SYNOPSIS “A study of factors affecting employee retention in BPO sector in Jalandhar”

Submitted to Lovely Professional University In partial fulfillment of the requirements for the award of degree of MASTER OF BUSINESS ADMINISTRATION

Submitted by: Group No QH16 Parul Bhalla Niharika Sarna Nimisha Dhiman Mayank Kumar Pal RQ3703A24 RQ3703A27 RQ3703B39 RQ3703B38

Supervisor: Navjot Kaur Faculty Guide

DEPARTMENT OF MANAGEMENT LOVELY PROFESSIONAL UNIVERSITY PHAGWARA
(2011-2012)

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INDEX SR. NO.
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CONTENT
Chapter -1 1.1Introduction 1.2Company Profile

PAGE NO.
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Chapter-2 Review Of Literature 10-15 16-16 3.1Scope of the Study 3.2 Need of the Study

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Chapter-3

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Chapter-4 Objective of the study Chapter-5 Research methodology

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18-18 5.1 Research Design 5.2 Universe of the study 5.3 Sample Size 5.4 Data collection 5.5 Tools used Chapter-6 6.1 References 6.2 Weblinks

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19-20

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not comply with organization practices. This is known as a moral hazard problem. Employees often may take credit for the successes and deflect failures to other employees. Outstanding employees may leave an organization because they become dissatisfied. This is especially possible when due to inadequate in formation outstanding performance is not rewarded. They may demand higher wages. In many in stances companies may reward or punish employees for an organization out come for which they had no impact (Kerr 1975). and while trying to retain employees within the organization they may present other challenges as well. and not interact well with their coworkers or comply with their managers’ directions. and the like are directly affecting employee/employer relationships. This study attempted to explore the main factors that contribute to employee retention existing in the private sector in Kuwait. loyalty was the cornerstone of that relationship. trade agreements. Today. “Until recently. The next paragraphs discuss the background of the study by clarifying the theoretical framework for the main problems with employee retention. under paid or unmotivated (Coff 1996). The better employees may move to other organizations for better opportunities. Besides these problems asymmetric information or lack of information about the employees’ performance may complicate an organization’s Endeavour to retain productive employees. Without adequate information an organization may not be able to distinguish productive workers from non-productive ones.CHAPTER 1 INTRODUCTION The retention of employees has been shown to be significant to the development and the accomplishment of the organization’s goals and objectives. Non productive and productive 3 . The coworkers who cannot improve their positions are more likely to stay. global economics. Retention of employees can be a vital source of competitive advantage for any organization. The loss of talented employees may be very detrimental to the company’s future success. Insufficient information about employees’ performance may result in adverse selection by them (Gross man & Hart 1986). changes in technology.

This is done to reduce the risk of failure by the company. The employee can signal the labor market his superiority through the selection of a fast starting project. It is another result of asymmetric in formation where both the manager does not know the information for which to ask from the employee and the employee does not know what to provide. Therefore. Employees may also be enticed to make suboptimal investment decisions for the firm. which protects the no diversified employee from loss of wealth. This strategy may cause the firm to miss profitable long-term projects or much needed research and development. The employees or agents of the organization may also use a short sighted approach in investment selection to enhance their own career chances (Narayanan 1985). the company may still have to cope with agency costs resulting from them and their colleagues.workers end up receiving the same or nearly the same compensation and package of perks because of management’s in ability to distinguish talented employees from the rest of the labor force in the organization. Since most company employees have their wealth tied up in the organization for which they work. Even if an organization is fortunate enough to retain talented employees. employees may attempt to make investment decisions which are less risky than the stock holders of the firm would prefer. productive workers cannot distinguish themselves from nonproductive coworkers. 4 . This divergence of interests results in costs to the organization in the form of excessive perquisite consumption. Employees may also attempt to increase the size of the firm through acquisitions and project selection regard less of the effect on company profitability in order to increase their own power base within the firm. the employee may be motivated to act in his own interest which may diverge from the interest of the organization. Jensen and Meckling (1976) explained that it is in an employee’s interest to over consume perks and shirk job responsibilities of the firm if they are not sole owners of the organization. shirking of job responsibilities and poor investment decision making. The problem of attempting to keep talented members of the work force is further complicated because of bounded rationality (Simon 1976). This investment strategy may also reduce the return on investment that the diversified owners of the firm desire (Murphy 1985). which may fizzle out later for the firm. When in formation about an employee’s activities are difficult to gather.

