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Business and Management IA
TO: Managing Director
TITLE: How can employees be retained in the BPO/KPO/RPO of an XYZ firm.
FROM: Aakanksha Khurana
DATE: JUNE 2011
CC: Board of Directors
Word Count:
Research Proposal: 335 words
Written Report: 1630 words
Executive Summary: 204 words
I confirm that this work is my own and that it is the final version. I have also acknowledged
the use of words or ideas of another person, whether written or oral.
Acknowledgements:
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I would like to acknowledge and thank:
• Poonam Prakash – my Business and Management teacher for her support and assistance
in helping me with this report..
•
Paul Gaskin- HR Director of XYZ company- for his contribution to this report and hisvaluable time for my interview.
• Monika Khurana- Mother for her valuable support and information as and when needed
to complete this research.
• Sakshi Sharma- Employee of the Company for her valuable time and cooperation during
my Interview.
• Rajat Sood- Employee of the Company for his valuable time and cooperation during my
Interview.
Executive Summary
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Management at XYZ Company has expressed concern regarding the high staff turnover rates1 of
the company. As such the paper analyses the question, “How to retain employees in the
BPO/KPO/RPO of an XYZ firm?”
Initially a research proposal provides the rationale, theoretical framework and methodologyutilized and possible constraints in answering the question along with the action plan. The
introduction provides a basic background information specific to the organization in relation to
the question with a brief historical background of the company.
Discussion/analysis is based on primary research consisting of interviews with the management
(Appendix 1 and 2) and appropriate secondary sources including financial reports of the
company and various internet sites and books that allowed both financial (Profit and Loss
Accounts and Balance Sheet) and non-financial analyses (Fishbone model and SWOT analysis).
The possible causes and effects of the problem have been discussed and appropriate
recommendations keeping in mind the needs of the employees have been made. But in this
research the problem has solely been looked through an HR point of view whereas in reality the
financial aspect needs to be considered before making any decision. Therefore further research is
essential in terms of the financial matters before taking any concrete decision.
Research Proposal
1 Refer to Appendix 1
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Research Question:
How can the employees be retained in the BPO/KPO/RPO of an XYZ firm?
Rationale:
Majority of firms are facing the problem of retaining employees due to rising competition
amongst top players in the industry. The industries are offering handsome pay packs + perks to
attract/ tempt the youth to change jobs to lead a better life style.
Theoretical Framework :
I plan to analyze both the financial and non-financial aspects of the organization such as
remuneration being offered to the employees and in addition perks offered like medical
insurance for self and family, fuel re-imbursement/cab facility, etc.
Key areas of syllabus:
2.1 Human Resource Planning
2.2 Organizational Structure
2.5 Motivation (financial and non-financial aspects)
2.7 Employer and Employee Relations
Methodology
Primary Research:
• Interview the HR and Strategy Director of the XYZ firm to understand the possible
causes of unfullfillment of key reasons provoking people to fluctuate jobs.
• Interview some of the current employees of the firm to understand their views.
•Interview an ex-employee of the firm to understand his reason of leaving the job.
Secondary Research:
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• Collate information from the HR Department on number of employees who have left the
company in few months of joining due to lucrative offers from other players in the
market.
• Review Annual Report section and graphically represent the highs and lows of the
company.
• Use the financial statements to understand the key reason of many job fluctuations i.e.
salaries.
Anticipated Difficulties
Possible Problems Solutions
Limitations to factual data Will be acknowledged in the conclusion
Biased responses from the current employees
of the firm.
If possible get in touch with some of the ex-
employees of the firm.
Interview questions too specific in nature
limiting the information available.
A variety of open and closed questions to
enable depth of information.
Action Plan
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Dates Activities Modifications
February 2011 Topic Selection
9/3/2011-13/3/2011 Write Research Proposal Some research criteria were
added
23/3/2011 Write Interview Questions
15/4/2011-17/4/2011 Conduct the interviews
19/4/2011 Collect the secondary data
22/4/2011 Analyze secondary data
25/5/2011-15/6/2011 Complete first draft
13/7/2011-11/8/2011 Refine Draft
19/10/2011 Final Draft Submission
Contents Page
Acknowledgements………………………………………………………………………………
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Executive Summary………………………………………………………………………………
Research Proposal………………………………………………………………………………...
Introduction………………………………………………………………………………………
Procedure/Methodology………………………………………………………………………….
Main results and findings………………………………………………………………………..
Current Market Position………………………………………………………………………….
Remuneration of Finance Director……………………………………………………………….
Analysis…………………………………………………………………………………………..
