of organizational commitment
Organizational commitment can be created by permitting employees toparticipate

in decision making process, beinformed, share information, delegation of authority and
responsibility and ask questions. Lack of employee commitment is the main risk for the
survival of the organization as they loseefficient professionalwhich results in the loss of
competitive advantage for the organization1 9.
l) Influence of Co-workers
If the co-worker in the organization of the employee constantly make complaints,

or having negative attitude and opinion about others may have the impact of corrupting
others in their performance and job satisfaction. This poor ethic and attitude can drive the
colleague to move from the job to another job.
m) Favoritism
Favoritism means partiality shown by employer on favored employee. This

creates dissatisfaction among other efficient employees as they feel their hard work and
efficiency are not recognized and rewarded20. At extreme level, favoritism leads to
employee attrition.
45
n) Poor supervision
Poor supervision may arise due to inefficient management. This may give way for
disputes, lower productivity, stress and poor inter-personal relationships. At extreme
level employeesquit the organization.
o) Poor company policies
Company policy plays a vital role in the success of any business. If such policy
was lacking on several important issues it will cause ambiguity in certain issues like
transfer, promotion, recruitment etc. It creates problem among the employees which in
turn spoils the smooth functioning of the concern and leads to employee attrition.
3.6 Types of Attrition
Four typesof attrition classified namely Internal Attrition, External

21
Attrition,Voluntary Attrition and Involuntary Attrition .
1. Internal Attrition: Internal Attrition involves employees leaving their current position
within the same organization. Both positive and negative effects of internal attrition exist
and hence it is important to handle this form of attrition.Internal attrition can be
controlled by an effecting HR mechanism, such as an internal recruitment policy ors cope
for career growth within the organization.
2. External Attrition: ExternalAttrition refers to the employees leaving an organization

for various reasons. It may be lack of job satisfaction, poor supervision, unhappy with
remuneration, lack of job security, job transfers, etc.
3. Voluntary Attrition: VoluntaryAttrition means employees of their own choice

willingly leave the organization without compulsion of other or force. Eg,unsatisfied
working conditions, problems with management, lower salary and benefits etc.
4. Involuntary Attrition:Involuntary Attritionare those where employees has no choice

in their termination, i.e. they are compelled or forced by some factors like sickness,
death, moving or employer – initiated termination.
46
In all organization some degree of employee attrition is unavoidable and

advisable. However, high rate of attrition is a caution to management that something
went wrong with the wellbeingof the organization. It conveys that there avails porr inter-
personal relationship,inefficient supervision, poor company policies and lack of growth
opportunities and so on. High Employee attrition is sign of low morale and vulnerable
and it is dangerous to both employers and employees of the organization.
The Employee attrition has both effects negative as well as positive effects in an
organization.
3.7.1 Negativeeffects
Employee attrition have negative consequence in the business, they are
1. Selection and Recruitment Cost.
2. Training and Development Cost.
3. Operational Disruption.
4. Demoralization of Organizational Membership.
1. Selection and Recruitment Cost
The most transparent consequence of attrition is the costs, energy and time involved
in replacing the employees. When someone left an organization, new employees have to
be replaced through recruitment mechanism.If the firm suffers from high attrition then it
necessitates appointing a HR specialist on permanent basis for this purpose.
2. Training and Development Cost
Even it is easy for the management to select new employees in the place of old
employees, but it takes time for the new employees to start their work in full extent.
He/she needs time to understand the new working environment, goals, policies and
practices and his role and responsibilities of the firm. If the work is complicated, it still
requires more time to learn the work. Then it is necessary to give training for the
employees. Thus training costs includes material and resource costs, trainer’s
remuneration and food and accommodation expenses for the employees.
47
3. Operational Disruption
Besides from the recruitment and training costs associated with attrition of large number
of employees of an organization, sometimes it proves costly in the operational
disturbances. If people leave the organization, it may affect the ability of others work or
productivity as the work roles are inter-dependent within the organization. If key people
leave the job then it affects both the organization and other workers as it is both highly
inter-dependent and specialized22.
4. Demoralization of Organizational Membership

Sometimes attrition affects the morality of the employees. When somebody left
the firm then others may feel they are less desirable and will be unmotivated. In reality
attrition provides a crucial sign about the firm and role model to others.
3.7.2 Positive Effects

Employee attrition may also have positive effects but it is less compared to negative
effects. Sometimes it may also contribute to the long run viability of the organization.
The following are the positive consequences of attrition:
1. Increased Performance.
2. Reduction of entrenched conflict.
3. Increased Mobility and Morale.
4. Innovation and Adaptation.
1. Increased Performance
The replaced employee may be more efficient, well trained and experienced
compared to employees left. As an example, consider the effective work life of
employees in high-stress roles such as air traffic controllers, in roles demanding of
physical endurance such as mining and construction, or in roles requiring changing
technical skills such as electronics engineering.
2. Reduction of entrenched conflict
Sometimes attrition may result in reduction in entrenched conflict. There may be

entrenched conflict between employees, between employees and executives or between
departmental heads.It may cause a serious problem which affects the morality of
48
employees, productivity, satisfaction level, etc. This can be avoided or controlled if some
problematic employees are retrenched from the service.
3. Increased Mobility and Morale
Attrition may increase the mobility and morale of the employees and it is good sign for
the organization. If the employees are promoted within the organization, it will boost up
their morale and thus increases the productivity.
4. Innovation and Adaptation
An important consequence of attrition is the opportunity it provides for the

organization to adapt to its environment. One means of adaptation is through strategic
decision making and along with strategic changes generally comes some reallocation of
organizational resources. But resources cannot often be shifted from one department to
another or from an outmoded function to a newly established endeavor.
3.8 TRUTHS ABOUT EMPLOYEE ATTRITION

It is difficult to accept zero attrition prevails in the organization. It is better to
have healthier attrition rate. Some of such facts have been highlighted below:
 Attrition always happens23
Companies who say zero attrition rates are fooling themselves. This happens
because employees’ keeps on moving due to reasons like better prospects, marriage or
further education. No one can stop these employees from moving on. So, it is better to
retain employees
 Some attrition is Desirable

Attrition is advisable for two reasons. One is it is costly to hold the senior as
theyhave to be paid a lot and the another one is ideas, abilities and attitude remains
stagnant for current employees.
 Attrition includes costs

Attrition always includes certain costs. It may attribute to selection and
recruitment and training and development costs. Time and energy of the manger is
also spent for replacing employees.
49
 High salary doesn’t work
Most management feel that employees are satisfied with the high pay package and
it helps in retaining the employees in the firm, but sometimes attrition may be due to
other reasons like dissatisfied working condition, lack of career growth, poor
supervision, inflexibility in working hours, etc.
 The manager can reduce attrition
HR manager should take responsibility of finding out the reason for attrition and take
efforts to reduce attrition. He should hear the complaints given by the employees and
resolve the problem this will help in reducing attrition level in the organization.
 Reducing attrition takes commitment
Attrition can be reduced by the commitment and dedication of the top

management, as it requires involvement in the part of manager in recruitment, training,
development, stimulating, controlling and listening to the people.

Employee retention means effort taken by the management to retain their current
staff in the firm. It is crucial, long term soundness and growth of business. Managers
always agree that retaining the efficient employees ensures customer satisfaction,
increased sales, appraising the value of goodwill and satisfied co-workers

Nowadays, organizations are taking steps to retain its employees. This is because
of reducing the attrition level and alsoprevents talented employees from moving out of
the organization. The process of employee retention will benefit an organization in the
following ways:
1. The Cost of attrition
Retention reduces the cost of attrition as it involves amount, time and energy for
replacing old employees. While it is difficult to calculate the total cost of attrition,
industry experts refers the conservative estimates of average attrition of employee in
corporate is 25%.
50
2. Loss of Company Knowledge
Attrition gives way for the employees to leave the firm along with them the
knowledge of the company, clients,customers, current projects and past history.Since
more time and money has been spent on employees in expect of future return and it is not
realized for employees who have left.
3. Interruption of Customer Service

Employees create a good rapport with the customers and clients of the business.
As and when the employee is leaving some of the customers and clients also leave the
firm. This may affect the company’s profitability.
4. Attrition leads to more attrition

When an employee leaves an organization, it may have the negative effect on
other employees. They may feel that they are desirable which affects the morality of
others which leads to more attrition24.
5.Goodwill of the Company
High retention rate may attract efficient people to join the organization. The value
of Goodwill appraised as there is lesser attrition prevails in the company.
6. Regaining efficiency
Management takes effortsin hiring a new employee which involves costs and time
and this is a loss for the company which is unnoticed by the management. Even then
there is no assurance that same efficiency can be maintained.
3.11 DETERMINANTS OF EMPLOYEE RETENTION

There are many factors in the organization which determines the employee
retention. They are:
1. Development Opportunities
Growth opportunities of personal and professional are determining factor

retention. It increases the commitment of the employees to stay in the organization for a
longer period.
51
2. Compensation
Providing competitive and better pay is an important factor in retaining
employees.If this is coupled with quality of life then more number of employees are
retained in the organization25.
3.Work-life Balance
Work-life balance is becoming important nowadays for employees and it affects
the employee’s decision to stay in the organization. In machine life employees long for
flexible work schedules that allows them to take care of both their personal and
professional life. The balance between personal and professional lives is very important
and it determines the amount of sacrifice the individual is ready to make at the expense of
other areas of life.
4.Management/Leadership
Leadership style and management support have also great impact in retaining
employees in the organization. Participation of employees in important matters and in
decision making makes employees feel they are recognized this increases loyalty and
retention. Leadership style also plays an important role in retaining the employees.
5.Work Environment
A conducive and good work environment is also an essential factor in employee
retention. Flexible working hours, recreation and club facilities and availability of
resources and other facilities will make the environment conducive.
6. Social Support
Social support means the support from friends, colleagues or fellow employees. A
good and cordial relationship with co-workers is an essential factor to retain the
employees in the same organization.
7. Autonomy
Autonomy refers to the freedom in doing the work and taking decisions without
others influence. If an employee has autonomy on the job, he can do the workwithout any
disturbance of interference or force and it serves as an influencing factor for retention.
52
8. Training and Development
Training and development is considered to be the important key factor in

retaining the employees. Training and development gives employees more confidence,
individuality and motivation for the employees to do the work more efficiently which
acts as the determinant factor for retention.
3.12 EMPLOYEE RETENTION STRATEGIES
The following are the various retention strategies followed by many companies to
retain the employees:
 Hiring the right people and continuing to develop their careers

Oneof the retention strategies followed by organization is hiring the right kind of
people and developing their careers. It is crucial to hire right kind of people at the right
time and for the right job. Employees recruited should fit to the organizational culture,
values, principles and goals. Training new employees will ensure in retaining the
employee26.
 Developing an overall strategic compensation package
In today’s competitive market it is important to develop an overall strategic

compensation package for the employees which includes not only basic pay but also
other monetary and non-monetary benefits such as bonus, commission, allowances,
perks, insurance, Leave Travel Concession, pension benefits, etc.
 Data about the risk groups

It has to be identified attrition‘hot spots’, high-risk groups, cost and trends over
time. Avoid spending too much time on bench marking; it is internal trends and patterns
that are the most revealing.
 Exit interviews
Exit interviews should be conducted by the companies at the time when the employee
leaves the job. This will be helpful to know about the causes of attrition and expectation
of employees and dissatisfaction level of employees which in future helps the
organization to take steps to reduce employee attrition.
53
 Risk analysis
Prevention is better than cure. It is important to make a risk analysis regarding
attrition of the employees. Efforts should be made to find to what extent employees are in
danger zone and to find whose departure has serious impact in the organization.
 Adequate Training and Development
Proper and adequate training and development should be tailored and delivered to the
needs of the company as well as individual. Sometimes it may help to retain employees
and employees may not leave after training.
o Management Style
Management style plays an important role in retention. Participative leadership
style may be preferable by most of the employees, for some employees autocratic style
may be preferable and so on. The skill and experience of the manager may reduce
attrition.
o Flexible Working Hours
Employees are giving more importance to work/life balance that is whether they
are able to balance their personal and professional life. Flexible working hours or location
of the organization is need of the hour as there is a growth in the number of women
employees in the labor market.
3.13 MANAGING EMPLOYEE RETENTION

The task of managing employees understood as a three stage process.
1. Measuring the cost of attrition,
2. Finding the reasons for attrition and
3. Implementing retention strategies.
1.Measuring the cost of attrition
The first step of managing employee retention is measuring the cost of attrition
and rate of attrition for a particular period of time and benchmark with other competitors.
This helps in assessing whether the employee retention rates are healthier than other
companies. Secondly, the cost of employee attrition can be calculated.
54
2.Finding the reasons for attrition
The next step is to find the causes for attrition, it often puzzles top management.
Exit interviews is the best way of registering and analyzing the factors that have led
employees to leave the organization. This allows an organization to understand the causes
for leaving and underlying issues. However employees never provide correct response to
the asked question. So an impartial person has to be given in chargeof collecting the
response from the employees to whom they feel comfortable in expressing their opinions
about the organization27.
3.Implementing retention strategies

After finding the causes of attrition, the next to frame retention strategies and it
should be implemented. An effective retention strategy will seek to ensure:
 Right person for the right job.
 Previous experience of the employees should be considered.
 Professional opportunities must be communicated to the employees.
 Rewarding strategy must be transparent.
 Attrition of employees should be effectively.
3.14 MANAGER ROLE IN RETENTION28

Managers and departmental heads can reduce the attrition levels considerably by
creating a motivating team culture and improving the relationships with team members.
This can be done in the following ways:
o Creating a Motivating Environment

Departmental headsmust create motivating environments to keep their
departmental staff together for a longer period of time. Motivation need not necessarily
achieved through fun events such as parties, celebrations, team outings etc. They can also
be achieved e through serious events e.g. arranging conference, seminar, group
discussion, trainings or workshops.
o Standing up for the team

Departmental heads are very friendly to their staffs. There is a cordial relationship
and mutual understanding between staff and the head which helps to the implementation
55
of management decisions by the staff members. Sometimes the staff also needs to educate
their heads about the ground realities.
o Providing coaching
Every employee wants to be succeedingin his or her current job but they will not
know how to achieve it. Then it becomes the responsibility of the leader or the head to
give guidance and coaching that makes the employee to improve in his performance.
However, coaching should be followed by monitoring performance and
providingfeedback to the employees.
o Delegation
Delegating responsibility and authority to employees will motivate the employees

and makes them more committed and dedicated toward their work and the organization.
o Focus on future career
Managers should play the role of career counselors as well as the employees are
always cared about their future career. The manager should focus on improving
employees in his career ladder. If an employee feels that the current job offers a path
towards their future career aspiration, then they are likely to stay longer in the company.
3.15 STATUS AND GROWTH OF INDUSTRY IN INDIA
IT industry in India is playing a significant role andhas transformed India’s image

from slow moving bureaucratic economy to a land of innovation. “In India the major IT
hubs are Bangalore, Hyderabad, Chennai, Mumbai, Delhi Noida Gurgaon and Pune. Top
five Indian IT service providers are Tata Consultancy, Infosys, Cognizant, Wipro and
HCL technologies”29.
The Indian IT industry is divided into four major segments namely IT services,
Business Process Management (BPM), software products and engineering services and
hardware.“The Indian IT sector was expected to grow at a rate of 12-14% for FY 2016-
2017 in currency terms. The sector also expects to triple its current annual revenue to
reach US$ 350 billion in FY 2015.India’s IT core competencies and strength have
56
attracted significant investment from major countries. The computer software and
hardware sector in India attracted cumulative Foreign Direct Investment (FDI) inflows
worth US$ 22.83 billion Apr.2000 and Dec.2016 according to the data released by the
Department of Industry Policy and Promotion “(DIPP) 30.
In India BPO firmsare the fastest growing business among ITES industry.Factors
such as economies of operation and cost advantages,business risk mitigation, utilization
improvement and professional competency have led to the growth of Indian BPO
industry.In India IT was started around the mid 90’s and has now grown by leaps and
bounds. However, the recent global financial deadlock has deeply impacted Indian IT
companies and other MNCs. As a result hiring has reduced and employees are moving to
other sectors like manufacturing, telecommunication and other sectors31.
“IT BPM industry revenues (excluding hardware) were estimated may be around
US $130 billion in FY 2015-16 and is to be US $ 154 billion in F.Y 2016-17. The
contribution of the IT sector to India’s GDP stood at 7.7% in 2016. TCS is the market
leader, accounting for about 10.4% of India’s total IT and ITes sector revenue in FY
2016. The Top 5 IT firms contribute over 25% to the total industry revenue, indicating
the market is fairly competitive. The domestic revenue of the IT industry is estimated at
US $ 38 billion and export revenue is estimated at US$ 117billion in FY 2017”
(NASSCOM Report).
India is the one of the world’s largest sourcing destination for IT industry,
accounting approximately 67% of the US$ 124-130 billion market. The industry creates
employment opportunities for about 10 million workforces. More importantly, the
industry has made economic transformation of the country and changed the perception of
India image in the global market. India’s is providing cost advantagein providing IT
services, which is approximately 3-4 times cheaper than the US and continues to be the
cornerstone of its Unique Selling Proposition (USP) in the global sourcing market.
However India is also gaining importance in terms of intellectual capital with several
global IT firms selling up their innovation centre in India32.
57
3.16 MAJOR INFORMATION TECHNOLOGY HUBS
In India the major Information Technology hubs are Bangalore, Hyderabad,
Chennai, Mumbai, Delhi (Noida and Gurgaon) and Pune.
“Bangalore is known as the Silicon Valley of India and the IT Capital of India. It
is considered to be a global information technology hub and largest software exports
from India are done through Bangalore. Some of the top Indian IT service providers like
Infosys, Wipro, Mindtree and Mphasis are headquartered in Bangalore. Bangalore alone
consists of more than 35% of all the IT companies present in India and has nearly 5000
companies, making it the largest IT contributor in India”33.
“Hyderabad is known as the HITEC City and is a major global information
technology hub and second largest IT exporter. It has become the first destination for
the Microsoft development center in India and the largest software development center.
Some of the IT service providers were Microsoft, Facebook, Apple
Inc, Infosys, Google, Cognizant, Tata Consultancy Services, Computer Sciences
Corporation, Accenture, TechMahindra, Wipro, HCL, Amazon.com, IBM, Dell, Deloitte
etc. Nearly 3000 companies operate in this city”.
“Chennai has a world class IT infrastructures with dedicated expressway and
many other IT parks promoted by both government and private entities. The city's strong
industrial base also favors the setting up of many major R&D centers in its vicinity. Some
of the major companies having operation centers at Chennai are Accenture,Cognizant,
TCS,Syntel, Wipro,Infosys,Verizon, HCL, Amazon, eBay, Paypal, Polaris, Capgemini a
nd manymajor global providers”.
“Mumbai is regarded as the financial capital of India. It is the headquarter
of TCS,this is India's largest IT company. Other major IT companies based in the city
are Datamatics, Patni, L&T Infotech, 3iInfotech, Mastek and Oracle FinServ”.
“The National Capital Region comprising Delhi, Gurgaon and Noida are clusters
of software development, which consists of many multinational corporations such
as TCS, Mahindra Comviva, Huawei, Symphonyeleca, Infosys, Cognizant, Ciena,
Evalueserve, PitneyBowes, MphasiS, Accenture, amdocs, HCLTechnologies, NagaroSap
ient, IBM, HughesSystiqueCorporation, ThoughtWorks, Aricent, Oracle, SAP, Coriant, R
BS”.
58
“Pune is one of the leading Indian and international IT services and outsourcing
exporters. It is also known as the Tech City, which consists of many multinational
companiessuchas TCS, TechMahindra, Capgemini, Syntel, Infosys, Cognizant, Cybage,
Capgemini, Persistent,Mphasis, Accenture, Wipro, HCLTechnologies, Zensar, IBM, IGA
TE, Red Hat, Avaya, HSBC, BMC Software, Larsen & Toubro Infotech etc”.
3.17 ATTRITION IN INDIAN IT INDUSTRY

Nowadays employee’s attrition has been a serious issue in Indian IT industry. It
has been noted that IT professionals are consistently changing their job when compared
to other industry employees. It shows that there is a high attrition trend is found in IT
sector. Since due to high attrition of highly skilled employees will be very expensive and
disruptive for firms and it affects the smooth functioning of business.Losing key
employees may incur substantial costs related to recruitment, selection, training and
developmentof a new employee. This processinvolves time and energy consuming, and
expensive one.
3.18 ORIGIN AND GROWTH OF IT INDUSTRY IN PUDUCHERRY

Puducherry is working towards an IT revolution. It already revealed as a hardware
destination of India and also a center for IT investments in IT services and IT Enabled
Services (ITES). Large number of companies located here has got national awards for
earning highest foreign exchange. A communication revolution is taking place in
Puducherry with availability of adequate International and National Bandwidth for both
basic and value added services by several Public and Private Service
Providers34.Following are a few key differentiators which make the Union Territory (UT)
of Puducherry a preferred choice of many international IT majors as well as budding
Entrepreneurs.
Infrastructure and its Strategic Location: A Multi-Product Special Economic
Zone at Sedarapet and, IT Park at Kalapetdispense world-class infrastructure and
business support facilities for IT operations. The UT has well connected roads, excellent
civic services and other adequate infrastructure that supports the endeavor of all
industries.It is only 2 hours’ drive by road from Chennai International Airport, Tamil
Nadu, 70 kms from Maheand Yanamand 200 kmsfrom Calicut and Vishakapatnam
59
Airport. It offers closeness to existing IT hubs, excellent connectivity, peaceful law and
order, and good standard of living. Steady supply of power atcompetitive rates than
neighboring statesis also available.
Institutional Set-up: The Puducherry Industrial Promotion Development and

Investment Corporation (PIPDIC) is the nodal agency of the UT facilitating infrastructure
and investment promotion. Puducherry Technopolis IT Park in Puducherry Engineering
College campus with earth station isfor dedicated data transmission forges synergies of
association between industry and academia. It has business friendly and proactive
administration facilitates and time bound response to investor needs and issues. For easy
availability of finance, many nationalized banks exist in Puducherry.
Resource Base:Puducherry has plenty of required resources such as skilled and

educated manpower, excellent infrastructure and by a committed Government. This not
only provides clean eco-system but also provides effective cost of operation in this
industry.
Information Technology Policy, 200835IT policy of Puducherry has the

following objectives: To establish Puducherry as preferred destination for investment in
IT/ ITES industry.
 “To support industry by providing International quality IT infrastructure and

effective government-business interface”.
 “To encourage education-led economic development and create more employment
opportunities”.
 “To bring-in increased transparency, efficiency and accountability in government
operations through e-Governance”.
Targets:PuducherryIT policy has the following targets:
 ITIS: Information Technology Infrastructure Services. This includes the

activities like hardware and network and application maintenance. Job
opportunities created were desktop engineer, application support, server
admin, backup admin, database admin etc.
60
 ITES:Information Technology Enabled Services. Job opportunities like
service desk analyst, production support analyst, IT analyst were been
created.
 BPO: Business Process Outsourcing (BPO). Positions jobs such as

customer care executive, finance analyst, IT analyst or any job of IT that
can outsourced to another company were been created.
. IT industry has huge potential; however, it requires more assistance on the part of
the government. There is a need for SEZs and IT parks to attract MNC investment in the
field of IT. Proper policy implementation on the part of the government will boost the
growth of the IT industry in the coming years.
3.19 SPECIFIC REASONS OF EMPLOYEE ATTRITION IN PUDUCHERRY
There are many reasons for employee attrition in an organization but there are
some unique reasons of employee attrition in Puducherry. Since Puducherry is a small
union territory, it has limited opportunities for career growth and development and IT
firms in Puducherry are very less compared to other cities Chennai, Hyderabad, Mumbai
etc. For want of better career prospects and better salaries many people may move to
other cities like Chennai, Bangalore etc.
SUMMARY
To sum up, this chapter covered a conceptual overview of employee attrition and
retention. The topics covered in this chapter were meaning of employee attrition,
definition of employee attrition, methods of computing employee attrition, attrition costs,
causes of employee attrition, types of employee attrition, truths about employee attrition,
employee retention, determinants of employee retention, employee retention strategies,
managing employee retention, manager role in employee retention, status and IT growth
in India, major IT hubs, attrition in Indian IT industry, origin and growth of IT industry in
Puducherry and reasons of employee attrition in employee attrition in Puducherry region.
61
1. S.Batty Dorance Jeen, “A Study on Attrition – Turnover Intentions in Retail

Industries”, International Journal of Business and Administration Research Review, 1(3),
Jan-Mar 2014.
2. Hom and Griffeth, “A meta –Analysis of antecedents and correlates of employee

turnover: update, moderate tests, and research implications for the next millennium”,
Journal of Management, June 2000.
3. Kossen, “Organizational Career growth and turnover intention: an application in audit

firms in Turkey”, International Business Research, 2014.
4.Loquercio, “Turnover and Retention”,People in Aid, 2006-chsalliance.org
5. Sing, “Organizational Career growth and turnover intention: an application in audit

6.Cost Accounting, S.P. Jain and K.L.Narang.
7. IDS Bulletin, 2004.
8. Michael C.G. Davidson, Nils Timo and Ying Wang, “How much does labor turnover
cost?”, International Journal of Contemporary Hospitality Management, 22(4), 451-466,
Sep. (2009).
9. Cost Accounting, T.S.Reddy and Y.HariPrasad Reddy.
10. Wikipedia, Retirement.
11. www.investopedia.com , Permanent disability
12. Wikipedia, Moral turpitude.
13. Wikipedia, Insubordination.