lack of career growth. For example. It is the understanding of the situation that provokes an action an employee interprets their organizational environment through his or her own mental model. Surveys have listed night shifts. This study is an attempt to answer many questions related to BPO workforce retention which have not been reported yet. These solutions do not work anymore. inability to handle various types of stress. Various estimates suggest that losing a middle manager in most organisations. the work can often be monotonous and opportunities for career growth minimal. as reasons for quitting jobs. This might be worse for BPO companies where fresh talent is intensively trained and inducted and then further groomed to the successive stages. company policies. as some of the most common reasons listed by BPO employees. creating his or her own world. For example. money. each employee in an organization creates his or her own understanding of a phenomenon and assumptions. In this scenario. how is the BPO workforce aware of any retention efforts in their agency? What make BPO workforce think about leaving their work? How does the BPO workforce feels unique about their agency’s retention situation? Does BPO’s discuss with the workforce specific reasons why they were leaving or not? Do BPO’s workforce in know of specific retention problems in their agency? What type of work environment or organizational culture e. problems with those in senior positions etc. translates to a loss of up to five times his salary. is most appealing to workforce? 5 . they raised wages until the situation stabilized.g. work itself. This study is for understanding employee perspectives and measuring their retention factors are critical to an organization success. a reality of the second order thus arises that is in some way imperfect. In an industry like BPO. there are some common reasons that especially cause people to leave. If that did not work. First.. So when opportunities beckon. the loss of a middle manager can often prove dear. supervisory style.Another area contributing to decreased employee satisfaction is that of a company’s motivational style. they increased training budgets for new hires and first-level supervisors. the high rate of attrition is not surprising. However. However. Weinberg (1997) states that “Most companies relied in the past on two traditional strategies for managing turnover. monotonous work.

By implementing lessons learned from key organizational behavior concepts employers can improve retention rates and decrease the associated costs of high turnover. retention becomes the strategies rather than the outcome. However. a retention rate of 80% usually indicates that an organisation kept 80% of its employees in a given period). • Employs an easy-to-understand systems approach to ensure the root causes of turnover are addressed and the potential for lasting change unleashed. Employers can seek "positive turnover" whereby they aim to maintain only those employees who they consider to be high performers. theory-supported approaches to improving employee engagement. EMPLOYEE RETENTION STRATEGIES What sets Employee Retention Strategies apart is a steadfast philosophy that: • Uses only research-based. this isn't always the case. EMPLOYEE RETENTION Employee retention refers to the ability of an organization to retain its employees. In a Business setting.” While commonly used. However. the goal of employers is usually to decrease thereby decreasing training costs. many consider employee retention as relating to the efforts by which employers attempt to retain employees in their workforce. these short-term fixes fail to produce genuine employee loyalty (more than 60 years’ of research tells us so!). Employee retention can be represented by a simple statistic (for example. Avoided are gimmicks such as employee of the month. In this sense. 6 .Thus. suggestion boxes. recruitment costs and loss of talent and organisational knowledge. the present study aimed to enhance our understanding and improve the shortage of literature by focus on Jalandhar to explore BPO workforce retention factors that lead to their existing in their work place. prizes or other “carrots.

