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PROJECT TOPIC

“EMPLOYEE ATTRITION AND RETENTION”

SUBMITTED IN THE PARTIAL FULFILLMENT OF THE AWARD OF

THE DEGREE OF

BACHELOR OF MANAGEMENT STUDIES

SUBMITTED TO

K.M.AGRAWAL COLLEGE OF ARTS, COMMERCE AND SCIENCE

SUBMITTED BY

MISS. TEJASHREE ASHOK PAGARE

SEAT NUMBER : 00000

SUPERVISED BY

PROF. KHUSHBOO BHATIA

NOVEMBER 2013

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DECLARATION

I hereby declare that the project entitled, ― Employee attrition and

retention‖, submitted to K.M.Agrawal College of Arts, Commerce and Science in

partial fulfillment of award of Master of Management Studies of University of

Mumbai is my original work and does not form any part of previously conducted

projects.

This information is purely for academic purpose.

TEJASHREE ASHOK PAGARE

B.M.S ( BACHELOR OF MANAGEMENT STUDIES)

DATE :

PLACE : KALYAN

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CERTIFICATE

This is to certify that the project entitled, “Employee Attrition And Retention”, submitted

by Miss. Tejashree Ashok Pagare, in partial fulfillment for the award of Master in

Management Studies of University of Mumbai is original work and does not form any part of

the projects undertaken previously.

Also it is certified that the project represents the original work on the part of the candidate.

Place : Kalyan

Date :

External Examiner Principle

(Drs. Miss. Anita Manna)

Guide Co-Ordinator

(Prof.Khushboo Bhatia) (Prof. Sujeet Singh)

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ACKNOWLEDGEMENT

I take this opportunity to express my profound gratitude and deep regards to my

guide PROF..KHUSHBOO BHATIA for her exemplary guidance, monitoring andconstant encouragement throughout the course of this thesis. The blessing, help andguidance given by her time to time shall carry me a long way in the journey of lifeon which I am about to embark.

I also take this opportunity to express a deep sense of gratitude to PROF. SHALINIVENKATESH , for her cordial support, valuable information and guidance, whichhelped me in completing this task through various stages.

Lastly, I thank almighty, my parents, sisters and friends for their constantencouragement without which this assignment would not be possible.

TEJASHREE ASHOK PAGARE

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INDEX

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EXECUTIVE SUMMARY

This project is done on human resource management topic in the area of ―EMPLOYEE ATTRITION AND RETENTION‖. The most challenging job for any

present manager is to retain their employees.

Employee retention involves taking measures to encourage employees to remain in theorganization for the maximum period of time. Corporate is facing a lot of problem inemployee retention these days. Hiring knowledgeable people for the job is essential for an employer. Employee attrition and retention are one of the major issues facing thecorporates today. But retention is even more important than attrition. There is no endof opportunities for talented person. There is ample number of choice aroundemployees. In olden days salary was all that matters, but today it‘s just one amongthe components. Some of the other elements are like work environment, relationship,freedom to work etc.

Due to high level of attrition it is important to know whether the employees aresatisfied with their job and organization, if not the reason for leaving. This project willspecify the effectiveness of various retention practices used retain the employees. Thestudy include various trends of practice followed by the organizations and it‘s effecton the problem of attrition. Retention is a top business priority for more than onethird of the organizations. More than one third of HR professionals in views retentionas one of their pressing issues. It is not very often that the management would beaware of the true reason as to why an employee would be leaving their organization.

To be successful in knowing the reason, an effective exit interview procedure is veryessential. This would help the organization to an extent to get a clear picture of whatis going wrong. Thus, this study is conducted to find out directly from the employeesthe factor that does not motivate them to continue employment with their organization. With help of a self developed questionnaire few factors are taken intoconsideration for the study. With the help of the study, An attempt is made to findout the effectiveness of the practices and how practical is it to retain the employees.

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1.1 SUMMARY

Employee attrition is the rate at which organizations and/or company's hiring and fireemployees to either represent their firm or leave their firms. It it also referred to the employee

turnover rate.

Simple ways to describe it are "how long employees tend to stay" or "the rate of traffic

through the revolving door". Turnover is measured for individual companies and for their

industry as a whole. If an employer is said to have a high turnover relative to its competitors,

it means that employees of that company have a shorter average tenure than those of other

companies in the same industry. High turnover may be harmful to a company's productivity if

skilled workers are often leaving and the worker population contains a high percentage of

novice workers Labour turnover is equal to the number of employees leaving, divided by theaverage total number of employees, multiplied by 100 (in order to give a percentage value).