14. Whatis.techtarget.com, Acquisition of a company.
15. Manju Dhillon, “Attrition in Indian IT sector”, International Conference on Recent

Innovations in science, Technology, Management and Environment, New Delhi, June
(2016).
16. www.mnestudies.com, Stress Role.
17. Smallbusinesschron.com, Lack of proper communication.
18. Smallbusinesschron.com, Lack of job satisfation
19. files.eric.ed.govt, Lack of organizational commitment.
20. Fortune insiders/timesinc.net, Favoritism.
21. www.quantumworkplace.com, Types of attrition.
22. Barry M. Staw(1980), “Consequence of Turnover” , Journal of Occupational

Behavior, 1(4), 253-273, Oct. (1980).
23.www.RetentionHome.com, Truth about Employee Attrition.
24. Retention.Naukrihub.com, Importance of Employee Retention.
25. Bodjrenou Kossivi, Ming Xu and Bomboma Kalgora, “Study on Determining Factors
of Employee Retention”, Open Journal of Social Sciences, 4, 261-268, May (2016).
26. Retention.Naukrihub.com, Retention Strategies
27. www.RetentionHome.com, Managing Employee Retention.
28. www.RetentionHome.com
29.wikipedia, IT in India, Growth of IT Industry in India.
30. dipp.nic.in, Department of Industry Policy and Promotion

31.www.Outsourcing2india.com, The BPO industry in India
32.www.ibef.org, IT and ITes Industry in India
33.Wikipedia, Recent Development in IT
34.www.dqweek.com, Software companies boost IT growth in Pondicherry
35. meity.govt.in, IT Policy in Pondicherry

CHAPTER IV
EMPLOYEE PREFERENCE TOWARDS
ANORGANIZATION
4.1 FACTORS OF EMPLOYEE PREFERENCE TOWARDS AN ORGANIZATION
4.1.1 Nature of Job
4.1.2 Working Condition
4.1.3 Motivation
4.1.4 Company Policies
4.1.5 Remuneration
4.1.6 Inter-personal Relationship between Employees
4.1.7 Inter-personal Relationship between Employee and Superior
4.1.8 HRD practices
4.1.9 Overall ranking of factors of Employee Preference towards an Organization
4.2 PERCEPTIONAL DIFFERENCE OF EMPLOYEES OF EMPLOYEE PREFERENCE TOWARDS AN ORGANIZATION
4.2.1 Perceptional difference of employees of Employee Preference with regard
to Age, Education and Experience
4.2.2 Perceptional difference of employees of Employee Preference with regard
Gender and Marital Status
4.3 SEM ANALYSIS FOR EMPLOYEE PREFERENCE TOWARDS AN ORGANIZATION
4.3.1 CFA on Employee Preference towards an organization
4.3.2. Measurement Model
4.3.2.1 Relationship between Nature of Job, Working Condition, Company Policy and Remuneration
4.3.2.2 Relationship between Motivation, Employee-Employee Relationship,
Employee-Superior Relationship and HRD practices
4.3.2.3 Overall Relationship Model of Employee Preference towards an Organization
4.3.3 Path Model
4.3.3.1 Impact of of Nature of Job on Working Condition, Company Policies and Remuneration
4.3.3.2 Impact of Human Resource practices on Employee-Employee Relationship,
Employee-Superior Relationship and Motivation
4.3.3.3 Overall Structural Equation Modeling of Employee Preference towards an Organization

CHAPTER IV
EMPLOYEE PREFERENCE TOWARDS AN ORGANIZATION
“No one is too busy to do what they actually prefer”. – Alan Cohen
Having discussed about the conceptual overview of attrition and retention, an in-
depth attempt has been made to collect the views of employees in choosing an
organization among the IT companies in Puducherry. A detailed description and analysis
of their views are given in this chapter.
Employee preference towards an organization means the willingness of the

employees to stay in the organization that is they are attached to the job and to the
organization as they are satisfied with various factors such as natureof job, working
environment, remuneration, etc.
Employees workingin IT companies in and around Puducherry were asked to give

their opinion regarding employee preference towards an organization. The data set
contains 300 respondents with eight different groups of variables of survey on employee
attrition and retention strategies in information technology (IT) industry in Pondicherry.
The value of the variables ranges between 1 strongly disagree to 5 strongly agree. This
data has been collected to find out the factors that influence IT employees to stay in the
present organization. Their views are elicited and given under different heads viz. nature
of job, working condition, motivation, company policies, remuneration, inter-personal
relationship between employees and between employee and superior and HRD practices.
The data collected were analyzed using descriptive statistics mean, standard
deviation and ranking, to find out the feature under each factor and among the whole,
which has influenced the employees to stay in the organization.
The demographic profile of the respondents is taken and it is related to the factors
of employee preference, to find out the difference of opinion of employees. One Way
Analysis of Variance (ANOVA) is used to find out the significant difference in the
opinion of the employees with regard to age, education and experience. Independent
sample t test is used to find the difference of opinion of employees towards employee
preference with regard to marital status and gender.
62
SEM is used to find whether the variables carry standard loading factors in order
to find out the relationship between the constructs with the help of measurement model
and to analyze the impact of one construct on another construct with the help of path
model.
4.1 FACTORS INFLUENCING EMPLOYEE PREFERENCE TOWARDS AN
ORGANIZATION
From the literature reviews done, it is identified some of the factors that
influences the employees preference towards an organization and their features were
given in the table 4.1.
Table 4.1 VariablesDescription of Employee Preference towardsOrganization1
S. No NATURE OF JOB
1 Interest in the job performance
2 Secured job
3 Normal job target
4 Growth opportunities
5 Autonomy in job
6 Responsible job
WORKING CONDITION
1 Satisfied working hour
2 Better organized
3 Economically good
4 Free from abuse
MOTIVATION
1 Role to play in decision making
2 Hard work is recognized
3 Supports and encourages high level performance
4 Rewards of merit performance
5 Performance based promotion
COMPANY POLICIES
1 Clearly defined polices
2 Innovation
63
3 Free flow communication
4 Promotion policy is strictly followed
5 Security policy is strictly followed
SL.NO REMUNERATION
1 Attractive and competitive pay
2 Periodical incentive
3 Leave benefits
4 Maternity benefits
5 Rewards
EMPLOYEE-EMPLOYEE RELATIONSHIP
1 Group harmony
2 Self-dignity
3 Team bondage
4 Workplace ethics
5 Provision of space
EMPLOYEE-SUPERIOR RELATIONSHIP
1 Industry harmony
2 Resolves grievance
3 Listens to suggestions
4 Encourage co-operation
5 Extend equal and fair treatment
6 Expectation is clearly communicated
7 Provide appropriate and challenging assignments
8 Coaches, trains and helps in the development of employees
HRD PRACTICES
1 Best recruitment practices
2 Training is an on-going process
3 Open-door policy is adopted
4 Performance appraisal is periodically done
5 Performance feedback is given
6 Promotion on the basis of merit
64
4.1.1 Nature of Job
Nature of job means the features of the job that naturally comes along with or is a
part of the job.It is usually comprises of features like interesting job, job security,
2
opportunities for transfer or promotion etc . For assessing the perception of employees of
their preference towards an organization with regard to nature of job, mean and standard
deviation was worked out along with the rank. The results were given in the table 4.2.
Table 4.2Descriptive Statistics of Employee’s perception aboutNature of Job

Features of job Mean Standard Deviation Rank
Job is interesting 4.24 0.655 I
Job is secure 3.89 0.918 II
Target fixed is normal 3.69 0.874 VI
Growth opportunities 3.86 0.853 III
Autonomy 3.76 0.831 V
More responsibility 3.79 0.864 IV
It is clear from the table 4.2 that the variable ‘job is interesting’ has the highest
mean score of 4.24, which means that it is the main reason for the employees to stay in
the present organization. The least considered feature by the employee is ‘target fixed is
normal’, with a mean score of 3.69. This denotes that it plays the least role in influencing
the employee to stay in the organization. It is observed that the standard deviation of all
features of job is less than 1; this implies that there is uniformity in the opinion of
employees with regard to all the features.
4.1.2 Working condition

Working condition refers to the circumstances or the factors affecting the way in
which people work, especially with regard to their well-being. Positive work environment
is essential for workers physical and mental well being3. It covers features like
satisfactory working hour, better organized work, ergonomically good environment etc.
Table 4.3 shows the descriptive statistics, mean and standard deviation along with rank
related to employee preference towards an organization with regard to the factor working
condition.
65
Table 4.3Descriptive Statistics ofEmployee’s perception aboutWork Condition
Features of working condition Mean Standard Deviation Rank
Working hour is satisfactory 3.88 0.903 II
Better organized 3.94 0.767 I
Ergonomically good 3.86 0.748 III
Free from abuse 3.83 0.849 IV
From the table 4.3, it is inferred that the feature‘better organized’ has the highest
mean score of 3.94, showing that most of the respondents considered better organized
working environment is the main reason for the employee to stay in the present
organization. The least considered feature by the employee is free from abuse, with a
mean score of 3.83; which denotes that it plays the least role in influencing the employee
to stay in the organization. It is observed that the standard deviation of all features of
working condition is less than 1; this implies that there is uniformity in the opinion of IT
4.1.3 Motivation
Motivation means the process of stimulating people to work more effectively in
order to accomplish the organizational goal4. There are some internal and external factors
that stimulate the desire and energy in people to be continually interested doing the job in
an effective manner. The factors like commission, bonus, allowances, recognition,
promotion, transfer etc.were considered to be the motivational factors. Table 4.4 shows
the descriptive statistics along with rank related to employee preference towards an
organization with regard to the factor motivation.
Table 4.4Descriptive Statisticsof Employee’s perception aboutMotivation
Features of motivation Mean SD Rank
Role to play in decision making 3.95 0.781 I
Hard work is recognized 3.87 0.794 II
Supports and encourages high level performance 3.83 0.861 III
Rewards employees basis of merit performance 3.56 0.907 IV
Promotion is based on performance 3.46 1.035 V
66
Table 4.4 gives a clear picture that the variable ‘role to play in decision making’
has the highest mean score of 3.95, which shows that most of the respondents considered
that role to play in decision making motivates the employees to stay in the present
organization. The least considered feature by the employee is ‘promotion is based on
performance’, with a mean score of 3.46, which denotes that it plays the least role in
influencing the employee to stay in the organization. It is observed that the standard
deviation of all features of motivation except promotion is based on performance is less
than 1; this implies that there is uniformity of the opinion of IT employees with regard to
all features of motivation except promotion is based on performance. IT employees
widely oscillate in their opinion about the feature promotion is based on performance.
4.1.4 Company policies
Company policy refers to the set of documented guidelines, principles and rules
formulated after analysis of all internal and external factors that can affect a firm’s
objectives, operations and plans. It is usually formulated by the Board of Directors of the
firm5. Table 4.5 shows the descriptive statistics, mean and standard deviation along with
rank related to employee preference towards an organization with regard to the factor
‘company policies’.
Table 4.5Descriptive Statistics Employee’s perception aboutCompany Policies

Features of company policies Mean SD Rank
Clearly defined policies 4.07 0.855 I
Innovation 3.70 0.852 II
Free flow communication 3.68 0.917 III
It is clear from the table 4.5 that the variable ‘clearly defined policies’ has the
highest mean score of 4.07, stating that most of the respondents considered that clearly
defined policies is the main reason for the employee to stay in the present organization.
The least considered feature by the employee is ‘free flow communication’, with a mean
score of 3.68, which denotes that it plays the least role in influencing the employee to
stay in the organization. It is observed that the standard deviation of all features of
company policies is less than 1; this implies that there is uniformity of the opinion of IT
67
4.1.5 Remuneration
Remuneration is the compensation that one receives in exchange for the work or
services performed. It is in the form of pay, salary or wage, including allowances,
benefits etc6. Table 4.6 shows the descriptive statistics, mean and standard deviation
along with rank related to employee preference towards an organization with regard to
the factor remuneration.
Table 4.6Descriptive Statistics of Employee’s perception aboutRemuneration
Features of remuneration Mean SD Rank
Attractive and competitive pay 3.75 0.910 II
Periodical incentive 3.51 1.017 IV
Leave benefits 3.69 1.015 III
Maternity benefits 3.77 1.039 I
Rewards 3.51 0.976 IV
Table 4.6 indicates that the variable ‘maternity benefits’ has the highest mean
score of 3.77, stating that most of the respondents considered that maternity benefits is
the main reason for the employee to stay in the present organization. The least considered
features by the employee are ‘periodical incentive’ and ‘rewards’, with a mean score of
3.51 for both, which implies that they play the least role in influencing the employees to
stay in the organization. It is observed that the standard deviation of the feature ‘attractive
and competitive pay’ is less than 1; which implies that there is uniformity of the opinion
of IT employees with regard to this feature. IT employees widely oscillate in their
opinion about the features‘periodical incentive’, ‘leave benefits’, ‘maternity benefits’ and
‘rewards’.
4.1.6 Interpersonal relationship between employees
Interpersonal relationship between employees refers to a strong association
between employees working together in the same organization. Relationship helps people
to confirm and validate their ideas and feelings as well as to value themselves7. Table 4.7
shows the descriptive statistics, mean and standard deviation along with rank related to
employee preference towards an organization with regard to the factor inter-personal
relationship between employees.
68
Table 4.7Descriptive Statistics of Employee’s perception aboutInter-personal
Relationship between Employees
Features of interpersonal relationship between employees Mean SD Rank
Group harmony 3.98 0.706 I
Self-dignity 3.66 0.796 II
Team bondage 3.59 0.901 III
It is clear from the Table 4.7 that the variable ‘group harmony’ has the highest
mean score of 3.98, stating that most of the respondents considered that ‘group harmony’
is the main reason for the employee to stay in the present organization.The least
considered feature by the employee is team bondage, with a mean score of 3.59, which
denotes that it plays the least role in influencing the employee to stay in the organization.
It is observed that the standard deviation of all the features is less than 1; which implies
that there is uniformity of the opinion of IT employees with regard to these features.
4.1.7 Interpersonal relationship between employee and superior
Interpersonal relationship between employees and superior refers to an
association in the work place. Favorable relation between employees and superior
provides support for the employees and reduce work stress8.
Table 4.8Descriptive Statistics of Employee’s perception aboutInter-personal

Relationshipbetween Employee and Superior
Features of interpersonal relationship between Mean SD Rank
employees and superior
Industry harmony 3.92 0.797 I
Resolves grievance 3.67 0.776 II
Listens to suggestions 3.60 0.772 III
Encourage co-operation 3.59 0.839 IV
Extend equal and fair treatment 3.54 0.885 V
Clearly communicates expectation 3.46 0.874 VIII
Provide appropriate and challenging assignments 3.53 0.886 VI
Coaches and trains helps to development of employees 3.52 1.000 VII
69
Table 4.8 shows the descriptive statistics, mean and standard deviation along with
rank related to employee preference towards an organization with regard to the factor
inter-personal relationship between employee and superior.It is interpreted that the
variable ‘industry harmony’ has the highest mean score of 3.92, stating that most of the
respondents considered that ‘industry harmony’ is the main reason for the employee to
stay in the present organization. The least considered feature by the employee is ‘extend
equal and fair treatment’, with a mean score of 3.46, which denotes that it plays the least
role in influencing the employee to stay in the organization. It is observed that the
standard deviation of all the features except coaches, trains and helps in the development
of employees is less than 1; which implies that there is uniformity of the opinion of IT
employees with regard to these features. IT employees widely oscillate in their opinion
about the feature coaches, trains and helps in the development of employees.
4.1.8 HRD practices

Human resource practices refer to the method, procedure, process or rule followed
by HR managers in dealing with employees. They are strategic in nature. It includes
formulating a method of measuring and analyzing the effects of particular employee
reward program9. Table 4.9 shows the descriptive statistics, mean and standard deviation
along with rank related to employee preference towards an organization with regard to
the factor HRD practices.
Table 4.9Descriptive Statistics of Employee’s perception about HRD practices
Features of HRD practices Mean SD Rank
Best recruitment practices 3.89 0.896 I
Training is an on-going process 3.77 0.843 II
Open-door policy is adopted 3.61 0.913 IV
Performance appraisal is periodically done 3.72 0.986 III
Performance feedback is given 3.57 1.001 V
Promotion on the basis of merit 3.39 1.059 VI
Table 4.9 indicates that the variable ‘best recruitment practices’ has the highest
mean score of 3.89, stating that most of the respondents considered that best recruitment
70
practices is the main reason for the employee to stay in the present organization. The
least considered feature by the employee is‘promotion on the basis of merit’, with a mean
stay in the organization. It is observed that the standard deviation of all the features
except‘promotion on the basis of merit’ is less than 1, which implies that there is
uniformity of the opinion of IT employees with regard to these features. IT employees
widely oscillate in their opinion about thepromotion on the basis of merit.
4.1.9 Overall ranking of factors ofEmployee Preference towards an Organization
The factors of employee preference towards an organization such as nature of

job, working condition, motivation, company policy, employee-employee relationship,
employee superior relationship, remuneration and HRD practices. In order to find out the
most influencing factor among all the factors relating to employee preference towards an
organization the descriptive statistics mean, standard deviation along with rank were
calculated and the results were given in the table 4.10.
Table 4.10Descriptive Statistics relating to overall ranking offactors of Employee

Preference towards an Organization
Factors relating to employee

preference towards an organization Mean SD Rank
Nature of job 3.87 0.588 II
Working Condition 3.88 0.567 I
Motivation 3.73 0.624 V
Company policy 3.81 0.712 III
Employee –Employee Relationship 3.74 0.658 IV
Remuneration 3.65 0.727 VII
Employee –Superior Relationship 3.60 0.575 VIII
HRD Practices 3.66 0.709 VI
From the above table 4.10, it is interpreted that the employee preference towards
an organization is mainly because of two reasons, they are ‘working condition’
71
and‘nature of job’ as the mean scores of these factors are 3.88 and 3.87 respectively.The
least considered factor by the employee is‘employee- superior relationship’with a mean
stay in the organization. It is observed that the standard deviation of all the features is less
than 1; this implies that there is uniformity of the opinion of IT employees with regard to
this factors.
4.2 PERCEPTIONAL DIFFERENCE OF EMPLOYEES ON EMPLOYEE

PREFERENCE TOWARDS AN ORGANIZATION
To find out the difference of opinion of respondents with regard to the employee
preference towards an organization One Way ANOVA and Independent sample t test
were used and result were shown below.
4.2.1 Perceptional difference of Employees on Employee Preference towards an

Organization with regard to their Age, Education and Experience
Respondents in the overall sample has been categorized on the basis of age into
three different groups namely ‘18 - 25years’, ‘26 - 35 years’ and ‘36 years and above’,on
the basis of education, employees categorized into three groups namely ‘undergraduate’,
‘postgraduate’ and ‘technical qualification’ and on the basis of experience employees
categorized into four groups namely experience ‘up to 2 years’, ‘2-5 years’, ‘6-10 years’
and ‘more than 10 years’. The categories of age, education and experience are more than
two groups the difference of opinion of the employees can be tested by One Way
ANOVA.
H0: There is no significant difference in the opinion of different age group,

education level and experience of the respondents and other attributes.
The other attributes comprises of factors which makes the employees to stay in
the organization namely nature of job, working condition, motivation, company policy,
interpersonal relationship between employees, relationship between superior and
employees and HRD practices.
72
Table 4.11 Perceptional difference of employees on Employee Preference towards an
organization with regard to their Age, Education and Experience
Factors related to employee Mean F ANOVA Sig.

