Professional Documents
Culture Documents
Index
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Benefits of Investing in Employee Retention Benefits offered by the BPO Companies Compensation and Benefits provided by IT, ITES Companies Bibliography
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Introduction
Employee retention. Ask 10 managers what they mean by the term and youll receive 10 (sometimes very) different answers. Answers like these: Employee retention? You mean stopping people from leaving this organization? Employee retention is all about keeping good people. Getting our compensation and benefits into line with the marketplace. Stock options, crche facilities, and other perks. Its got to do with our culture and how we treat people. Staunching the high employee turnover we have in department x or job function y. Now what u all will be wondering is which one of these is the right definition or is it a combination of these or is it something that we have not yet spoken of? Well it is a combination of all of this and something that we have not yet spoken of. You may be thinking to yourself, Oh great, employee retention. Yet another supervisory challenge. Employee retention is one of the hottest management topics in the United States for good reason; it is impacting employers on a daily basis. The number of qualified applicants available for vacant positions is currently in decline and employers are finding it difficult to hire new employees and to keep employees over the long run.
life decision, and someone who made many and frequent job changes was seen as somewhat out of the ordinary. As a natural result of this status quo employer-employee relationship, an employee leaving his or her job voluntarily was seen as an aberration, something that shouldnt really have happened. After all, the essence of status quo is just that little or nothing should change in the relationshipand leaving was a pretty big change!
productivity and keep employees energized and motivated to give their best. Job satisfaction can equate to employees who stick with their current employer and strive to perform at or above expectations and standards.Employee retention is commonly considered to mean the ability to maintain a stable workforce. It is often linked to morale and to organizational productivity. Retention is thus the opposite of turnover , a well-known concept. In addition the perception of having a job for life in a public sector role no longer exists. The trend for the younger generation of workers is to shift from job to job and this is becoming a norm of society. Companies that can recruit the best talent and retain them will have an edge in the long run. Today talented persons are like frogs in a wheelbarrow, which can jump at any point of time when they sense opportunities
manager issue. If you have a turnover problem, look first to your managers. Most of the HR functions of IT organizations spend more than 50 % their time and energy in hiring new resources without investing much time in the way their human resources can be retained. Fact is, it takes 25 to 30 % more for organization to retain the existing qualified resource as compare to spending more than 50 % in getting new resource as a replacement of an existing resource.
And the recent turnover figures about U.S. are Overall U.S. voluntary turnover increased slightly to 23.4% annually, up from 22.7% the previous year. The highest turnover by far is still in the Accommodation and Food Services sector at 56.4% and the Leisure and Hospitality sector at 52.2%. Sectors that saw the highest increase in turnover were Accommodation and Food Services, up 7% from the previous year, Leisure and Hospitality, up 5.4% and Information, up 4.5%. The only sectors seeing a (slight) decrease in turnover were Real Estate, Natural Resources and Mining, and Professional and Business Services. In the Government sector, turnover was up slightly at 8.2% with the Federal sector increasing the most to 9.3% up from 5.7%. Regionally, all areas were up slightly except the Northeast which saw a slight decrease.
A Challenge
10 Reasons Why Employees Leave
1. Expectations not met: Expectations play a large part in determining whether an employee is satisfied or dissatisfied with the current state of affairs. On joining the firm the individual will have a range of expectations covering areas such as the style of management, the working hours, holidays, pay, bonus and so on. It is not unusual for employees to leave within the first six months when they discover that things arent quite as they imagined they would be. Their expectations may have been unrealistic from day one, but each departure is yet more disruption, harming productivity, adding extra unnecessary costs and making it more difficult to reach goals for sales, revenue and profitability. Few firms seem to appreciate the importance of expectations. They dont ask candidates about their expectations, giving them the opportunity to select someone who is unlikely to be disappointed, and therefore, more likely to stay. 2. Mismatch between the person and the role Employees who find themselves in roles that do not suit their individual strengths, tend not to stay around that long. A productive employee gets promoted into a position that requires skills that they do not possess. A role that exposes their weaknesses, and as a result, a role that they do not enjoy. Faced with the prospect of having to spend many months, perhaps years, in a job that is a struggle, a job that they find difficult, a job that is a mismatch for their specific talents, most of them choose to leave the company and go.