Balance Sheet……………………………………………………………………………………
Non-financial analysis…………………………………………………………………………...
Fishbone Model…………………………………………………………………………………
Conclusions and recommendations……………………………………………………………..
Bibliography…………………………………………………………………………………….
Appendix 1……………………………………………………………………………………...
Appendix 2………………………………………………………………………………………
Appendix 3………………………………………………………………………………………
Appendix 4…………………………………………………………………………………….
Introduction
XYZ Company, established in 1991, is a leading service provider in the international and
domestic BPO markets in India.
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Retention of employees is one of the major concerns of corporate leaders due to the intense
amount of competition and the high financial costs incurred whenever an existing employee has
to be replaced. Hence, for me this research holds importance as it is of great importance in
today’s world.
The primary research consists of a detailed interview with various open and close questions with
Paul Gaskin, HR Director of XYZ Company. An additional interview was conducted with an
employee of the BPO sector of the Company to understand their views about the problem. The
interviews focused on the physical working environment, employer-employee quos, problems
likely to be the cause of job fluctuations and strategies being practiced to tackle this problem. A
former employee of the firm was also interviewed to understand his reasons for job fluctuation.
The secondary research which was undertaken consists of the reviewing of financial reports of
XYZ Company and its key competitors and analyzing their recruitment strategies and staff
turnover ratios. No. of employees who left the job within few months of joining and the reasons
they gave for job fluctuation is also analyzed for further research.
Final Accounts have been used and other non- financial tools like SWOT and fishbone model to
reach to a concrete conclusion. While the primary research was taking place some questions
were added on the spot to gather fruitful information.
Main results and findings:
For any research to be conducted on a company its financial performance has to be carefully
looked upon and appropriate results be deduced to reach on a concrete conclusion.
Figure 1: XYZ recent financial performance
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2010 2009 2008 2007 2006 2005 2004
Revenue £m 4326.7 3970 3123.8 2810.7 2548.3 2260.3 1656.8
Gross Profit
£m
644.3 586.8 456.8 406.2 365.7 325 200
PBIT 213.9 177.1 136.1 114.6 107.4 77.9 57.4
PAT 156.8 130.2 99.7 82.4 79.5 54.4 36.0
Figure2: Operating Profit3 of XYZ in recent years
Analyzing the financial performance of XYZ between the years 2004 and 2010, one can clearly
see that until 2007 there has been a significant increase in the profits 4, but from 2007 onwards
the profits started declining steadily probably because the depression was at its peak. There were
profits but not with a great margin as before. So there has to be something which is hindering the
company from making enormous profits.
Current Market Position:
With a recent acquisition5 of the market leader of the domestic BPO, XYZ has emerged as the
single largest player in this field. It has made the largest acquisition in the Indian BPO space till
date6.
Figure 3: Remuneration for the company’s Chief Executive for the year 2010.
3 Operating Profit: Profit made by a business as a result of its ordinary trading activities.
4 Here we consider only revenues, gross profit and operating profit due to the differing taxrates every year.
5 About the acquisition refer to appendix 1
6 Featured articles from the Times of India.2011,viewed 13/6/11,<http://articles.timesofindia.indiatimes.com>
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Figure4: Remuneration for the company’s Finance Director for the year 2010.
It can be evidently seen from these two pie diagrams that there is a huge amount of increase in
the annual salaries of the higher officials. But for those working at the base level there is minimal
done7. So clearly this is a case of a demotivated staff and thus people are left with no option
rather than change jobs and go to a company which is offering a higher pay package along with
meaningful perks. This eventually leads to a high staff turnover rate which proves to be
detrimental to the company’s profits.
Analysis/Evaluation
Both the primary and secondary data collected point to only one direction, the company is doing
well i.e. gaining profits but not “marginal profits” and the reason for this is a demotivated staff
7 Refer to Appendix 2.
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41% 34%
25%
37%39%
24%
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due to the pay packs offered to people at the executive and trainee levels who are unsatisfied 8.
The ever increasing rate of competition is giving rise to high job fluctuation rates especially after
the year 2007 particularly for XYZ.