preference towards an orgn Age Edu Exp
Nature of job 3.87 1.012 0.365 0.955 0.962
Working Condition 3.88 1.569 0.210 0.846 0.227
Motivation 3.73 5.532 0.004* 0.806 0.659
Company Policies 3.81 1.616 0.200 0.056 0.612
*
Remuneration 3.65 4.185 0.016 0.621 0.969
Employee-Employee Relationship 3.74 1.572 0.209 0.096 0.792
Employee-Superior Relationship 3.60 2.168 0.116 0.052 0.196
HRD Practices 3.66 1.492 0.227 0.014* 0.829
Source: Primary Data Level of significance at 5% * P value is significant
It is inferred from the table 4.11, between employee’s age and nature of job, the
‘P’ value is 0.365 (p > 0.05), it shows that there is no significant difference in the opinion
of different age groups of the respondents with respect to Job. It shows that irrespective
of the age of employees perception about the nature of job is same.
Compared age of the employees with working condition the probability value is
0.210 (p > 0.05), it convey that there is no significant difference in the opinion of
different age groups of the respondents with respect to working condition. It reflects that
whatever the age of the respondents their perception about the working condition
provided in the organization is same.
The probability value of age of the employees compared with motivation is 0.004
(p < 0.05), it tells that there is significant difference in the opinion of different age groups
of the respondents with respect to motivation. It indicates that the perception of the
employees about the motivation factor is different as per their age.
The perceptional difference between age and motivation, the results shows that
there is significant difference in the opinion of different age groups of the respondents
with respect to motivation. In order to find among the age group which groups have
similar opinion regarding motivation is tested by post hoc Duncan test. The following
table shows the results of post hoc Duncan test.
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Table 4.11.1 Age and Motivation
Age Group Mean value F value P value

18 – 25 3.67a
26 – 35 3.71a 5.532 0.004*
36 & above 4.01b
* Significantat 5% level: Different alphabet denotes the subset of Duncan test
It is interpreted from the table 4.11.1, that the opinion of the respondents about
the employee preference towards an organization with regard to motivation is similar
between the age groups‘18 to 25’ and ‘26 to 35’. It shows that young people working in
IT sector will have the same opinion regarding motivation..
Compared age of the employees with company policy probability value is 0.200
(p > 0.05), it conveys there is no significant difference in the opinion of different age
groups of the respondents with respect to company policies. It indicates the perception of
employees about company policies is same irrespective of their age.
Compared age of the employee with remuneration the probability value is 0.016
(p < 0.05), it signifies that there is significant difference in the opinion of different age
groups of the respondents with respect to remuneration. It shows that the perception of
the employees about remuneration is different as per their age.
The perceptional difference between age and remuneration, the results shows that
there is significant difference in the opinion of different age groups of the respondents
with respect to remuneration. In order to find among the age group have similar opinion
regarding remuneration is tested by post hoc Duncan test. The following table shows the
results of post hoc Duncan test.
Table 4.11.2Age and Remuneration

18 – 25 3.63a
26 – 35 3.56a 4.185 0.016*
36 & above 3.92b
*Significant at 5% level Different alphabet denotes the subset of Duncan test
74
It is interpreted from the table 4.11.2, that the opinion of the respondents about
the employee preference towards an organization with regard to remuneration is similar
between the age groups‘18 to 25’ and ‘26 to 35’. This result also shows that the young
people of IT Company have the same opinion regarding remuneration.
Compared age of the employee with interpersonal relationship between

employees, the probability value is 0.209 (p > 0.05), it impart that there is no significant
difference in the opinion of different Age groups of the respondents with respect to
employee-employee relationship. It indicates that the perception of the employees about
interpersonal relationship between employees is same irrespective of their age.
Compared age of the employee withinter-personal relationship between employee

and superior the probability value is 0.116 (p > 0.05), it implies that there is no
significant difference in the opinion of different age groups of the respondents with
respect to employee-superior relationship. It shows that the perception of the employees
about interpersonal relationship between employee and superior is same irrespective of
their age.
Compared age of the employeewith HRD practices the probability value is 0.227
(p > 0.05), it communicates that there is no significant difference in the opinion of
different age groups of the respondents with respect to HRD Practices. It indicates that
the perception of the employees about HRD practices is same irrespective of their age.
Compared education of the employee with nature of job the probability value is
0.955 (p > 0.05), it signifies that there is no significant difference in the opinion of
different education level of the respondents with respect to job. It shows that the
perception of the employees about the nature of job is same irrespective of their
education level.
Compared education of the employee with working condition the probability

value is 0.846 (p > 0.05), it relays that there is no significant difference in the opinion of
different education level of the respondents with respect to working condition. It
indicates that the perception of the employees about the working condition is same
irrespective of their education level.
75
Compare education of the employee with motivation the probability value is
0.806 (p > 0.05), it is implied that there is no significant difference in the opinion of
different education level of the respondents with respect to motivation. It implies that
employee’sperception about motivation is same irrespective oftheir education level.
Compared education of the employee with company policy the probability value
is 0.056(p > 0.05), it imparts that there is no significant difference in the opinion of
different Education level of the respondents with respect to Company Policies. It implies
that the perception of the employees about the company policies is same irrespective of
their education level.
Compared education of the employee with remuneration the probability value is

0.621 (p > 0.05), it projects that there is no significant difference in the opinion of
different education level of the respondents with respect to remuneration. It shows that
the perception of the employees about the remuneration is same irrespective of their
education level.
Compared education of the employee with interpersonal relationship between

employees the probability value is 0.096 (p > 0.05), it communicates that there is no
significant difference in the opinion of different education level of the respondents with
respect to interpersonal relationship between employees. It implies that the perception of
the employees about interpersonal relationship between employees is same irrespective of
their education level.
Compared education of the employee with interpersonal relationship between
employee and superior the probability value is 0.052 (p > 0.05), it delivers that there is no
significant difference in the opinion of different education level of the respondents with
respect to interpersonal relationship between employee superior. It shows that the
perception of the employees about interpersonal relationship between employee and
superior is same irrespective of their education level.
Compared education of the employee with HRD practices the probability value is
0.014 (p < 0.05), it projects that there is significant difference in the opinion of different
education level of the respondents with respect to HRD Practices. Itshows the perception
of the employees about HRD practices is different as to of their education level.
76
Comparison between education of the employee and HRD practices, results
shows that there is significant difference in the opinion of different education level of the
respondents with respect to HRD practices. In order to find among the educational level,
which one has similarity in their opinion is tested by post hoc Duncan test. The following
table shows the results of post hoc Duncan test.
Table 4.11.3Education and HRD practices

Education Mean F value P value
UG 3.68a
PG 3.54a 4.368 0.014*
Tech. Education 3.94b
*significant at 5% level: Different alphabet denotes the subset of Duncan test
It is interpreted from the table 4.11.3 that the opinion of the respondents about the
employee preference towards an organization with regard to HRD practices is similar
between the education categories‘undergraduate’ and ‘postgraduate’, the result shows that
employees qualified with under graduation and post-graduation will has the same opinion
with regard to the HRD practices followed by IT companies.
Compared experience of the employee with nature of job the probability value is
0.962 (p > 0.05), it implies that there is no significant difference in the opinion of
different experience level of the respondents with respect to job. It shows perception of
the employees about nature of job is same irrespective of their experience level.
Compared experience of the employee with working condition the probability

value is 0.227 (p > 0.05), it conveys that there is no significant difference in the opinion
of different experience level of the respondents with respect to working condition. It
shows that the perception of the employees about working condition is same irrespective
of their experience level.
Compared experience of the employee with motivation the probability value is

0.659 (p > 0.05), the null hypothesis is accepted at 5% level of significance and hence it
is concluded that there is no significant difference in the opinion of different experience
level of the respondents with respect to motivation. It indicates that the perception of the
employees about motivation is same irrespective of their experience level.
77
Compared experience of the employee with company policy the probability value
is 0.612(p > 0.05), it delivers that there is no significant difference in the opinion of
different experience level of the respondents with respect to company policies. It implies
that the perception of the employees about company policies is same irrespective of their
experience level.
Compared experience of the employee with remuneration the probability value is

different experiencelevel of the respondents with respect to remuneration. It shows that
the perception of the employees about remuneration is same irrespective of their
experience level.
Compared experience of the employee with interpersonal relationship between

employees the probability value is 0.792 (p > 0.05), it delivers that there is no significant
difference in the opinion of different experience level of the respondents with respect
interpersonal relationship between employees. It indicates that the perception of the
employees about interpersonal relationship between employees is same irrespective of
their experience level.
Compared experience of the employee with interpersonal relationship between

employee and superior the probability value is 0.196 (p > 0.05), it projects that there is
no significant difference in the opinion of different experience level of the respondents
with respect to interpersonal relationship between employee and superior. It shows that
the perception of the employees about interpersonal relationship between employee and
superior is same irrespective of their experience level.
Compared experience of the employee with HRD practices the probability value
is 0.829 (p > 0.05), it impartsthat there is no significant difference in the opinion of
different experience level of the respondents with respect to HRD Practices. It indicates
that the perception of the employees about HRD practices is same irrespective of their
experience level.
78
4.2.2 Perceptional difference of Employees on Employee Preference towards an
Organization with regard to their Gender and Marital Status
Respondents has been categorized on the basis of gender into two categories viz.,
male and female and the marital status has been categorized into two viz., married and
unmarried. For testing the difference of opinion between male and female and married
and unmarried employees the independent sample t test is used. The null hypothesis
tested in this case is there is no significant difference in the opinion among the gender
group and marital status of the respondents with respect to other attribute, the other
attributes comprise of factors which makes the employees to stay in the organization
namely nature of job, working condition, motivation, company policy, interpersonal
relationship between employees, relationship between superior and employees and HRD
practices.
Table 4.12 Perceptional difference of Employees on Employee Preference towards

an Organization with regard to their Gender and Marital Status
Factors related to employee Mean S.D. Gender Marital status

preference towards an orgn t value p value t value p value
Nature of job 3.87 0.588 1.007 0.178 1.174 0.266
Working Condition 3.88 0.567 0.525 0.602 0.578 0.233
Motivation 3.73 0.624 2.232 0.010* 1.970 0.807
Company Policies 3.81 0.712 1.110 0.903 0.361 0.001*
Remuneration 3.65 0.727 1.817 0.088 2.550 0.496
Employee-Employee 3.74 0.658 1.041 0.033 0.061 0.349
Relationship
Employee-Superior 3.60 0.575 0.201 0.680 0.132 0.984
Relationship
HRD Practices 3.66 0.709 1.110 0.716 1.523 0.229
Source: Primary Data Level of significance at 5% * p value is significant
It is clear from the table 4.12, compared gender with nature of job the probability
value is 0.178 (p > 0.05), it is clear that there is no significant difference in the opinion of
different gender group of the respondents with respect to job. It shows that the perception
of the employees about nature of job is same irrespective of their gender group.
79
Compared gender of the employees with working condition the probability value
is 0.602 (p > 0.05), it delivers that there is no significant difference in the opinion of
different gender group of the respondents with respect to working condition. It shows that
the perception of the employees about working condition is same irrespective of their
gender group.
Compared gender of the employees with motivation the probability value is 0.010
(p < 0.05), it projects that there is significant difference in the opinion of different gender
group of the respondents with respect to motivation. It shows that the perception of the
employees about motivation is different as to of their gender group.
Compared gender of the employees with company policies the probability value is
0.903 (p > 0.05), hence the null hypothesis is accepted. It conveys that there is no
significant difference in the opinion of different gender group of the respondents with
respect to company policies. It shows that the perception of the employees about
company policies is same irrespective of their gender group.
Compared gender of the employees with remuneration the probability value is
0.088 (p > 0.05), it projects that there is no significant difference in the opinion of
different gender group of the respondents with respect to remuneration. It shows that the
perception of the employees about remuneration is same irrespective of their gender
group.
Compared gender of the employees with inter-personal relationship between
employees the probability value is 0.033 (p < 0.05), it projects that there is significant
difference in the opinion of different gender group of the respondents with respect to
inter-personal relationship between employees. It shows that the perception of the
employees about inter-personal relationship between employees is different to their
gender group.
Compared gender of the employees with inter-personal relationship between
employee and superior the probability value is 0.680 (p > 0.05), it implies that there is
respect to inter-personal relationship between employees. It shows that the perception of
the employees about inter-personal relationship between employees and superior is same
irrespective of their gender group.
80
Compared gender of the employees with HRD practices the probability value is
0.716 (p > 0.05), it delivers that there is no significant difference in the opinion of
different gender group of the respondents with respect to HRD Practices. It shows that
the perception of the employees about HRD practices is same among the gender group.
Compared marital status of the employees with nature of job, the probability
value is0.266 (p > 0.05), it is implied that there is no significant difference in the opinion
in marital status of the respondents with respect to nature of job. It shows that the
perception of the employees about nature of job is same among the marital status of the
employee.
Compared marital status of the employees with working condition the probability
value is 0.223 (p > 0.05), it projects that there is no significant difference in the opinion
of marital status of the respondents with respect to working condition. It shows that the
perception of the employees about working condition is same among the marital status of
the employee.
Compared marital status of the employees with motivation the probability value is
0.807(p > 0.05it conveys that there is no significant difference in the opinion of marital
status of the respondents with respect to motivation. It shows that the perception of the
employees about motivation is same among the marital status of the employee.
Compared marital status of the employees with company policies the probability
value is 0.001(p < 0.05), it implies that there is significant difference in the opinion of
marital status of the respondents with respect to company policies. It shows that the
perception of the employees about company policies is different among the marital status
of the employee.
Compare marital status of the employees with remuneration the probability value
is 0.496 (p > 0.05), it conveys that there is no significant difference in the opinion of
marital status of the respondents with respect to remuneration. It shows that the
perception of the employees about remuneration is same among the marital status of the
employee.
81
Compare marital status of the employees with inter-personal relationship between
employees the probability value is 0.349 (p > 0.05), it signifies that there is no significant
difference in the opinion of marital status of the respondents with respect to inter-
personal relationship between employees. It shows that the perception of the employees
about inter-personal relationship between employees is same among the marital status of
the employee.
Compared marital status of the employees with inter-personal relationship

between employee and superior the probability value is 0.984 (p > 0.05), it gives a clear
picture that there is no significant difference in the opinion of marital status of the
respondents with respect to employee-superior relationship. It shows that the perception
of the employees about inter-personal relationship between employee and superior is
same among the marital status of the employee.
Compared marital status of the employees with HRD practices the probability
value is 0.229 (p > 0.05), it is implied that there is no significant difference in the opinion
of marital status of the respondents with respect to HRD Practices. It shows that the
perception of the employees about HRD practices is same among the marital status of the
employee.
4.3 SEM ANALYSIS FOR EMPLOYEE PREFERENCE TOWARDS AN

ORGANIZATION
Structural Equation Modeling is a multivariate statistical analysis technique that is
used to analyze structural relationships. This technique is a combination of factor analysis
and multiple regression analysis, and it is used to analyze the structural relationship
between measured variable and latent variable.
Structural Equation Modeling (SEM) has been used for analysis. The SEM has
the following steps10:
Step – 1.Find whether the variables carry standard loading factors
Step –2. Find out the relationship between the constructs with the help of measurement
model.
Step –3. Analyze the impact of one construct on another construct with the help of path
model.
82
4.3.1 Confirmatory Factor Analysis (CFA) on Employee Preference towards an
Organization
The CFA is a statistical technique used to verify the factors structure of a set of
observed variables. The purpose of CFA is to test whether the data fits the hypothesized
measurement model. This hypothesized model was based on the theory and various
analytical researches. CFA allows the researcher to test the null hypothesis that there is
no relationship between observed variables and their underlying constructs exists11.
The CFA gives how the proposed model captures the covariance between the
items. The fitness of the model can be measured by comparing with the threshold value.
If the values are as per the expectation then the model is good fitted. If the model is
inconsistent with standard data results indicates that the model is poor fitted. This may be
due to wrong specification in the model or some items may be more correlated to each
other (Co linearity) 12.
Figure 4.1Confirmatory Factor Analyses for Nature of Job

Figure 4.1 shows CFA for the factor, nature of job, six variables related to nature
of job was included in the CFA model to evaluate the factor loading of the variables, the
factor loading of all the six variables are more than 0.50 (0.57, 0.60, 0.64, 0.69, 0.67 and
0.60). Hence these variables are considered for further analysis.
Figure 4.2 Confirmatory Factor Analyses for Working Condition
83
Figure 4.2 shows CFA for the factor working condition, four variables related to
working condition was included in the CFA model to evaluate the factor loading of the
variables, the factor loading of all the four variables are more than 0.40 (0.44, 0.72, 0.69
and 0.44). Hence these variables are considered for further analysis.
Figure 4.3 Confirmatory Factor Analyses for Motivation

Figure 4.3 shows CFA for the factor, motivation, five variables related to
motivation included in the CFA model to evaluate the factor loading of motivation, the
factor loading for all the five variables are more than 0.40 (0.55, 0.64, 0.80 and 0.62 and
Figure 4.4 Confirmatory Factor Analyses for Company Policies

Figure 4.4 shows CFA for the factor, company policies, five variables related to
company policies are included in the CFA model to evaluate the factor loading of the
variables, the factor loading for three variables are more than 0.50 (0.70, 0.72, 0.69) and
the remaining two variables are less than 0.50 (0.05 and 0.03). Hence these variables are
excluded from analysis and remaining three variables are considered for further analysis.
Figure 4.5 Confirmatory Factor Analyses for Remuneration

84
Figure 4.5 shows CFA for the factor, remuneration, five variables related to
remuneration are included in the CFA model to evaluate the factor loading of the
variables, the factor loading for all the five variables are more than 0.40 (0.43, 0.67, 0.89
0.63 and 0.63). Hence these variables are considered for further analysis.
Figure 4.6 Confirmatory Factor Analyses for Employee-Employee Relationship

Figure 4..6 shows CFA for the factor, employee-employee relationship, five
variables related to employee-employee relationship are included in the CFA model to
evaluate the factor loading of the variables, the factor loading of three variables are more
than 0.50 (0.51, 0.95, 0.69) and remaining two variables are less than 0.50 (0.04 and
0.00). Hence these two variables are excluded from the analysis and remaining three
variables are considered for further analysis.
Figure 4.7 Confirmatory Factor Analyses for Employee-Superior Relationship

Figure 4.7 shows CFA for the factor, employee superior relationship, eight
variables related to employee superior relationship are included in the CFA model to
evaluate the factor loading of the variables, the factor loading of all the eight variables are
more than 0.50 (0.68, 0.76, 0.70, 0.58, 0.54, 0.59, 0.53 and 0.52). Hence these variables
are considered for further analysis.
85
Figure 4.8 Confirmatory Factor Analysis for HRD practices
Figure 4.8 shows CFA for the factor, HRD practices. six variables related to HRD
practices are included in the CFA model to evaluate the factor loading of variables, the
factor loading of all the six variables are more than 0.50 (0.60, 0.62, 0.66, 0.76, 0.73, and
4.3.2 Measurement model
The Measurement Model indicates the system prevailing how the latent variables
(LV) are measured in terms of the observed variables (OV), and it express the
measurement properties of the observed variables. The measurement models are
concerned with the relations between latent variables and observed variables, such
models state that the hypotheses about the relationship between a set of observed
variables, i.e. constructs they were considered to measure13. The measurement model has
an important as it recommend a test for the reliability of the observed variables employed
to calculate the latent variables. The measurement model was evaluated by using the
maximum likelihood technique provided in the AMOS software14 (Hair et al.,
Tabachnick and Fidell, 2001).
4.3.2.1 Relationship between Nature of Job, Working Condition, Company Policy
and Remuneration
Hypothesis
H0: There is no relationship between the employee preference towards job and working
conditions, company policy and remuneration in information technology (IT) industry in
Pondicherry.
H1: There is a relationship between the employee preference towards job and working
conditions, company policy and remuneration in information technology (IT) industry in
Pondicherry.
86
Selected variables: A group of variables about the employee preference towards job and
working conditions, company policy and remuneration.
Significance level: 0.05; Selected tools: Measurement model
Guidelines: If ‘P’ value is lesser than 5 per cent it indicates there isa relationship
between the variables otherwise no relationship between these two latent (unobserved)
variables.
Figure 4.9 Relationships between Nature of Job,Working Condition, Company
Policy and Remuneration
Figure 4.9 shows the structural equation model input covariance matrix generated
from the measurement model has twelve observed variables, out of this three variables
for nature of job, two variables for working condition, three variables for company policy
and four variables for remuneration.
87
The measurement model has positive degrees of freedom (78-27 = 51), and the
model was fitted for the data well by the chi-square test, X2 – 2.734 (N =300, df = 51) =
266.06, P > .05. Although the hypothesized model is fitted for the observed variance –
covariance matrix well by the chi-square test, the baseline comparisons fit five indices of
GFI, NFI, CFI and TLI are all above 0.90 (GFI, 0.919, NFI 0.913, TLI 0.933 and CFI
0.942) and RMSEAis 0.72, these indices compare the fit of the hypothesized model. All
the four variables namely nature of job, working conditions, company policy and
remuneration well related and there is relationship among the four variables for employee
preference towards an organization i.e., information technology industry in Pondicherry.
The results show that the path coefficient value of measurement model is 0.63, 0.62, 0.33
and positive relationship between four group of variables of employee preference.
4.3.2.2 Relationship between Motivation, Employee-Employee Relationship,

Employee-Superior Relationship and Human Resource Practices
Hypothesis
H0: There is no relationship between the employee preference towards job with regard to
human resource practices and motivation, employee-employee relationship and
employee-superior relationship in information technology (IT) industry in Pondicherry.
H1: There is a relationship between the organizational preference of human resource
practices and motivation, employee-employee relationship and employee-superior
relationship in information technology (IT) industry in Pondicherry.
Selected variables: A group of variables about the organizational preference of human

resource practices and motivation, employee-employee relationship and employee-
superior relationship.
Significance level: 0.05; Selected tools: Measurement model
Guidelines: If ‘P’ value is lesser than 5 per cent it indicates there is a relationship
between the variables otherwise no relationship between these two latent (unobserved)
variables.
88
Figure 4.10 Relationship between HRD practices, Employee-Employee Relationship,
Figure 4.10 shows the structural equation model input covariance matrix
generated from the measurement model has fourteen observed variables for three
variables for motivation, three variables for employee-employee relationship, four
variables for employee-superior relationship and four variables for human resource
practices of employees preference on information technology industry in Pondicherry.
model was fitted for the data well by the chi-square test, X2 2.892 (N =300, df = 74) =
366.06, P > .05. Although the hypothesized model is fitted for the observed variance,
covariance matrix well by the chi-square test, the baseline comparisons fit five indices of
0.929), and RMSEA is 0.68 these indices compare the fit of the hypothesized model. All
the four variables namely motivation, employee-employee relationship, employee-
superior relationship and human resource practices are well related and there is
relationship among the four variables for employee preference in information technology
industry in Pondicherry. The results show that the path coefficient value of measurement
model is 0.44, 0.29, 0.49 and positive relationship between four group of variables of
employee preference.
89
4.3.2.3 Overall Relationship Model for Employee Preference towards an
Organization
Figure 4.11: Overall Relationship Model for Employee Preference towards an

Organization
Table 4.13Model Fitness for Measurement Model
S.No Name of the Test Standard Value Actual Value Results
1 Chi-Square Less than 3 2.905 Model Fit
2 GFI Above 0.90 0.913 Model Fit
3 CFI Above 0.90 0.926 Model Fit
4 RMR Less than 0.05 0.048 Model Fit
5 RMSEA Less than 0.10 0.063 Model Fit
6 TLI 0.90 to 1.000 0.937 Model Fit
90
From the table 4.13 it is clear that the actual values of all indices for model fitness
is as per the standard values. It shows that measurement model is fit.
4.3.3 Path Model