3. Mismatch between person and the culture of the firm It is not so much that there is a single ideal culture, more that cultures vary, and as many departures show, not everyone is likely to be ideally suited to culture of your firm. Some workplaces are high pressured, fast paced, dynamic. Ideal for people who thrive on adrenaline, who enjoy this tempo, constantly being on the go. Others are caring, emotional, long discussions, shared views. Endless dialogue before action is taken. Everyones opinion counts. Put an employee in a culture that suits their temperament and they feel at home. It is an environment in which they can function to the best of their abilities. But put an employee in a firm whose culture does not suit their personality, their style or their approach and it rarely works. They dont settle, they under-perform, they miss the feel of previous employers where they were able to contribute more. They leave. 4. Insufficient opportunities for growth and advancement Employees want to make progress, to get ahead. They want to make that next step up the career ladder. They think about where they would like to be in 5 years time, in 10 years time. Their loyalty is largely to themselves, to make the most out of the natural talents, the skills, and determination they possess. They recognize the importance of building new skills, refining current ones, getting new experiences. If the opportunities arent available with their current employer, they will find look elsewhere. 5. Insufficient recognition or appreciation The Employees that dont receive adequate recognition for their contribution, that get little appreciation for their efforts, start to wonder why they bother. And it doesnt take much to tempt them away. Employees that did not feel valued, that felt that their efforts, their hard work, was not appreciated. That their achievements, their contribution to the success of the business, was not recognised.
Employees want to feel valued; as though their role is important, as though the business needs them. They want someone to say thank you. Thanks for that piece of work, thanks for helping out in a crisis, thanks for dealing with that problem. 6. Problems with direct manager The state of the relationship between an employee and their direct manager goes a long way towards determining whether they stay or leave. Some employees stay far longer than might otherwise be expected because of the relationship they have with their supervisor. Others leave jobs in the first few months because they sense their manager is not someone that brings the best out of them. And they need to get away. Because the daily challenge of dealing with someone they dislike, someone that lacks basic people skills, is just too much to bear. Poor relationships between employees and their managers are one of the most common reasons for employee turnover. 7. Dissatisfaction with pay Not receiving a fair salary, a fair pay rise, a fair bonus. Dissatisfaction with financial rewards is complex. Much of the dissatisfaction is due to comparisons. A previously adequate salary starts to feel insufficient when you have just learnt that a new arrival is receiving a higher wage for performing a similar role. Salaries rarely remain a secret. The information leaks out. If it isnt fair, if it isnt equitable, if the procedure for determining pay settlements is tainted, employees become dissatisfied. And in time many of them leave. 8. Stress The stress of work, the stress from working long hours, the stress related to pressure from above; employees can take only so much. Stress drives employees into the arms of alternative employers. They simply want to get away from the workplace, from the people involved, from the firm.