thereby creating a "winwin" situation. current practices and strategic objectives. action-oriented approaches that enable organizations to move forward quickly and effectively • Recognizes the research-proven role of no-cost strategies in developing the “glue” that builds employee loyalty and commitment. Valence is the degree to which the rewards offered by an organization align with the needs employees seek to fulfill. low valence is a poor alignment of needs with rewards and can lead to low job satisfaction and thereby increase turnover and decrease retention. competitive marketplace issues and talent shortages. • Integrates hands-on. In order to retain employees and reduce turnover managers must meet the goals of employees without losing sight of the organization's goals. Increasing expectancy in an organization can be done by training employees and thereby making them more confident in their abilities. • Involves those responsible for implementing change in actually creating the change. leading-edge organization-development best practices to effectively and quickly build a retention-rich culture.• Customizes all activities to your organization’s unique history. High valence indicates that the needs of employees are aligned well with the rewards system an organization offers. Also considered are challenges unique to your industry sector. while these theories may be valid they provide little practical assistant for business managers or human resource practitioners. Increasing instrumentality within an organization will be part of implementing an effective rewards system for attainment of specific goals and accomplishments. However. Conversely. More modern studies relating to employee engagement demonstrate that by developing a range of strategies that 7 . Valance and expectancy theories provided some of the earlier guidance for retaining employees. • Brings to an organization. Expectancy theory details have several factors that can lead to high job satisfaction and high retention rates for organizations. ensuring input and improved shared understanding and support of all initiatives.

These outcomes include higher profitability.address various drivers of engagement. many positive outcomes can be achieved. lower absenteeism and lower accident rates as well as higher employee retention. 8 . improved customer satisfaction.

Its revenue earnings for FY 10-11 were US$ 448 million.firstsource.1 COMPANY PROFILE: Firstsource was established in 2001 and has grown to employ more than 27.000 employees across India.aspx 2 9 . USA and APAC.ShaileshMehta Matthew Vallance Firstsource provides Business Process Outsourcing (BPO) services across the customer life cycle that covers: Customer Acquisition Customer Care Transaction Processing Accounts Receivable Management / Collections Research & Analytics First Source customized business process management solutions across key industries: Banking Financial Services and Insurance Healthcare Telecommunications and Media 2 1 Source-http://www.com/ http://www. leading organization. its client list boasts of 18 Fortune 500 companies and 6 FTSE 100 companies among many others Chairman Managing Director and CEO Vice Chairman Ananda Mukerji Dr. UK.com/about-us/about_us-bod. An award winning.firstsource.

and 15 HR and operations managers as subject matter experts. and physical strain (22%). The research study referred to in this paper adopts a ‘‘mixed method case study approach. In the Indian call center context. The employees listed satisfaction with wages (27%). Employee Retention questionnaire 10 . boring and monotonous work. Dr Sangeeta Gupta(2011) . Skill shortage is another major problem in the Indian ITES/BPO industry. Employee turnover figures in the Indian ITES/BPO industry vary widely between studies. the largest of its kind for this industry to date. night shift working. leaving to pursue higher education (29%). Based on convenience sampling. More importantly.in her research paper focused on three main objectives that is to identify and compare the various factors influencing decision of employees to leave BPO’s .to find out the major factors affecting employee retention in BPO Sector in India and to compare the extent of employee satisfaction with respect to prevalent retention strategies adopted by BPO’s. an estimated half of this turnover occurs in the first 6 months of employment. and chances for advancement (17%) as three most important factors that made them stay in their current job. lack of career opportunities (45%). The problem is even more acute at the supervisory and team leader level because of the short tenure of employees. from 20%to more than 100% but the general consensus seems to be around 40%to 50% which makes it one of the highest in the global call center industry.CHAPTER-2 REVIEW OF LITERATURE M Thite(2010) in his article mentioned that several studies have concluded that retention is one of the biggest challenges faced by Indian call centers . One study lists limited growth and career development opportunities compared to employees’ higher educational standards. enjoyment of the work (20%). illness (28%). four large Indian ITES/BPO firms participated in the study. many studies have identified the reasons for high attrition. less pay.Another study highlights dissatisfaction with wages (47%).’’ combining employee survey and managerial interviews. and management favoritism as triggers for employee turnover . involving 638 customer service representatives (CSRs).