The structural equation modelor path analysis is a comprehensive model that
identifies the pattern of relationships between independent and dependent variables,
either observed or latent15. The idea of using Structural Equation Modeling (SEM) has to
explain causal relations fixed among two variables, as SEM has been used for sufficient
if the researcher has investigate causal relationships or be determined to linkage multiple
and observed indicators to unmeasured causes or trying to evaluate whether the overall
16
model fitted the data (Bohrnstedt and Knoke, 1994). Path analysis was used to check
the causal model to the coverage the observed variables were envoy of the latent
constructs of the proposed model. The factor loading values were well above 0.40, as
recommended by Rummell (1967) 17.
4.3.3.1 Impact of Nature of Job on Working Condition, Company Policy and

Remuneration
PATH analysis is used in this study to find the impact of one variable on another
variable. PATH model has been constructed to find the impact of employee preference
of job on working conditions, company policy and remuneration.
Hypothesis
H0: There is no impact of nature of job on working conditions, company policy and
remuneration in information technology (IT) industry in Pondicherry.
H1: There is an impact on nature of job on working conditions, company policy and
remuneration in information technology (IT) industry in Pondicherry.
Selected variables: A group of variables about the employee preference of job on

working conditions, company policy and remuneration.
Significance level: 0.05; Selected tools: Path model
Guidelines: If ‘P’ value is lesser than 5 per cent it indicates that there is animpact of the
variables otherwise no impact of these two latent (unobserved) variables.
91
Figure 4.12 Impact of Nature of Job on Working Conditions, Company Policy and
Remuneration
Figure 4.11 shows the impact of nature of job on working conditions, company
policy and remuneration. In this study, the path analysis was executed to show whether
there was a direct effect of the employee preference towards the organization,
information technology (IT) industry in Pondicherry. The path model has positive
degrees of freedom (78-27 = 51), and the model was fitted for the data well by the chi-
square test, X2 2.592 (N =300, df = 51) = 230.690, P > .05. Although the hypothesized
model is fitted for the baseline comparisons fit five indices of GFI, NFI, CFI and TLI are
all above 0.90 (GFI, 0.937, NFI 0.928, TLI 0.938 and CFI 0.961), RMSEA is 0.73 these
indices compare the fit of the hypothesized model.
As the results of the path analysis were illustrated in Figure no.4.1.11 that job has
positive effect on working conditions, company policy and remuneration as the path
coefficient value of path model is 0.69, 0.64, 0.53 and it show the positive relationship on
three groups of variables of employee preference towards an organization information
technology (IT) industry in Pondicherry.
92
4.3.3.2 Impact of HRD practices on Employee-Employee Relationship, Employee-
Superior Relationship and Motivation
PATH model has been constructed to find the impact of employee preference of
human resource practices on employee-employee relationship, employee-superior
relationship and motivation.
Hypothesis
H0: There is no impact of human resource practices on employee-employee relationship,
employee-superior relationship and motivation in information technology (IT) industry in
Pondicherry.
H1: There is an impact of human resource practices on employee-employee relationship,
employee-superior relationship and motivation in information technology (IT) industry in
Pondicherry.
Selected variables: A group of variables related to human resource practices, employee
–employee relationship, employee-superior relationship and motivation.
Significance level: 0.05; Selected tools: Path model
Guidelines: If ‘P’ value is lesser than 5 per cent then it indicates that there is an impact
of one variable on other variables otherwise no impact of these two latent (unobserved)
variables.
Figure 4.13Impact of HRD practices on Employee-Employee Relationship,
93
Figure 4.12 shows the impact of human resource practices on employee-employee
relationship, employee-superior relationship and motivation. In this study, the path
analysis was executed to show the direct effect of human resource practices have impact
on three groups of variables on information technology (IT) industry in Pondicherry. The
path model has positive degrees of freedom (106-31 = 76), and the model was fitted for
the data well by the chi-square test, X2 2.722 (N =300, df = 74) = 236.06, P > .05.
Although the hypothesized model is fitted for the baseline comparisons fit five indices of
0.934), and RMSEA is 0.69 these indices compare the fit of the hypothesized model.
The results of the path analysis were illustrated in Figure no 4.1.12 the human
resource practices has positive effect on employee-employee relationship, employee-
superior relationship and motivation as path coefficient value of path model is 0.52, 0.58,
0.75.
4.3.3.3 Overall Structural Equation Modeling (SEM) of Employee Preference of Job

and Human Resource Development practices
Hypothesis
H0: The nature of job and HRD practices has no impact on working conditions, company
policy and remuneration of information technology industry in Pondicherry Region.
H1: The nature of job and HRD practices has an impact on working conditions, company
policy and remuneration ofinformation technology industry in Pondicherry Region.
Selected variables: A group of variables about the employee preference of job itself and
human resource practices about working conditions, company policy and remuneration.
Significance level: 0.05; Selected tools: Structural Equation Model (SEM)
Guidelines: If ‘P’ value is lesser then 5 percent indicates there is an impact of one
variable on other variables.
94
FIGURE 4.14Overall Structural Equation Model for Employee Preference towards
an Organization
Figure 4.14 shows the path model for employee preference of job and human
resource practices on working conditions, company policy, remuneration, employee-
employee relationship, employee-superior relationship and motivation.
Table4.14Model Fitness for Path Model
Sl. No Name of the Test Standard Value Actual Value Results

1 Chi-Square Less than 3 2.865 Model Fit
2 GFI Above 0.90 0.923 Model Fit
3 CFI Above 0.90 0.917 Model Fit
4 RMR Less than 0.05 0.046 Model Fit
5 RMSEA Less than 0.10 0.073 Model Fit
6 TLI Above 0.90 0.931 Model Fit
From the table 4.14 it is clear that the actual values of all indices for model fitness
are as per the standard values. It shows that path model is fit.
95
Table 4.15 Results of Employee Preference Model
S. No Construct Arrow Construct Estimate S.E. C.R. P value Result
1 WC <--- JOB .644 .106 6.464 *** Reject
2 CP <--- JOB .566 .097 5.814 *** Reject
3 REM <--- JOB .500 .096 5.223 *** Reject
4 EER <--- JOB .253 .056 4.537 *** Reject
5 ESR <--- JOB .180 .068 2.625 .009 Reject
6 MOT <--- JOB .571 .092 6.211 *** Reject
7 WC <--- HRP .195 .053 3.704 *** Reject
8 CP <--- HRP .229 .050 4.622 *** Reject
9 REM <--- HRP .458 .064 7.207 *** Reject
10 EER <--- HRP .240 .040 6.040 *** Reject
11 ESR <--- HRP .514 .057 8.986 *** Reject
12 MOT <--- HRP .222 .042 5.275 *** Reject
Source: Author’s calculation from primary data.
Table 4.15 shows the path value of job on working conditions, company policy,
remuneration, employee-employee relationship, employee-superior relationship,
motivation and human resource practices on working conditions, company policy,
remuneration, employee-employee relationship, employee-superior relationship,
motivation
SUMMARY
To sum upin this chapter, data collected from the employees of IT firms in
Puducherry regarding the employee preference towards an organization has been
analyzed using statistical tools such as mean, standard deviation, ranking, one way
ANOVA and SEM analysis. Based upon the analyses results derived were given in the
following paragraphs.
From the study it was found that the reasons for the employees to stay in the
present organization are‘job is interesting’ (nature of job), ‘better organized’ (working
condition), ‘role to play in decision making’ (motivation), ‘clearly defined policy’
(company and its policies), ‘maternity benefit’ (remuneration), ‘group harmony’
96
(interpersonal relationship between employees), ‘industry harmony’ (inter-personal
relationship between employees and superior) and ‘best recruitment practices’ (HRD
practices).
Among the various factors influencing employee preference towards an

organization, nature of job and working condition were considered to be the most
influencing factors for the employees to stay in the organization for a longer period.
The perceptional difference of employees their preference towards an

organization with regard to the demographic variables of employees. Among the
variables age and motivation, age and remuneration, education and HRD practices,
gender and motivation, marital status and company policy were considered to be having
significant difference in the opinion of employees irrespective of their age, education,
gender and marital status of the employees.
The SEM analysis results show that there is a positive relationship between nature
of job, working condition, company policy and remuneration and there is also positive
relationship between motivation, employee-employee relationship, employee-superior
relationship and HRD practices. Measurement model of overall relationship between
variables also shows to be fit. The Path model shows that nature of job has a positive
effect on other 3 variables viz., working condition, company policy and remuneration and
another path model also shows that the HRD practices has a positive effect on other 3
variables viz., employee-employee relationship, employee-superior relationship and HRD
practices. The overall SEM model shows that the nature of job and HRD practices has
positive effect on all the other 6 variables and the table values shows that the model is fit.
97
1. R. Nirmala, “A Study on Retention of employees at ABT Maruti, Chennai”,

2. Smallbusiness.chron.com, Nature of work.
3. www.businessdictionary.com, Working Condition.
4. www.managementstudyguide.com, Motivation.
5. www.businessdictionary.com, Company Policies.
6. Wikipedia, Remuneration.
7. www.schoolmattazz.com, Inter-personal Relationship.
8. work.chron.com, Inter-personal Relationship between employee and supervisor.
9. www.researchgate.net, HRD practices.
10. www.statisticssolutions.com, SEM: Step by Step – Statistics solutions
11. www.statmodel.com, Confirmatory Factor Analysis
12. mycourses.aalto.fi, CFA- My Courses
13. http/Stats.stackexchange.com, SEM: What is measurement model- Cross validated
14. Hair et al, Tabachnick and Fidell, 2001, Stefanie Leimeister 2010, Business and
Economics.
15. www.grpetrology.com, Material Analysis
16. David Knoke, George W. Bohrnstedt, Alisa Potter Mee (2002), Statistics for Social
Data Analysis, F.E. Peacock Publishers.
17. Rummell (1967), “Understanding Factor Analysis”, Journal of Conflict Resolution.
1
CHAPTER V
EMPLOYEE ATTRITION: CAUSES AND MEASUREMENT
5.1 CAUSES FOR EMPLOYEE ATTRITION
5.1.3 Avoidable Causes vs. Unavoidable Causes
5.2 ASSOCIATION BETWEEN DEMOGRAPHIC VARIABLES OF THE EMPLOYEES AND

CAUSES OF EMPLOYEE ATTRITION
5.3 PERCEPTIONAL DIFFERENCE OF EMPLOYEES ON CAUSES OF EMPLOYEE

ATTRITION WITH REGARD TO DEMOGRAPHIC VARIABLES OF EMPLOYEES
5.3.1 Perceptional difference of Employees on Causes of Employee

Attrition with regard to their Age, Education and Experience
5.3.2 Perceptional difference of Employees on Causes of Employee

Attrition with regard to their Gender and Marital Status
5.4 MEASUREMENT OF EMPLOYEE ATTRITION
5.4.1 Employee details of IT Industry in Puducherry
5.4.2 Attrition Rate in IT Industry, Puducherry
5.4.3 Attrition Rate in different categories IT Industry, Puducherry
5.4.4 Attrition Rate in different categories of Employees in IT Industry,

Puducherry
5.4.4 Attrition Rate among Gender category of Employees in IT Industry,

Puducherry
CHAPTER V
EMPLOYEE ATTRITION: CAUSES AND MEASUREMENT
“Men live by intervals of reason under the sovereignty of caprice and passion”. –
Thomas Browne
This chapter describes the causes of employee attrition and measurement of

employee attrition. The perception of the employees of IT Company regarding the causes
of employee attrition was also elicited and analyzed using descriptive statistics mean,
standard deviation and ranking. Based on this, the main reason or reasons of employee
attrition has been found out. Chi-square was used to find out the association between
demographic profile of the respondents such as age, gender, marital status, education
level and experience and the causes of employee attrition. One Way ANOVA was used to
find out the difference of opinion of the employees regarding causes of attrition with
regard to age, education and experience and the Independent t test was used to find out
the difference of opinion of the employees regarding causes of attrition with regard to
gender and marital status.
5.1 CAUSES FOR EMPLOYEE ATTRITION
Employee attrition is very expensive, obviously it is important for organization to

reduce attrition rate. However in order to reduce these rates organization must first
understood the causes of employee attrition. The causes of employee attrition may be
divided into two categories; they are avoidable causes and unavoidable causes.
The causes which can be avoided if the firm takes necessary steps is referred as
avoidable causes, these causes are within the control of the firm and it is usually related
to job, management and the organization Table 5.1 shows the descriptive statistics, mean
and standard deviation along with rank related to causes of employee attrition with regard
to the avoidable causes.
98
Table 5.1Descriptive Statistics of perception about Avoidable Causes
Avoidable causes of employee attrition Mean SD Rank
Dissatisfaction with job 3.70 1.027 I
Dissatisfaction with wages 3.63 0.958 II
Poor working conditions 3.35 1.012 VI
Unsuitable working hours 3.39 1.007 IV
Non-co-operative attitude 3.45 1.054 III
Better prospects is not available 3.35 1.034 VI
Unethical attitude of management 3.38 1.023 V
It is clear from the Table 5.1 that the variable ‘dissatisfaction with job’ and
‘dissatisfaction with wages’ were the major avoidable reasons for the employees to leave
the organization as they have the highest mean scores of 3.70 and 3.63 respectively. The
least considered causes by the employee are ‘poor working condition’ and ‘better
prospects is not available’, with a mean score of 3.35, which denotes that it plays the least
role in employee attrition. It is observed that the standard deviation of all causes of
employee attrition except dissatisfaction with wages are more than 1, this implies the IT
employees widely oscillate in their opinion about the causes of employee attrition except
the cause dissatisfaction with wages.
The causes which are beyond the control of management and it is purely of
personal nature are termed as unavoidable causes. The causes such as marriage, death or
illness come under this category. Table 5.2 shows the descriptive statistics, mean and
standard deviation along with rank related to reasons for leaving the organization with
regard to the unavoidable causes.
Table 5.2 Descriptive Statistics of perception aboutUnavoidable Causes
Unavoidable causes of employee attrition Mean SD Rank
Marriage 3.69 0.998 II
Accident or illness 3.72 0.927 I
Retirement or death 3.65 0.918 III
Personal betterment 3.53 0.923 IV
Employee's roving nature 3.42 1.010 V
99
It is inferred from the Table 5.2 that the causes ‘accident or illness’ and
‘marriage’ were the major unavoidable reasons for the employees to leave the
organization as they got a highest mean scores of 3.72 and 3.69 respectively. The least
considered cause by the employee is ‘employee’s roving nature’, with a mean score of
3.42, which denotes that it plays the least role in employee attrition. It is observed that the
standard deviation of all causes of employee attrition except employees roving nature are
less than 1, this implies that there is uniformity of the opinion of IT employees with
regard to all features except the cause employees roving nature
5.1.3 Avoidable Causes vs. Unavoidable Causes
To find out which cause either avoidable or unavoidable cause is the main reason
for employee attrition, descriptive statistics mean, standard deviation along with rank is
calculated, results are shown in the table 5.3.
Table 5.3Descriptive Statistics of Avoidable Causes vs. Unavoidable Causes
Causes of employee attrition Mean SD Rank
Avoidable causes 3.46 0.738 II
Unavoidable causes 3.60 0.728 I
It is clear from the table 5.3 that the unavoidable causes (mean value = 3.60) such
as ‘marriage’, ‘death or retirement’, ‘accident or illness’, ‘personal betterment’ and
‘employee’s roving nature’ were the major reasons for employees to leave the
organization compared to avoidable causes (mean value = 3.46) such as ‘dissatisfaction
with job’, ‘dissatisfaction with wages’, ‘poor working conditions’, ‘unsuitable working
hours’, ‘non co-operative attitude’, ‘better prospects is not available’ and ‘unethical
attitude of management’.
5.2 Association between Employee’s Demographic Variables and Causes for
Attrition
The degree of association between the demographic variables of employees of

study units such as age, gender, marital status, experience and education and their
perception about causes of employee attrition is studied here. Chi-square test has been
used for this purpose. The table 5.4 shows the results of chi-square test.
100
Table 5.4Association between Employee’s Demographic Variables and Causes for
Attrition
Causes for attrition Total Chi- P
Variables Avoidable Unavoidable 300 square value
Age 18-25 years 84(59.2) 58(40.8) 142
26-35 years 69(61.6) 43(38.4) 112 5.590 0.061
36& above 36(78.3) 10(21.7) 46
Male 106(57.3) 79(42.7) 185
Marital Gender
Female 83(72.2) 32(27.8) 115 6.733 0.009*

Married 85(65.4) 45(34.6) 130
Status
Unmarried 104(61.2) 66(38.8) 170 0.560 0.454

Up to 2 years 61(66.3) 31(33.7) 92
Experience
2-5 years 79(57.2) 59(42.9) 138

6-10 years 31(64.6) 17(35.4) 48 5.785 0.123
Above 10 years 18(18.8) 04(18.2) 22
UG 89(57.8) 65(42.2) 154
Education
PG 83(73.5) 30(26.5) 113 8.954 0.011*

TechEducation 17(51.5) 16(48.5) 33
Source: Primary Data:Significant at 5% Level: * P value is significant
Figures within brackets represent percentage
It is inferred from the table 5.4 that the respondents in the overall sample belong
to three different age groups namely ‘18 - 25years’, ‘26 - 35 years’ and ‘36 years and
above’. The null hypothesis tested in this case is there is no association between age of
the employees and reasons for leaving the organization.
Since the Probability Value is 0.061 (p > 0.05), it shows that the two attributes age
and reasons for leaving the organization are independent. Hence it is further concluded
that the reasons for leaving the organization does not depend on age of the employees.
Whether the employee is between ‘18- 25 years’ or ‘26 – 35 years’ or ‘above 36 years’, it
does not make any difference in the decision of the employees to leave the organization.
101
Gender classification of the respondents falls into two categories i.e., male and
female and they are in the ratio of 6:4. To find out whether there is any association
between gender and reason for leaving the organization chi-square analysis is used. The
null hypothesis tested in this case is there is no association between gender of the
employees and reasons for leaving the organization.
Since the Probability Value is 0.009 (p < 0.05), it signifies that the two attributes
gender and reasons for leaving the organization are dependent. Hence it is further
concluded that the reasons of the employees leaving the organization depends on gender
of the employees. It denotes that whether the employee is male or female, it plays an
important role in deciding whether to continue with the organization or to leave the
organization.
The total sample of the study has been categorized on the basis of marital status as
married and unmarried. To find out whether there is any association between marital
status of the employees and reasons for leaving the organization chi-square analysis is
used. The null hypothesis tested in this case is there is no association between marital
status of the employees and reason for leaving the organization.
Since the Probability Value is 0.454 (p > 0.05), it conveys that the two attributes
marital status and reasons for leaving the organization are independent. Hence it is further
concluded that the reasons for leaving the organization does not depends on marital status
of the employees. Whether the employee is married or unmarried it does not make any
difference in the decision of the employees to leave the present organization.
Respondents of the study has been categorized on the basis of experience into
four , they are experience ‘up to 2 years’, ‘2-5 years’, ‘6-10 years’ and ‘more than 10
years’. To test whether experience has any role in the decision of the employee to leave
the organization chi-square analysis is used. The null hypothesis in this case is there is no
association between experience of the employees and reasons for leaving the
organization.
Since the Probability Value is 0.123 (p > 0.05), it projects that the two attributes
experience and reasons for leaving the organization are independent. Hence it is further
concluded that the reasons for leaving the organization does not depends on experience
of the employees. Whatever be the experience of the employee whether experienced or
102
fresher it does not make any difference in the decision of the employees to leave the
organization.
The total sample of the study has been categorized on the basis education into3,
they are employees completed under graduation, and employees completed post-
graduation and employee holding technical qualification. The demographic profile
education of the employees is also compared with employee attrition. To find out the
association between this two attributes chi- square test is used, the null hypothesis tested
is that there is no association between education of the employees and reasons for leaving
the organization.
Since the Probability Value is 0.011 (p < 0.05), it communicates that the two
attributes education and reasons for leaving the organization are dependent. Hence it is
further concluded that the reasons for leaving the organization depends on educational
level of the employees. Educational level of the employees whether they are under
graduated or post graduated or technical qualified plays an important role in the decision
making of the employees to leave the organization.
5.3 Perceptional difference on Causes of Employee Attrition with regard to

Demographic Variables of Employees
Perceptional differences of the respondents on causes for leaving the organization
can be tested through One Way ANOVA. The independent variable must have more than
two categories. The independent variables such as age, education and experience has
more than two categories ANOVA can be applied to test the significant difference in the
opinion of the respondents on causes for leaving the organization with regard to age,
education and experience.
5.3.1 Perceptional difference of Employees on Causes of Employee Attrition with
regard to their Age, Education and Experience
Respondents in the overall sample has been categorized on the basis of age into
three different groups namely ‘18 - 25years’, ‘26 - 35 years’ and ‘36 years and above’,
on the basis of education, employees categorized into three groups namely ‘under
graduation’, ‘post-graduation’ and ‘technical qualification’ and on the basis of experience
employees categorized into four groups namely experience ‘up to 2 years’, ‘2-5 years’,
‘6-10 years’ and ‘more than 10 years’. The categories of age, education and experience
103
are more than two groups the difference of opinion of the employees can be tested by
One Way ANOVA.
H0: There is no significant difference in the opinion of different age group, education
level and experience of the respondents and causes of attrition.
Table 5.5 Perceptional difference of Employees on Causes of Employee Attrition
with regard to their Age, Education and Experience
Causes of employee Mean / F ANOVA Sig.