The number of employees leaving and the total number of employees are measured over one

calendar year.

Employee retention refers to the ability of an organization to retain its employees. Employee

retention can be represented by a simple statistic (for example, a retention rate of 80% usually

indicates that an organization kept 80% of its employees in a given period). However, many

consider employee retention as relating to the efforts by which employers attempt to retain

employees in their workforce. In this sense, retention becomes the strategies rather than the

outcome. In a business setting, the goal of employers is usually to decrease employee

turnover , thereby decreasing training costs, recruitment costs and loss of talent and

organisational knowledge. By implementing lessons learned from key organizational

behavior concepts employers can improve retention rates and decrease the associated costs of

high turnover. However, this isn't always the case. Employers can seek "positive turnover"

whereby they aim to maintain only those employees who they consider to be high performers.

http://en.wikipedia.org/wiki/Productivity



http://en.wikipedia.org/wiki/Business



http://en.wikipedia.org/wiki/Turnover_(employment)




http://en.wikipedia.org/wiki/Positive_organizational_behavior










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1.2 INTRODUCTION

In the recent decades the Indian industry has changed its outlook. The employment scene

has changed its appearance. The factors like skill sets , job satisfaction drive the employment

and not just the money. The employer hence faces the heat of continuous employee

turnover. Continuous efforts are made by organizations to control the employee turnover rate

as it directly affects the performance of the organization as many key people leave the

organizations for various reasons at crucial points. This turnover is normally known as

―ATTRITION.‖

Employee attrition refers to the loss of employees through a number of circumstances, suchas resignation and retirement. The cause of attrition may be either voluntary or involuntary,though employer-initiated events such as layoffs are not typically included in the definition.Each industry has its own standards for acceptable attrition rates, and these rates can alsodiffer between skilled and unskilled positions. Due to the expenses associated with trainingnew employees, any type of employee attrition is typically seen to have a monetary cost. It isalso possible for a company to use employee attrition to its benefit in some circumstances,such as relying on it to control labor costs without issuing mass layoffs.

There are many different ways for a company to lose employees, most of which are typicallytaken into account to ensure that the organization is able to operate efficiently. Attrition refersto the loss of employees due to reasons other than firing and other employer-initiated events.This means that an employer has no direct control over how many personnel are lost toemployee attrition. Retirement is one major cause of employee attrition, and since people

tend to retire around a specific age this is a factor that can be accounted and planned for.Other causes of employee attrition, such as personnel who quit due to prolonged illness,dissatisfaction with the company, or other reasons, can be more difficult to estimate.

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1.3 MEANING OF EMPLOYEE ATTRITION

Employee attrition is the rate at which organizations and/or company's hiring and fire

employees to either represent their firm or leave their firms. It also referred to theemployee turnover rate. Employee attrition refers to the loss of employees through anumber of circumstances, such as resignation and retirement. The cause of attritionmay be either voluntary or involuntary, though employer-initiated events such aslayoffs are not typically included in the definition. Each industry has its ownstandards for acceptable attrition rates, and these rates can also differ between skilledand unskilled positions. Due to the expenses associated with training new employees,any type of employee attrition is typically seen to have a monetary cost. It is also

possible for a company to use employee attrition to its benefit in somecircumstances, such as relying on it to control labor costs without issuing masslayoffs.

There are many different ways for a company to lose employees, most of which aretypically taken into account to ensure that the organization is able to operateefficiently. Attrition refers to the loss of employees due to reasons other than firingand other employer-initiated events. This means that an employer has no direct controlover how many personnel are lost to employee attrition. Retirement is one major cause of employee attrition, and since people tend to retire around a specific age thisis a factor that can be accounted and planned for. Other causes of employee attrition,such as personnel who quit due to prolonged illness, dissatisfaction with the company,or other reasons, can be more difficult to estimate.