A stressful workplace is rarely a productive one. Attrition is high, people dont matter; there will always be someone else to fill the vacancy. And in time they too will probably leave for much the same reasons. Stressful work environments tend to be high turnover environments. If there is an alternative, people take it. 9. Lack of work life balance Employees have responsibilities to their employer, to their families, to their friends. There are times when the demands of work require extra hours, staying late to get things finished, working during weekends to meet deadlines. For some employees the demands of work are no longer compatible with the needs of their family, the needs that exist beyond the workplace. Perhaps they coped better when they were younger, before they got married, before they had a family. But now the arrangement just isnt practical. They need a better balance. They need to have time for themselves. Time to take care of loved ones. Free time not devoted to work. 10. Loss of confidence in the firm, particularly leadership. Confidence matters. Companies go bust; you just need to read the papers, watch the news, to realize the risk involved. When employees lose confidence in the firms leadership they head towards the exit door. They know that confidence matters, that seemingly invincible companies can collapse in days, if not hours. They dont want to be left without a job, should the company go under, or be taken over. Other factors for Retention being a challenge are:
A robust economy Shift in how people view their careers Changes in the unspoken "contract" between employer and employee Corporate cocooning A new generation of workers Changes in social mores
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of those who will have daily contact with the post holder. It is a fact of life that many hiring failures come down to clashes of personality. When interviewing prospective managers, consider the notion of upward feedback. Promote rather than hire - Internal promotions send a signal to employees that they too may get the chance of career advancement, if they remain with the firm. Conversely, if strong internal candidates are not selected, it may look like the best option is to leave, if you want to get ahead. - save money on recruitment - save money on signing bonuses - signal to employees - person - culture fit known
During the first week: Ask them how they like to be managed, motivated Give appropriate assignments Get them started so they can make a real contribution Establish medium term goals including both personal and career development goals Detail available resources, schedule any training, arrange a mentor if appropriate Arrange short meetings to check how they are doing Get colleagues to meet them to explain how best to communicate Invite them to the next social event
3) Job Sculpting:
Many departures arise from frustrations due to the day to day experience of the role, rather than the issues relating to the firm or to individuals.
Move them internally first - If someone is unhappy in their role, see if you can find them a new position internally, before they opt to leave. Match talents to the requirements of the role - Match talents to the requirements of the role. Get employees to use their natural strengths, their intrinsic talents. If you want people to stay, get them to use their natural talents. Most people enjoy doing what they are good at. They like being able to excel. Increase job variety - Sometimes the lack of variety involved in their role can frustrate employees to the extent that they decide to leave. Some people like routine, others like change. Again, a little imagination, a small adjustment, can be the difference between losing them and retaining them. Tailor roles to suit individuals - If you have individuals you wish to retain, it makes sense to tailor roles to suit them. This way they get far more value from work and it is more difficult for other firms to attract them away. Customizing roles to suit individuals can be a winning retention strategy for some firms. Enriching jobs - Enriched jobs have long been shown to offer extra value to many employees The keys to job enrichment: Skill variety, Task completion, Task significance, Autonomy and Feedback Intrinsic motivation - Understand why people want to work in the first place Passions - Individuals that get to focus on their passions are far more difficult to tempt away. Connecting to passions is a great way can be a great way to improve retention. Most alternatives will start to look far less attractive once an employee gets the chance to focus on something they are passionate about. Meaningful work - Some employees find it difficult to connect their day to day work with the end product. In a sense their work appears to lack meaning. By explaining how their job fits into the big picture, you can create meaning, thus increasing their motivation, and perhaps their willingness to stay.
Explain why their work is significant Work life balance guide Performance agreement Development plan Dialogue
Goal setting Provide the resources they need to the job Delegation, autonomy and initiative Encourage ideas Provide challenging work
8) Communication:
Recent years have seen firms place emphasis on communicating their message to employees. Communication in the opposite direction is rarely as effective. It is possible to improve lines of communication should employee insight reveal this to be an issue that needs to be addressed. Some firms use schemes that encourage employees to contribute their ideas on potential improvements. Others appoint people in roles specifically designed to listen in to employee opinion. Annual employee attitude surveys are a common occurrence in many sectors. While a few firms choose to conduct pulse surveys to measure the temperature on certain key issues. Conducting retention focused interviews every six months is a sensible way to keep track of the current state of play.