D Cristopher Amrutham(Sep 2011) in his research work focussed on the importance of mentoring in maintaining a sustainable relation between the employee and employer.respect and an enabling environment for them to be the best they can be . work life balance)on employee retention in BPO industry . Interview technique is adopted to collect the data from the executive managers of said industry.poor working condition.In order to gain an insight into the parameters that affect employee retention.A t o t a l o f 5 0 i n t e r v i e w s w e r e t a k e n f r o m m a n a g e r s o f d i f f e r e n t B P O organizations in Pakistan.He concluded thet These all have positive impact with each others and it is also telling that if these variables positively will be in BPOorganizations then its employee retention rate will be (positive) high. in his research study focuses on the impact of variables (career development.Talented people do not like being digested by their companies in the name of recognition and often turn their back on pom to do jobs that allow them to live more rounded lives. The Department. The Management and Compensation and benefits.According to this study employee attrition occurs mainly due to want of higher monertary benefit .what talented people crave for is the freedom . A sample of 100 was taken of which 50 each from Genpact and HCL were surveyed. Graphical Analysis is indicating that these variables have significant and positive impact on employee retention.lack of 11 .2011) in his article highlights the steps that corporations are taking to retain the top talent and mistakes that companies usually make in their talent management. Two major BPO’s were identified-Genpact and HCL. literature review was employed to identify 5 areas which have a significant influence on employees’ retention. supervisor support. The Supervisor.regular working hours. Umer Muhammad[undated]. work environment.was used to collect the responses of the people working in BPO’s.Other mistake that CEO make is smothering a talented person in the name of offering greater responsibility. Rajiv Vastupal(Oct. They were The Job itself.According to his views .

The study also highlighted that for employees desire for security trumps everything and many employees sacrifice carrier growth for a secure job.better opportunities and family reasons. they are not always a reliable indicator of leadership potential.advancement opportunities. but it must also excite average to below average salespeople as well. recruitment. Training is critically important for both the new and seasoned agent alike and is a key ingredient for agent retention. discussed how he retains and develops talent in the conglomerate's diverse mix of companies.lack of job security. Perhaps less obvious. but a formula that includes factors such as leadership. While the skills required to be an effective salesperson are fundamentally important.2011) in the article named “employer brands for employee demands” highlights the importance of employer branding and the array of factors that influence expectations of employees from their potential and present employers. Sonia Chan (Oct 2009) states that In an interview.A company should think about inversting in employer branding only if it is serious about positioning itself as an employer in market. training. a sales incentive program should not only appeal to top producers. but just as detrimental. John Boe (Mar 2009) stated that excessive personnel turnover is not only unhealthy for the morale of a sales force. Retaining successful salespeople is not a secret recipe. Bent works with a 12 . progressive companies offer a clear career path and proactively support the leadership development of their top salespeople.difference with co-workers. Group Head of Human Resources at the Jardine Matheson Group. Ritchie Bent. This concept has a linkage with retention of employees. and professional growth opportunities. Anonymous(Oct. is the negative impact excessive turnover has on eroding customer confidence and loyalty. To be effective. but it is also costly in terms of time and money. In an effort to retain solid performers.