DEFINITION

1.―The reduction in staff and employees in a company through normal means, such asretirement and resignation. This is natural in any business and industry.‖

2.―Attrition is the abandonment of a position due to retirement, resignation or other similar

reasons. Therefore, attrition decreases the workforce, because there are no immediate

replacements.‖

3.The employee attrition rate is the number of exits during the perioddivided by the average number of employees

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1.5. FACTORS OF EMPLOYEE ATTRITION

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1.6 FACTORS AFFECTING EMPLOYEE BEHAVIOUR

Organizational culture

The overall culture of a company impacts how employees conduct themselves with co-workers, customers and suppliers. More than just a work environment, organizational cultureincludes management amp;#039;s attitudes towards employees, company growth plans andautonomy/empowerment given to employees. "Tone at the top" is oftenused to describe the organizational culture of a company. A positive tone can help employees

be more productive and happy. A negative tone can lead to employee dissatisfaction,absences and even theft or vandalism.

Local economy

An employee amp;#039;s view of his job is impacted by the state of the local economy. If

jobs are plentiful and the economy is booming, employees are happier overall and their behavior and performance mirror that. On the other hand, when times are tough andunemployment is high, employees can become fearful and anxious about holding their job.This anxiety leads to lower performance and lapses in judgment. In some employees,however, fear of job loss can be a motivating factor to perform better.

Reputation of company in community

Employees amp;#039; perceptions of how their company is viewed by the local communitycan impact behavior. If an employee is aware that her company is considered to beunderhanded or cheap, her actions may also be that way. It is a case of living up to

expectations. However, if a company is seen as a pillar of the community with lots of goodwill, employees are more likely to exhibit similar behavior because customers andsuppliers expect that from them.

Competition in industry

The degree of competitiveness in an industry can impact the ethics of both management andemployees, especially in situations where compensation is based on revenues. In a highlycompetitive environment, ethical behavior towards customers and suppliers may slipdownward as employees scramble to bring in more work. In a stable industry where attractingnew customers is not an issue, employees are not motivated to lay their internal ethics asideto chase money.

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1.7 OBJECTIVES OF EMPLOYEE ATTRITION

To find out employees annual as well as average turnover rate.

To ascertain the cause of Employees turnover.

To determine the effect of employee turnover.

To measure the satisfaction level of employees in the organization.

To identify factors which would trigger attrition

To know the major reasons for employees to leave their jobs.

To evaluate how an employee is valued as a part of this office.

To study whether the promoting respect and fair treatment among all staff is a high priority

To find whether the communication between staff and management is effective.

To study whether the workload in this office is distributed equitably.

To evaluate whether the employee know exactly what is expected of him/her as anemployee.

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1.8 ADVANTAGES OF EMPLOYEE ATTRITION

A new employee may bring a new enthusiasm to the tasks that make up a job; this

‗new blood‘ can provide a nice balance of motivation.

Employee turnover can lead to different points of view which may result in innovative

ideas

Retaining employees reduces training costs.

It builds a team of skilled and experienced employees.

Retaining experienced staff creates a positive impact on customer services.

Retention activity fosters loyalty towards the organization amongst employees.

Encourages friendly environment and fosters bonding amongst employees.

It facilitates smooth workflow of internal processes.

It increases the quantity of work delivered.

It enhances the quality of the work produced.

While employees bring knowledge with them, on the flip side people often get locked

into a particular mindset and sometimes see things from a pretty limited perspective.

New and fresh ideas often leads to innovation and businesses who have high turnover

often find themselves able to come up with new products, services and ways of doing

things.

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1.9 DISADVANTAGES OF EMPLOYEE ATTRITION

One of the most significant disadvantages of high employee turnover is the loss of

fully trained employees.

A loss of points of contact is another drawback. There is a good chance that the

experienced employee‘s rolodex will not transfer to the new employee and a lot of

time will be spent building or re-building those relationships

When your most experienced person departs for retirement or greener pastures, there

is a vacuum of intellectual knowledge that goes with them

It promotes groupism amongst old employees which creates an insecure environmentfor new employees.

Improper mixing of staff affects productivity and ensures poor quality of work.

Excessive liberty to staff just to maintain work flow affects quantity and quality both.

Flexible work timings rarely justify the work delivered.

Retaining non-delivering staff kills the productivity and creativity of knowledgeable

employees.

Retaining spoon-fed and complaining employees add to the cost of the organization.

Affluent employees who do not require a job, rarely add value to the employee

strength.

High costs are one of the biggest drawbacks to high employee turnover. It takes a lot

of efforts and resources in the application process to advertise positions, recruit,

interview and hire.

The time invested in the training process is a considerable con of high employee

turnover.

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1.10 TYPES OF EMPLOYEE ATTRITION

At first glance, the phrase "employee turnover" has a negative connotation -- a stigma

associated with an employer's obligation to reduce turnover at all costs. However,there are different types of turnover and all turnover isn't negative. Turnover occurs

for a variety of reasons, ranging from termination for poor performance to the

departure of highly-skilled employees who resign after they help grow start-up

businesses to sustainable levels.