undertake for purposes such as travel related expenses like Hotel bills, Air tickets etc 7. Cellular Phone / Laptop: Cellular phone and / or Laptop are provided to the employees on the basis of business need. The employee is responsible for the maintenance and safeguarding of the asset. 8. Personal Health Care (Regular medical check-ups): Some of the BPO'S provides the facility for extensive health check-up. For employees with above 40 years of age, the medical check-up can be done once a year. 9. Loans: Many BPO companies provide loan facility on three different occasions: Employees are provided with financial assistance in case of a medical emergency. Employees are also provided with financial assistance at the time of their wedding. And, the new recruits are provided with interest free loans to assist them in their initial settlement at the work location. 10. Educational Benefits: Many BPO companies have this policy to develop the personality and knowledge level of their employees and hence reimburses the expenses incurred towards tuition fees, examination fees, and purchase of books subject, for pursuing MBA, and/or other management qualification at India's top most Business Schools. 11. Performance based incentives: In many BPO companies they have plans for, performance based incentive scheme. The parameters for calculation are process performance i.e. speed, accuracy and productivity of each process. The Pay for Performance can be as much as 22% of the salary. 12. Flexi-time: The main objective of the flextime policy is to provide opportunity to employees to work with flexible work schedules and set out conditions for availing this provision. Flexible work schedules are initiated by employees and approved by management to meet business commitments while supporting employee personal life needs .The factors on which Flexi time is allowed to an employee include: Child or Parent care, Health situation, Maternity, Formal education program
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13. Flexible Salary Benefits: Its main objective is to provide flexibility to the employees to plan a tax-effective compensation structure by balancing the monthly net income, yearly benefits and income tax payable. It is applicable of all the employees of the organization. The Salary consists of Basic, DA and Conveyance Allowance. The Flexible Benefit Plan consists of: House Rent Allowance, Leave Travel Assistance, Medical Reimbursement, Special Allowance 14. Regular Get together and other cultural programs: The companies organizes cultural program as and when possible but most of the times, once in a quarter, in which all the employees are given an opportunity to display their talents in dramatics, singing, acting, dancing etc. Apart from that the organizations also conduct various sports programs such as Cricket, football, etc and regularly play matches with the teams of other organizations and colleges. 15. Employee Referral Scheme: In several companies employee referral scheme is implemented to encourage employees to refer friends and relatives for employment in the organization.
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Benefits:
Organizations in both the IT and ITES industry are consolidating benefits, with a greater focus on employee attraction and retention. Company Cars: An 18-20 percentage point reduction was reported in company car programs in the IT and ITES industry, as more companies moved towards cash-based programs. Loan Programmes: A 5 to 15 percentage point decrease was reported in the various loan schemes (housing, vehicle, and other loans) from last year. Stock Options: Stock options are losing their charm in the IT and ITES industry. A 10 percentage point drop was reported in the prevalence of stock option programs between 2002 and 2003. Non-Statutory Retirement Benefits: There was a 5 to 10 percentage point decrease in the number of companies offering non-statutory retirement benefits, such as superannuation programs. People Practices: Recruitment: A 7 - 14 percentage point reduction was reported in the allocated budget for recruitment, hiring, and orientation from 2002 to 2003. Training: Training hours in the IT industry decreased by 13 per cent, whereas the ITES industry reported a 4.3 per cent increase in training hours over last year. Career Paths: ITES organizations are focusing on more long-term orientation for employees. A 14 percentage point increase was reported in the number of organizations offering employees a formalized career path. Workforce: 41 per cent of the IT companies saw a significant workforce reduction (affecting 5 per cent or more employees). This figure for the ITES industry stood at 11.5 per cent. Rewards and Recognition: There has been a 4 percentage point increase in the number of organizations offering special recognition awards to their employees, with 95 per cent of the ITES companies having these awards in place.
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Bibliography
Textbook: Human Resources Management - Ashwathappa
Websites:
www.orcworldwide.com www.entrepreneur.com/encyclopedia/term/82184.html www.employeeretentionstrategies.com www.bpoindia.org/research/retention-strategies-call-center-industry.shtml www.employee-retention-guide.com
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