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A Project report submitted in partial fulfillment of the requirement for the award of the degree of
‘Bachelors of Management Studies’
VARUN.A.CHHIBBER Roll no. 7720 SEMESTER: V
Parle Tilak Vidyalaya Association’s
Mulund College of Commerce
2005 – 2006
University of Mumbai
I, Varun.A.Chhibber, a student of Mulund College of Commerce T.Y.BMS (semester Vth) herby declare that I have completed this project on “Employee Retention” in the academic year 2005-2006. The information submitted is true and original to the best of my knowledge
Signature of student
I MISS.ROOPALI.MANDLEKAR hereby certify that Varun.A.Chhibber a student of Mulund College of Commerce TYBMS (Semester 5) has completed the project titled Employee Retention in the academic year 2005-2006. The information submitted is true and original to the best of knowledge
Signature of the Project the Coordinator
Signature of Principal of College/Institution
Signature of the Examiner
I take this opportunity with great pleasure to present before you this project on “Employee Retention” which is a result of cooperation, hard work and good wishes of many people. I would like to thank my with deep sense my project guide for & her
appreciation, friendly guidance, constant encouragement, involvement in my project work and for her valued guidance throughout my study. I owe the debt to our Principal Mr. D.G Deshpande for giving me an opportunity to present a creative outcome in form of a project. I express my sincere thanks to the library staff who have provided me right information and study material at the right time. No words can adequately express my debt of gratitude to all my BMS friends for their continuous support while the work was in process. I must also put on record my gratitude to my Institute Mulund College of Commerce for all that I learnt as a student. I also wish to thank my Family Members whose efforts and creativity helped me in giving the final structure to the project. Lastly needless to say I am also thankful to all those seen and unseen hands and minds, which have been of direct or indirect, help in the completion of my project.
Employee Retention Executive Summary The project begins with the significance of Human Resource Management in today’s corporate world. It signifies the increasing importance of HRM. rewards and recognition and exit interviews. Then it leads over to the employee turn over problem faced by the companies. And at the end the report finally highlights various aspects which are to be considered for improvement of employee retention strategies. Then the project highlights the significance of employee retention to overcome the employee turnover problem. It highlights the resource for the high turnover rate and the cost that this act adds up to the company. training and development. compensation management. negotiation. namely salary recruitment. The project briefly covers the various areas where employee retention strategies are implemented work culture. 5 .
3) General problems faced by the companies while practicing employee retention. 2) Strategies employed by the company to improvise on the rate of employee turnover rates.Employee Retention Objective of Study 1) To know the importance attached to employee retention in today’s corporate world. 6 .
Employee retention has become a major goal of the organization. Major importance is attached to employee retention.Employee Retention Scope of study This project has been prepared with an intention to make one realize and understand the significance of employee retention. recruitment has become just a part of HRM. 7 . but now in today’s corporate world. A survey has been done to understand the strategies followed by various organizations to ensure Employee Retention. Initially recruitment was only talked about. This project not only aims to present the theoretical aspects. but the practical aspects as well.
The information collected has been diluted and presented in a very simple and lucid manner. 8 .Employee Retention Methodology The information provided in this project has been collected from various sources. This was done with an objective that even a layman should be able to understand the topics that I have dealt with.3 edition” written by K. Aswathappa. These include major information’s downloaded from various articles through the Internet. And the matter was also acquired from the book “Human Resource and Personal Management.
14. 12. 8. 10. 11.Employee Retention Index Sr. Selection & Induction Remuneration Negotiation Work Environment Significance of Training & Development Performance Appraisal Compensation Management & Reward Exit Interviews Questionnaire Analysis of Survey Managing IT Retention & Turnover Employee Retention Problems faced by Call Centers Retention Stratagem 9 . 6. 3. 7. 9. 5. 16. 15. 13. Employee Retention Recruitment.No 1. a) b) c) Contents Introduction Significance of HRM in Corporate World Employee Turnover Measuring Employee Turnover Why do People Leave Organizations??? When does Employee Turnover Become Problematic??? Page No 4. 2.
Some people might have this misconception that this resource is less important than the other resources like money. I would like to put a lot of stress in the word required. The only and most important resource for any company is its people.Employee Retention 17. So if we are able to stop this or at least know the answer to why there is such a high employee turnout we would know what it takes to retain the required people. Well if we all know that people are the most important resource then why do we have this question that is Employee Retention required or not. But we have all learned from all successful companies around the world that their success was and is due the most important M of all the other M’s and that’s the manpower. I guess this question arised all around the world because of a very high figure of employee turnover. 18. materials and machinery. This word needs to be understood by lot of people and 10 . What’s a business without people and how is it going to work if the required people aren’t there. Conclusion Bibliography & Webliography Introduction Employee Retention Employee retention is not a question or debate but rather it’s the most important thing for any concern if its serious in long term business.
is competent enough to match the candidate’s long term career aspirations to the companies’ requirement. Are we willing to share with him the companies’ clear vision and mission and the long-term company strategies. Well that can be a very tricky and difficult thing for the HR dept. Unfortunately and sadly they are unable to figure out the deep negative impact if they do not get the required people. But we all know that the HR depts. would not find it very difficult to find the required and right person. Well that’s assuming that the HR dept. And with the present tremendous gap between demand and supply the HR dept. more emphasis is given to details & specifications.Employee Retention especially the people in the top management believe who believe that there is not much difference in manpower requirement and material requirement and the irony is that in the later case. are trained and equipped with lot of tools to know the career aspirations of a candidate. What is the minimum desired output? Is it long term or short term? Are we capable of meeting his expectations or rather that his takeaway is above or below market rates? Are we ready to spend time and energy in grooming him and including him in the family? Yes. I believe that the employees of a company are like a family and it would benefit a lot of companies if they too agree. And the most important of all that. With the answers to the above questions we would be in a position to specify the required people to the HR dept. 11 . The reason I think why they are very particular about material specifications is because they can calculate the losses if they do not get the required material. So how do we specify the required people? I think we can start with answering a few questions. are we willing to be transparent enough for him to understand the company and its people.
They have a clear vision of where they want to be in future & all their actions are aimed towards it. have a unified theory about transformation and are holistic in approach. 12 . In these organizations people are empowered to act and openly share knowledge and experience. when told by others • Do not change even when told by others. Also these Organizations are low profile.Employee Retention Now that we have the right and required person there is no doubt that we need to retain him. These Organizations encourage People to accept ownership and responsibility to solve problems. They focus on strengthening fundamentals and mobilize the entire organization with people aligned. There are three types of organizations The Organizations that: • Change by themselves • Change. We need to know our Organization and the type it belongs to. They govern their own future and not are merely victims of circumstances. The excellent organizations belong to the category of ‘change by themselves”. These Organizations have their concepts right regarding people development.
and empowerment efforts -. “Employee-involvement practices such as information sharing. Increased global competitiveness has given way to uncertainty. However studies reveal that in today’s business world. 13 .all of which fall squarely into Hr’s domain -.show a significant bottom-line return”. which is impacting the environment within an organization. but there also proof that investing in HR does produce returns.Employee Retention General Electric(GE) is one of the finest examples worldwide and back home we have the much talked about Infosys & Wipro Significance of Human Resource Management in Corporate World HR has always been seen as the “cost centre” of an organization. Companies who have followed the employee-involvement practices have produced a 13 percent higher return on equity. This is where the role of a HR manager is becoming even more crucial. How do you select and retain talented people? How can you create an environment. skills training rewards programs. It’s all about how you invest in your human capital. Thus it’s obvious that employees form an integral part. HR practices does churn revenues. Studies suggest that not only is Human resource the most valued asset of a company. which helps people thrive at work? Many such questions form an integral part of a company’s HR policy.
Lastly. The person should be very effective at understanding people. mission. culture and organization building). Some key points to remember 14 . The basic trait required in an efficient HR manager is his ability to gauge the strengths of his employees and put them to best use. Both these functions have always been considered “soft” roles. while always retaining the accountability. The HR department plays a key role in the company’s overall business strategy. rather than just managing people. personnel and performance management. HR managers have a clear understanding of the business. He should be able to delegate responsibility. personal touch plays an important factor for creating a sense of belonging with the company. the organization. Today the equation has changed. Be a supportive manager and create an environment where employees feel assured that they can fall back for support in difficult situations. The focus of HR today is to create an agile organization.Employee Retention Traditionally the HR department has played dual roles—an operational function (such as recruitment. which can innovate rapidly and exceed client expectations constantly. employee relations and statutory compliance’s) and a human developmental role (comprising people development. their skill sets and emotional intelligence which will help in goal setting and finally achieving the desired results. values and are given ample freedom to bring processes in place to get people aligned to these values and goals. its vision.
It also makes no distinction between functional (i. which helps in better productivity. Crude turnover figures are used by all the major surveys of employee turnover. So they are necessary for effective benchmarking purposes. You don’t need control. which is dysfunctional. control. redundancy or retirement. However. communication and commitment. it is also useful to calculate a separate figure for voluntary turnover and to consider some of the more complex employee 15 . even people who left involuntarily due to dismissal.e. measurement of work processes. There has to be a common theme built relating to vision. Experts point out that if you create an environment where people truly participate. The formula is simply: Total number of leavers over period Average total number employed over period x 100 The total figure includes all leavers.Employee Retention The organization has to ensure that communication is timely and open to retain employee trust. This also means that there is continuous feedback from employees. The employees do what needs to be done.-beneficial) turnover and that. Employee Turnover Measuring employee turnover Most organizations simply track their crude turnover rates on a month by month or year by year basis. participation.