Attrition Descriptive Age Education Experience
Avoidable causes 3.46 1.080 0.341 0.031* 0.699
*
Unavoidable causes 3.60 6.319 0.002 0.445 0.299
Source: Primary Data Level of significance at 5% * P value is significant
It is interpreted from the table 5.5, that between age and avoidable causes the
probability value is 0.341 (p > 0.05), it is implied that there is no significant difference in
the opinion of different age groups of the respondents with respect to avoidable causes. It
emphasizes that the perception of the respondents about avoidable causes for leaving the
organization is same irrespective of their age.
Compared age with unavoidable causes the probability value is 0.002 (p < 0.05),
it conveys that there is significant difference in the opinion of different age groups of the
respondents with respect to unavoidable causes. It implies that that perception of the
respondents about unavoidable causes for leaving the organization is different as per the
age.
Employees of different age groups have significant difference in the opinion with
regard to unavoidable causes. To find out among the different age groups of the
employees which age groups have similar opinion about unavoidable causes Post Duncan
test is applied, the result is shown in the table 5.5.1
Table 5.5.1Age and unavoidable causes
18 – 25 3.59a
26 – 35 3.49a 6.319 0.002*
36 & above 3.93b
*significant at 5% level (Different alphabet denotes the subset of Duncan test)
104
It is interpreted from the table 5.5.1 that the opinion of the respondents about the
unavoidable causes is similar between the age group ‘18 to 25’ and ‘26 to 35’. It denotes
that employees of age between ‘18 to 25’ and ‘26 to 35’ have similar perception with
regard to unavoidable causes.
Compared education with avoidable causes the probability value is 0.031(p <
0.05), it concludes that there is significant difference in the opinion of different education
level of the respondents with respect to avoidable causes. It shows that the perception of
the employees about the avoidable causes is different as to their education level.
Employees of different education level have significant difference in the opinion
with regard to avoidable causes. Find out similarity in their perception about avoidable
causes Post Duncan test is applied and the result is shown in the table 5.5.2.
Table 5.5.2 Education and Avoidable Causes
Education Mean F value P value
b
UG 3.49
PG 3.52b 3.530 0.031*
Technical Education 3.15a
*Significant at 5% level (Different alphabet denotes the subset of Duncan test)
It is interpreted from the table 5.5.2 that the opinion of the respondents about
avoidable causes is similar between the education category undergraduate and post
graduate. It denotes that employees having under graduate and post graduate have similar
perception with regard to avoidable causes.
Compared education with unavoidable causes the probability value is 0.445 (p >
0.05), it shows that there is no significant difference in the opinion of different education
level of the respondents with respect to unavoidable Causes. It indicates that the
perception of the employees about the unavoidable causes is same irrespective of their
education level.
Compared experience with avoidable causes the probability value is 0.699(p >
0.05), it implies that there is no significant difference in the opinion of different
experience level of the respondents with respect to avoidable causes. It shows that the
perception of the employees about avoidable causes is same irrespective of their
experience level.
105
Compared experience with unavoidable causes the probability value is 0.299 (p >
0.05), it communicates that there is no significant difference in the opinion of different
experience level of the respondents with respect to unavoidable causes. It indicates that
the perception of the employees about unavoidable causes is same irrespective of their
experience level.
5.3.2 Perceptional difference of Employees on Causes of Employee Attrition with

regard to their Gender and Marital Status:
Respondents have been categorized on the basis of gender into two viz., male and
female and on the basis of marital status have been categorized into two viz., married and
unmarried. For testing the difference of opinion between male and female and married
and unmarried independent sample t test is used.
H0: There is no significant difference in the opinion among the gender group and
marital status of the respondents with respect to the causes of attrition.
Table 5.6 Perceptional difference of Employees with regard to their Gender and
Marital Status
Causes of employee Mean S.D. Gender Marital status
attrition t value p value t value p value
Avoidable causes 3.46 0.738 1.691 0.131 0.378 0.230
Unavoidable causes 3.60 0.728 0.201 0.000* 1.466 0.961
Source: Primary Data Level of significance at 5% * p value is significant
It is clear from the table 5.6, between gender and avoidable causes the probability
value is 0.131 (p > 0.05), it conveys that there is no significant difference in the opinion
of different gender group of the respondents with respect to avoidable causes. It shows
that the perception of the employees about avoidable causes is same irrespective of their
gender group.
Compared gender with unavoidable causes the probability value is 0.000 (p <
0.05), it projects there is significant difference in the opinion of different gender group of
respondents with respect to unavoidable causes. It shows that the perception of the
employees about unavoidable causes is different as to their gender group.
106
Compared marital status with avoidable causes the probability value is 0.230(p >
0.05), it signifies there is no significant difference in the opinion of marital status of the
respondents with respect to avoidable causes. It shows that the perception of the
employees about avoidable causes is same among the marital status of the employee.
Compared marital status with unavoidable causes the probability value is 0.961 (p
> 0.05), it is concluded that there is no significant difference in the opinion of marital
status of the respondents with respect to unavoidable causes. It shows that the perception
of the employees about unavoidable causes is same among the marital status of the
employee.
5.4 MEASUREMENT OF EMPLOYEE ATTRITION
Employee attrition rate can be measured by applying various methods viz.,

Separation Method, Replacement Method, Flux Method, Crude Wastage Rates,
Resignation Rates, etc.
Attrition rate allows in determining the percentage of employees left the business
over a specified period of time usually a year1. If the rate is high, then it gives an alarm to
the management to take measures to retain the current staff in their organization. The
ability to measure attrition gives the management the information needed to reduce its
negative effect, determining what can be done to address the underlying causes. The
widely followed method of calculating employee attrition rate is crude wastage method2.
5.4.1 Employee details of IT Industry in Puducherry
For the purpose of calculating employee attrition rate, IT industry details has been
collected from the Directorate of Industries and Commerce (DIC), Puducherry and the
details of employee size of IT firms has been collected from the Department of Labor
Welfare, Puducherry. Information regarding number of employees left an organization
during a given period has been collected from the HR manager of the IT firms in and
around Puducherry and average number of employees in an organization is calculated for
the purpose of calculating attrition rate. Table 5.7 gives the details of employee size of
IT firms in Puducherry.
107
Table 5.7 Employee details of IT Industry in Puducherry3
No. of employees left the
Average
Size of No. of company (involuntary)
S.No. No. of
employees companies 201
2011 2012 2014 2015 employees
3
1 Less than 300 11 24 30 24 27 30 150
2 300 – 600 7 81 95 81 99 122 450
3 600 – 900 8 165 195 210 225 240 750
4 900– 1200 6 263 295 315 336 357 1050
5 1200-1500 3 405 432 446 486 568 1350
6 1500 – 2500 2 840 880 840 900 1042 2000
Source: DIC and Department of Labor Welfare inPuducherry
From the table 5.7, it is understood that the employee size ranges from less than
300 to 2500. Totally there are 37 IT firms in Puducherry and it has been classified into 6
on the basis of employee size of the firm. Number of involuntary leavers range from 20
to 1050, as the firm size is less involuntary leavers during a given period is also less as
the firm size increases the number of involuntary leaver also high. Average number of
employees ranges between 150 and 2000.
5.4.2 Attrition rate in IT Industry, Puducherry
Attrition rate has been calculated for the IT firms on the basis of employee size.
Crude wastage method is used for calculating attrition rate. The formula to find out crude
wastage rate is given below4.
No.of leavers in a given period (involuntary leavers)
Crude Wastage Rate = ×100
Table 5.8 Attrition rate in IT Industry, Puducherry
No. of No. of Attrition Rate (Crude Wastage method)
S.No.
employees companies 2011 2012 2013 2014 2015
1 < 300 11 16 20 16 18 20
2 300 – 600 7 18 21 18 22 27
3 600- 900 8 22 26 28 30 32
4 900 – 1200 6 25 28 30 32 34
5 1200 – 1500 3 30 32 33 36 42
6 1500 – 2500 2 42 44 42 45 52
Average Employee Attrition rate 26 29 28 31 35
108
From the table 5.8, it is clear that the attrition rate in IT firm for the period 2011
to 2015 ranges from 10% to 45%. Attrition rate is less for the firms having less number of
employees i.e., 10% to 30% as the employee size is big the attrition rate is also high i.e.,
30%to 52%. On an average the attrition rate from 2011 to 2015 it ranges from 26 % to
35%.
5.4.3 IT Industry category wise Employee Attrition Rate

IT industry in Puducherry has been classified in 3 categories i.e., Hardware Firms,
Software Firms and BPO Firms. Totally it is 37 firms out of that 6 are hardware firms, 19
are software firms and 12 firms are BPO’s. Employee attrition rate is calculated for the IT
industry on the basis of categories of IT firms such as hardware firms, software firms and
BPO’s. The results are given in the Table 5.9.
Table 5.9 IT Industry Category Wise Employee Attrition Rate
Attrition Rate (Crude Wastage Attrition

Category of No. of
S.No. method) rate
IT firms companies
2011 2012 2013 2014 2015
1 Hardware 6 23 19 22 25 28 23
2 Software 19 42 38 40 42 44 41
3 BPO 12 44 41 45 48 49 45
Source: Source: Author’s calculation from primary data
From the table 5.9, it is clear that attrition rate in IT industry is high. Employee
attrition rate is increasing from year to year. Attrition rate is high for BPO firms and
software firms compared to hardware firms. In software firms and BPO firms the attrition
rate ranges from 38% to 49%. On an average it is 23% for hardware firms, 41% for
software firms and 45% for BPO firms.
5.4.4Industry Category wise and Employee Category wiseAttrition rate
Employees of IT industry are further categorized into staff and workers. Senior
level professionals and mid-level professionals such as chief executive officer, chief
operation officer, chief finance officer, chief technical officer, senior project manager,
project head, technical head, senior quality analyst, project leader, etc., has been
categorized into staff and entry level professionals such as team leader, programmer
109
analysts, software developer, software engineer, junior developer etc., has been
categorized into workers. Attrition rate has been calculated for different categories of
employees and results were given in the Table 5.10.
Table 5.10 Industry Category wise and Employee Category wiseAttrition Rate
Attrition Rate (Crude Wastage
Categoryof
of IT firms
companies
employees
Category
Attrition
S.
No. of
method)
rate
No.
2011 2012 2013 2014 2015
1 Hardware 6 Staff 10 8 10 9 13 10
firms Worker 13 11 12 16 15 13
Total 23 19 22 25 28 23
2 Software 19 Staff 16 14 16 17 15 16
firms Worker 26 24 24 25 29 26
Total 40 34 40 42 44 41
3 BPO firms 12 Staff 21 20 20 23 25 22
Worker 23 21 25 25 24 24
Total 44 41 45 48 49 45
From the table 5.10 it is interpreted that the attrition rate is increasing from year to
year. Compared to staff, workers attrition rate is high in all category of IT industry such
as hardware, software and BPO firms. On an average for the Hardware firms, staff
attrition rate is 10% and workers attrition rate is 13%, for software firms staff attrition
rate is 16% and workers attrition rate is 26% and for BPO firms, staff attrition rate is
22%and workers it is 24%. For hardware and BPO firms the attrition rate is more or less
the same whereas in case of software firms workers attrition rate is more compared to
staff attrition rate.
5.4.5 Attrition Rate among Gender category in IT Industry
Employee of IT firms are further categorized on the basis of gender and employee
attrition rate was calculated for hardware firms, software firms and BPO’s on the basis of
gender and the results are shown in the table 5.11.
110
Table 5.11 Attrition Rate among Gender category in IT Industry
Attrition Rate (Crude Wastage
companie
employee
Category
Category
Attrition
No. of
firms
S.No
of IT
method)
rate
of
s
s
. 2011 2012 2013 2014 2015
1 Hardware 6 Male 17 12 14 15 16 15
firms Female 6 7 8 10 12 9
Total 23 19 22 25 28 23
2 Software 19 Male 28 25 25 28 28 27
firms Female 14 13 15 14 16 14
Total 42 38 40 42 44 41
3 BPO firms 12 Male 28 29 30 29 27 29
Female 16 12 15 19 22 17
Total 44 41 45 48 49 45
The table 5.11 shows that the attrition rate on an average for male employees of
hardware firms was 15% and female employees is 9% for male employees of software
firm was 27% and female employees is 14% and for male employee of BPO firms was
29% and for female employees it is 17%.On the whole for all categories of firms, male
employee attrition was more than female employee attrition rate. This shows that male
employee move from one place to another place for search for better job compared to
female employees.
SUMMARY
To summarize, this chapter narrates the data collected from employees of IT firms
in Puducherry regarding the causes of employee attrition and attrition rate. The opinion
collected were analyzed by using statistical tools such as mean, standard deviation,
ranking, chi- square, one-way ANOVA and independent sample t test. Information
collected from the Directorate of Industries and Commerce and Department of Labor
Welfare and HR managers of IT firms in Puducherry such as IT industry details,
employee size details and number of leavers in an organization attrition rate of IT
industry was calculated using Crude Wastage Rate method. Based upon the analyses the
results derived were given in the following paragraphs.
111
Majority of the respondents feel that dissatisfaction with job and wages were the
major avoidable reasons and accident or illness and marriage were the major unavoidable
reasons for the employees to leave the organization. Among the causes for leaving the
organization, unavoidable causes are considered to be the main reason for employee
attrition.
Among the association between demographic profile and reason for leaving the
organization, gender and education of the employees influences the employee to leave the
organization.
Among the avoidable causes and unavoidable causes, the unavoidable causes
shows significant difference in the perceptional difference on causes for leaving the
organization when compared to their age and the opinion of the respondents about
unavoidable causes is similar between the age group 18 to 25 and 26 to 35. Avoidable
causes indicates significant difference in theperceptional difference on the causes for
leaving the organization when compared to their education and the opinion of the
respondents about avoidable causes is similar between the education level of respondents
having undergraduate and post graduate qualification. Unavoidable causes indicate
significant difference in the perceptional difference on causes for leaving the organization
when compared to their gender.
Number of involuntary leavers range from 20 to 1050, as the firm size is less
involuntary leavers during a given period is also less as the firm size increases the
number of involuntary leaver also high. Average number of employees ranges between
150 and 2000.
Employee attrition rate is increasing from year to year. Attrition rate is high for
BPO firms and software firms compared to hardware firms. In software firms and BPO
firms the attrition rate ranges from 38% to 49%. On an average it is 23% for hardware
firms, 41% for software firms and 45% for BPO firms.
On an average for the Hardware firms, staff attrition rate is 10% and workers
attrition rate is 13%, for software firms staff attrition rate is 16% and workers attrition
rate is 26% and for BPO firms, staff attrition rate is 22%and workers it is 24%. For
hardware and BPO firms the attrition rate is more or less the same whereas in case of
software firms workers attrition rate is more compared to staff attrition rate.
112
On an average for male employees of hardware firms was 15% and female
employees is 9% for male employees of software firm is 27% and female employees is
14% and for male employee of BPO firms is 29% and for female employees it is 17%.On
the whole for all categories of firms, male employee attrition is more than female
employee attrition rate. This shows that male employee move from one place to another
place with enhanced pay for a better job compared to female employees.
113
1. Smallbusiness.chron.com
2. Human Resource Planning
3. Directorate of Industries and Commerce and Department of Labor Welfare,
Puducherry.
4. IDS Bulletin,2004
CHAPTER VI
EFFECTS OF EMPLOYEE ATTRITION AND
RETENTION STRATEGIES: EMPLOYERS’ PERCEPTION
6.1.1Positive Effects
6.2 Association between demographic variables and perception about effects of

employee attrition
6.3 PERCEPTIONAL DIFFERENCE OF EMPLOYERS ON THE EFFECTS OF EMPLOYEE ATTRITION
6.3.1 Perceptional difference of employers on the effects of employee attrition

with regard to their age
6.3.2 Perceptional difference of employers on the effects of employee attrition

with regard to their gender and marital status
6.4 SEPARATE RETENTION POLICY
6.6 FACTORS INFLUENCING RETENTION
6.6.1 Remuneration
6.6.2 Organizational environment
6.6.3 Growth and Career
6.6.4 Inter-personal relationship
6.6.5 Moral support
6.6.6 Overall ranking of factors influencing retention
6.7 Perceptional difference of employers on factors influencing retention with

regard to their demographic variables
6.7.1 Perceptional difference of employers on factors influencing retention with

regard to their age
6.7.2 Perceptional difference of employers on factors influencing employee

retention with regard to their gender and marital status
6.8 perception about RETENTION STRATEGIES - EMPLOYEE category wise

6.8.1 Retention strategy at Entry Level Professionals
6.8.2 Retention strategy at Mid Level Professionals
6.8.3 Retention strategy at Senior Level Professionals
6.9 PERCEPTIONAL DIFFERENCE of employers ON RETENTION STRATEGIES AT DIFFERENT

LEVELS WITH REGARD TO DEMOGRAPHIC VARIABLES
6.9.1 Perceptional difference of Employers on the Retention Strategy with

regard to their Age
6.9.2 Perceptional difference of employers on the Retention Strategy with

regard to their Gender and Marital Status
CHAPTER VI
EFFECTS OF EMPLOYEE ATTRITION
AND RETENTION STRATEGIES: EMPLOYERS’ PERCEPTION
“If you think hiring professionals is expensive, try hiring amateurs”. -Anonymous
The previous chapterdiscussed the causes of employee attrition and measurement

of attrition rate. The effects of employee attrition, factors influencing employee retention,
employee retention strategies adopted in the study units are discussed in this chapter.
Statistical tools such as mean, standard deviation, ranking, chi-square test, one-way
ANOVA and independent sample t test were used to detect the additional information
and to deduce major inferences.
Business hires and train employees to carry out the tasks necessary to operate and
generate revenue. Businesses depends on their worker to succeed but employees may
leave their job for variety of reasons such as taking new jobs at other companies,
marriage, ill health etc. Employee attrition results in various effects in an organization1.
Effects of employee attrition have been classified into two major types they are positive
effects and negative effects. To find out the various positive and negative effects of
employee attrition, employers’ perceptions were collected from the study units and
analyzed. For this purpose, employers’ of IT Companies or their management
representatives, unvaryingly HR managers were approached with structured interview
schedule to elicit their views.
6.1.1Positive Effects
Employeeattrition typically has a negative connotation, mainly due to the

potentially high costs associated with replacing a departed worker2. However, to some
extent attrition can actually be considered desirable. For assessing the perception of
managers about the positive effects of employee attrition, mean and standard deviation
was worked out along with the rank. The results were given in the table 6.1.
114
Table 6.1 Descriptive Statistics of Employers’ perception about Positive Effects
Positive effects Mean SD Rank

Increased performance 4.00 0.871 I
Reduction of entrenched conflict 3.70 0.877 II
Increased mobility and morale 3.53 1.332 III
Innovation and adaptation 3.07 1.507 IV
From the table 6.1, it is inferred that the variable increased performance has the
highest mean score of 4.00 stating that most of the managers feel that increased
performance is the major considered effect of employee attrition which favors the
organization in many ways. The least considered effect of employee attrition is
innovation and adaptation, as the mean score is 3.07. It is observed that the standard
deviation of the effects increased performance and reduction of entrenched conflict are
less than 1; this implies that there is uniformity in the opinion of employers with regard to
these two effects and for the remaining two effects opinion of IT employers widely
oscillate.
Attrition causes continuously and affects the regular functioning of the

organization3. It obstructs the routine, causes escalation in cost and interrupting discipline
in the organization. To know the perception of the manager regarding negative effects,
descriptive statistics mean and standard deviation along with rank related to negative
effects of employee attrition was calculated and the result were shown in the Table 6.2.
Table 6.2 Descriptive Statistics of Employers’ perception about Negative Effects
Negative effects Mean SD Rank

Increased selection and recruitment cost 3.57 0.898 I
Increased training and development cost 2.93 1.337 IV
Creating operational disturbances 3.20 1.215 II
Demoralization of organizational membership 3.13 1.106 III
115
It is clear from the table 6.2 that the variable increased selection and recruitment
cost has the highest mean score 3.57, stating that most of the respondents feel that
increased selection and recruitment cost is the major effect of employee attrition and it
does not favors the organization. The least considered effect of employee attrition is
increased training and development cost, as the mean score is 2.93. It is observed that the
standard deviation of all the effects except the increased selection and recruitment cost
are more than 1; this implies that there is a wide oscillation in the opinion of employers
with regard to these effects.
6.2 Association between Employees’ Demographic Variables and perception about

Effects of Employee Attrition
The degree of association between demographic variables of employers/managers

of study units such as age, gender, marital status and education and their perception about
effects of employee attrition is studied here. Chi-square test has been used for this
purpose. The following table shows the results of chi-square test.
Table 6.3 Association between Employees’ Demographic Variables of Employer and

their perception about Effects of Employee Attrition
Variable Effects of Employee Chi-

Total
Attrition square P value
(30)
Positive Negative value
Age 26-35 years 06(35.3) 11(64.7) 17
36-45 years 04(40) 06(60) 10 0.076 0.963
46-55 years 01(33.3) 02(66.7) 03
Educati Marital Gender
Male 09(37.5) 15(62.5) 24