Involuntary

Involuntary turnover occurs when employers terminate an employee or ask an

employee to resign. The latter may ultimately be considered voluntary turnover;however, the initial decision is to effect an involuntary turnover. When employees areterminated for violating workplace policies, poor performance or business slowdown,the departure is considered involuntarily. Some instances of involuntary turnover maycause trepidation among remaining employees. Employees who witness regular involuntary turnover or terminations might be concerned about their own job security.Other employee terminations may come as a relief to remaining employees, whosemorale and productivity suffer when poor performers affect the workplace climate.

Voluntary

Voluntary turnover occurs when employees leave of their own volition. Employees whoresign, retire or simply leave the organization for other reasons are counted in turnover analyses as voluntary turnover. Attrition is often part of the turnover analysis. Humanresources experts define attrition as a decrease in the workforce for voluntary departures. Thedifference between attrition and voluntary turnover is that employers do not replaceemployees who leave by virtue of attrition. While some instances of voluntary turnover mayoccur because employees are dissatisfied, a number of employees resign for reasons unrelatedto working conditions. Examples of voluntary turnover for nonwork-related reasons areemployees who leave their jobs to travel with spouses, or students who leave the workplaceto return to school.

Positive

Desirable -- or positive -- turnover occurs when the workforce experiences change due to newemployees bringing fresh ideas and perspectives to the company replace workers who areterminated for poor performance. Infusing new talent in an organization can re-energize theworkplace, catapult productivity and boost profitability. Employers may initially beapprehensive about this type of turnover, simply because the word turnover has a negativeconnotation. Replacing a stagnant workforce can be costly.

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Negative

Negative turnover is often referred to as undesirable turnover. It's easy to understand whyturnover is considered negative or undesirable when employees leave under a cloud of circumstances such as suggested wrongful termination, mass exodus of disgruntled workersor workplace conflict. Mass layoffs, business closure and plant shutdowns might also beclassified as negative or undesirable turnover -- layoffs have a devastating impact on workersand the surrounding community. The negative effects of losing jobs in certain areas cancreate a downward spiraling effect to economic conditions for employees of other nearbycompanies. For example, when employees suffer job loss from a plant shutdown, surroundingcompanies that provide services such as meals and other lunchtime and break-time servicesalso suffer from lost revenue.

Another types of employee attrition are:

Market Driven – based on the demand for a particular skill or ability in temporarily lowsupply(self-correcting in normal markets). The typical initial reaction by employers to marketdriven attrition is to increase wages, offer better benefits, escape the market by relocation or site migration or relax hiring standards.

Workload or Stress Driven – on the actual capacity to perform the work required. This iswhen there are not enough of the right people.

Process Driven – variables associated with job design and/or the organization. In someindustries and organizations there is a belief that attrition has always been there and always

will be there. Addressing this scenario produces the most lasting results.

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1.11 ATTRITION CYCLE AND DRIVERS

Typically, in organizations experiencing systemic or chronic attrition, a cycle develops as:

Attrition normally brings decreased productivity. People leave causing others to work harder.

This contributes to more attrition, which contributes to increasing costs, lowe revenue. Thisoften forces additional cost reductions and austerity measures on an organization. This in turnmakes working more difficult, causing the best performers with the most externalopportunities, to leave.

There are two primary drivers of voluntary attrition. These are, no one likes to feelinadequate and, in most organizations, it is easier to leave than stay and try to alleviate the

problem. People feel inadequate when communication is either incomplete or unreliable.

Choices are either absent or insufficient. Often, the challenges in these situations are unclear,unsatisfying or overwhelming. People will give up trying to change things when promises arenot specific, not kept or are not fulfilled in a timely manner. Additionally, when expectationsare thwarted, changed arbitrarily or unfulfilled, people will lose motivation.

Other common demotivators are when commitments are unacknowledged, vague or incompatible.

Rarely do organizations create environments where employees can meaningfully participatein activities, which will reduce turnover. Attrition is commonly thought of as

peopleterminating employment. Another form of classifying types of attrition are:

• Empty Chair Attrition: Employees quit and leave

• Warm Chair Attrition: Employees quit and stay.