At present surprisingly few (7%) HR departments calculate the costs of turnover. Costing employee turnover Estimating the cost of employee turnover is a useful starting point when seeking to persuade line managers and Finance Directors that money needs to be invested in order to improve retention rates.Employee Retention turnover indices. This figure can then be multiplied by the crude turnover rate for that staff group to calculate the total annual cost of turnover. It is possible to compute a ‘not less than’ figure very easily by working out what it costs on average to replace a leaver with a new starter in each of the major employment categories. 16 . The major categories of costs to take account of are: • Administration of the resignation • Recruitment costs • Selection costs • Cost of covering during the period in which there is a vacancy • Administration of the recruitment and selection process • Induction training for the new employee. which take account of characteristics such as seniority and experience.
Most staff has a preference for stability. • • Sometimes it is mixtures of both pull and push factors. • • Sometimes it is the attraction of a new job or The prospect of a period outside the workforce which ‘pulls’ them. More complex approaches to turnover costing give a more accurate and invariably higher estimate of total costs. A widely quoted method involves estimating the relative productivity of new employees during their first week’s or months in a role and that of resigns during the period that they are working their notice Why Do People Leave Organizations? Employees resign for many different reasons. agencies or assessment centers are used in the recruitment process. their alternative 17 . as is the case when someone relocates with their spouse or partner. Recent research strongly suggests that push factors are a great deal more significant in most resignations than most managers appreciate. even when offered higher pay elsewhere. on other in occasions present they jobs are to ‘pushed’ seek due to dissatisfaction employment. For a fourth group reasons for leaving are entirely explained by domestic circumstances outside the control of any employer.Employee Retention Many of these costs consist of management or administrative staff’s time (opportunity costs) but direct costs can also be substantial where advertisements. It is relatively rare for people to leave jobs in which they are happy.
Recent research highlights the importance of front line managers and how their behaviour relates directly to the levels of commitment.Employee Retention It is important to appreciate that the reason people give for their resignations are frequently untrue or only partially true. but its significance can be masked as a result of the difficulties associated with exit interviews mentioned above. colleagues or the organization generally. 18 . 44% of respondents cited ‘promotion outside the organization’ as a main cause of labour turnover. particularly when conducted by someone who may later be asked to write a reference for the departing employee. preferring to give some less contentious reason for their departure. 40°/o highlighted ‘change of career’ and 37% ‘lack of career of developmental opportunities. A lack of training and developmental opportunities is also major reason voluntary turnover. Early leaving In the high turnover industries in particular. On an average. motivation and satisfaction reported by employees. The use of exit interviews is widespread yet they are notoriously unreliable. They are reluctant to voice criticism of their managers. 2O% of leavers left between 0 and 6 months’ service. a great deal of employee turnover consists of people resigning or being dismissed in the first few months employment. Research shows that during 2003. A poor relationship with a line manger can be an important reason for individuals leaving their organization. Even when people stay for a year or more is often the case that the decision to leave sooner rather than later is effectively taken in the first weeks of employment.
Employee Retention Poor recruitment and selection decisions. Organizations do this in order to ensure that they fill their vacancies with sufficient numbers of wellqualified people as quickly as possible. Expectations are often raised too high during the recruitment process leading people to compete for and subsequently to accept jobs for which they are in truth unsuited. This is especially true of situations in which 19 . turnover is likely to be problematic from a management point of view.e. When Does Employee Turnover Become Problematic? There is no set level of employee turnover above which effects on the employing organization becomes damaging. where the labour market is loose). However. By contrast. Everything depends on the type of labour markets in which the company competes. where skills are relatively scarce. along with poorly designed or non-existent induction programs. avoidable turnover and the development of a poor reputation in local labour markets. over the longer term the practice is counter-productive as it leads to costly. it is possible to sustain high quality levels of service provision despite having a high turnover rate. are usually to blame. Where it is relatively easy to find and train new employees quickly and at relatively little cost (i. where recruitment is costly or where it takes several weeks to fill a vacancy. both on the part of the employee and employer.
Moderate levels of staff turnover can also help to reduce staff costs in organizations where business levels are unpredictable month on month. Employee Retention 20 . This happens whenever a more effective employee replaces a poor performer.Employee Retention you are losing staff to direct competitors or where customers have developed relationships with individual employees as is the case in many professional services organizations. and can happen when a senior retirement allows the promotion or acquisition of welcome ‘fresh blood’. Some employee turnover positively benefits organizations. In such situations when business is slack it is straightforward to hold off filling recently created vacancies for some weeks.
and a corporate culture which values their work.Employee Retention Retaining Top Talent in a Competitive Market Successful Companies Develop Integrated Retention Programs to Keep Top Talent from Leaving for the Competition With business booming. flexible career options. it’s a sellers market for job seekers. The company should identify the following benefits of recruiting candidates based on their competencies: improved accuracy in selecting the best candidates. we offer these basic pillars of success for companies in any industry: Employ competency-based recruiting to improve selection effectiveness and increase employee retention. So how can companies keep employees happy and retention rates high? Research says that top talents in organizations cannot be retained merely by high salary and a wealth of perks. Talented employees are highly marketable and almost always have advanced degrees. reduced turnover. retention of key employees is more important than ever. higher levels of productivity and contribution. as tempting offers from competitors seeking to correct their own labour shortage increases the likelihood of key employees heading out for greener pastures. an 21 . companies must also show their appreciation for key employees contributions with substantial compensation packages. Offer an attractive benefits package. While salary and benefits cannot substitute for deficiencies in other areas. They demand more intangible benefits — stimulating work. lower hiring costs. For company HR departments. As experienced consultants in the area of Talent Retention. Like health care benefits in the industry. better person-job fit.
Provide opportunities to explore different positions within the company Here employees participate in different types of activities within their field of interest. This sharing atmosphere gives everyone a voice in creating the type of corporate culture in which they would like to work. Companies that recognize the importance of long-term. new hires can explore their strengths and interest areas before selecting a job that best suits them. contribute ideas and resolve issues. Leading companies look at talent retention as an integrated process. An open door policy encourages employees at all levels to ask questions. and one of the largest corporatesponsored day-care centers in the country. dedicated employees begin the retention process during recruiting and embed retention practices in career path and employee development and processes. Employees value a workplace in which their input is encouraged and appreciated. not as isolated events. Establish a corporate culture that emphasizes knowledge sharing and employee feedback. 22 .Employee Retention employee stock purchase plan. The variety of assignments also benefits new employees by giving them an opportunity to learn more about the company’s diversity develop a company contact network and demonstrate their research capabilities to a variety of employees.
23 . A study commissioned by our firm among executives at the nation’s 1000 largest companies found that. Reward managers whose record at keeping people is good by including the subject in appraisals. the more likely are to retain a staff of satisfied. aside from salary.Employee Retention Today’s workers are no longer inclined to stay at one company for the duration of their careers. • Maximize opportunities for individual employees to develop their skills and move on in their careers • Ensure wherever possible that employees have a ‘voice through consultative bodies. regular appraisals. The most talented professionals are more likely to be courted by other businesses. and the effects of turnover can be costly. productive employees. Take care not to raise expectations only to dash them later. The implication is clear: The more enriching your work environment. • Make line managers accountable for staff turnover in their teams. Hiring smart is the first step to developing a loyal. and attitude surveys and grievance systems. rehire and retain can quickly cut into a firm’s bottom line. Other factors. motivated workforce and keeping turnover at a minimum. Improving employee retention • Give prospective employees a ‘realistic job preview’ at the recruitment stage. such as competitive compensation and creating an employee-friendly work environment also play a role. job applicants inquire just as frequently about corporate culture as they do other benefits. The time and money it takes to recruit.
While doing so.Employee Retention • Wherever possible accommodate individual preferences on working hours. they need to recruit people with requisite skills. organizations cannot progress and prosper. Employees who are made to feel that their jobs are precarious may put a great deal of effort in to impress • Bend over backwards to ensure that you do not and are never seen to discriminate against employees on any unfair grounds. Once the required number and kind of human resources are determined. Recruitment. All this process is generally known as recruitment. Without positive and creative contributions from people. The success or failure of an organization is largely dependent on the caliber of the people working therein. • Defend your organization against penetration by headhunters and others seeking to poach your staff. Recruitment is distinct from Employment and Selection. Be as flexible as possible in the allocation of shifts. • Provide as much job security as possible. the management has to find the places where the required human resources are/will be available and also find the means of attracting them towards the organization before selecting suitable candidates for jobs. therefore. they have to keep the present as well as the future requirements of the organization in mind. Selection & Induction The human resources are the most important assets of an organization. In order to achieve the goals or the activities of an organization. Some people 24 . qualifications and experience.
e. it’s crucial to have a recruiting strategy in place. Recruitment is only one of the steps in the entire employment process. effort and money spent in the hiring process very often comes to naught because hiring managers make 25 . whereas the selection is the process of finding out the most suitable candidate to the job out of the candidates attracted (i. These are not the same either.Employee Retention use the term “Recruitment” for employment. Some others use the term recruitment for selection. These two are not one and the same. Technically speaking. recruited).. the function of recruitment precedes the selection function and it includes only finding. developing the sources of prospective employees and attracting them to apply for jobs in an organization. Recruiting Smart Finding and recruiting good people can be a challenge for any company Therefore. Why are some recruitment’s successful while others are disastrous failures? The mount of time.