and compensation & benefits -.but from a strategic perspective. Jonathan P Doh. On top of that. But how do you ensure that you're doing the best possible job of enabling your employees? Walter G Tymon Jr. They help to develop the macro retention plan of each of the Group's companies.team of specialists who specialize in three core areas -.leadership development. we develop and test a model of talent management across 28 Indian firms involving 4811 professional-level employees. To examine this situation. given that this subject has not received sufficient concern in Asia. What's missing is real employee enablement to position motivated employees to succeed. The intrinsic rewards experienced are a critical element in employee retention. We found support for the importance of intrinsic rewards as a mediating variable. managing. selection & evaluation.5 times greater. Support.(Apr 2010) stated that the challenge of global talent management is critical to firm success.5 times that of organizations in the bottom quartile. In fact. IOMA's Report on Compensation & Benefits for Law Offices (2007). satisfaction with the organization. Gregory A. The various training and development programs they offer are an important part of the strategy. companies in the top quartile on both engagement and enablement achieve revenue growth 4. and performance management (PM). Stephen A Stumpf. Sawitzky (Mar 2010) stated that staff turnover in mental health service organizations is an ongoing problem with implications for 13 . Jardine has fairly strong values which most people admire. especially in the developing regions of the world where economic activity has outpaced the availability of skilled employees. and retaining talent. Through the Mindset program. Even with the global economic slowdown of 2008 and 2009. as well as for the moderating role of certain hygiene factors. there are continuing challenges in attracting. Aarons and Angelina C. they focus on their funds on philanthropic activities relating to mental health. The fact that there are opportunities to move to other companies within the Group is also very attractive. We explored four antecedents of intrinsic rewards: the social responsibility of the employer. manager support. our findings suggest that although organizations in the top quartile on engagement demonstrate revenue growth 2. and career success. pride in the organization.

Wages. Steve Vernon(2010) stated that many workplace veterans yearn for more work-life balance. and they are not mutually exclusive. and are still engaged and productive -.staff morale. it is the culture of an organization which dictates the expected employee behavior permits to form a compatible work environment. In an effort to retain solid performers. the organizational climate. training. The key point is that these two concepts exist in work settings. they are not always a reliable indicator of leadership potential. but a formula that includes factors such as leadership. recruitment. mediational models of the impact of culture and climate on work attitudes have not been examined. They're not ready for retirement (even if they could afford it). organizational effectiveness. but it is also costly in terms of time and money. However. namely. Yahyagil (2010) proposed that the purpose of this paper is to clarify the nature of the complex interrelations between organizational culture and climate. Retaining successful salespeople is not a secret recipe. trying to stay competitive during the downturn has meant a sharper focus on cost cutting. In terms of the basic assumptions.. employers create a much more gradual transition to the current abrupt retirement event. benefits or other employee perks have not been enhanced. and implementation of innovation. Training is critically important for both the new and seasoned agent alike and is a key ingredient for agent retention. staff turnover.or on any list. values and beliefs. but just as detrimental. progressive companies offer a clear career path and proactively support the leadership development of their top salespeople.and will be for years to come. and professional growth opportunities. They have valuable knowledge and contacts. is the negative impact excessive turnover has on eroding customer confidence and loyalty. for a host 14 . Recent studies in public sector services have examined the impact of organizational culture and climate on work attitudes (i. Y.e. Preservation of talent and human capital management have not been on the critical list -. productivity. ultimately. SallyHass. John Boe (Mar 2010) proposed Excessive personnel turnover is not only unhealthy for the morale of a sales force. Perhaps less obvious. job satisfaction and organizational commitment) and. While the skills required to be an effective salesperson are fundamentally important. For many employers.

of good reasons. 15 . The article is about creating an extended period in seasoned workers lives where the employer benefits from their substantial work and life experience at all acceptable cost. and the workers get more work-life balance.

CHAPTER-3 SCOPE AND NEED OF THE STUDY 3.1 SCOPE OF THE STUDY i. ii. 16 .2 NEED OF THE STUDY • Employee turnover figures in the Indian ITES/BPO industry vary widely between studies. an estimated half of this turnover occurs in the first 6 months of employment . The study will prove useful for future research 3. • More importantly. The study will be useful for BPO’s facing high attrition rate as it will let them know the factors affecting retention of employees and may prove useful in reducing attrition rate in future. from 20%to more than 100% but the general consensus seems to be around 40%to 50% which makes it one of the highest in the global call center industry.this triggers the need of studying the affect of factors affecting retention.

CHAPTER-4 OBJECTIVES OF THE STUDY To study the factors affecting employee retention in business process outsourcing centres in Jalandhar CHAPTER-5 17 .