Financial Analysis:
Profit and Loss Account for XYZ, for the year
ended 31st December 2010
PARTICULARS AMOUNT IN MILLION POUNDS
Sales Revenue 4326.7
Cost of Sales (3682.4)
Gross Profit 644.3
Less Expenses (413)
Less Depreciation of assets (17.4)
PBIT 213.9
Tax (57.1)
Profit after Tax 156.8
Balance Sheet9 of XYZ as on 31st December 2010
8 Refer to Appendix 1.
9 A balance sheet gives the financial position of a business at a particular point in time
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Fixed assets
Intangible Assets 1044.5
Tangible Assets 135.4
Total Fixed Assets 1378.2
Current Assets
Stock 65.4
Cash at hand or in bank 279.3
Total Current Assets 344.7
Total Current Liabilities 1675.7
Net Assets 841.3
Loan Capital 262.9
Share Capital 9.9
Retained Profit 568.5
Capital Employed 841.3
There is sufficient amount of capital which is held by the company every year. This is proved by
the financial analysis. But most of this is distributed or spent on increasing the salaries of the topmost officials of the companies such as the Chief Executive or the Finance Director 10. The
salaries of such top officials includes transport allowance, children’s education allowance, bonus
amounts etc.11 In fact it’s not only this company, but “The rise in the pay for the board level
executives is seen to be more than twice the rate of inflation in the previous year. This also
seems to be quite a unique situation for the company as most of the companies were lowering
pays and slashing jobs to overcome recession.”12 In such a scenario when the higher officials are
being made much more than the people at the lower levels, they do not want to put any extra
10 Refer to Figure3 and Figure4
11 Refer to Appendix 1.
12 Article Basic salaries up by 10% despite bad economy , viewed 15/6/11<http://www.financialculture.com>
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effort because they know their effort would not bore any fruitful results. Thus, the best option
they consider or rather are left with is to shift to a job which pays more than the current one and
offers better perks for them. This is the major factor which is proving to be detrimental for the
company’s growth and profits.
Concepts like profit-related pay or performance related pay can help motivate a dissatisfied
workforce. Performance bonuses, loyalty bonuses, pay rises and gratuity are some such
examples. These would create incentives for people to work and perform better. Workers can
also focus better if their targets are clearly set out.
Non-Financial Analysis
Though the financial problems faced by the people working in the BPO sector of the XYZ
company are the most important but there are factors other than these which are equally
important and should be taken care of for a healthy working environment and a motivated and
dedicated staff. To explain these the best way would be using Maslow’s13 “Hierarchy of needs”
Fishbone Model14
Lack of training Lack ambition
and development Lack training
programmes.
Dull working Insufficient motivational
13 American psychologist Abraham Maslow focused on the psychological needs of workerssince he believed that people are motivated by more than just money. He argued that theseneeds be met in order to motivate the employee.
14 Professor Kaoru Ishikawa’s fishbone model is a graphical representation of the most likelycauses and effects of a particular problem.
14
Demotivated
Staff
Polici People
Paraphernal
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environment. techniques.
Clearly, the company needs to restructure its strategies and concentrate more on the most
important aspect of a business i.e. the people. Maintenance factors should be met to prevent
dissatisfaction. Motivators like job enlargement, job enrichment and job empowerment should be
implied to increase the psychological growth of workers and hence increase satisfaction and
performance at work. Appropriate training and development programs should be initiated for
employees so that they learn something new and face more challenges so that they enjoy what
they are doing. Another way to motivate workers could be making them participate in the
decision making of the business. The decisions which might affect them could be taken by taking
their suggestions and thoughts into consideration. In this way, workers feel that they are very
much a part of the business.
“There is no happiness except in the realization that we have accomplished something”.15
Recognition and praise of the workers for what they are doing can also be an encouraging factor.
A pleasant working environment helps boost the morale of workers. As the effect of recession is
now receding, slowly inflation is getting to its peak and with rising costs of living; people are
demanding better salaries and other perks. XYZ should do something about this and cater to the
needs of their workforce to reduce the level of staff turnover.
With rising competition valuable workforce has left from XYZ and shifted to companies which
are providing them with a higher pay and other factors such as suitable work hours16
. This is notonly increasing the company’s staff turnover figure but also the added costs of recruiting and
training new employees and starting the work from scratch with them.
15 Quote by Henry Ford
16 Refer to Appendix 2.
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Nevertheless, the recent acquisition by the company 17 can prove to be a boom for the firm and
provide more employment opportunities and if the factors that have led to the high staff turnover
figure are kept in mind and worked upon it can be a great success for the company.
Conclusion and Recommendations
The research has enabled a deeper understanding of the situation and has looked at the problem
of Employee Attrition from various views i.e. from an official’s view as well as an employee’s
view point. The company’s good employer-employee relations 18are a plus point. But the fact
that the workforce is not really satisfied with the training and development processes in the
company is a factor to be carefully considered. Workers in today’s world like challenges 19and
repetitive work every day becomes monotonous for them so the company can work towards that.
A healthy working environment and improved working space would also ensure workers serving
a longer tenure in the company.