The CV of a person is in fact the most common blind spot as it often exaggerates the truth and can be misleading in the selection process. ability to work under pressure. Why is it necessary for the recruitment process to be very focused? Finding out whether the person is the “right fit” in the organization culturally is as important as Testing his/her skill sets. Blindly promoting from within and hiring because a friend referred the candidate are the other mistakes that are often repeated. which could be different from the earlier organization: and from the perspective of ability to work in teams. Adding to this is the inability to test the exact skills of the candidate. At times organizations hire out of desperation and consequently land up paying the price of inducting a candidate who is not suitably qualified or skilled to take care of the responsibilities. Failure to identify the exact company needs is one of the reasons that lead to wrong hiring. the recruitment process is more complex than meets the eye. etc. Yes.” Cost effectiveness plays an important part too.Employee Retention some inevitable mistakes. Rushed hiring can lead to overlooking of many factors. often it is the good communication skills of the candidate that help him/her succeed in the interview without the necessary domain knowledge or skill. and it is this inability to understand the subtle factors of the system that leads to hiring the wrong person. Furthermore. “One has to check where The candidate comes from—from the perspective of suitability to work in the new culture. customer-facing skills. 26 . which often becomes a calamitous situation for the company.
Employee Retention Selection Steps in Selection The purpose of selection programme & technique is to choose the most suitable candidate for a given job from among the prospective employees. Selection procedures which employees 27 .
company rules & regulations. This process gains more significance as the rate of turnover is high among new employees compared to that among senior employees. A wrong man on a wrong job will mar the development & progress of the organization. In order to achieve organizational objectives effectively & efficiently. variations in the requirements of the job & the organization also disturb the new employee. induction plays pivotal role in acquainting the new employee to the new environment. A sound selection system based on scientific methods can go a long way in establishing an image of impartiality & thus can help to attract & retain the most qualified candidates for in/towards the organization. it is important to place the right man on the right job at the right time at the right place. This situation leads to instability & turnover. Further absence of information. job location. Further induction is essential as the newcomer may feel insecure. behavioural variations. whereas the right man on right job will contribute to organizational growth. This is mainly because of the problem of adjustment & adaptability to the new surroundings & environment. surroundings.Employee Retention systematic & scientific methods that are reliable & valid can achieve this objective & can also save cost. nervousness & disturbing. cultural gap. and various employees is the final step of employment process. shy. 28 . it is necessary to adopt the principal of scientific selection. Hence. different levels of technology. organization. lack of knowledge about the new environment. Induction Introducing the new employee who is designated as a probationer to the job. The use of science & systematic procedure in selection is essential for finding the right man for the right job. organizational surroundings. In order to avoid the pitfalls of wrong selection & placement.
make the offer as soon as possible. Candidates with in-demand skill sets may already be evaluating other opportunities by the time you make an offer. Cautiously Evaluate the Employment Offer Enter negotiations with a strong understanding of compensation trends. A delay can cause you to lose the best applicant. so its important to handle this stage effectively. The offer should be fair to the candidate and in line with current standards in the industry and at your firm. Act Quickly Once you’ve selected the prospective hire. Businesses that 29 . Following are some tips for successful salary negotiations.Employee Retention Remuneration Negotiation Salary negotiations are a critical step in the hiring process and also attach a huge significance in retention of the employees.
Prospective employees are interested in hearing about staff recognition and bonus programs. make the offer in person. try to discover the source of the hesitation. Provide Encouragement When presenting an offer. This allows you to explain all aspects of the salary and benefits package. advancement possibilities and unique aspects of the corporate culture. Elucidate the Details If possible. Know When to End Negotiations When faced with a candidate who’s reluctant to accept an offer. Maintain Communication 30 . persuading an applicant with serious reservations can backfire if that individual has second thoughts after joining your organization. Applicants who will need to relocate may require additional time. For example. profit sharing or extra time off. Likewise. providing a salary that exceeds someone’s potential contributions can ultimately affect your firms overall compensation scale. and more senior level candidates up to a week. and provides an opportunity for the candidate to ask questions.Employee Retention can’t provide high starting salaries should consider offering other incentives — such as stock options. Consider the potential impact of any changes required to address these concerns or issues. be sure to highlight the reasons someone would want to work at your company. Set a Time Frame Give entry-level professionals a few days to consider the offer.
Following are some strategies followed by companies for creating a friendly working environment. Solicit feedback from employees by periodically conducting anonymous satisfaction surveys. call the individual to make sure he or she has all of the information needed for a successful start at your firm. employees are asking for corporate programs that reflect a more flexible business environment. The challenge for businesses is responding to these concerns without sacrificing productivity. Also. Building a Worker-Friendly Reputation Encourage staff to participate in developing solutions for enhancing your company’s work environment. Work Environment The top career concern of employees today involves balancing family and work demands — even above earning a competitive salary according to a research study commissioned by our company. Increasingly.Employee Retention It’s important to stay in touch with the candidate after the offer is accepted. Ask not 31 . Send relevant brochures about your company and employment forms.
Hire for the Long Term The way a company hires. Hiring for aptitude and then training for career advancement goes a long way toward building loyalty and increasing retention rates.Employee Retention only for improvements they would like to see but also practical ways of implementing these suggestions Publicizing Programs Accentuating out those aspects of your business that most Appeal to job candidates. Companies with worker-friendly management practices are at a distinct advantage when it comes to hiring qualified talent. 32 . you may have more flexibility than larger companies when it comes to offering nontraditional benefits. is kept to a minimum. as well as recruitment and training costs. Look for areas in which your company excels and emphasize them when you interview applicants. trains and rewards employees reveal a great deal about its values. For example. satisfying workplace where employee turnover. These programs help create a productive. if your firm is small. relaxed business attire or a faster track to career advancement Empowering the Employees Most people work harder and do a better job if they feel the company values their opinions. the management trusts them to be responsible and empower them to make their own decisions.
The estimate may be low. Where training fits in. employee turnover is an important consideration for managers and employers alike. enhances motivation.Employee Retention Significance of Training and Development Does training increase employee retention? IN MORE WAYS THAN ONE. In addition to financial considerations. the monetary cost of hiring a new worker is significantly high. and improves personnel cooperation. interdepartmental service. turnover takes its toll in other ways as well. and--most significantly--customer 33 . many employers believe that training boosts morale. Productivity. It lowers staff morale. It is estimated that the cost of replacing an employee could average as much as 1 year’s salary for that position. safety. A pharmaceutical company recently put the cost of a single employee turnover at 1.5 times the person’s annual salary. For starters.
The same holds true for women when the employers fail to provide training about sexual harassment. The following statements support the belief that training is. • Employees are trained to do things that are applicable only to jobs found in their own organizations.Employee Retention retention. as a result. for instance. indeed. • Effective. 34 . comprehensive training provides experiences that allow workers to realize success early on in their careers. improved employee retention. for example. might have difficulty finding a similar job elsewhere (unless that skill were in short supply. Marriott hotels found. resulting in increased morale and. skilled in a highly specialized technique in forensic pathology. Someone. • Inadequate training for multicultural staff results not only in hostility and increased turnover of minority groups but also in fewer applications from members of these groups. that effective training of its entry-level workers had a profound effect on keeping these employees • Lack of training to promote career development encourages ambitious employees to find new employers who will provide such educational opportunities. likely to improve worker retention. in which case the worker would be highly sought after by other employers). Note: The most successful training will be that which is given during the orientation of new employees since this is when workers are most receptive to learning new things. therefore.
Employee Retention • Training in participative management. for 35 . Case in point: Hospital A trains student nurses. Hospital B uses the money that it has saved by not supporting a training school to entice Hospital A graduates into joining B’s staff. • Many employers discover--unfortunately. turnover may increase for a short time since some employees thrive only in paternalistic organizations and therefore will be unwilling or unable to accept more responsibility. judging from the recruiting messages of the armed services. encouraging turnover. morale may plummet. and selfdirected teams produces significantly increased job satisfaction. this practice is actually encouraged. that when such programs are first introduced. In fact. however. too late--that they have trained their people for other employers. Bank managers are constantly complaining that they train their employees in computer operations.) Now lets look at the other side of the coin. empowerment. knowing full well they will leave as soon as they complete that training. since some people would argue that training can actually work against employers. • If training is involuntary or must be paid for by the trainee. often the competition. If training programs cause hardship. People who become members of semi-autonomous work teams are more resistant to turnover. only to lose them as soon as they become proficient. • Many people accept positions in organizations that provide high quality education or highly specialized training. This is especially true in the military. (Keep in mind.