0.036 0.850
Female 02(33.3) 04(66.7) 06
Married 09(36) 16(64) 25
Status
0.029 0.865
Unmarried 02(40) 03(60) 05
P.G. 05(21.7) 18(78.3) 23
Technical 9.459 0.002*
06(85.7) 01(14.3) 07
on
Education
Source: Primary Data:Significance at 5% Level: *p value is significant
Figures within brackets represent percentage
116
It is inferred from the table 6.3 that the respondents in the overall sample belong
to three different age groups namely ‘26 - 35 years’ and ‘36 – 45 years’ and ‘46 – 55
years’. As there are more than two groups dependency of the variable can be tested by
chi-square. The null hypothesis tested in this case is there is no association between age
of the employer and their perception about effects of employee attrition.
Since the Probability Value is 0.963 (p > 0.05), the two attributes age and
perception about effects of employee attrition are independent. Hence it is further
concluded that perception about the effects of employee attrition does not depend on age
of the managers. Whether the manager is between 26–35 or 36–45 or 46–55 years it does
not make any difference in the perception about effects of employee attrition.
Gender classification of the respondents falls into two categories i.e., male and
female and they are in the ratio of 4:1. To find out whether there is any association
between gender and perception about effects of employee attrition chi-square analysis is
used. The null hypothesis tested in this case is there is no association between gender and
perception about effects of employee attrition.
Since the Probability Value is 0.850 (p > 0.05), the two attributes gender and
perception about effects of employee attrition are independent. Hence it is further
concluded that the perception about effects of employee attrition does not depends on
gender of the employees. It denotes that whether the employee male or female is not an
important factor in deciding the effects of employee attrition is positive / negative.
The total sample of the study has been categorized on the basis of marital status as
married and unmarried. To find out whether there is any association between marital
status and perception about effects of employee attrition chi-square analysis is used. The
null hypothesis tested in this case is there is no association between marital status and
perception about effects of employee attrition.
Since the Probability Value is 0.865 (p > 0.05), the two attributes marital status
and the perception about effects of employee attrition are independent. Hence it is further
concluded that the perception about effects of employee attrition does not depends on
marital status of the managers. Whether the manager is married or unmarried it does not
make any difference in the perception about effects of employee attrition.
117
The total sample of the study has been categorized on the basis education
intothree, but managers fell under two categories they are managers completed post-
graduation and managers holding technical qualification no one fell under the category
manager holding under graduation. The demographic profile education of the employees
is also compared with perception about effects of employee attrition. To find out the
association between this two attributes chi- square test is used. The null hypothesis tested
is that there is no association between education and perception about effects of
employee attrition.
Since the Probability Value is 0.002 (p < 0.05), the two attributes education and
perception about effects of employee attrition are dependent. Hence it is further
concluded that the perception about effects of employee attrition depends on education of
the employees. Education of the managers whether the manager is post graduated or with
technical qualification, it plays an important role in the perception about effects of
employee attrition.
6.3 PERCEPTIONAL DIFFERENCE OF EMPLOYERS ON THE EFFECTS OF
EMPLOYEE ATTRITION
To find out the difference of opinion of respondents with regard to the effects of
employee attrition One Way ANOVA and Independent sample t test were used and
result were shown below.
6.3.1 Perceptional difference of Employers on the Effects of Employee Attrition with
regard to their Age
Respondents in the overall sample are categorized on the basis of age, into three
different groups namely ‘26 - 35 years’, ‘36 - 45years’ and ‘46 – 55years’. The
classification of age has more than two groups the difference of opinion of the employees
on the basis of age can be tested by One Way ANOVA.
H0: There is no significant difference in the opinion of different age group of the
respondents with regard to the effects of attrition.
Table 6.4 Perceptional difference of Employers on the Effect of Attrition
Effects of attrition Mean / Descriptive F ANOVA
Positive Effects 3.58 0.883 0.425
Negative Effects 3.21 0.459 0.637
Source: Primary Data: Level of significance at 5%
118
The table 6.4 vividly shows that between age of the employer and perception
about positive effects of employee attrition, the probability value is 0.425 (p > 0.05), the
null hypothesis is accepted at 5% level of significance and hence it is concluded that
there is no significant difference in the opinion of different age groups of the respondents
with respect to positive effects. It shows that irrespective of the age of the managers their
perception about the positive effects of attrition is same.
Compared age of the employer and perception about negative effects of
employee attrition, the probability value is 0.637 (p > 0.05), it projects that there is no
significant difference in the opinion of different age groups of the respondents with
respect to negative effects. It shows that irrespective of the age of the managers their
perception about the negative effects of attrition is same.
6.3.2 Perceptional difference of Employers on the Effects of Employee Attrition with
regard to their Gender and Marital Status
female and the marital status has been categorized into two viz., married and unmarried.
For testing the difference of opinion between male and female and married and
unmarried employer independent sample t test is used.
H0: There is no significant difference in the opinion among the gender group and
marital status of the respondents with regard to the effects of attrition.
Table 6.5 Perceptional difference of employers on the effect of employee attrition
with regard to their gender and marital status
Effects of attrition Mean S.D. Gender Marital Status

t value P value t value P value
Positive Effects 3.58 0.936 0.701 0.556 0.256 0.610
Negative Effects 3.21 1.013 1.251 0.205 1.241 0.115
It is clear from the table 6.5, between gender of the employer and perception
about positive effects of employee attrition, the probability value is 0.556 (p > 0.05), it
conveys that there is no significant difference in the opinion of different gender group of
the respondents with respect to positive effects. It shows that irrespective of the gender of
the managers their perception about the positive effects is same.
119
Compared gender of the employer with perception about negative effects of
employee attrition, the probability value is 0.205 (p > 0.05), it communicates that there is
no significant difference in the opinion of different gender group of the respondents with
respect to negative effects. It shows that irrespective of the gender of the managers their
perception about the negative effects is same.
Compared marital status of the employer and perception about positive effects of
employee attrition, the probability value is 0.610 (p > 0.05), it shows that there is no
significant difference in the opinion of different marital status of the respondents with
respect to positive effects. It shows that irrespective of the marital status of the managers
their perception about the positive effects is same.
Compared marital status of the employer and perception about negative effects
of employee attrition, the probability value is 0.115 (p > 0.05), it conveys that there is no
significant difference in the opinion of different marital status of the respondents with
respect to negative effects. It shows that irrespective of the marital status of the managers
their perception about the negative effects is same.
6.4 SEPARATE RETENTION POLICY
Retention of employees is an effort by a business to maintain a working
environment which supports current staff in remaining with the company. Many
employee retention policies are aimed at addressing the various needs of employees to
enhance their job satisfaction and reduce the substantial costs involved in hiring and
training new employees4. The information regarding whether the organization has
separate retention policy to retain their employees is collected from the managers and the
result was given in the table 6.6 below.
Table 6.6IT firm having Separate Retention Policy
Variable Attributes No. of Respondents Percentage
Yes 18 60.0
Separate retention policy
No 12 40.0
It is inferred from the table 6.6 that out of 30 managers, 18 (60%) managers said
yes i.e., they have a separate retention policy in the organization. The managers have
stated some of the retention policies followed by their organization, they were, fixing
120
responsibilities,providing attractive and competitive salary, motivating employees for
better performance, giving annual increment with promotion based on performance
appraisal, providing perquisites, time flexibility in working hours, increment once in 6
month, leave benefits, etc. 12 (40%) manager said no i.e., they do not have separate
retention policy in the organization and also stated the reasons for not having such
policy. Many companies are not caring about recruiting new employees; it avoids having
a separate retention policy. To avoid or to minimize the problems of employee attrition,
companies whether they are small or big, try to develop a suitable retention policy and
consistently practice it.
6.5 Importance of Employee Retention
Employee retention in an organization hassignificant role for business
development. The following are the reasons why it considered to be important viz., more
effective and transparent recruitment, reduction in costs, maintaining better staff morale,
enhanced goodwill of the company, more constructive development of the organization’s
knowledge base, effective communication system, creation and up gradation of HR
information system, sound and attractive wage policy and utmost care in employees
recognition. Table 6.7 shows the descriptive statistics, mean and standard deviation along
with rank related to importance of employee retention.
Table 6.7 Descriptive Statistics of Employers’ perception about Importance of
Employee Retention
Importance of employee retention Mean SD Rank
More effective and transparent recruitment 3.40 1.303 IV
Reduction in costs 3.77 0.971 II
Maintaining better staff morale 3.07 1.337 VII
Enhanced goodwill of the company 3.40 0.894 IV
More constructive development of the organization’s 3.43 0.774 III
knowledge base
Effective communication system 3.93 0.868 I
Creation and up gradation of HR information system 2.80 1.297 IX
Sound and attractive wage policy 2.97 1.497 VIII
Utmost care in employees recognition 3.17 1.416 VI
121
From the table 6.7 it is understood that the mangers considered the importance of
employee retention in the following order effective communication system (3.93),
reduction in costs (3.77), more constructive development of the organization’s knowledge
base (3.43), more effective and transparent recruitment (3.40), enhanced goodwill of the
company (3.40), utmost care in employees recognition (3.17) and maintaining better staff
morale (3.07). The managers neither agree or not the factors sound and attractive wage
policy (2.97) and creation and up gradation of HR information system (2.80) as
importance of employee retention.
6.6 FACTORS INFLUENCING RETENTION
Employee’s retention can be influenced by many factors in an IT company. From

the literature review done, it is identified that there are five key factors influences the
retention in an organizational set up. They are remuneration, organizational environment,
growth and career, inter-personal relationship and moral support. Opinion about these
factors and sub-factors were elicited from the employers/managers of study units in
Puducherry. Descriptive statistics of their views in terms of mean and standard deviation
along with rank were calculated for these factors and results were given below.
6.6.1 Remuneration
Remuneration refers to the reward for employment in the form of pay, salary or
wage including allowances, benefits, bonuses, cash incentives and monetary value of
non-cash incentives5. Find out among the various attributes of remuneration which
influences most in employee retention the descriptive statistics, mean and standard
deviation along with rank were calculated and results were shown in table 6.8.
Table 6.8Descriptive Statistics of Employer’s perception about Remuneration
Features of remuneration Mean SD Rank

Salary with attractive annual increment 3.53 1.279 I
Bonus based on performance 3.30 1.393 II
Adequate leave benefits 3.07 1.311 IV
Health insurance coverage for all employees 2.93 1.388 V
Maternity benefits are provided 3.17 1.440 III
122
It is inferred from the table 6.8 that the feature salary with attractive annual
increment has the highest mean score of 3.53 stating that the respondents feel the feature
salary with attractive annual increment is the major influencing factor which retains the
employee in the organization with regard to remuneration. The least considered feature is
health insurance coverage for all employees, with a mean score of 2.93. It is observed
that the standard deviation of all the features of remuneration is more than 1; this implies
that there is a wide oscillation in the opinion of employers regarding remuneration.
6.6.2 Organizational Environment
Organizational environment are composed of forces surrounding an organization

that affect performance, operations and resources6. Environment factors are divided into
two parts viz. internal and external environment. The factors may comprise of giving
importance to traditions, cultures and values, good company reputation, leading
technologies, create a motivating environment, etc7. To find out among the various
environmental factors which influence most in employee retention the descriptive
statistics, mean and standard deviation along with rank were calculated and the results
were shown in table 6.9.
Table 6.9Descriptive Statistics of Employer’s perception about Organizational

Environment
Features of organizational environment Mean SD Rank

Giving importance to traditions, cultures and 3.47 1.167 III
values
Good company reputation 3.30 1.368 V
Quality of people in the organization 3.57 1.040 II
Risk taking behavior of employer 2.93 1.413 VIII
Leading technologies 3.80 1.031 I
Having trust on employees 3.17 1.315 VII
Create a motivating environment 3.20 1.324 VI
Proper delegation of duties, responsibilities and 3.43 1.305 IV
authority
123
From the table 6.9 it is clear that the feature leading technologies has the highest
mean score of 3.80 stating that the respondents feel the feature leading technologies is the
major influencing factor which retains the employee in the organization with regard to
organizational environment. The least considered feature is risk taking behavior of
employer, with a mean score of 2.93. It is observed that the standard deviation of all the
features of organizational environment remuneration is more than 1; this implies that
there is a wide oscillation in the opinion of employers regarding organizational
environment.
6.6.3 Growth and Career
Growth and career is referred as a way of success for the employees, to have new
challenges to face, new activity to do, new responsibility to handle and new process to
learn8. There were various features relate to growth and career viz., work profile,
personal growth and dream, training and development etc. To find out among the various
features to growth and career which influence most in employee retention the descriptive
statistics, mean and standard deviation along with rank were calculated and the results
were shown in Table 6.10.
Table 6.10 Descriptive Statistics of Employer’s perception about
Growth and Career
Features of growth and career Mean SD Rank
Work profile 3.83 0.592 I
Personal growth and dreams 3.23 1.455 III
Training and development 3.33 1.466 II
Providing job enrichment practices 3.17 1.416 IV
Vertical career path 3.07 1.363 V
Source: primary data
From the table 6.10 it is understood that the feature work profile has the highest
mean score of 3.83 stating that the respondents feel the feature work profile is the major
influencing factor which retains the employee in the organization with regard to growth
and career. The least considered feature is vertical career path, with a mean score of 3.07.
It is observed that the standard deviation of all the features except work profile is more
than 1; this implies that there is a wide oscillation in the opinion
124
of employers regarding growth and career and for the feature work profile the
employers has uniformity in their opinion.
6.6.4 Inter-Personal Relationship
Inter-personal relationship is a strong, deep or close association or acquaintance

between two or more people that may range in duration from brief to enduring9. There
were various features relate to inter-personal relationship viz., cordial relationship with
colleagues, respect for individual, fair and equal treatment to all employees etc. To find
out among the various features to inter-personal relationship which influence most in
employee retention the descriptive statistics, mean and standard deviation along with rank
were calculated and the results were shown in Table 6.11.
Table 6.11Descriptive Statistics of Employer’s perception about Inter-Personal

Relationship
Features of inter-personal relationship Mean SD Rank

Respect for individual 3.47 1.479 II
Cordial relationship with colleagues 3.90 0.712 I
Cordial relationship with manager 3.10 1.269 III
Fair and equal treatment to all employees 3.07 1.388 V
Encouraging team work 3.10 1.423 III
It is inferred from the table 6.11 that the feature ‘cordial relationship with
colleagues’ has the highest mean score of 3.90 stating that the respondents feel the
feature ‘cordial relationship with colleagues’ is the major influencing factor which retains
the employee in the organization with regard to inter-personal relationship. The least
considered feature is fair and equal treatment, with a mean score of 3.07. It is observed
that the standard deviation of all the features except ‘cordial relationship with colleagues’
is more than 1; this implies that there is a wide oscillation in the opinion of employers
regarding inter-personal relationship and for the feature cordial relationship with
colleagues the employers has uniformity in their opinion.
125
6.6.5 Moral Support
Moral support usually means making people feel that their opinion or decision or
action is the right one. It often involves reassuring people that they doing right thing.
There were various features relate to moral support viz., providing feedback, giving
counseling, giving recognition and reward etc. To find out among the various features of
moral support which influence most in employee retention the descriptive statistics, mean
and standard deviation along with rank were calculated and the results were shown in
Table 6.12.
Table 6.12Descriptive Statistics of Employer’s perception about Moral Support
Features of moral support Mean SD Rank

Providing feedback 3.73 0.640 I
Giving recognition and rewards 3.13 1.358 II
Give counseling 3.07 1.461 III
Providing emotional support 3.00 1.365 IV
From the table 6.12 it is clear that the variable ‘providing feedback’ has the
highest mean score of 3.73 stating that the respondents feel the variable ‘providing
feedback’ is the major influencing factor which retains the employee in the organization
with regard to moral support. The least considered feature is providing emotional support,
as the mean score is 3.00. It is observed that the standard deviation of all the features
except providing feedback is more than 1; this implies that there is a wide oscillation in
the opinion of employers regarding moral support and for the feature providing feedback
the employers has uniformity in their opinion.
6.6.6 Overall ranking of factors influencing Retention
There are number of factors which influence employee retention, they are
remuneration, organizational environment, growth and career, inter-personal relationship
and moral support. To find out among these factors which have highly influenced
employee retention, the descriptive statistics, mean and standard deviation along with
rank were calculated and results were shown below.
126
Table 6.13 Descriptive Statistics of Employer’s perception about the factors
influencing Retention
Factors influencing retention Mean SD Rank

Remuneration 3.20 1.159 V
Organizational environment 3.36 1.065 I
Growth and career 3.33 1.174 II
Inter-personal relationship 3.33 1.167 II
Moral support 3.23 1.139 IV
It is inferred from the table 6.13 that the feature organizational environment has
got the highest mean score of 3.36 stating that the feature organizational environment has
highly influenced employee retention than the other factors growth and career (3.33),
inter-personal relationship (3.33), support (3.23) and remuneration (3.20).
6.7 Perceptional difference of Employers on factors influencing Retention with

regard to their Demographic Variables
Perceptional differences of the respondents onretention strategy at different levels

have been tested through one way ANOVA. This can be applied to find out the
significant difference in the opinion of the respondents for the independent variable
having more than two categories. The independent variables age has more than two
categories ANOVA can be applied to test the significant difference in the opinion of the
respondents onfactors influencingretention with regard to age.
6.7.1 Perceptional difference of Employers on factors influencing Retention with

regard to their Age
On the basis of age, respondents in the overall sample are categorized into three
different groups namely 26 - 35 years 36 - 45years and 46 – 55years. As there are more
than two groups the difference of opinion of the employees on the basis of age can be
tested by ANOVA.
H0: There is no significant difference in the opinion of different age group of the
respondents with regard to the factors influencing retention.
127
Table 6.14 Perceptional difference on factors influencing Retention with regard
to their Age
Factors influencing retention Mean / Descriptive F ANOVA
Remuneration 3.20 0.833 0.445
Organization environment 3.36 1.146 0.333
Growth and career 3.33 1.202 0.316
Inter-personal relationship 3.33 0.378 0.689
Moral support 3.23 0.176 0.839
It is inferred from the table 6.14 between age of the employer and perception
about remuneration, the probability value is 0.445 (p > 0.05), the null hypothesis is
accepted at 5% level of significance and hence it is concluded that there is no significant
difference in the opinion of different age groups of the respondents with respect to
remuneration. It shows that irrespective of the age of the managers their perception about
the remuneration is same.
Compared age of the employer and perception about organizational environment,

the probability value is 0.333(p > 0.05), it reveals that there is no significant difference in
the opinion of different age groups of the respondents with respect to organizational
environment. It shows that irrespective of the age of the managers their perception about
the organizational environment is same.
Compared age of the employer and perception about growth and career, the
probability value is 0.316 (p > 0.05), it signifies that there is no significant difference in
the opinion of different age groups of the respondents with respect to growth and career.
It shows that irrespective of the age of the managers their perception about growth and
career is same.
Compared age of the employer and perception about inter-personal relationship,

the probability value is 0.689 (p > 0.05), it shows that there is no significant difference in
the opinion of different age groups of the respondents with respect to inter-personal
relationship. It shows that irrespective of the age of the managers their perception about
inter-personal relationship is same.
128
Compared age of the employer and perception about moral support, the
probability value is 0.839 (p > 0.05), it conveys that there is no significant difference in
the opinion of different age groups of the respondents with respect to moral support. It
shows that irrespective of the age of the managers their perception about moral support is
same.
6.7.2 Perceptional difference of Employers on factors influencing Employee
Retentionwith regard to their Gender and Marital Status
unmarried employer independent sample t test is used. The null hypothesis tested in this
case is, there is no significant difference in the opinion among the gender group and
marital status of the respondents with regard to the factors influencing retention. The
following table shows the results of independent sample t test.
Table 6.15 Perceptional difference of Employers on factors influencing Employee
Retentionwith regard to their Gender and Marital status
Factors influencing Mean S.D. Gender Marital Status

employee retention t value P value t value P value
Remuneration 3.20 1.159 1.619 0.122 1.192 0.824
*
Organizational environment 3.36 1.065 1.290 0.022 1.812 0.437
*
Growth and career 3.33 1.174 0.867 0.015 1.646 0.929
*
Inter-personal relationship 3.33 1.167 1.537 0.001 0.850 0.518
*
Moral support 3.23 1.139 2.297 0.012 1.868 0.468
Source: Primary Data: Level of significance at 5%:*P value is significant

The table 6.15 vividly shows that between gender of the employer and perception
about remuneration, the probability value is 0.122 (p > 0.05), the null hypothesis is
accepted at 5% level of significance and hence it is concluded that there is no significant
difference in the opinion of different gender groups of the respondents with respect to
129
remuneration. It shows that irrespective of the gender of the managers their perception
about the remuneration is same.
Compared gender of the employer and perception about organizational

environment, the probability value is 0.022 (p < 0.05), it communicates that there is
respect to organizational environment. It shows that the gender of the manager influences
their perception about the organizational environment.
Compared gender of the employer and perception about growth and career, the
probability value is 0.015 (p < 0.05), it signifies that there is significant difference in the
opinion of different gender groups of the respondents with respect to growth and career.
It shows that gender of the managers influences their perception about growth and career.
Compared gender of the employer and perception about inter-personal

relationship, the probability value is 0.001 (p < 0.05), it is concluded that there is
respect to inter-personal relationship. It shows that gender of the managers influences
their perception about inter-personal relationship.
Compared gender of the employer and perception about moral support, the
probability value is 0.012 (p < 0.05), it communicates that there is significant difference
in the opinion of different gender group of the respondents with respect to moral support.
It shows that gender of the manager influences their perception about moral support.
Compared marital status of the employer and perception about remuneration, the
probability value is 0.824 (p > 0.05), it conveys that there is no significant difference in
the opinion of different marital status groups of the respondents with respect to
remuneration. It shows that irrespective of the marital status of the managers their
perception about the remuneration is same.
Compared marital status of the employer and perception about organizational

environment, the probability value is 0.437 (p > 0.05), it shows that there is no significant
difference in the opinion of different marital status of the respondents with respect to
130
organizational environment. It shows that irrespective of the marital status of the
manager their perception about the organizational environment is same.
Compared marital status of the employer and perception about growth and career,
the probability value is 0.929 (p > 0.05), it conveys that there is no significant difference
in the opinion of different marital status of the respondents with respect to growth and
career. It shows that irrespective of the marital status of the managers their perception
about growth and career is same.
Compared marital status of the employer and perception about inter-personal
relationship, the probability value is 0.518 (p > 0.05), it shows that there is no significant
difference in the opinion of different marital status group of the respondents with respect
to inter-personal relationship. It shows irrespective of the marital status of the managers
perception about inter-personal relationship is same.
Compared marital status of the employer and perception about moral support, the
probability value is 0.468 (p > 0.05), it communicates that there is no significant
difference in the opinion of different marital status group of the respondents with respect
to moral support. It shows that irrespective of the marital status of the manager s their
perception about moral support is same.
6.8 PERCEPTION ABOUT RETENTION STRATEGIES – EMPLOYEE

CATEGORY WISE
Retention strategies are policies and plans that organization follow to reduce
employee attrition and ensure employees are engaged and productive for a long term.
Employees in the IT companies are usually categorized into three levels they are entry
level professionals, mid-level professionals and senior level professionals. The retention
strategies followed by organization are also varies according to the category of
employees.
6.8.1 Retention strategy at Entry Level Professionals
Entry level professionals in IT firms includes team leader, programmer analysts,
software developer, software engineer, junior developer etc., and the retention strategies
followed to this group includes appreciating and recognizing a well done job, recognizing
131
professional and personal significant events, providing benefits, perks etc. To find out
among the strategies which strategy is mostly followed by the organization, the
descriptive statistics mean and standard deviation along with rank were calculated and
shown in table 6.16.
Table 6.16Descriptive Statistics relating to Retention Strategy at Entry Level

Professionals
Retention strategies at entry level professionals Mean SD Rank

Appreciating and recognizing a well done job 3.20 1.472 II
Recognizing professional and personal significant events 2.97 1.402 V
Providing benefits 3.17 1.392 III
Providing perks 2.87 1.383 VI
Providing workplace convenience 3.40 1.070 I
Employer support in tough time and personal crisis 3.17 1.440 III
Table 6.16 indicates that the strategy providing workplace convenience has the
highest mean score 3.40, stating that most of the respondents feel that providing
workplace convenience is the most followed retention strategy to retain the entry level
employees. The least followed retention strategy is providing perks for the employees,
with a mean score of 2.87. It is observed that the standard deviation of all strategies are
more than 1; this implies that there is a wide oscillation in the opinion of managers with
regard to the retention strategies followed in the organization to retain their entry level
staff.
6.8.2 Retention strategy at Mid-Level Professionals
Mid-level professionals in IT firms includes senior project manager, project head,

technical head, senior quality analyst, project leader, etc., and the retention strategies
followed to this group includes appreciating and recognizing a well done job, benefit
program for family support, providing training and development, personal growth and
opportunities, etc. To find out among the strategies which strategy is mostly followed by
the organization, the descriptive statistics mean and standard deviation along with rank
were calculated and shown in Table 6.17.
132
Table 6.17 Descriptive Statistics relating to Retention Strategy at Mid-Level
Professionals
Retention strategies at mid-level professionals Mean SD Rank
Appreciating and recognizing a well done job 3.27 1.461 II
Benefit program for family support 2.80 1.324 V
Providing training and development 2.97 1.351 IV
Providing personal growth opportunities 3.00 1.339 III
Providing workplace convenience 3.47 1.196 I
Table 6.17 gives a clear picture that the retention strategy providing workplace
convenience has the highest mean score 3.47, stating that most of the respondents feel
that providing workplace convenience is the most followed retention strategy at middle
level. The least followed retention strategy is benefit program for family support, as the
mean score is 2.80. It is observed standard deviation of all strategies are more than 1; this
implies that there is a wide oscillation in the opinion of managers with regard to the
retention strategies followed in the organization to retain their mid-level staff.
6.8.3 Retention strategy at Senior Level Professionals Senior level

professionals in IT firms includes chief executive officer, chief operation officer, chief
finance officer, chief technical officer, etc., and the retention strategies followed to this
group includes providing work/life effectiveness, understand employee needs,
encouraging professional training and development etc. To find the mostly followed
strategy by organization, the descriptive statistics mean and standard deviation along with
rank were calculated and shown in Table 6.18.
Table 6.18Descriptive Statistics relating to Retention Strategy at Senior Level