Respondents: a total of 150 employees from First source BPO on convenient based on basis B.articles. Primary data will be collected by using a questionnaire and secondary data has been collected using journals .2 Universe of the study: The survey is to be carried out among the employees of first source business process outsourcing unit in jalandhar 5. A.4 Data collection: The selection of sample for the collection of primary data would be convenient sampling technique.RESEARCH METHODOLOGY 5.3 Sample Size: The total sample size is based on 150 respondents. Quantitative and qualitative analysis would be done and inferences would be drawn in line with the objective of the study 5.1 Research Design The present study is exploratory in nature. web based journals and articles 5. The respondents of present study will be the employees of First source business process outsourcing unit . This research is to be conducted using survey method.5 Tools used: Statistical Package for Social Sciences Factor Analysis 18 . 5. The primary data received through questionnaires from employees of the business process outsource centre would be classified and tabulated.

“Sustainability of Employee Employer Relationship:A Focus on ‘Menotring’ Inintiatives”. 2.pp-31 5. Sangeeta(2011). international journal of research in commerce & management.10 8.viewed 24 November 2011.Vol.20.Muhammad[undated]. pg. “Employee retention: a comparative study of indian bpo companies”. Sonia Chan (Oct 2009).3.pp-36-42 6.pp-42-48. Umer . Journal of Academy of Management Review.No. 7-22. 16. Dr. 22.2.University of Lahore. Thite.9.Vol.2011). Gupta. Journal Of Organizational Computing & Electronic Commerce. 3. 46-49.The Human Factor.HRM Review.11. ‘Employer Brands for Employee Demand’.No.2. M (2010).Vol. 8. viewed 24 November 2011. EBSCOhost. Vol.CHAPTER-6 REFERENCES AND WEBLINKS REFERENCES 1.10.Rajiv(Oct 2011). Iss.Indian Management. Vol.No.No.Vol. Journal of Compensation & Benefits for Law Offices. Vastupal . “Employees Retention (Human Capital) in BusinessProcess Outsourcing (BPO) Industry in Pakistan”.1-2 19 . Amrutham D Cristopher(Sep 2011).No. “All that Glitters is not Gold: Employee Retention in Offshored Indian Information Technology Enabled Services”. Anonymous(Oct. 1.viewed 24 November 2011 4. “Talent Management”. 7. pp.50. “Biggest challenge on road to recovery: Retention”. Vol. pp. Business Source Complete. John Boe (Mar 2009) “The hypothesized effects of ability in the turnover process”.

New York Dec (2009). Vol. IOMA's Report on Compensation & Benefits for Law Offices. Walter G Tymon Jr. 7. 1 pgs. Vol. and research implications for the next millennium”. Journal of Review of Public Personnel Administration. 12. Gregory A.org. 5-17. moderator tests. 09. John Boe.com http://www. 80.9. pg. 11. Apr (2010). Yahyagil. Iss. Y.in http://www. pg.proquest. WEBLINKS: http://search. Jonathan P Doh. 4 pgs. Vol. (Nov 2010). pg. 45. “Managing Employee Retention: The Role of Organizational Culture and Attitudes of Supervisor on Turnover Intensions”. Stephen A Stumpf. (2010). 15 (2).aspx? direct=true&db=bth&AN=48097682&site=ehost-live www. “Retention is a Problem That Won't Go Away”. 55.aspx ****_____**** 20 . pg. Journal of World Business Greenwich.firstsource.com/about-us/about_us-bod. Vol. “Human resource management’s role in the future aging of the Workforce”. 2. Iss. Journal of World Business Greenwich. 10. pg. 8. 12. Journal of Management. 13. 463-488.ebscohost. Vol. Steve Vernon(2010).ijrcm. pg.com/login. “Exploring talent management in India: The neglected role of intrinsic rewards”. 3. Sally Hass.scribd. 335-349. Aarons and Angelina C Sawitzky. “A meta-analysis of antecedents and correlates of employee turnover: Update. Jan (2010). 14. Journal of Applied Psychology. “Support and Engagement are the Keys to Retention” Vol. Iss.com/doc/47417563/employee-retention-in-BPO-industry-inPakistan www. 26. 109.

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