Any of these instances spur workers to look for a new job.Employee Retention example. • A bigger question. given to the right employees. Technologists will surely become frustrated if they are taught things contrary to what they have learned in the laboratory. and reinforced by their managers back on the job can have a significantly beneficial effect on customer service. productivity. • Employees become upset when they believe that their training agenda is inappropriate or that the quality of the training sessions leaves much to be desired. Perhaps rather than pondering over whether training helps to retain employees. employee retention is once again threatened. 36 . at the right time. employees may not be able to synchronize their participation with personal obligations. safety. and morale. we should ask ourselves this question: “Does training improve service?” The answer is a resounding YES! The right kind of training. Hence. turnaround time. or if they are unable to apply what they were taught in the classroom to their work back at the bench. by being offered only after work hours or at another inconvenient time. by the light trainers.
Performance appraisal may be defined as a structured formal interaction between a subordinate & supervisor, that usually takes the form of a periodic interview (annual or semi - annual), in which the work performance of the subordinate is examined & discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement & skill development. In many organizations – but not all – appraisals results are used, either directly or in directly, to help determine reward outcomes. That is, he appraisal results are used to identify the better performing employees who should get the majority of available merit pay increase, bonuses & promotions.
From the employee view point the purpose of appraisal is four – fold : 1) Tell me what you want me to do 2) Tell me how well I have done it 3) Help me to improve my performance 4) Reward me for doing well
From the organizations point of view, one of the most important reasons for having a system of performance appraisal is to establish & uphold the principle of accountability
Before performance appraisal one must keep the following things in mind: Encourage
employees are likely to feel more satisfied with their appraisal result if they have a chance to talk freely & discuss their performance. It is also more likely that such employees will be better able to meet future performance goals.
Constructive Intention – It is very important that employees recognize that negative appraisal feedback is provided with a constructive intention, i.e. to help them overcome present difficulties & to improve their future performance. Employees will be less anxious about criticism, & more likely to find it useful,
Employee Retention when they believe that the appraiser’s intentions are helpful & constructive. Set Performance Goals – it has been shown in numerous studies that goal setting is an important element in employee motivation. Goals can stimulate employee effort, focus attention, increase persistence, & encourage employees to find new & better ways to work.
Appraiser Credibility – it is important that the appraiser be well informed & credible. Appraiser should feel comfortable with the techniques of appraisal & should be knowledgeable about the employee’s job & performance. When these conditions exist, employees are more likely to view the appraisal process as accurate & fair. They also express more acceptance of the appraiser’s feedback & a greater willingness to change.
Motivation, Satisfaction & Retention
Performance appraisal can have profound effect on levels of employee motivation & satisfaction. Performance appraisal provides employees with recognition for their work efforts it also offers opportunity to focus on work activities & goals, to identify & correct existing problems, & to encourage better future performance. Thus, the performance of the whole organization is enhanced. The power of social recognition as an incentive has been 39
Employee Retention long noted. In fact, there is evidence that human beings will even prefer negative recognition in preference of no recognition at all. If nothing else, the existence of an appraisal program indicates to an employee that the organization is genuinely interested in their individual performance & development. This alone can have a positive influence on the individual’s sense of worth, commitment & belonging. The strength & prevalence of this natural human desire for individual recognition should not be overlooked. Absenteeism & turnover rates in some organizations might be greatly reduced if more attention were paid to it. Regular performance appraisal, at least, is a good start
Compensation Management & Reward
Compensation considers why organizations pay people the way they how various pay strategies influence the success of organizations. Compensation management basically starts with job analysis, job descriptions, job evaluation, salary surveys, salary ranges, and customized performance evaluations Compensation could be briefly classified into categories namely Monetary compensations Non monetary compensations Benefits are any form of compensation that aren’t part of an employees basic pay and aren’t tied directly to job requirements or performance levels. Specific employee benefits today take a multitude 40
The former had in fact brought the organization from its inception to the current level. Case Study Every month Sandeep Mahajan and Ramesh Boridkar eagerly wait for one thing — the pay cheque. Six months later the executive started raising the very issue of his perceived worth and claimed that he should be drawing Rs 50 Iakh. child.Employee Retention of forms — from the basics that you find in every benefits package (Social Security. We thought we had done a pretty good job because the pay was equivalent to that of the managing director. The pay has become a symbol of someone’s worth in the organization vis-a-vis the of the work being performed by the person.or elder-care assistance and in-house concierge services. Sandeep is the director and Ramesh the office boy in the same company. the competition for talent within the industry and the strategic business plan. workers’ compensation and unemployment insurance) to highly specialized offerings such as tuition reimbursement. Precisely which benefits the company offers and what portion of its payroll expense goes to pay for these services will depend on the company’s financial health. After pro deliberations we offered Rs 40 lakh per annum. Figuring out how much any one is really worth has been never easy. 41 . Like them millions await their pay cheques every month. The managing director and other directors had never had any salary hike for the past three years. Recently we hired a very senior executive for an IT client.
Employee Retention The new executive had agreed on performance target of $2 million and failed to deliver. Yet. the quantum was so small it failed to register any impact on the performance. must be on the same salary irrespective of contributions. The salary has been and will continue to represent the positional level in the organization. Even in companies. he argued that his compensation was unfair and was not reflecting his worth. The meaning of pay has to change just like the economic and social orders 42 . or should a good portion of the pay come from performance and contribution? The traditional pay scale models are not viable any more. or the position or hierarchy to drive the pay. which attempted merit pay. but it also assumes that people occupying similar positions in organizations. it is time for organizations to re-engineer their salary system. Employees expect not a jump but a big leap in pay but would not agree or even discuss how much they performance would go up in the elevated position. or having similar experience or skills. based on supply and demand levels (We have witnessed pay rates going up over $100 per hour during the Y2K crunch). The issue therefore is—should we allow the market to dictate pay. The traditional Pay Cheque Traditional pay scales in companies reflect job characteristics like importance of the work. The HR community also spends considerable time in collecting market and industry data. decision/responsibility level. The market ultimately decides pay levels. The pay levels for positions go up or down. Pay hikes are similarly linked to promotions. Hence.
but which performance? That of the individual or the organization? Individual performance as a determinant of pay increase has been identified as the most important internal equity. Quite often this contradicts the view that the organization’s performance s team work. Companies are working on the theory of doing more with less.Employee Retention have undergone a change. IT organizations are already on the road to change the meaning of compensation. status to contribution. and then do annual or semiannual raises based on performance (this is still conservative in my view). That is remuneration according to the expected level of contribution. Pay the base salary as per the job ranks. The new order Having said all the above it is worthwhile to look at merit pay system also. Many would agree that pay raises should come only through performance. Companies must then 43 . “get paid only if there s contribution”. The new mantra must be. This will have some revolutionary consequences. The guaranteed pay syndrome must now end. The basis to determine pay is gradually shifting from position to performance. The route therefore is not far away from performance and pay cheque linkage. Comparable worth is a complicated issue and hence very many organizations are defining the meaning of worth itself. Merit pay is the first logical step to link performance to pay. It still protects the traditional hierarchy based system. They are driven hard to conserve precious human as well as financial capital. as pay raises here come only for individual performance.
44 . As the compensation mode moves away from status or position price to contribution and performance. quick problem solving. There is a universal agreement among lower level people that managers receive unfairly excessive amounts. Manage overall labour costs. the work culture also undergoes change. Successful introduction will depend on striking balance between the two. In conclusion we can say that there is considerable merit in linking compensation to corporate and individual performance. Attach meaningful monetary values to posts in the organization ensuring that the organization’s compensation is in line with market forces (this maybe cy means of traditional job evaluation or other methods such as skill or competency based pay). risk taking. Thus aspects to be considered while formulating the compensation plan Develop compensation strategies and policies in line with legislation and the organization’s business strategy. The question of getting more by paying less will be answered if there is a system of thin guaranteed pay and fat variable pay that depends on the company’s performance. Develop appropriate compensation systems for the organization. the status as basis for pay also must vanish soon. Work cultures are no more authoritarian and encourage constant innovation.Employee Retention lean towards systems wherein the better performers at least will see the linkage of raises to their contributions. The fixed wage cost thus can be brought down. Evidence shows that there is positive association between organization performance and compensation.