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1.12 DIAGRAM RELATED TO EMPLOYEE ATTRITION

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1.13 HOW TO CALCULATE EMPLOYEE ATTRITION RATE

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1.14 ROLE OF HR DEPARTMENT IN EMPLOYEE ATTRITION

Attrition Rate is good for the organization as long as the rate is at normal level. This will helpthe organization to get new blood into the organization and for the organization to develop.But it becomes a problem when the attrition rate is abnormal. Therefore, HR Department has

the most crucial role to play in any organization. At the time of conducting interviews, theHR personnel try to bring right candidate to the right job. Similar is true even when theattrition rate is abnormal, so they have a very crucial role to play.

Following are some of the tips to reduce attrition rate:

1.Hiring

The individuals who are truly fit to succeed in the position for hire will dramatically increasethe chances of that employee being satisfied with his or her work, and remaining with the

company for an extended period of time. Employees should not only be selected on the basisof communication skills and educational qualifications.

2.Communication

Communication of employee's roles, job description and the responsibilities within theorganization, new policies will help to retain employees.

3. Participative decision making

It is incredibly important to include employees in the decision making process, especially

when decisions are related to employees. This can help to generate new ideas and perspectives that top management might never have thought of.

4. Sharing knowledge with others

Allow the members to share their knowledge with others. This helps in retention of information. This also lets a team member know that he is a valuable member of theorganization. Similarly, facilitating knowledge sharing through an employee mentoring

program can be equally beneficial.

5. Shorten the feedback loop

This helps the employees to know the feedback to their work within a short period. This alsohelps to keep performance levels high and reinforce positive behavior among employees.

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6. Pay package

Any employee wants to be appropriately paid and fairly for the work he or she does. For this,conduct a research to find out the pay package in other similar type of organizations atregional as well as at national levels.

7. Balance Work & Personal Life

No doubt family is exceptionally important to employees. When work begins to put pressureon one family, no pay package will keep an employee in the organization. Therefore, thereshould be a balance between work and personal life. Small gestures like allowing anemployee to take an extended lunch once a week to watch his son's cricket game will result inloyalty and helps to retain the employee.

8. Organizational Culture

Try to select the candidates who believe in the organization culture and adopt with ease toorganization culture.

9. Exit Interview

Taking interview with the employees who are leaving the organization will help theorganization to find out the reasons why the employees are leaving the organization. This willalso help to find out any drawbacks in the organization.

10. Another method to reduce attrition rate is that they should find out why employees are

leaving the organization from the employees who are working for the past so many years.

11. Motivational Training

It is sure that motivational training helps to retain the employees. One of the crucial aspectsto motivate employees is to ensure that they have ample growth opportunities which can be

provided through training.

12. Multi-Tasking

One of the ways to retain the employees in the organization is try to get people with differentqualities like smart, adaptable, and capable of multi-tasking.

13. Referrals

Another technique is to try to get the employees hired through referrals. This makes themstick with the organization.

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14. No Favoritism

One of the surest ways to create animosity and resentment in an organization is to allowfavoritism and preferential treatment towards an employee. Be sure to treat all employeesequally and avoid favoritism at all costs.

15. Support and communicate.

Employees want to know what is expected of them. Be clear about job descriptions andresponsibilities and give continual feedback. Reward performance with words of praise aswell as the systems, tools, and technology that people need to do deliver their best

performances.

16. Train and promote.

It is far cheaper to develop internal talent than to recruit, hire, and train outsiders. Keep aneye out for potential in the raw and offer professional development as a way to inspirediamond-in-the-rough employees while also preparing and fueling your own succession

pipeline.

17. Compensate cooperation.

When some workers are carrying the load for many others, they are obviously your greatestassets. But they will soon leave because that kind of system is unfair to them. Get rid of thedead weight and those who spread negativity within the ranks, using the money you save byshedding lackluster employees to financially compensate those who distinguish themselves

through positive teamwork.

18. Listen and learn.

One of the biggest reasons employees are dissatisfied is because of a disconnect betweenthemselves and upper management. Lead from the trenches, get to know everyone in theorganization, and learn to value their input, however insignificant it may seem. Otherwiseyour own leadership will suffer because leaders are only capable and powerful when theyhave loyal followers

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DIAGRAM SHOWING MAJOR REASONS FOR TERMINATION OF

EMPLOYEES

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EFFECTS OF EMPLOYEE ATTRITION

1.Decreased Performance

One of the simplest but highly impacting negative effects of turnover is decreased

performance in the workplace. In their December 2007 Harvard Business School article

"Managing the Impact of Employee Turnover on Performance: The Role of Process

Conformance," Zeynep Ton and Robert S. Huckman cite a 48-month study conducted in a

large United States retail chain that revealed that both profit margin and customer service

were adversely affected by turnover. Less experienced workers are less likely to sell higher

value solutions and deliver optimized service.