Professionals
Retention strategies at senior level professionals Mean SD Rank
Providing work/life effectiveness 3.63 0.850 I
Understand employee needs 3.10 1.348 V
Encouraging professional training and development 3.20 1.375 III
Encouraging personal growth 3.13 1.408 IV
Provide an environment of trust 3.30 1.466 II
133
From the table 6.18, it is interpreted that the retention strategy providing work/
life effectiveness has the highest mean score 3.63, stating that most of the respondents
feel that providing work/ life effectiveness is the most followed retention strategy to
retain senior level employees. The least followed retention strategy understands
employee needs, as the mean score is 3.10. It is observed that the standard deviation of all
strategies except providing work/life effectiveness are more than 1; this implies that there
is a wide oscillation in the opinion of managers with regard to the retention strategies
followed in the organization to retain their staff at senior level.
6.9 PERCEPTIONAL DIFFERENCE OF EMPLOYERS ON RETENTION

STRATEGIES AT DIFFERENT LEVELS WITH REGARD TO DEMOGRAPHIC
VARIABLES
Perceptional differences of the respondents onretention strategies at different

levels can be tested through one way ANOVA. ANOVA can be applied to find out the
significant difference in the opinion of the respondents for the independent variable
having more than two categories. The independent variables age has more than two
categories ANOVA can be applied to test the significant difference in the opinion of the
respondents onretention strategy at different levels with regard to age.
6.9.1 Perceptional difference of Employers on the Retention Strategywith regard to

their Age
On the basis of age, respondents in the overall sample are categorized into three
different groups namely 26 - 35 years 36 - 45years and 46 – 55years. As there are more
than two groups the difference of opinion of the employees on the basis of age can be
tested by ANOVA. The null hypothesis tested in this case is there is no significant
difference in the opinion of different age group of the respondents with regard to the
retention strategies at different levels.
134
Table 6.19 Perceptional difference of Employers on the Retention Strategywith
regard to their Age
Retention strategies at different levels Mean F ANOVA
Retention strategy at entry level professionals 3.13 1.352 0.276
Retention strategy at mid-level professionals 3.10 0.465 0.633
Retention strategy at senior level professionals 3.27 0.457 0.638
It is inferred from the table 6.19 as to age and retention strategy at entry level, the
probability value is 0.276 (p > 0.05), it concludes that there is no significant difference in
the opinion of different age groups of the respondents with respect to retention strategy at
entry level. It shows that irrespective of the age of the managers their perception about
the retention strategy at entry level is same.
As to age and retention strategy at middle level, the probability value is 0.633 (p
> 0.05), it projects that there is no significant difference in the opinion of different age
group of the respondents with respect to retention strategy at middle level. It shows that
irrespective of the age of the managers their perception about the retention strategy at
middle level is same.
As to age and retention strategy at high level, the probability value is 0.638 (p >
0.05), it reveals that there is no significant difference in the opinion of different age
groups of the respondents with respect to retention strategy at high level. It shows that
irrespective of the age of the managers their perception about the retention strategy at
high level is same.
6.90.2 Perceptional difference of Employers on the Retention Strategywith regard to
their Gender and Marital Status
The gender of the respondents has been categorized into two viz., male and
unmarried employer independent sample t test is used. The null hypothesis tested in this
case is, there is no significant difference in the opinion among the gender group and
marital status of the respondents with regard to the retention strategies at different levels.
The following table 6.20 shows the results of independent sample t test.
135
Table 6.20 Perceptional difference of Employers on Employee Retention Strategy
with regard to their Gender and Marital Status
Retention strategies at Mean S.D. Gender Marital Status

different levels t value P value t value P value
Retention strategy at
entry level professionals 3.13 1.210 1.434 0.131 1.286 0.704
mid-level professionals 3.10 1.230 1.355 0.082 0.995 0.496
senior level professionals 3.27 1.219 1.599 0.011* 1.919 0.855
It is understood from the table 6.20 as to the gender and retention strategy at
entry level, the probability value is 0.131 (p > 0.05), it implies that there is no significant
difference in the opinion of different gender groups of the respondents with respect to
retention strategy at low level. It shows that irrespective of the gender of the managers
their perception about the retention strategy at entry level is same.
As to gender and retention strategy at middle level, the probability value is 0.082
(p > 0.05), it denotes that there is no significant difference in the opinion of different
gender groups of the respondents with respect to retention strategy at middle level. It
shows that irrespective of the gender of the managers their perception about the retention
strategy at middle level is same.
As to gender and retention strategy at high level, the probability value is 0.011
(p < 0.05), it conveys that there is significant difference in the opinion of different gender
group of the respondents with respect to retention strategy at high level. It shows that
gender of the managers influences their perception about the retention strategy at high
level.
As to marital status and retention strategy at entry level, the probability value is
different marital status groups of the respondents with respect to retention strategy at low
136
level. It shows that irrespective of the marital status of the managers their perception
about the retention strategy at entry level is same.
As to marital status and retention strategy at middle level, the probability value is
0.496 (p > 0.05), it is concluded that there is no significant difference in the opinion of
different marital status groups of the respondents with respect to retention strategy at
middle level. It shows that irrespective of the marital status of the managers their
perception about the retention strategy at middle level is same.
As to marital status and retention strategy at high level, the probability value is
0.855(p > 0.05), it signifies that there is no significant difference in the opinion of
different marital status of the respondents with respect to retention strategy at high level.
It shows that irrespective of the marital status of the managers their perception about the
retention strategy at high level is same.
SUMMARY
In a nutshell, this chapter describes the data collected from employers of IT firms
in Puducherry regarding the effects of employee attrition, factors influencing retention,
employee retention strategies followed in the organization. They have been analyzed by
using statistical tools such as mean, standard deviation, ranking, chi- square, one-way
ANOVA and independent sample t test. The major inferences of the analysis are given
here:
Among the positive effects of employee attrition, increased performance and
among the negative effects, increased selection and recruitment cost were the major
effects of employee attrition. Association between demographic variables of the
respondents and effects of attrition, the result shows that the education of the manager
plays an important role the perception about the effects of employee attrition.
Perceptional difference of employers on the effects of employee attrition with regard to
the demographic variable, the result shows the age, gender and marital status of the
employer has insignificant difference opinion about employee attrition.
Effective communication system is considered to be the most important variable
in employee retention.
Among the factors influencing employee retention salary with annual increment
(remuneration), leading technologies (organizational environment), work profile (growth
137
and career), cordial relationship with colleagues (interpersonal relationship), providing
feedback (moral support) were considered to be the major influencing factors in
employee retention and among all factors, organizational environment is considered to be
the most important factor in influencing employee retention. Perceptional difference in
the opinion of the employers on the factors influencing retention with regard to
demographic variables, gender of the employer has a significant difference opinion with
organizational environment, growth and career, inter-personal relationship and moral
support.
Among the retention strategies followed by the IT employers to retain their
employees, providing work place convenience for both entry level and middle level
professionals and providing work/life effectiveness for senior level professionals were
considered to be widely followed strategy. Perceptional difference in the opinion of the
employer on the retention strategies with regard to the demographic variables, gender of
the employer has a significant difference opinion with regard to retention strategy at
senior level professionals.
138
1. Smallbusiness.chron.com, The effects of High Turnover in Companies.

2. Chron.com, Positive Effects of Turnover.
3. www.researchgate.net, The negative Effect and Consequence of Employee Turnover.
4. www.Businessdictionary.com, Employee Retention.
5. www.Businessdictionary.com.
6. www.Study.com, Definition and Theory.
7. iedunote.com, Internal and External Environment factors that influence
Organizational Decision.
8. www.careergrowth.com
9. Wikipedia, Inter-personal Relationship
1
CHAPTER VII
SUMMARY OF FINDINGS, SUGGESTIONS AND
CONCLUSION
7.1 FINDINGS
7.1.1 Factors influencing employee preference
Towards an organization
7.1.2 Causes of Employee Attrition
7.1.3 Measurement of Employee Attrition
7.1.4 Effects of Employee Attrition
7.1.5 Separate Retention Policy
7.1.6 Importance of Employee Retention
7.1.7 Factors influencing Employee Retention
7.2 SUGGESTIONS
7.3 CONCLUSION
7.4 SCOPE FOR FURTHER RESEARCH

CHAPTER VII
SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION
“Knowing comes from learning, finding from seeking”. – Vaddey Ratner
This chapter depicts the snapshot of the study highlighting the problem chosen
for the research, its relevance, design and methodology adopted. In addition to that, it
also outlines the major findings drawn as research outcomes, suggestions in line with
major findings and a brief conclusion. Present study was conducted to find out the
causes of employee attrition and retention strategies followed by IT industry,
Puducherry. Along with the causes and retention strategies, employee preference
towards an organization, effects of employee attrition, factors influencing retention
and importance of retention are also done in this study. Various factors influencing
employee preference towards an organization such as nature of job, working
condition, motivation, company policies, remuneration, interpersonal relationship
between employees, between employee and superior, HRD practices. Causes of
employee attrition such as avoidable and unavoidable causes, effects of employee
attrition such as positive effects and negative effects, factors influencing employee
retention such as remuneration, organizational environment, growth and career,
interpersonal relationship and moral support, retention strategies followed at different
levels such as retention strategy at entry level professionals, retention strategy at mid-
level professionals and retention strategy at senior level professionals are taken into
consideration.
Both primary data and secondary data were gathered for the study. Primary
data were collected from employees and employers of IT firms in and around
Puducherry through interview schedule. Sample size for employee is 300 and for
employer is 30. Data on employee preference towards an organization, causes of
employee attrition were collected from employees and data on effects of employee
attrition, factors influencing retention and retention strategies followed by IT firms to
retain their current staff were collected from employers. Totally there are 37 IT firms
in Puducherry, out of that 6 were hardware firms, 19 were software firms and 12 were
BPO firms. Secondary data was collected from registers, books, journals, magazines,
websites, etc.
139
The data collected were analyzed using SPSS and AMOS and the statistical
tools uses were mean, standard deviation, chi-square, ANOVA, independent sample t
test and SEM.
7.1 FINDINGS
7.1.1 Factors influencing employee preference towards an organization
Among the features of job, ‘job is interesting” was the main feature that
influenced employee to stay in the present organization.
Among the features of working condition, “better organized work

environment” was the main feature that influenced the employee to stay in the present
organization.
Among the features of motivation, “role to play in decision making” was the
main feature that influenced the employee to stay in the present organization.
Among the features of company policy, clearly defined policy was the main
feature that influences the employee to stay in the present organization.
Among the features of remuneration, periodical incentive was the main feature
that influenced the employee to stay in the present organization.
Among the features of inter-personal relationship between employees, group

harmony was the main feature that influenced the employee to stay in the present
organization.
Among the features of inter-personal relationship between employees and

superiors, industry harmony was the main feature that influenced the employee to stay
in the present organization.
Among the features of HRD practices, best recruitment practices were the
main feature that influenced the employee to stay in the present organization.
Among the factors relating to employee preference towards an organization,

nature of job and working condition were the factors which make the employee to
stay in the present organization for a longer period.
140
The result of perceptional difference in the opinion of the employees on
employee preference towards an organization with regard to demographic variables of
employees shows that with regard to motivational factors and remuneration factors,
the employees have significant difference in the opinion based on their age. The
opinion of the employees are similar between the age group 18 to 25 and 26 to 35,
which shows that young people working in IT sector have the same opinion regarding
motivational and remuneration factors.
With regard to HRD practices followed in the IT firms, the employees have
significant difference in opinion based on their educational level. The opinion of
employees is similar between the educational level undergraduate employees and
postgraduate employees. It shows that the degree holders working in IT sector have
similar opinion with regard to HRD practices.
There is a significant difference in the opinion of the employees with regard to

motivational factors of the organization based on their gender category. It shows that
the male employee and female employee of IT Company are having difference of
opinion about motivational factors.
There is a significant difference in the opinion of the employees with regard to

company policies of the organization based on their marital status. It shows that the
married employee and unmarried employee are having difference of opinion about
company policies.
model was fitted well for the data by the chi-square test, X2 – 2.734 (N =300, df = 51)
= 266.06, P > .05. Although the hypothesized model is fitted well for the observed
variance – covariance matrix by the chi-square test, the baseline comparisons fit five
indices of GFI, NFI, CFI and TLI are all above 0.90 (GFI, 0.919, NFI 0.913, TLI
0.933 and CFI 0.942) and RMSEA is 0.72, which compare the fit of the hypothesized
model. All the four variables namely nature of job, working conditions, company
policy and remuneration were related and there is relationship among the four
variables for employee preference towards an organization i.e., Information
Technology industry in Puducherry. The results show that the path coefficient value
of measurement model is 0.63, 0.62, and 0.33 and there is positive relationship
between four groups of variables of employee preference.
141
Another measurement model also has positive degrees of freedom (105-31 =
74), and the model was fitted well for the data by the chi-square test, X2 2.892 (N
=300, df = 74) = 366.06, P > .05. Although the hypothesized model is fitted well for
the observed variance, covariance matrix by the chi-square test, the baseline
comparisons fit five indices of GFI, NFI, CFI and TLI are all above 0.90 (GFI, 0.923,
NFI 0.941, TLI 0.958 and CFI 0.929), and RMSEA is 0.68 which compare the fit of
the hypothesized model. All the four variables namely motivation, employee-
employee relationship, employee-superior relationship and human resource practices
are well related and there is relationship among the four variables for employee
preference in Information Technology industry in Puducherry.
Path analysis result shows that the nature of job has positive effect on working
conditions, company policy and remuneration as the path coefficient value of path
model is 0.69, 0.64, 0.53 and it show the positive relationship on three groups of
variables of employee preference towards an organization Information Technology
(IT) industry in Pondicherry.
The results of the path analysis shows that the human resource practices has
positive effect on employee-employee relationship, employee-superior relationship
and motivation as path coefficient value of path model is 0.52, 0.58, 0.75 respectively.
The nature of job was positively (0.64) significant with working conditions. It
reveals that there is a positive impact of job on working conditions of Information
Technology industry in Puducherry Region. This means the nature of job has an
impact on working conditions at one per cent, (critical ratio 6.464 and p<0.001).
The nature of job has high positively (0.56) significant with company policy. It
reveals that there is a positive impact of nature job on company policy of Information
Technology industry in Puducherry Region. This means the employee preference on
job has an impact on company policy at one per cent level (critical ratio 5.814 and
p<0.001).
The nature of job is positively (0.46) significant to remuneration. It reveals that

there is a positive impact of nature of job on remuneration of information technology
industry in Puducherry Region. This means the nature of job has an impact on
remuneration at one per cent level (critical ratio 5.223 and p<0.001).
142
The nature of job is positively (0.41) significant to employee-employee
relationship. It reveals that there is a positive impact of job on employee-employee
relationship of Information Technology industry in Pondicherry Region. This means
the nature of job has an impact on employee-employee relationship at one per cent
level (critical ratio 4.537 and p<0.001).
The nature of job is positively (0.25) significant to employee-superior

relationship. It reveals that there is a positive impact of job on employee-superior
relationship of Information Technology industry in Pondicherry Region. This means
the nature of job has an impact on employee-superior relationship at one per cent level
(critical ratio 2.625 and p<0.001).
The nature of job is positively (0.70) significant to motivation. It reveals that there
is a positive impact of nature of job on motivation of employees of Information and
Technology industry in Puducherry Region. This means the nature of job has an
impact on motivation at one per cent level (critical ratio 6.211 and p<0.001).
The HRD practices is positively (0.26) significant to working conditions. It

reveals that there is a positive impact of HRD practices on working conditions of
Information Technology industry in Puducherry Region. This means the HRD
practices followed in IT firms has an impact on working conditions of the firms at one
per cent level (critical ratio 3.704 and p<0.001).
The HRD practices is positively (0.32) significant to company policy. It reveals

that there is a positive impact of HRD practices on company policy of Information
Technology industry in Puducherry Region. This means the HRD practices followed
in IT firms has an impact on company policies of the firms at one per cent level
The HRD practices is positively (0.57) significant to remuneration. It reveals that

there is a positive impact of HRD practices on remuneration of Information
Technology industry in Puducherry Region. This means the HRD practices followed
in IT firms has an impact on remuneration of the employees at one per cent level
The HRD practices is positively (0.53) significant to employee-employee

relationship. It reveals that there is a positive impact of HRD practices on employee-
143
employee relationship of Information and Technology industry in Puducherry Region.
This means the employee preference on HRD practices followed in IT firms has an
impact on employee-employee relationship of IT firms at one per cent level (critical
ratio 6.040 and p<0.001).
The HRD practices is high positively (0.76) significant to employee-superior

relationship. It reveals that there is a positive impact of HRD practices on employee-
superior relationship of Information Technology industry in Puducherry Region. This
means the HRD practices followed in IT firms has an impact on employee-superior
relationship of IT firms at one per cent level (critical ratio 8.986 and p<0.001).
The HRD practices is positively (0.32) significant to motivation. It reveals that

there is a positive impact on motivation of Information technology industry in
Puducherry Region. This means the HRD practices followed in IT firms has an impact
on motivation at one per cent level (critical ratio 5.275 and p<0.001).
7.1.2 Causes of Employee Attrition
Among the avoidable causes the variable dissatisfaction with job and wages
were the major avoidable reasons for the employees to leave the organization as they
have the highest mean scores of 3.70 and 3.63 respectively. The least considered
causes by the employee are poor working condition and better prospects are not
available, as the mean score is 3.35; it denotes that it plays the least role in employee
attrition.
It is inferred that accident or illness and marriage were the major unavoidable
reasons for the employees to leave the organization as they have the highest mean
scores of 3.72 and 3.69 respectively. The least considered cause by the employee is
employees roving nature, as the mean score is 3.42; it denotes that it plays the least
role in employee attrition.
The unavoidable causes (mean value = 3.60) such as marriage, death or

retirement, accident or illness, personal betterment and employee’s roving nature were
the major reasons for employees to leave the organization compared to avoidable
causes (mean value = 3.46) such as dissatisfaction with job, dissatisfaction with
wages, poor working conditions, unsuitable working hours, non-co-operative attitude,
better prospects is not available and unethical attitude of management.
144
Chi-square result shows that the association between demographic variables of
employees and causes of employee attrition. The reason for leaving the IT
organization depends on gender and education of the employee. The employee
whether male or female or undergraduate or post graduate or technically qualified
plays an important role in employee attrition.
There is a significant difference in the opinion of the employee with regard to

unavoidable causes of employee attrition based on their age. It shows that different
age group of the employee has different opinion about unavoidable causes and the
opinion of the employees are similar between the age group 18 to 25 and 26 to 35, it
shows that the young people working in IT sector are having the same opinion
regarding unavoidable causes.

avoidable causes of employee attrition based on their education. It shows that
employees having different educational qualification have different opinion about
avoidable causes and the opinion of the employees are similar between the
educational level of under graduation and post-graduation; it shows that the degree
holders are having the same opinion regarding avoidable causes.

avoidable causes of employee attrition based on their gender category. It shows that
employees whether male or female have different opinion about avoidable causes of
attrition.
7.1.3 Measurement of Employee Attrition
Number of involuntary leavers’ in the IT companies ranges from 20 to 1050.