As the dynamics of the labor market shift. Short-term variable pay is compensation that s paid for the result of work measured in increments of a year or less. The operative word here is everything! Yet this definition is inconsistent with how reward plan design is generally practiced.Employee Retention Reward = Retention Recruiting and retaining the staff who can deliver the strategic objectives of an organization are fundamental responsibilities of any manager. Building on base cash is any short-term variable pay. organizations offer employees rewards in various forms that. it is everything the employee takes away from his or her relationship with an employer.cash rewards take on greater significance for several reasons. 45 . From an employee’s perspective. they will not join the organization if the pay and benefits package is not attractive. Non-cash Rewards In addition to the elements of Total Remuneration.” This term includes all types of rewards indirect as well direct and intrinsic as well as extrinsic. Whilst selecting individuals who match the ethos and culture is crucial. Defining Total Rewards and a Rewards Strategy Designing a reward strategy begins with the broadest view and understanding of the concept of “Total Rewards. while measurable. Total Rewards TR begins with base cash the fixed and recurring wage. these other non. may or may not have a dollar value. very few companies take such a holistic view. it typically varies from one period to the next.
and managing reward is doing the things that needs to done to implement the reward strategy. ‘It costs money to keep staff. but then recruitment can cost up to 150 per cent of the advertised post’s salary and failing to deal with staff retention can potentially affect financial performance It is not a simple issue. but if relationship that matter most to today’s workforce. The fact is. Assessing the companies’ assets all too often. Setting salary benefits packages to attract and retain staff is all about managing reward. Good remuneration packages benefits and staff perks. or employer/employee opportunity. support.’ Stopping employees from leaving begins before they are recruited and continues even after they have left. the difficulty arises in knowing how to effectively implement and assess it. the power of the individual a company is neglected or underrated. or other forms of reward. advice and guidance. just common sense. ‘The reward strategy is the means of using pay and. However. but what about the package the pay and benefits? If the company relies on their team’s knowledge and talents success. People do not leave jobs for money they leave jobs for 46 . have they assessed the impact their reward system might have on their employees? After all.Employee Retention Non cash rewards are the components of the employment compact. the companies don’t want their Einstein s running off to their competitors! It doesn’t take a genius to determine the fundamentals for retaining key staff. without a team of individuals that are fighting with the company and for the company the company going to be in five years time? The company may have given them training. to assist the organization to achieve its corporate goals.
type and nature of the organization. benefits. qualifications. graduates. Research shows that paying extortionate rates to attract and retain talent is not necessarily the answer. and form the basis for career planning.IT sectors. and should provide the flexibility to cope with market and skills pressures. older workers. women and specialist staff.0 can be seen between salary levels for similar positions between IT and non . Getting the basic pay structure in place is of prior importance. Service. First of all. which type of job evaluation are the companies going to use to structure their pay package? Analytical — where they create the job first and then put the people in place? Nonanalytical — where the whole job evaluation is based on a ranking scheme? Or using pay comparisons? ‘The salary structure should depend on the size. Typical staff rewards cover pay. 47 . Salary levels have been taken to unrealistic level. Compensation becomes the weak link during uncertainty or downturns.’ In order to maintain a happy working environment. it is important for employers to identify what’s important to the people that make up its workforce.Employee Retention the company wants to keep their best staff then they need to take action. parents.5 : 1. training and the working environment. The pay ranges can then be set in relation to age. For example. Today the ratio of 1. This has resulted in low withstanding capacity of companies. performance and marketability. It should also have the scope to reward high achievers and solid performers.
reviews. are interest in the job. to learn new skills. On a list of the top eight reasons why people leave jobs. ask for feedback in appraisals. If the company doesn’t know. why not ask their staff. which in turn is directly linked to rewards and recognition.Employee Retention Other motivating factors. It is by broadly defining Total Rewards to include other non-cash rewards that employers truly distinguish themselves in the labor 48 . People seek the opportunity to contribute. so it cannot different one company’s employment compact from another. social / family needs. Cash is a commodity. Customer service is a proven byproduct o employee satisfaction. it is the intangibles that distinguish. which attract and retain staff. long term association and specific superior performance awards. someone will always pay more. long term security. At the same time. chief executive officers rank customer satisfaction and employee retention as the top two measurements of value creation. education / learning of employee and family. or in exit interviews. Besides. and they want to feel their contribution is appreciated. pay rants at number eight. Make the staff feel valued — show them that their input counts now — rather than leaving it too late!’ The top three reason people leave jobs all involve opportunities the opportunity to grow and develop. asset building. when it comes to money. medical needs. Send a survey around the office. In addition. and to be in an environment where they are appreciated. prospects in the organization and working conditions. non cash rewards are the only real way to differentiate your employment offerings. Is it a ‘nice place to work? What do the employees like about it? What’s lacking Benefits could be categorized into salary (fixed and variable).
’ Exit Interviews In traditional internal face-to-face exit interviews. But what matters to employees is the total package the Total Rewards. If you get your strategy correct. ‘Spend the money. and clients could begin to doubt the ability of the company. “better pay” and “better job opportunities” are often the main reasons cited for leaving the organization However. Organizations spend a lot of time measuring Total Remuneration. It is a matter of focusing the employment compact on the rewards that matter to the workforce you are trying to create. not on the cash elements traditionally measured by companies. benefits. Although some staff will eventually move on.pay.Employee Retention market from the competition and earn employee commitment. relying on the information gathered 49 . invest in your staff. adept team. continual training and investment — can provide an excellent grounding for a successful. you’ll be rewarded with more than ten times the amount of money invested. it is important to identify the needs of the individual — what benefits are attractive and how will these produce results? A strategic reward system . It is never advisable to wait for the inevitable to come along — losing staff could have repercussions on the business.
then. in this type of interview situation. including: Gathering and collating the data in a structured manner Aggregating the results for the organization as a whole Analyzing the findings to identify consistent trends. not necessarily executed consistently and both less reliable and valid than using surveys to collect the data. employees are often reluctant to identify the true causes for their decision to resign and tend to provide more “socially acceptable” reasons for leaving. including being time-consuming. The traditional method of having the employee’s supervisor or a company HR representative conduct an in-person interview on an employee’s final day is fraught with difficulties and problems. 50 . It appears. that many organizations are failing to recognize the value of a systematic approach to collecting information from exiting employees.Employee Retention in this way can be misleading since. an exit interview is simply a means of determining the reasons why a departing employee has decided to leave an organization. In the most straightforward terms. patterns and themes Using the results to determine and implement strategies to increase retention and reduce turnover. difficult to tabulate. This issue of pay emphasizes the need to be sensitive to both “push” and “pull” factors that may have influenced the employee’s decision.
including: Opportunity to learn new skills/develop new talents Corporate commitment to training and development 51 . including: Clarity and strength of vision and mission Management style Overall perception of leadership Level of respect and support received. Corporate leadership. It is this information that is essential to highlighting the areas of perceived deficiency in the organization’s working environment and can then be used to plan effective retention strategies and actions. including: Perceived opportunity for advancement Presence and/or clarity of development plan. organizational and personal variables affecting the decision to leave are likely to be uncovered. The main reasons for leaving can be categorized into five primary “themes”… Career opportunities.Employee Retention With the use of an exit survey system that effectively canvasses the opinions and attitudes of departing employees. a wide range of operational. Enjoyment of the work. Availability of training. including: How well work utilizes skills “Fit” with job Work/life balance.
These reasons for leaving include both the longer. From this analysis. it is clear that organizations should seriously consider what strategies and policies are in place to reduce turnover and retain valuable employees. the organization has at least some influence over the employee’s decision to voluntarily give up a job. More than 50% of the reasons for leaving are within the control of both the employer and the employee. In fact. Compensation/rewards. including: Base/variable pay Benefits Recognition of contributions Communication regarding performance. in many cases.Employee Retention Keeping up with latest technology.term concerns and problems that can lead to a gradual decrease in satisfaction as well as the more immediate workoriented “shocks” that can prompt previously-satisfied employees to rethink their commitment to the organization and. leave their jobs. Thus it should be recognized that. it is imperative for organizations to determine how best to intervene and thereby prevent at least some degree of turnover. when all reasons for leaving are categorized in terms of (1) The employer’s impact on the decision to stay or go and (2) The employee’s own level of control over the decision. Since a large proportion of turnover appears to be avoidable. ultimately. 52 .
Monitored — setting targets for reduction in turnover through planned strategies helps to ensure that the investment made in exit surveys is to its maximum use.Employee Retention The value of exit surveys A structured system of exit surveys can play an integral role in a well – planned programme of employee satisfaction and work climate research. Independent — minimizing the discomfort in revealing the true reasons for leaving improves the reliability of the results. Some principles for planning an exit survey system include being: Universal — interviewing all voluntary departures provides a more complete understanding of turnover. Available — encouraging centralized access to the findings increases the likelihood of taking action. Comprehensive — including feedback on the work environment in addition to reasons for leaving increases usefulness in determining strategies to reduce turnover. Standardized — using a core set of consistent questions ensures comparability throughout the organization and across time. 53 .
What according to you attracts job seekers to your company? a) What kind of induction program does the company design for the new recruit? b) Duration of the program c) Do you think that the employees benefit from the induction program? If yes. According to you. to what extent? 3. Is succession planning done for the employees if yes at what level? 54 .Employee Retention Questionnaire Name of the organization: Name of the employee: Designation 1. which sources are reliable for recruiting the right candidate? 2.
Does work culture of the company help in boosting the morale of the employees? a) How do you define the culture of your organization? 5.Employee Retention 4. How often management development programs organized for managers? 55 . What efforts are taken to ensure that the employees have a good working environment? 6. How are the training needs identified? 10. How does the result of performance appraisal help the employees & the organization? 8. How often are performance appraisals conducted? i) 3 months ii) 6 months iii) Annually iv) other [pls specify] 7. What steps are taken by the company in order to motivate the employees who have reached at a stagnation level? 9.