2.Unfulfilled Daily Performance

Many of the negative effects of turnover relate to performance quality, but the "Encyclopedia

of Business" points out companies with higher turnover may struggle to complete all

necessary or important daily functions. For instance, if it takes 10 workers to a complete a

given work task or function in a day, and only seven workers are currently employed in that

area, the company has to figure out how to deal with the unfulfilled daily work requirement.

3.Costs

High costs are one of the more discussed negatives of high turnover. Every time an employeeleaves and is replaced, there are costs associated with the process of losing the first employee

and hiring and training the new one. The Rain Maker Group indicates that it can cost about

one-half of an unskilled worker's salary to replace a lost employee. Replacing a technically

skilled employee or a high level manager can cost as much as three to five times the annual

salary. Training costs are commonly discussed, but many people forget costs to complete exit

interviews, market new openings and complete necessary background, reference and drug

checks.

4.Lower Knowleadge Base

In organizations with high turnover, constant change in employee ranks means average years of experience and background of employees are low. This means employees are generally less familiar with work tasks they complete and working effectively with customers. The "Business Link" websiteindicates that the more valuable the positions being turned over are to the company, the more impactthe turnover will have on current and future performance.

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1.17 REASONS FOR EMPLOYEE ATTRITION

Good employees quit for many reasons. The following is a list of what might be considered12 reasons for employee turnover.

1. RUDE BEHAVIOUR

Studies have shown that everyday indignities have an adverse affect on productivity andresult in good employees quitting. Rudeness, assigning blame, back-biting, playing favoritesand retaliations are among reasons that aggravate employee turnover. Feeling resentful andmistreated is not an enticement for a good work environment.

2. WORK-LIFE IMBALANCE

Increasing with economic pressures, organizations continue to demand that one person do thework of two or more people. This is especially true when an organization downsizes or restructures, resulting in longer hours and weekend work. Employees are forced to choose

between a personal life and a work life. This does not sit well with the current, younger workforce, and this is compounded when both spouses or significant others work.

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3. JOB DID NOT MEET THE EXPECTATIONS

It has become all too common for a job to significantly vary from the initial description andwhat was promised during the interviewing stage. When this happens it can lead to mistrust.The employee starts to think, ―What else are they not being truthful about?‖ When trust is

missing, there can be no real employee ownership.

4. EMPLOYEE MISALIGNMENT

Organizations should never hire employees (internal or external) unless they are qualified for the job and in sync with the culture and goals of the organization. Managers should not try toforce a fit when there is none. This is like trying to force a size-nine foot into a size-eightshoe. Neither management nor employee will be happy, and it usually ends badly.

5. FEELING UNDERVALUED

Everyone wants to be recognized and rewarded for a job well done. It‘s part of our nature.

Recognition does not have to be monetary. The most effective recognition is sincereappreciation. Recognizing employees is not simply a nice thing to do but an effective way tocommunicate appreciation for positive effort, while also reinforcing those actions and

behaviors

6. COACHING AND FEEDBACK WAS LACKING

Effective managers know how to help employees improve their performance andconsistently give coaching and feedback to all employees. Ineffective managers put off giving feedback to employees even though they instinctively know that giving and gettinghonest feedback is essential for growth and building successful teams and organizations.

7. DECISION MAKING ABILITY WAS LACKING

Far too many managers micromanage to the level of minutia. Micromanagers appear insecureregarding their employees‘ ability to perform their jobs without the manager directing every

move. Organizations need employees to have ownership and be empowered! Empoweredemployees have the freedom to make suggestions and decisions. Today ―empowerment‖

seems to be a catch-all term for many ideas about employee authority and responsibility.

However, as a broad definition, it means an organization gives employees latitude to do their jobs by placing trust in them. Employees, in turn, accept that responsibility and embrace thattrust with enthusiasm and pride of ownership.

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8. PEOPLE SKILLS ARE INADEQUATE

Many managers were promoted because they did their jobs very well and got results.However, that doesn‘t mean they know how to lead. Leaders aren‘t born— they are made.People skills can be learned and developed, but it really helps if a manager has a natural

ability to get along with people and motivate them. Managers should lead by example, reward by deed.