As the firm size is less involuntary leavers during a given period is also less and as the
firm size increases the number of involuntary leavers also rises. Average number of
employees ranges between 150 and 2000.
Employee attrition rate is increasing from year to year. Attrition rate was high
for BPO firms and software firms compared to hardware firms. In software firms and
BPO firms the attrition rate ranges from 38% to 49%. On an average it was 23% for
hardware firms, 41% for software firms and 45% for BPO firms.
145
On an average for the Hardware firms, staff attrition rate was 10% and
workers attrition rate is 13%, for software firms staff attrition rate is 16% and workers
attrition rate is 26% and for BPO firms, staff attrition rate is 22%and workers it was
24%. For hardware and BPO firms the attrition rate was more or less the same for
staff and workers whereas in case of software firms workers attrition rate was more
compared to staff attrition rate.
On an average for male employees of hardware firms the attrition rate was
15% and for female employees it was 9% for male employees of software firm the
attrition rate was 27% and female employees it was 14% and for male employee of
BPO firms the attrition rate was 29% and for female employees it was 17%. On the
whole for all categories of firms, male employee attrition rate was more than female
employee attrition rate. This shows that male employee move frequently move from
one place to another place in search of better job compared to female employees.
7.1.4 Effects of Employee Attrition
It is inferred that the variable increased performance has the highest mean
score of 4.00 stating that most of the managers feel that increased performance was
the major considered effect of employee attrition which favors the organization in
many ways. The least considered positive effect of employee attrition was innovation
and adaptation, as the mean score is 3.07. It is clear that the variable increased
selection and recruitment cost has the highest mean score 3.57, stating that most of the
respondents feel that increased selection and recruitment cost is the major effect of
employee attrition does not favors the organization. The least considered effect of
employee attrition is increased training and development cost with mean score 2.93.
Among the demographic variables age, gender, marital status and education of
employer the variable education has association with the perception about the effects
of employee attrition. It implies that the perception about employee attrition depends
on the education of the employer whether the employer was an undergraduate,
postgraduate or technically qualified.
There is no significant difference in the opinion of the employer with regard to

the effects of employee attrition with regard to their age, gender and marital status of
the employer.
146
7.1.5 Separate Retention Policy
It is inferred that out of 30 managers, 18 (60%) managers have said

they have a separate retention policy in the organization. The managers have stated
some of the retention policies followed by their organization such as fixing
responsibilities, providing attractive and competitive salary, motivating employees
for better performance, giving annual increment with promotion based on
performance appraisal, providing perquisites, time flexibility in working hours,
increment once in 6 month, leave benefits, etc. 12 (40%) manager said they do not
have separate retention policy in the organization and also stated the reasons for not
having them. They were - the company does not care about recruiting new employees,
it avoids having a separate retention policy, the company still has to improve a lot to
have a separate retention policy and the company management does not allow having
such a policy.
7.1.6 Importance of Employee Retention
It is understood that the mangers considered the importance of employee

retention in the following order effective communication system (3.93), reduction in
costs (3.77), more constructive development of the organization’s knowledge base
(3.43), more effective and transparent recruitment (3.40), enhanced goodwill of the
company (3.40), utmost care in employees recognition (3.17) and maintaining better
staff morale (3.07). The managers neither agree nor disagree that the factors such as
sound and attractive wage policy (2.97) and creation and up gradation of HR
information system (2.80) are important for employee retention.
7.1.7 Factors influencing Employee Retention
It is inferred that the feature “salary with attractive annual increment” has the
highest mean score of 3.53 stating that the respondents feel that it is the major
influencing factor which retains the employee in the organization with regard to
remuneration.
It is clear that the feature “leading technologies” has the highest mean score of
3.80 stating that the respondents feel that it is the major influencing factor which
retains the employee in the organization with regard to organizational environment.
147
It is understood that the feature “work profile” has the highest mean score of
3.83 stating that the respondents feel it is the major influencing factor which retains
the employee in the organization with regard to growth and career.
It is inferred from the table that the feature “cordial relationship with
colleagues” has the highest mean score of 3.90 stating that the respondents feel that it
is the major influencing factor which retains the employee in the organization with
regard to inter-personal relationship.
It is clear that the variable “providing feedback” has the highest mean score of
3.73 stating that the respondents feel that it is the major influencing factor which
retains the employee in the organization with regard to moral support.
Among all the factors influencing employee retention it is inferred that the
feature organizational environment has got the highest mean score of 3.36 stating that
it has highly influenced employee retention than the other factors growth and career
(3.33), inter-personal relationship (3.33), support (3.23) and remuneration (3.20).
There is significant difference in the opinion of different gender group of the

respondents with respect to organizational environment. It shows that the gender of
the manager influences their perception about the organizational environment.
There is significant difference in the opinion of different gender groups of the

respondents with respect to growth and career. It shows that gender of the managers
influences their perception about growth and career.
There is significant difference in the opinion of different gender group of the

respondents with respect to moral support. It shows that gender of the manager
influences their perception about moral support.
7.1.8 Retention Strategies at different levels of employees
It isseen that the strategy “providing workplace convenience” has the highest
mean score of 3.40, stating that most of the respondents feel that it is the most
followed retention strategy to retain the entry level employees. The result gives a clear
picture that the retention strategy “providing workplace convenience” has the highest
mean score of 3.47, stating that most of the respondents feel that it is the most
followed retention strategy at mid-level employees also.
148
It is interpreted that the retention strategy providing “work/ life effectiveness”
has the highest mean score of 3.63, stating that most of the respondents feel that it is
the most followed retention strategy to retain senior level employees.
There is a significant difference in the opinion of different gender group of the

respondents with respect to retention strategy at high level. It shows that gender of the
managers influences their perception about the retention strategy at high level.
7.2 SUGGESTIONS
• Nature of job and working condition are the most influencing factor in employee
preference towards an organization, IT companies have to create and maintain
conducive working environment and provide better organized and interesting
job to their employees.
• Since nature of job and HRD practices have an impact on other factors such as
working condition, motivation, remuneration, company policy, relationship
between employees and relationship between employee and superior, they
should give more importance to nature of job and HRD practices. This enhances
the employee preference towards an organization for a longer period.
• Employee Attrition rate is high for large scale IT companies. Such companies
have to follow effective retention strategies. Not only implementing the
retention strategy is required, but also the measurement of the effect of strategy
paves way for retaining employees.
• Employee Attrition rate is higher for BPO’s and software firms than for
hardware firms since these employees have lot of opportunities. Hence the IT
firms must pay fair and competitive pay and perks. Revise the pay more
frequently on the basis of skill, experience and achievements.
• Attrition rate in IT Industry is more for workers than the staff. As the workers
nature of job is temporary. They have to be given job security that will motivate
the workers to stay in the organization.
• The major reasons for employee attrition were dissatisfaction with job and
dissatisfaction with wages. Periodical surveys have to be conducted by the IT
firms so that the areas of dissatisfaction can be found out and measures can be
149
taken to reduce it. It is well-known that cost of hiring is higher than cost of
retaining the employee. Hence the firms should ensure that they spend time and
resources for their retention program.
• The negative effects of employee attrition affect the productivity and the good
will of the industry and these effects has to be reduced. It can be reduced by
treating the employees as an asset and not as a cost to the company. The IT
companies should ensure that their employees are aware this view, so that they
work with pleasure and not in pain and this can help to reduce attrition.
• Some of the IT firms are not having separate retention policy to retain their staff.
Such firms have to frame some retention strategy. IT Policy in Puducherry can
include guidelines regarding employee attrition and retention strategies to be
followed in theIT industry.
• Since effective communication system is considered as the most important

factor in employee attrition, IT firms must have free and effective
communication system to allow the employees to give their view, expectation
and creative ideas. It motivates and boost the employees at all levels to perform
their job in a better way.
• Since workplace convenience and work/life effectiveness were considered as the

most effective strategies followed by IT firms, they should take initiatives on
work life balance such as flexi working hours, providing compassionate and
urgency leave, providing health care facilities for self and for the family
members, recreational clubs and a stress less work environment.
• Since organizational environment is the most influencing factor for retention,

the IT firms have to do environmental scanning because there are rapid changes
taking place in the environment that have a great impact on the working of the
firm. Scanning the environment helps to identify the firm’s strength, weakness,
opportunities and threats. It is very essential for the survival of the business.
• Retention Policy should be designed in line with strategic vision of the

organization.Psychological working condition in the organizational environment
should be given key importance.
150
• IT units try to introduce wage parity based on the nature of operation taking into
account dignity of labor.Government support and initiative has to be geared up
to strengthen the IT units.
7.3 CONCLUSION
 Puducherry is recognized as an education and health care hub with several

world class facilities. It also has huge potential to be the next IT hub of the
country. However it requires more assistance on the part of UT government.
There is need for SEZs and IT parks in Puducherry to attract MNC investment
in the field of IT. Proper policy implementation on the part of the government
will boost the growth of the UT in coming years.
 It was found through the analysis that most of the industries have faced the
problem of employee attrition because of dissatisfaction with work or working
condition. The Working hours, workload and work schedules, incentives,
salaries and the facility which are provided to the workers are not up to the
mark. This study “An Empirical analysis of employee attrition and retention
strategy in IT industry, Puducherry” reveals that most of the IT companies,
even the top most companies are facing attrition due to many factors. The
most important of all is working condition, nature of job, accident or illness,
marriage etc., as plenty of opportunities are there in the market for
experienced, well qualified employees if they wish to switch over to other
companies. IT companies should be alert and frame some necessary strategies
to reduce attrition so that they can reduce the expenditure regarding for
recruitment, training and development.
 Employee retention has become a major concern for corporate nowadays.

Now organizations are recognizing that their competitive advantage lies not
with capital or physical resources but rather with their human resources. From
the reviews, it was found that various retention strategies were followed by
the companies to retain its employees like rewards and recognition, pleasant
working environment, skill recognition, support learning, training and
development opportunities, mentoring and coaching sessions, good
compensation structure, providing flexi-timing facilities and annual
performance appraisal which are very helpful in retaining the employees.
151
From this study, it was found that most of the IT firms follow work place
convenience and work/life effectiveness retention strategies to retain their staff
at entry level, mid-level and at senior level.
 To conclude, IT firms in Puducherry have to take the matter of employee

attrition and retention seriously and design a prospective plan to control
attrition and effectively retain the employees. Being a knowledge industry,
knowledge workers’ interests have to be protected in all possible ways to get
them to do their best for the organization.
 Retention paves the way for organizational sustenance, competitive advantage,

excellence and Innovation.
7.4 SCOPE FOR FUTURE RESEARCH
 This study was conducted on all aspects of employee attrition and employee
retention in IT industry, Puducherry. Future research can be done in deep
analysis on any one aspect of employee retention in IT sector.
 From the reviews it was found that few studies have been carried out on
measurement of attrition rate. In future, the young researcher can choose this
topic.
 Since Puducherry is well known for educational facilities, the future
researchers can carry out their research on employee attrition and retention in
educational sector.
 Studies can be made on measurement of attrition costs and the effects of
employee attrition.
 Studies can be made on implementation of retention policy and its impact in
the organization.
 Studies can be made on causes of employee attrition rate in BPO firms and
the ways to reduce the attrition.
 A comparative study can be made on employee attrition in IT Industry and
other manufacturing industry.
 Studies on the effect of organizational culture on employee retention in
Indian IT sector.
 Studies on the relationship between attrition and productivity in
manufacturing industries.
152
153
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AN EMPIRICAL ANALYSIS OF EMPLOYEE ATTRITION
AND RETENTION STRATEGIES IN INFORMATION
TECHNOLOGY (IT) INDUSTRIES, PONDICHERRY
Interview Schedule for Employees
I request you to provide your frank views for the following statement of
questions. Your views will be kept confidential. Kindly help me for academic purpose.
G. ARUNMOZHI
Ph.D Research Scholar
Pondicherry University.
I Personal Profile (Employee Demographics)
1. Age:
a)18-25 years b) 26-35 years c) 36-45 years d) 46-55 years e) above 55 years.
2. Gender:
a) Male b) Female
3.Marital Status:
a) Married b) Unmarried.
4. Education:
a)Undergraduate b) Postgraduate c)Technical Education.
5. Experience:
a) upto 2 years b) 2-5 years c) 6-10 years d) Above 10 years.
6. For how many organisations you have worked earlier:
a) only one b) 2-5 c) 5 and above.
II. Employee preference towards an organisation:
Please tick the relevant box. 5 point Likert Scale is used.
1)Strongly Agree -5 2) Agree -4 3)Neither Agree or Disagree -3
4)Disagree -2 5) Strongly Disagree -1

1. Job Itself.
Strongly Agree Neither Disagree Strongly

Factors related to Job Agree Agree nor Disagree
Disagree
1.The Job I perform is
interesting
2.My Job is secure.
3.The target fixed in my job is
normal
4.The job has more growth
opportunities
5.I have autonomy in performing
my job.
6.My job carries more
responsibility.
2.Working Conditions.

Factors related to Working Agree Agree nor Disagree
Condition. Disagree
1.The current working hours in
the organization is satisfactory.
2.Work Place is better organised.
3.Working condition is
ergonomically good.
4.Work place is free from abuse
(verbal / sexual).
3. Motivation:

Factors related to Motivation. Agree Agree nor Disagree
Disagree
1.I have a role to play in the
decision making process.
2.My hard work is recognized by
the company.
3.The organization supports and
encourages high level
performance.
4.The organisation rewards
employees on the basis of merit
performance.
5.Promotion is based on
performance.
4.Company and its Policies:

Factors related to Company and Agree Agree nor Disagree
its policies. Disagree
1.The organisation has clearly
defined policies which are
communicated to the employees.
2.The organisation has interest
over employees.
3.The organisation atmosphere
facilitates open and free flow
communication.
5.Remuneration:

Factors related to Remuneration. Agree Agree nor Disagree
Disagree
1. Attractive and competitive pay
is provided.
2.Periodical incentives are
provided.
3. Leave benefits are provided.
4. Maternity benefits are
provided.
3.Rewards commensurate with
performance and contribution.
6.Inter-personal relationship:
a) Employee-Employee Relationship.

Factors related to Employee- Agree Agree nor Disagree
Employee reationship.. Disagree
1.There is a group harmony and
good supporting relationship
exists among team members.
2.Individual self-dignity is
respected.
3.Team bondage is promoted.
b)Employee-Superior relationship.

Factors related to Employee- Agree Agree nor Disagree
Superior relatio nship. Disagree
1.Industry harmony (good
employer-employee relationship)
is prevalent.
2.Resolves grievance promptly.
3.Listens to suggestions.
4.Encourages co-operation.
5.Extend fair and equal treatment
to all
Employees.
6.Clearly communicates
expectation.
7.Provided appropriate and
challenging assignments.
8.Coaches, trains and helps in
the development of employees.
7.HRD Practices:

Factors related to HRD practices. Agree Agree nor Disagree
Disagree
1.Best recruitment practices are
followed.
2.Training is an on-going
process in the company.
3.Open-door policy is adopted.
4.Performance Appraisal is
periodically done.
5.Performance feedback is given.
6.Promotions are given on the
basis of merit.
III.Reasons for leaving the organisation:
a)Avoidable Causes:

Avoidable Causes. Agree Agree nor Disagree
Disagree
1.Dissatisfaction with job.
2.Dissatisfaction with wages.
3.Poor working conditions.
4.Unsuitable working hours
5.Non-Co-operative attitude.
6. Better prospects not available.
7.Unethical attitude of
management.
b)Unavoidable Causes:

Unavoidable Causes. Agree Agree nor Disagree
Disagree
1.Marriage.
2.Accident or Illness.
3.Retirement or Death.
4.Personal betterment.
5.Employee’s roving nature.
IV.Consequences of Migration:

Consequence of migration. Agree Agree nor Disagree
Disagree
1.Better prospects.
2.To seek a workplace which is
more congenial.
3.To receive higher
remuneration.
4.To have workplace in the
native place.
5. To have workplace near where
the spouse is working.
------------
AN EMPIRICAL ANALYSIS OF EMPLOYEE ATTRITION
AND RETENTION STRATEGIES IN INFORMATION
TECHNOLOGY(IT) INDUSTRIES, PONDICHERRY
Interview Schedule for Employers
I request you to provide your frank views for the following statement of
questions. Your views will be kept confidential. Kindly help me for this academic
purpose.
G. ARUNMOZHI
Ph.D Research Scholar
Pondicherry University.
I Personal Profile (Employer Demographics)
1. Designation:
2.Age:
a)18-25 years b) 26-35 years c) 36-45 years d) 46-55 years e) above 55 years.
3.Gender:
a)Male b) Female
4.Marital Status:
a)Married b) Unmarried.
5.Education:
a)Undergraduate b) Postgraduate c)Technical Education.
II. Employee Attrition rate in the organization:
a) Below 20% b) 20%-40% c) 41%-60% d) more than 60%
III. Measurement of Employee Attrition in the organization: (please tick the relevant
points)
a) No. of voluntary leavers in a year

b) No. of involuntary leaver in a year
c) Average number of employees during a given period
d) Number of vacancy to be filled in a year
IV. Employee Attrition cost: (Give ranks from 1 to 3, 1-more, 2-less, 3-least)
a) Recruitment cost ( )
b) Training and Development cost ( )
c) Administration cost ( )
V. Whether your organization has separate Employee Retention Policy.
(a)Yes (b) No
i) If Yes, State about it.
-----------------------------------------
-----------------------------------------
ii) If No, Why?
------------------------------------------
-----------------------------------------
VI.Consequences of Employee Attrition:
Please tick the relevant box. 5 point Likert Scale is used.
1)Strongly Agree 5 2) Agree 4 3)Neither Agree or Disagree 3
4)Disagree 2 5) Strongly Disagree 1
1)Positive Consequences.

Positive Consequences of Agree Agree nor Disagree
Employee Attrition. Disagree
1.Increased performance.
2.Reduction of entrenched
conflict.
3.Increased mobility and morale.
4.Innovation and adaptation.
2)Negative Consequences.

Negative Consequences Agree Agree nor Disagree
ofEmployee Attrition. Disagree
1.Increases Selection and
recruitment cost.
2.Increases Training and
Development cost.
3.Creating Operational
Disruption.
4.Demoralisational of
Organisational membership.
VII. Employee Retention Strategy at different levels:

1. Low level:
Factors related to Employee Agree Agree nor Disagree
Retention Strategy . Disagree
1.Appreciating and recognizing a
well done job.
2.Recognizing professional and
personal significant events.
3.Providing benefits.
4.Providing perks.
5.Providing workplace
convenience.
6.Employer support in tough
time and personal crisis.
2. Middle Level:

Factors related to Employee Agree Agree nor Disagree
1.Appreciating and recognizing a
well done job.
2.Benefit program for family
support.
3.Providing training and
development,
4.Providing personal growth
opportunities.
5.Providing workplace
convenience.
3. High Level:

Factors related toEmployee Agree Agree nor Disagree
1.Providing work/ life
effectiveness.
2.Understanf Employee needs.
3.Encouraging professional
training and development.
4.Encouraging personal growth.
5.Provide an environment of
trust.
VIII. Factors influencing Retention:

1.Remuneration:
Factors related to remuneration. Agree Agree nor Disagree
Disagree
1.Salary with attractive annual
increment.
2.Bonus based on performance.
3.Adequate Leave Benefits.
4.Health Insurance coverage for
all employees.
5.Maternity benefits are
provided
2.Organization Environment:

Factors related to Organization Agree Agree nor Disagree
Environment. Disagree
1.Giving importance to
traditions,Cultures and values.
2.Good Company reputation.
3.Quality of people in the
organisation.
4.Risk takingBehaviour of
employer.
5.Leading technologies.
6.Having truston employees.
7.Create a motivating
environment.
8.Proper delegation of Duties,
Responsibilities and Authority.
3.Growth and Career:

Factors related to Growth and Agree Agree nor Disagree
Career. Disagree
1.Work profile.
2.Personal growth and dreams.
3.Training and Development.
4.Providing Job enrichment
practices.
5.Vertical career path.
4.Inter-personal Relationship:

Factors related to Inter-personal Agree Agree nor Disagree
relationship. Disagree
1.Respect for the Individual.
2.Cordial relationship with
Collegues.
3. Cordial relationship with
manager.
4.Fair and equal treatment to all
employees.
5.Encouraging team work.
5.Support:

Factors related to Support. Agree Agree nor Disagree
Disagree
1.Providing feedback.
2.Giving recognition and
rewards.
3.Giving Counselling.
4.Providing emotional support.
IX. Importance of Employee Retention:

Importance of Employee Agree Agree nor Disagree
Retention. Disagree
1.More effective and transparent
recruitment.
2.Reduction in Costs.
3.Maintaining better staff
morale.
4.Enhanced Goodwill of the
company.
5. More constructive
development of the
organization’s knowledge base.
6.Effective communication
system.
7.Creation and Upgradation of
HR Information System.
8.Sound and attractive wage
policy.
9.Utmost care in Employee
Recognition.
----------------
List of IT Industry ,Pondicherry (Source: Directorate of Industries and Commerce)
S.No. Name of the Firm (Hardware)

1. HCL INFOSYSTEMS LTD.
2. Wipro Ltd.
3. Lenova Private Ltd.
4. Frontline Solutions
5. NCR Corporations India Private Ltd.
6. Acer India Ltd.
Soft ware
1. MIC Electronics Ltd,
2. Integra Software Services Pvt. Ltd.
3. Shuttle Technology Pvt, Ltd.
4. Accel ICIM Systems and Services Ltd.
5. Kalni Technology Pvt. Ltd.
6. PSL Management and Software Technology Ltd.
7. St. Joseph Computing
8. Aurosoft Computer Consultancy
9. Modsys International
10. Sun Soft System
11. Vishual Technologies
12. Space Computer and Systems Ltd.
13. JJ Softech Private Limited
14. Eonour Technologies Ltd.
15. Itrigger Technologies Pvt. Ltd.

16. Linux Solutions Pvt. Ltd.
17. SMR Universal Softech Ltd.
18. System Telecom and Data services (p) Ltd.
19. Winstar Data Services
BPO’s
1. Spatial Info Labs
2. Mphasis
3. IHorse
4. Victory Data Processing (p) Ltd.
5. Data Matrics
6. E-Quire
7. Muhesh Technologies
8. Promicro Page
9. SPI Technologies India Private Ltd.
10. Azhimuth Technologies
11. Maruthi Computer Academy
12. JBC Associate & Co.
Total No. of firms = 37

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AN EMPIRICAL ANALYSIS OF EMPLOYEE ATTRITION AND

RETENTION STRATEGIES IN INFORMATION TECHNOLOGY

This is to certify that the thesis entitled “AN EMPIRICAL ANALYSIS OF

EMPLOYEE ATTRITION AND RETENTION STRATEGIES IN INFORMATION

TECHNOLOGY (IT) INDUSTRY, PUDUCHERRY” submitted for the award of the

degree of Doctor of Philosophy by Mrs. G. ARUNMOZHI is based on the original

work done by her in the Department of Commerce, Pondicherry University,

any Degree, Diploma, Associateship, Fellowship or any other similar title.

Date: (Dr. P. NATARAJAN)

I hereby state that the thesis entitled “AN EMPIRICAL ANALYSIS OF

EMPLOYEE ATTRITION AND RETENTION STRATEGIES IN

INFORMATION TECHNOLOGY (IT) INDUSTRY, PUDUCHERRY”,

submitted to the Department of Commerce, Pondicherry University, for the award of

degree of Doctor of Philosophy in Commerce is my original work under the supervision

and guidance of Dr. P. NATARAJAN, Professor, Department of Commerce,

degree, Diploma, Associateship, Fellowship or any other similar title.

what I feel: gratitude, acknowledgement” - Octavio Paz

This research work has given me an immense sense of satisfaction. This is

I express my sense of gratitude to the Department of Commerce, School of

Management, Pondicherry University for giving me an opportunity to pursue my

I wish to express my sincere thanks to Dr. P. Natarajan, Professor, Department

of Commerce, Pondicherry University, who throughout this journey of research acted as a

I would like to wholeheartedly be grateful to my Doctorial Committee members

University, and Dr. M. Banumathi, Associate Professor, Department of International

Department of Commerce, Pondicherry University, for her continuous support

throughout my research work.

I extend my thanks to all Faculty members and Office staff of department of

I express my gratitude to the Principals, Dr. W.V.Balaji, Perunthalaivar

Dr.P. Nallasamy, Dr. Cheryl-Ann Gerardine Shivan, Perunthalaivar Kamarajar Arts

completing my research work.

My sincere and heartfelt thanks to Dr.A.Senthamizhraja, HOD, Department of

Commerce, Perunthalaivar Kamarajar Arts College, Madhagadipet and my dear

colleagues Dr. V.Veeraperiyanayagi, Mr. C.Chandrakasan, and Mr.A.Albert

throughout my research work.

The pace of research work gets accelerated only in a sustained research

research environment of information, knowledge and experience sharing.

Success is impossible without the warmth and loving family. I am indebted to my

parents who wished me to be doctorate. I pay my sincere appreciation to my life partner

Mr.S.Pushparaj, without whose motivation, co-operation and moral support, it is

preparation of this report.

Last but not least I thank my students particularly I batch B.Com.(PKAC)

process and wished me to complete the research as earlier as possible.

CHAPTER TITLE PAGE No

Fig. No Title Page No

ACER A Computer Entrepreneurial Revolution

AMOS Analysis of a Moment Structures

ANOVA Analysis of Variance

BPM Business Process Management

BPO Business Process Outsourcing

CFA Confirmatory Factor Analysis

CFI Comparative Fit Index

DIC Directorate of Industries and Commerce

EER Employee-Employee Relationship

ESR Employee-Superior Relationship

F value Fisher Snedecor Distribution value

GDP Gross Domestic Product

GFI Goodness of Fit Index

GPRO Group Procurement

HCL Hindustan Computers Limited

HITEC Health Information Technology Economic and Clinical Health Act

HRD Human Resource Development

ITes Information Technology enabled services

IT IS Information Technology Infrastructure Services