Employee Retention 11. enrichment. What are the two challenges faced by the HR department & how can it be overcome? 14. enhancement techniques adopted in your organization? If yes. What steps are taken for retaining productive & efficient work force? 15. how does it benefit the employees & the organization? 13. far? . Are job rotation. What retention strategies are adopted by the company so 56 . According to you how can exit interviews prove to be a double edged weapon for developing retention strategies? 16. On what basis are the pay packages revised? 12.
vision and other values of the company. and Airtel. As very much obvious the companies interviewed are quite reputed so it’s the brand name that attracts the job seekers towards the company. followed by feedback. creative thinking. Convergys. investment of time. The companies whose survey analyses are presented are Ceat. Attempts are being made to promote employees vertically and laterally. Basically during recruitment itself the skills needed are tested and even through performance appraisal system is undertaken to gauge soft skills. walk-in interviews.Employee Retention Analysis of survey Following is the analysis of the survey conducted by me of various companies. The companies basically underwent the same recruitment’s processes such as ads in newspaper. good housing and schooling facilities. working condition is the best. interpersonal skills. email etc. Induction program generally include proper orientation and top management takes part in formal induction of employee and convey the mission. L&T infotech. money and energy in continuous training. And other reasons were scope for multifunctional experience under one roof. 57 . And these skills are basically working in teams. Major information has been acquired by personally visiting the companies and some information is compiled with the material acquired through internet. Job prospects offered are mostly complete orientation of the organization in all functional facilities. entrepreneurial skills etc. campus interviews. employee referrals. Below is the brief analysis of the survey. approved manpower agencies.
i. Whereas at Ceat it is not considered as a decisional factor they believe more on non-monetary benefits. informality. respect for people. And exit interviews play a vital role in reducing attrition rates. even best performers reward schemes for dealer’s e. no obstruction during delivering error free service. build employee capability Attrition rate is around 15% in L&T Infotech. employee communication.g. fun.Employee Retention The main requirements for prevalence of healthy work culture are spirit of teamwork.e. foreign trip. is by being transparent in the various policies and strategies. ease at work. informal employee feedback. open. especially since new employees are comfortable with computers. by seeing to it that that the employees personal goals is matched to that the expectation of the organization. work life balance. But the major problem faced is senior people feel insecure with young entrants. Developing commitment. and the steps taken to achieve the above stated aspects are to empower employee to take decision and suggestions are encouraged. Well here Convergys said it is one of the most important retention strategies. thank you note etc. The next question was about the importance attached to compensation benefits. Building trust in their minds for the company could bring about commitment from employees. rewards for achieving above expectation results. 18% in Airtel and around 1% in Ceat and quite normal in other companies. empowerment with accountability and entrepreneurship are the key ingredients. Rewards and recognition schemes undertaken are like employee of the month. Some of the unique HR policies followed by these companies are as follows: 58 . passion and a positive attitude. Informal and performance enabling innovativeness.
the people who are in the midst of the “Real action” on the shop floor (if I may use that word). Follow open door policy Managing IT Retention and Turnover The Indian software industry is poised for stupendous growth in the coming years. Software is a wealth and job creating industry. HR reach out. 3. a high intellectual capital lends competitive advantage to a firm. The related issues are varied indeed: recruitment of world-class workforce and their retention. yes reference is to the software programmers who make those arcane lines of code really work. Customer contact program 4. it has really not being sounding as a sweet music to the real soldiers of this revolution. Though this might sound like great news for the Industry stalwarts and the IT Industry as a whole. showing a nearly 50% compounded annual growth rate over the recent years. technological obsolescence and employee turnover. grown to US $ 1 trillion. With a global explosion in market opportunities in the IT sector. Being knowledge — based industry. Recognition of higher studies (part time) and encouraging company sponsored management programs.Employee Retention 1. employing millions of professionals worldwide. the shortage of manpower both in numbers and skills is a prime challenge for HR professionals. which has in just a few years. The Indian software industry has burgeoned. 2. Intellectual capital comprises human capital and intellectual assets — the latter being any created bit of knowledge or expertise. Continues identification of training needs (functional as well as soft skills) and organizing training in a regular basis. compensation and career planning. This article presents some of the 59 .
the “Human Resource”. for many of them just barely. The more motivated they are closer the goal. in the range of 15% in the past year. An ideal turnover level. these guys are no zombies who are paid for sweating on the assembly lines instead these are the “Knowledge Workers”. have moved into the 20% range for many organizations.R. These factors have compelled the IT companies to give priority-one attention to its greatest resource. more stable Revenue Models etc. But. Companies need to make far more investments today in producing effective leaders at all levels. and their employers cannot afford to turn a deaf ear to them. leadership is no more “Motivational”. While the Indian IT industry has been blessed with superlative leadership at the very top (N. it is a “Hygiene Factor” today. talking about the markets. Ashank Desai). more qualified. is 60 . They have a voice. As different consultants occupy themselves painting a rosy picture for this industry in the coming years. The turnover rates. Azim Premji. Another interesting aspect that we need to identify is that these people work in teams and as it is. this leadership does not always percolates down the line. every successful team needs a successful leader. more human and more expressive. technologies. estimated by many at about 5%. Here employee retention and motivation becomes a critical component of this humongous challenge. the industry leaders are busy chalking out business strategies.Narayanmurthy. Top performers are those companies that have managed to hold their turnover below 10%. They need leaders at every level.Employee Retention findings of our recent research on the HR challenges posed by the IT sector. we often forget that at the core is the software professionals who are ultimately going to make this possible.
the next salary survey released or the next headhunter calls. to focus on a more fundamental strategy of employee development. we have seen many organizations recognize that they need to move beyond the concept of traditional compensation. Nonetheless. of course. Over the past year. that may only stem a mass exodus for a period of time. This shift from tactics to strategy is a critical step in recognizing how to 61 . We need to explore areas where organizations may in fact spend less and accomplish more. like most compensation based retention tactics. to examine the nature of IT work and the work environment. development and advancement opportunities to managing retention and turnover. Those companies that do achieve such levels in the short term may get there by using various short term retention tactics. for both the organization and the employee. in order to retain top IT talent. If this is a critical time on a project. They need to explore the importance of training. Today. Companies need to think beyond compensation. such as bonus and incentive plans.Employee Retention simply unattainable for most organizations. merely a short-term fix. They need to examine in detail the issues related to employee retention. Let us examine the tactics being used to “treat” the IT retention problem in organizations today and raise some strategic options for organizations to consider in developing a true staffing strategy. We also have to look at the impact of work-family life balance. One that lasts until the bonus is paid. it is. an employee’s life outside the workplace can have a significant impact on their value to the organization. it can be well worth it.
and a challenging environment ranked higher than competitive pay structures as effective retention practices. Money was a prime motivator for ‘starters’ but for those into their third or fourth jobs. showed that while the professional gave importance to personal and cultural job-fit. longservice a and stock options. HR managers believed that the key to retention was salary and career satisfaction. Our own recent survey of 1028 software professionals from 14 Indian software companies. and are setting up Manpower Allocation Cells (MAC) to assign the right project to the right person’. In fact. apart from performance-based bonuses.Employee Retention approach the management of the most costly resource in IT departments. offering ‘the best salaries in industry’ is the minimum every company is doing. Many organizations frequently conduct employee satisfaction and organization climate surveys. Monetarily. some are even helping employees with 62 . the use of new technologies. People—a Gartner group company specializing in management of human capital in IT organizations—has observed that the average tenure for an IT professional is less than three years. A Tactical View of Retention and Turnover Retention and motivation of personnel are major HR concerns today. the support of learning and training. their valueaddition to the organization was more important. Further.
Development and Advancement Communication Management quality 63 . employees and employee retention and turnover are managed tactically. A wide variety of tactics are employed. each of which is thought to have a positive effect on employee retention. For the most part these tactics are employed in an evolutionary and ad hoc way in response to issues that arise inside the IT organization. Whether they emerge from a systematic review process or as a by product of some other issue. Some emerge as part of a planned process to deal with staffing issues. others are developed in response to a problem or issue faced by one or more employees. The tactical approaches can be organized into eight major areas: Compensation and benefits Reward and recognition The work environment Lifestyle support and work arrangements (very important for the female employee) Flexibility and autonomy Training. These tactics or initiatives are reactive in nature.Employee Retention their personal and domestic responsibilities to satisfy & motivate their workforce! For most IT organizations. its intention is merely to solve an existing issue and not to anticipate the larger issues and address them. their costs are not well understood and their specific impact on retention even less so. they are seldom formulated into an overall strategy.
Employee Retention For each of these areas. By its very nature the software industry is young. and they significantly differ in their upbringing. more so in an IT enterprise.e. Yet. multilingual. Another challenge that faces the Indian IT companies is that people in India are culturally diverse. They make a bottom line assessment of the critical value of each area (i. they come together to achieve a common goal. all of which make them unique. let us try to understand the demographics of a typical IT organization Above 40 A majority of software professional belongs to the age group of 21-30. constituting almost 74%. The factors that motivate or at sometimes demotivate can be clustered under following headings. People differ in their needs. likes and dislikes. The IT companies have as many different people as their fingerprints. Company Driven Company’s Brand Image Latest technologies to work on 64 . 1. expectations and preferences. Human resources are considered to be the most complex and challenging among all available resources in an enterprise. Thus. how important is each component for addressing the employee issue) and then explore the individual tactics. aspirations. these are. highlighting some key details in each area. a general overview of the impact on retention and turnover is provided. The employees here have certain unique needs and aspirations. in organizations.