9.ORGANISATIONAL INSTABILITY

Management‘s constant reorganization, changing direction and shuffling people arounddisconnects employees from the organization‘s purpose. Employees don‘t know what‘s going

on, what the priorities are or what they should be doing. This causes frustration leading toconfusion and inefficiencies.

10.RAISES AND PROMOTION FROZEN

Over the years, studies have shown that money isn‘t usually the primary reason people leave

an organization, but it does rank high when an employee can find a job earning 20 to 25 percent more elsewhere. Raises and promotions are often frozen for economic reasons but areslow to be resumed after the crisis has passed. Organizations may not have a goal to offer the

best compensation in their area, but if they don‘t, they better pay competitive wages and

benefits while making their employees feel valued! This is a critical combination.

11.FAITH AND CONFIDENCE SHAKEN

When employees are asked to do more and more, they see less evidence that they willultimately share in the fruits of their labor. When revenues and profits increase along withworkload, organizations should take another look at their overall compensation packages.Employees know when a company is doing well, and they expect to be considered as criticalenablers of that success. Organizations need to stop talking about employees being their mostimportant asset while treating them as consumables or something less than valuable. If anorganization wantsempowered employees putting out quality products at a pace that meets customer demand,they need to demonstrate appreciation through actions.

12.GROWTH OPPORTUNITIES NOT AVAILABLE

A lot of good talent can be lost if the employees feel trapped in dead-end positions. Oftentalented individuals are forced to job-hop from one company to another in order to grow instatus and compensation. The most successful organizations find ways to help employeesdevelop new skills and responsibilities in their current positions and position them for futureadvancement within the enterprise. Employees who can see a potential for growth andcomparable compensation are more inclined to stay with an organization.

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1.13 EMPLOYEE TURNOVER V/S. ATTRITION

"Turnover" and "attrition" are business and human-resource terms that often are confused.

There are several types of turnover, but attrition usually can be described as a reduction inworkforce. Using these terms interchangeably or incorrectly can affect your workforce dataand skew measurements that are necessary for workforce planning.

DEFINITION

Employee turnover and employee attrition both occur when an employee leaves the company.Turnover, however, may result from a number of employment actions, such as discharge,termination, resignation or job abandonment. Attrition occurs when an employee retires or when the company eliminates his job. The major difference between the two is that whenturnover occurs, the company seeks someone to replace the employee. In cases of attrition,the employer leaves the vacancy unfilled or eliminates that job role.

INVOLUNTARY

Turnover or attrition can be involuntary. Involuntary turnover typically refers to anemployment decision to terminate the employee. Reasons for involuntary turnover include

poor performance, excessive absenteeism or violation of a workplace policy that isconsidered a terminable offense. Attrition due to layoff, reduction in force or job eliminationis typically involuntary because the employment relationship ends based on the employer'scircumstances, not the employee's decision to leave. Pennsylvania State University professor

education Erling Boe and colleagues differentiate between turnover and attrition in their article "Teacher Turnover: Examining Exit Attrition, Teaching Area Transfer, and SchoolMigration." They indicate that, when a teacher decides to leave the teaching profession, it iscalled attrition, which they consider to be a component of turnover.

VOLUNTARY

Voluntary termination occurs when an employee resigns to pursue another career opportunity, relocate with a spouse or simply leave the workforce for personal reasons, suchas raising a family. In this case, the employer starts the recruitment and selection process tofind a suitable candidate to fill the vacant position. Retirement is a form of voluntary

turnover; however, if the employer decides against filling the position left vacant, it isconsidered attrition. Nevertheless, in the case of retirement, the reason the job is vacant is theemployee's decision to retire -- classifying it as a voluntary action.

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LAYOFFS AND REDUCTION IN FORCE

A business facing closure, shutdown or a work slowdown develops a strategy for laying off

workers or reducing its workforce. This is attrition, not turnover, because the employer doesnot plan to fill positions. Once the layoff or reduction in force occurs, the positions thatemployees once held no longer exist.

COMPENSATION AND BENEFITS

Compensation and/or final pay are factors that distinguish turnover from attrition, but there isa compensation-related distinction between the two. Turnover, whether involuntary or voluntary, typically does not include pay or compensation beyond that to which the employeeis entitled, such as accrued vacation or a final paycheck. Employment that ends due toattrition may include pension payments, continued benefits for retirees or severance payments

to employees being laid off or separated from employment due to job elimination.