Recommendations:
As such my recommendations would be:
17 Refer to Appendix 1
18 Refer to Appendix 2.
19 Refer to Appendix 2.
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• Introduce better training and development programs along with better working hours if
possible20.
• Financial and non-financial motivation techniques such as bonuses and other perks can
help motivate people to serve in the company for longer.
• New and challenging work for employees can also help boost their morale.
• The company can try and take suggestions from employees when making decisions that
would affect them as well take time to time reviews from them.
However my research is limited: it has looked into the matter only from an HR point of view and
is a very HR oriented research. Factors such as bonuses, training and development programs
have to be looked into from the financial point of view. The feasibility of such options has to be
considered. Such decisions require careful and long term strategic planning for the betterment of
the business and the employees both. There can be minor differences in the financial data due to
confidentiality issues. But this is a serious problem and has to be looked into very carefully and
appropriate solutions be deduced because if not done so it can prove to be very harmful for the
business in the long run.
Bibliography:
Annual Reports of XYZ Company.
Articles from the Times of India 2011
<http://articles.timesofindia.indiatimes.com/2011-06-01/india-business/29607751_1>
Viewed on 13th June 2011 Time of access: 5:56PM
Article on rise in basic salary by 10%
<http://www.financialculture.com/basic-salaries-up-by-10-for-ftse-despite-bad-economy/>
Viewed on 15th June 2011 Time of access: 1:24 PM
Dictionary for Reference
<http://www.dictionary.com>
20 Refer to Appendix 4.
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Viewed on 13th June 2011 Time of access: 2:54 PM
Hall, D, Jones, R, Raffo, C.2007. Business Studies (3rd Edition). Causeway Press Ltd.
Interview with Mr. Paul Gaskin HR Director of XYZ Company.
Interview with Mr. Rajat Sood BPO Employee of XYZ Company.
Interview with Ms. Sakshi Sharma BPO Employee of XYZ Company.
Interview with Ms. Sambhavna. Ex-employee of XYZ Company.
NASSCOM foundation
<www.naascomfoundation.org>
Viewed on 15th June 2011 Time of access: 9:24 PM
Outsourcing Blog
<theoutsourceblog.org>
Viewed on: 14th June 2011 Time of access: 3:29 PM
Paul Hoang, 2007. International Baccalaureate Business and Management. Edition. IBID
Press.
Quotes
<thinkexist.com › Authors › Jaz Jen>
Red mayne
<www.redmayne.co.uk>
Viewed on: 13th June 2011 Time of access: 5:56PM
Top 10 BPO Companies in India
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< www.chillibreeze.com/articles/top-BPO-companies.asp>
Appendix 1: Interview with Mr. Paul Gaskin- HR Director of XYZ Company
1) SEEING THE PRESENT SCENARIO OF THE BPO SECTOR ACROSS THE
COUNTRY WHERE DO YOU SEE IT GOING?
Ans) There is a lot of competition currently floating in the Indian market as far as the BPO
sector is concerned. The market trend during the recession period has forced small Indian
BPO companies to shut down their firms as a result of which a lot of unemployment was
seen but as the recession period is fading we see opportunities and new firms coming up as
well as M&A of various BPO companies providing new opportunities for workers. A recent
acquisition of our firm has enabled us to become the largest domestic BPO sector in India in
addition to providing jobs for almost 5000 people henceforth.
2) WHAT ARE THE REMUNERATION PACKS YOU HAVE BEEN OFFERING TO
YOUR EMPLOYEES IN THE PAST THREE YEARS?
Ans) Remuneration packs depend upon the qualification and experience of the person hired.
Although once hired there has been a minimum increment between 10 to 20% for every
employee per annum.
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3) HAVE THE PAY PACKS AND PERKS BEING OFFERED AT DIFFERENT JOBS
REMAINED CONSTANT IN THE PAST THREE YEARS?
Ans) At certain levels like managers and team leaders it will be a yes but at executive and
trainee levels the result has not been very satisfying and our staff turnover figures have
reached about 80 -100 people leaving jobs per year.
4) WHAT DO YOU THINK CAN BE THE POSSIBLE CAUSE OF EMPLOYEES
LEAVING THE FIRM?
Ans) A majority of employees choose to move from one firm to another basis higher
increments, better positions offered and locational issues.
5) WHAT WRE THE ALLOWANCES THAT ARE OFFERED TO YOUR TOPMOSTOFFICIALS?
Ans) Their allowances include medical benefits, bonus amounts, transport allowances,
children’s education allowances etc.
6) HOW ARE THE EMPLOYER- EMPLOYEE RELATIONS IN THE FIRM?