Value Driven Fair/Impartial treatment Timely rewards/recognition Regular feedback Respect for the individual Empowerment to take decisions 5.Employee Retention Company’s bright future Company’s ambitious growth plan The Learning experience 2. Relationship/Behavior Driven Dynamic Leadership Team environment Well defined roles! expectations Sound interpersonal relationships 4. Process Driven Participate management culture Fast careers growth Enhancement of competencies Transparent and effective communication 3. Sustenance Driven Location of work Compensation Functional infrastructure Onsite Opportunities 65 .
instead they have a cumulative impact on the employees’ performance at the work place. coordinates teams staff. design specifications. The employees can be further classified in different levels as follows: Level 5 Level 4 Level 3 Level 2 Level 1 Level 1: Associate. Depending upon the level of employee in terms of his designation. Entry Level. Level 2: Intermediate Level. Level 3: Senior Fully Experienced Level Develops and applies advanced methods to create. design tasks. age the weight he gives to these factors varies. design. Level 4: Consultant Conducts. develops routine and utility Programs. recommends technical correction. organizing and conducting different phases of software projects. experience. 66 . Uses experience and technical competence for planning. plans and directs major projects. Primarily works on project tasks.Employee Retention HR policies These factors do not work in isolation. based on performance requirement. and develop complex software. or phases of projects.
Software Engineering! Development. Setting a target level of turnover Managing towards a low target level of turnover can be accomplished through a variety of approaches by combining different tactics. People issues should be resolved with the same importance as the IT strategy considers architectural issues related to hardware and software and their fit to their business needs. They need to manage for turnover by restructuring work and employment relationships to taking into account persistent high levels of turnover. Three influence points that can be used as the core of such a strategy are as follows: A Compensation based strategy A Career based strategy 67 . projects. Reviews. Organizations need to manage the level of turnover toward some desired target. proposals Developing a Strategic Orientation People Management cannot be treated as a one off initiative but it should be. It is imperative that IT companies review a large number of tactics and take their analysis up to a somewhat higher level and formulate a strategic position around their people management strategies.Employee Retention Level 5: Manager. In short companies face two strategic directions they might pursue in light of the IT labor shortage and the inevitable turnover that it engenders. It is must that the software companies should have an IT staffing strategy that provides overall guidance in managing the people in any organization. evaluates and approves software development specifications.
turnover is a particularly troubling problem costing organizations millions of dollars per year.7 years 68 . This article explores the cost or turnover to a call center. In the call center operation.3 years on average (compared to 1.5 years just 15 years ago). workers aged 20-24 stay with an organization only 1.Employee Retention A work environment strategy Of course these factors can also be combined in various ways to develop a unique strategic mix that best fits with your organization. the reasons why turnover happens. Employee Retention Problems Faced By Call Centers One of the most difficult challenges faced by call center management too how to retain qualified workers. In all types of jobs.line supervisors can do to improve Turnover Rate: Turnover is at an all-time high. and what front. and workers aged 25-34 stay 2. where over 70% of costs are related to staffing.
69 . Both are costly to the call center organization. measurable costs. There are two important numbers to understand in this turnover calculation. Turnover Costs There are many costs associated with call center staff turnover. and other promotions to attract qualified staff. Hiring Costs: The cost of the human resource department to process applications and screen employees. One is the statistical rate of turnover and the other is the actual cost of turnover to the call center and the organization as a whole. direct. job fairs. Both numbers should be calculated and tracked on a regular basis for trending purposes and business case justification for programs to assist with retention.Employee Retention The cost of even low levels of turnover is substantial and should be tracked carefully in planning a retention strategy. as well as call center staff time interview candidates. Some are obvious. while others are indirect costs organization. This turnover rate should then be reviewed to analyze internal (employees leaving for other positions within the company) versus external (employees leaving the organization) turnover. but obviously some benefits to the organization if qualified people are leaving to fill other roles within the company. The measurable costs of turnover generally fall into the following categories: Recruiting Costs: The cost of print or other advertising.
and student training materials. why they stay) so that problems in the center’s control can be addressed. both for initial and ongoing training. One of call center management’s responsibilities is to consistently assess the reasons why people leave the center (and conversely. The main reasons for call center turnover fall into these four categories: 1. Some of these reasons are under the control of the call center and are “fixable” while some must be chalked up as simply cost of doing business.Employee Retention Training Costs: The cost of training facilities. Call centers should do periodic compensation bench marking studies to ensure their wages are commensurate with the wages or nearby centers for the same type of work. 70 . Compensation: Inadequate compensation is a reason often sited in agents exit interviews. Supervision Costs: The cost of additional supervisory time to assist new staff in their early learning stages. particularly in highly competitive areas. trainer time. This will be a common factor for call centers located in highly saturated call center labor markets such as Phoenix or Dallas where competition for qualified call center staff is high. Overtime Costs: The cost of paying overtime to existing staff to cover call workload during understaffed periods. Unproductive Paid Time: The cost of wages during the initial training period when staff are not yet available to process calls. Reasons for Turnover There are many reasons why turnover in the call center industry.
3. 71 . Some organizations have multilevel job ladders with numerous levels of agent positions and multiple career paths to many areas. More effort during the selection phase will pay for itself many times over in improving retention. This type of turnover can be reduced significantly by defining and advertising the job accurately and doing proper screening and assessment on the front end to make sure the job is a good choice for the candidate and vice versa.Employee Retention 2. Limited Job/Career Opportunities: Many individuals leave center due to limited possibilities for career growth or opportunities for advancement. 27% of people had left one call center job and were looking for another cited lack of promotional opportunities as their primary reason to leave. and inflexible work schedules. repetitive tasks. constant monitoring. In a survey conducted by callcentercareers. others are severely limited in growth potential and see turnover as a result. Part of this screening process will assess whether or not the candidate is likely to be happy within the unique working condition found in most call centers: solo work. confined space. Re-defining levels and looking for career advancement opportunities within the call center should be evaluated often. Unfortunately. Job Fit: Many times the reason an individual leaves the center is simply due to a poor job fit.com.
conceptualize. Supervisory Problems: Assuming compensation is in a reasonable range and there is at east a reasonable affinity for call center work. a supervisor can be either the greatest contributor to staff retention or the primary cause of turnover. the adage ‘people don’t leave companies. in terms of its acquisition. the main reason agents leave the call center is due to ineffective supervision. especially against erratic attrition trends and cutthroat competition no longer restricted to local or regional boundaries.Employee Retention 4. innovate. 72 . Today HR is selected to comprehend. In the majority of cases. Retention Stratagem The new age economy. development and retention has placed a heavy demand on today’s HR professional. they leave leaders” is certainly true in the call center environment. utilization. With a dynamically changing and volatile demand-supply equation. with its attendant paradigm shifts in relation to the human capital. a need for strategizing and putting in place a robust mechanism for attracting and retaining top talent becomes vital for the company’s very survival and growth. implement and sustain relevant strategies and contribute effectively towards giving the corporation its winning edge. For the most part.
does supply really outstrip demand? Supply of what and demand of what? What kind of people get the pink slip and whom do the companies ring fence? In any organization the employees may be broadly classified into four broad categories in terms of their performance and potential. They prefer to experiment and explore new opportunities. In the current scenario. are materially focused and have higher propensity to switch jobs. are high risk takers with higher aspirations and expectations and generally have a totally different mind-set about job and careers.Employee Retention The new age workforce comprises mostly of knowledge workers. 73 . who are techno – savvy aware of market realities.
but contribute immensely to the company’s overall performance. This constitutes about one fifth of the total human capital at our disposal and these people obviously qualify to be the first candidates for the pink slip. We could call this as the ‘talent’ segment. whose performance falls below their potential. recruitment and needs for downsizing must also be considered in conjunction. and potential compulsions. Retention strategies have to be viewed holistically against the total systemic framework of talent management that encompasses the ‘talent the ‘corporation’ and the ‘environment’. other important considerations being. We’ve got to protect this group from the pull of all non-retentive forces and that needs effective retention strategies that have to be kicked into high gear. As understanding of the inherent considerations of an individual who wishes to join a company and continue to stay. The other two segments comprise of the solid pro’s’ and the stars’ who are at the higher end of the performance continuum. This is the segment we do not want to lose. The former may be relatively lower in their potential as compared with the latter. the challenges of the job and attractiveness of the 74 . the pay package and other pecuniary benefits. Attrition and retention should be seen as reciprocal phenomena. the class and quality of people that work in the company. would help.Employee Retention There are people who are woefully inadequate in both dimensions. who we may call ‘strugglers’ and there are the ‘underperformers’. which push him away. The company’s brand image crowns the list of the priorities for the job seeker. which have an inverse relationship with each other.
mergers and acquisitions etc. Putting in place an effective sensing mechanism to gauge comfort. case studies and a multitude of trend analyses based on hard attrition data. mission. philosophy. to take up higher studies or certain private compulsions. one-to-one sessions.Employee Retention position & designation. organization climate audits. its brand equity. he would be exposed to. could be instrumental in taking decisions to leave. culture. ex-employee interviews. need for new competencies. From the company’s perspective. deeper and diverse job expectations. grape vines. the success depends on collection and collation of unbiased responses. cataloguing 75 . Many such instruments have evolved over the years and include employee satisfaction surveys.related attributes that impact employee retention include high demand on performance. goal & role clarity. movements. whether used singly or in combination. career offerings and growth prospects. values and ecology have a direct bearing on talent attraction and retention. need for re-skilling and re-deployment. Whatever may be the instrument. marginalization. power politics. contentment and commitment levels becomes a pre-requisite to designing and implementing any worthwhile retention strategy. change of boss. exit interviews. the opportunities for career growth and professional development and the kind of technology. Other factors could be to explore better prospects elsewhere. open forums. policies & processes and organizational communication. vision. informal social interactions. to start one’s own venture. Other company . broader. Anxieties and apprehensions arising from restructuring. change of tasks and responsibilities. Dissatisfaction in any of these aspects causes severe cracks to appear in the bonding.
unexciting and drab jobs. status. challenging work. control. congenial conditions. induction placement. in addition. While on the one hand. which in fact include sourcing. In order to appreciate the push and pull effect on the individual in the context of attrition and retention a qualitative force field listing may be helpful. adopting & providing effective the opportunities of for self development & promotional avenues. recognition etc would exert a positive influence on the subject talent. unjust discrimination. transparency. staffing and development strategies like improving the pay structures & level on part with those of similar organizations. compliance. working selection. power to control etc. maintaining sound industrial & human relations.Employee Retention of direct and proximate clues. credibility. appreciation. responsiveness and creative policies on compensation. achievement. knee-jerk changes. A robust sourcing strategy is crucial to the exercise since the 76 . lure of lucre and poaching would be debilitating. on the other hand. autonomy. The retention strategies should be designed such that the retentive forces are maximized and the debilitating forces minimized. techniques providing recruitment. unrealistic deadlines. security. Retention strategies should not be orchestrated in isolation but must form part of the overall strategies for strengthening the pull on the talent. a compelling brand image. creating the facilities & environment to satisfy he employee’s needs for pride. empowerment. their effective analysis and drawing sound inferences. recognition. an enduring culture and an environment that is trusting. rigid power structure. astute leadership within the organization. caring and nurturing.
there is a significant gap between HR managers’ perception of why employees change jobs and the real reasons as cited by the employees themselves. 77 .Employee Retention type of people one selects should not only fit into the job in terms of skill set but should match the company culture in terms of attitude. An effective selection process ensures the entry of the right kind of people into the organization. 1) Employees change job for a variety of reasons According to a research paper by an IIT . with the desired loyalty and sense of belonging that goes a long way in restricting attrition in the long run. personality and commitment. Conclusion Critical human resource acts that need to be introduced and altered for effective management of employees turn over ratio.Mumbai professor.
growth opportunity. 3) Employee’s first days are critical for retention success Studies have shown that an employee’s experiences during his or her first few weeks on a new job are critical in the employee’s later decision whether to stay or leave. the work ethic of colleagues and communication from upper management are all formed during this early time period 78 .Employee Retention The paper’s research findings show that people leave for different reasons depending on the stage in their career. Employers should also avoid presenting too rosy a picture of the company without including a realistic look at the job and the work requirements 2) Perks that work Job satisfaction may be at an all time low but not for many companies that have found a way to successfully incorporate perks into their workplace culture. to work with new technology and to move from small to large companies. While some experts stress that perks are less important than interesting & challenging work organizations finding that benefits do make a difference in employee retention. the workload. For example employees new to the workforce tend to leave for more money. One solution presented is for companies to be careful in their hiring & selection process to find employees with the ‘right’ cultural fit with the company. Lasting impressions about the company’s standards. More senior level employees leave when the work is not challenging and when they are unhappy with the company vision.
To help the new employee feel welcome during the first week or more assign a friend who can meet the employee for breaks and lunch and answer any questions that one might hesitate to ask the boss.place fresh flowers on the new employee’s desk. The new employee will have lots of questions buzzing around in his mind as his first day approaches. c) Assign a friend.Employee Retention The following are some tips to ensure that new employees get off to a good start with your company or organization: a) Anticipate the first day. Questions might include things like -What is the dress code? -Where should you park? -Where do workers eat lunch? b) Provide a warm welcome. 79 . This can be someone assigned to greet the new employee or a friendly person whom the new employee met during interview process. The new employee should be welcomed on her first day by a friendly face. Remind staff to say hello and if you want to go all out . Anticipate those questions and put the answers in a letter or handout for each employee.
e) Teach the job. If advancement opportunities are available. g) Provide hope for the future. They say that when an employee is leaving it is the best time to get honest information. Make sure files and equipment are available if necessary & consider providing a colleague tutor who can assist with learning.Employee Retention d) Provide a schedule. You can take steps to minimize this risk by making sure each employee gets a great orientation to the company. During the first week. f) Touch base. Each employee represents a significant investment that is lost if the employee leaves prematurely. explain how the process works and the steps for growth & training. Explain the organizational structure to the new employee & let him see how his job fits in with the company’s mission. be sure to check in daily with the new employee to find out how things are going. The employee at that point has nothing 80 . Be prepared with training to help the new employee successfully learn the specifics of the job. List tasks and/or meetings that the new employee will be working on and attending during his or her first few weeks. Employee retention is important even in an employer’s market where workers are plentiful. 3) Effectiveness of Exit Interviews Many organizations use exit interviews to find out why employees are departing. This should continue at least weekly for the first month or two.
glare at them. spread false rumors. compensation and reason for leaving. advancement opportunities. withhold information 81 . Some charitable organizations say they don’t have time to conduct exit interviews but it is recommended for those with a strong need or interest in keeping turnover low. insult and belittle employees in front of others. If the organization is large enough to have a Human Resources person.Employee Retention to lose and the organization can gather valuable insight into workplace issues Exit interview questions generally include how the employee felt about his or her workload. Information gathered from exit interviews can also be useful in crafting job descriptions. Some organizations also seek to find out if the employee is leaving for another organization and if so what makes the new job more appealing. he or she would be the most appropriate person to handle the exit interview. 4) Toxic bosses and more on workplace bullies There are many anecdotes about bosses who rant and rave. Experts recommend that someone other than a direct supervisor conduct the exits. Employees often state that they accepted the job without a clear understanding of what the job entailed. Results from exit surveys may also reveal which positions are underpaid and which supervisors lack good leadership skills. give employees the silent treatment.
Both men and women do the bullying but 80% of bully victims are female.50% of workers are bullied.10 hours per day with a half hour for lunch and two 15-minute breaks.Employee Retention and take credit for employee’s work. 5) Stress relievers reduce turnovers in call centers Call Center employees work an average of 9 .Employee gym -Quiet room with comfortable chairs for napping and reading . Why is bullying so ingrained in our workplace? It might be a matter of culture. We as a society value aggression. They tend to be women in their 40’s with many years of work experience. In many ways these kinds of beliefs come close to endorsing the toxic boss pain. In many ways these kinds of beliefs come close to endorsing the toxic boss. some companies are instituting benefits designed to relieve the stress that builds up on the job. toughness and endurance to pain. To improve their retention of call center representatives. Thus it is time that these bullies not to be recognized. length of calls and how long they are gone for bathroom breaks. This kind of psychological violence often leaves employees physically and mentally weak. Somewhere between 12% . Phone representatives are four times more likely to miss work because of stress related conditions. Stress relief benefits include: . It’s not surprising that staff turnover in call centers looms at 33% per year.Outdoor walking trails 82 . They are tied to their headsets and are monitored for call volume. They handle approximately 85 calls per shift.
7) Business coaches help solve work place challenges Hiring a business coach can help company develop a more productive and pleasant workplace. employees are fed up with feeling underappreciated and doing the job of 2 or 3 or 4 people due to corporate layoffs. 83 .Employee Retention . Why are workers so anxious to jump ship? According to recruiters.Ergonomic work stations Allowing representatives to focus on the quality of the call rather than the speed of the call has also shown to boost productivity and reduce the number of employee who quit by 50% 6) 83% of the managers will jump ships when job market improves Experts in the industry warn that if the job market heats up.Stress management and time management training .Company sponsored theme events . HR Managers should expect to see huge increases in staff turnover.Office Luncheons . Employees that nave expressed unhappiness with their work has increase from 15% in 2000 to 25% at the end of 2003.Video arcade with free games . Eighty-three percent of US managers and executives said they will likely seek work elsewhere when the opportunities become available. Employees are dissatisfied with lack of promotions and pay raises and feelings of being undervalued and overworked.
” discipline environments Bibliography 84 . build better relationships both on & off the job and manage stress. and Their goal to is to work “bring perspective. and accountability. relationships.Employee Retention Business coaches help companies improve communication. Although they are neither business consultants nor therapists they often function in similar focus roles.
Employee Retention Name of the Book Human Resource And Personnel Management Essentials of Human Resource Management & Industrial Relations Author K.com www.expressitpeople.retentionsystems.Careermosaicindia.hrfolks.com 85 .com www. Aswathappa P.com www. Subba Rao Webliography The following Websites have been used for reference: www.com www.thecallcentersschool.
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