Ans) The XYZ firm is valued for its employee friendly relationship which is why today we
are the market leaders.
7) LASTLY WHAT ARE THE STRATEGIES YOU HAVE IN MIND TO FOLLOW OR
ARE FOLLOWING CURRENTLY TO RETAIN EMPLOYEES?
Ans) Currently to retain employees we are offering attractive salary packages with perks and
commuting facilities which makes their lives easier and ours too as the public transport
system especially for female workers is not very safe in India. Also, providing them with
international quality training for better prospects and formation of a strong and easily
approachable ER team to understand the needs and problems if any faced by an individual
employee.
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Appendix 2: Interview with MS. Sakshi Sharma and MR. Rajat Sood combined together
with valuable information
1) SINCE HOW MANY YEARS HAVE YOU BEEN WORKING IN THE
ORGANIZATION?
Ans) 3 years
2) ARE YOU SATISFIED WITH WHAT THE COMPANY IS OFFERING YOU?
Ans) Yes it is a great company to work with which has taught me a lot of new chaptersenhancing my knowledge.
3) DO YOU PERSONALLY WANT ANY CHANGES IN THE ORGANIZATION
WHICH MIGHT HELP YOU AND OTHERS LIKE YOU ADAPT MORE
COMFORTABILY AND READILY TO THE WORKING ENVIRONMENT?
Ans) Personally I would want more training and development programs because I believe
training and development is a key source for growth for any individual employee to reach the
next level. Better training and development will result in better performance which in turn
will help the company grow which in turn will help the company profit so this basically a
cycle which helps in better performance of the company as well as the individual. Also
challenging and new work for employees is necessary to provoke a positive spirit in them.
4) WHAT DO YOU THINK COULD BE THE REASONS FOR THE EMPLOYEES
LEAVING THE ORGANIZATION SERVING A SHORT SPAN OF TIME?
Ans) Few reasons of employees leaving could be a) hasty decisions of not being comfortable
in the environment/set up, b) higher pay packages offered by competitors, c) preferential
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location suitable to the employee, d) suitable working hours as per the individual’s
convenience eg an individual is more comfortable working during day shift timings so that he
is able to spend quality time with his family but if he is positioned for a night shift duty he
does not get time to spend with his family.
5) HOW ARE YOUR WORKING RELATIONS WITH YOUR EMPLOYERS?
Ans) This company is a very employee friendly firm and pays genuine heed to concerns
raised by its employees and tries its best to satisfy/amicably sort out issues in the best interest
of the employee as well as the employer.
6) HAVE YOU BEEN FACING ANY PROBLEM IN THE FIRM AS SUCH WHICH
YOU WOULD LIKE TO DISCLOSE?
Ans) NO
Appendix 3: Interview with MS Sambhavna
1) WERE YOU AN EMPLOYEE OF XYZ COMPANY?
Ans) Yes
2) FOR HOW MUCH TIME DID YOU WORK THERE?
Ans) I worked for a very short tenure. About 5 months.
3) WHAT WAS THE REASON THAT YOU LEFT THE JOB?
Ans) Well firstly I was not happy with working hours. A 9 to 5 job became a 9 to 8 job for
me. It was becoming really hectic for me and adversely started affecting my health also.
Moreover I could not spend quality time with my family who are my topmost priority. Also,
the pay package I’m getting here is far better than that provided by XYZ Company and added
to that are the benefits like medical insurance, transport allowance etc.
4) APART FROM THE SALARY AND WORKING HOURS WAS THERE ANY OTHER
PROBLEM WHICH YOU WERE FACING THERE?
Ans) Not really but yes I would like to say that the company definitely should introduce
better training and development programs.
5) HOW WAS THE WORKING ENVIRONMENT THERE?
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Ans) Well I can say that the working environment was pretty much the same as in any MNC.
Except for the fact that the company maintains an excellent employer-employee quotient. It
is really commendable.
Appendix 4: XYZ Company SWOT Analysis
SWOT analysis consists of four categories, and is an analytical tool used to discover the current
situation of the business and prospects for its future. Includes the businesses internal strengths
and weaknesses and external opportunities and threats.
Strengths Weaknesses Opportunities Threats
-Is a market leader in
the BPO sector of the
country.
-Financial Status is
relatively good and
has a large amount of
profits every year.
- Maintains a good
employer-employee
relation.
-Concentrates on the
remuneration of
majorly the higher
officials.
-Lacks appropriate
training and
development
programs.
-The acquisition can
broaden the horizons
and can enable
employment of highly
efficient and valuable
staff.
-Big competitors in
the market and can
increase the level of
competition
tremendously.
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