CONSIDERATION

When turnover occurs, it is not always the undesirable talent that leaves. Turnover can helpan organization to infuse new talent into the company by replacing former employees withcandidates with innovative ideas and better skills and qualifications. Attrition, due toretirement or death, depletes the organization of valuable expertise and talent because noemployees are replaced after the employment relationship ends.

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1.14 STRATEGIES TO EMPLOYEE ATTRITION

Employees leave organizations for many reasons; oftentimes these reasons are unknown to

their employers. Employers need to listen to employees‘ needs and implement retentionstrategies to make employees feel valued and engaged in order to keep them. These retentionmethods can have a significant and positive impact on an organization‘s turnover rate. Here

we‘ll take a look at some of these strategies.

According to strategic planning consultant Leigh Branham, SPHR, 88% of employees leavetheir jobs for reasons other than pay: However, 70% of managers think employees leavemainly for pay-related reasons. Branham says there are seven main reasons why employeesleave a company:

1. Employees feel the job or workplace is not what they expected.2. There is a mismatch between the job and person.3. There is too little coaching and feedback.4. There are too few growth and advancement opportunities.5. Employees feel devalued and unrecognized.6. Employees feel stress from overwork and have a work/life imbalance.7. There is a loss of trust and confidence in senior leaders.

TURNOVER FACTS AND FIGURES

Turnover is costly. According to Right Management, a talent and career management

consulting firm, it costs nearly three times an employee‘s salary to replace someone, whichincludes recruitment, severance, lost productivity, and lost opportunities. Life Work Solutions, a provider of staff retention and consulting services, provides the following turnover factsand rates:

Over 50 % of people recruited in to an organization will leave within 2 years. One in four of new hires will leave within 6 months. Nearly 70% of organizations report that staff turnover has a negative financial impact

due to the cost of recruiting, hiring, and training a replacement employee and theovertime work of current employees that‘s required until the organization can fill the

vacant position.

Nearly 70 % of organizations report having difficulties in replacing staff. Approximately 50% of organizations experience regular problems with employee

retention.

From these statistics it‘s clear that it‘s important to develop a retention plan to retainemployees and keep turnover low.

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Having current employees offer referrals could help minimize confusion of job expectations.Current employees can realistically describe a position and the environment to the individualhe/she is referring. Another way an employer can lessen the impact of turnover is to hire from

within, since current employees have already discovered that they are a good fit in theorganization (Branham, 2005).

Coaching/feedback

. It‘s important for companies to give feedback and coaching to employees so that their efforts stay aligned with the goals of the company and meet expectations. During anemployee‘s first few weeks on the job, an employer should provide intensive feedback.

Employers should also provide formal and informal feedback to employees throughout theyear (Branham).

Provide growth opportunities.

An organization should provide workshops, software, or other tools to help employeesincrease their understanding of themselves and what they want from their careers andenhance their goal-setting efforts (Branham). It‘s important to provide employees with

adequate job challenges that will expand their knowledge in their field (Levoy, 2007).According to Right Management, employees are more likely to stay engaged in their jobs andcommitted to an organization that makes investments in them and their career development.

Make employees feel valued.

Employees will go the extra mile if they feel responsible for the results of their work, have asense of worth in their jobs, believe their jobs make good use of their skills, and receiverecognition for their contributions (Levoy).

Employees should be rewarded at a high level to motivate even higher performance. The useof cash payouts could be used for on-the-spot recognition. These rewards have terrificmotivational power, especially when given as soon as possible after the achievement. It‘s

important for employers to say ―thank you‖ to employees for their efforts and find different

ways to recognize them. Even something as simple as a free lunch can go a long way towardsmaking employees feel valued.

Listen to employees and ask for their input as to what rewards might work best at your organization. Conduct meetings and surveys to enable employees to share their input(Branham). Most team members will work harder to carry out a decision that they‘ve helped

to influence.

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Lower stress from overworking and create work/life balance.

It‘s important to match work/life benefits to the needs of employees. This could be in theform of offering nontraditional work schedules (such as a compressed work week,telecommuting, and flextime) or extra holidays. When work-life balance is structured

properly, both the employee and employer come out ahead. For example, the employer willexperience more productivity in the workplace because employees will be less stressed,healthier, and thus, more productive (Wingfield). Encouraging employees to set work/lifegoals, such as spending more time with their children, communicates that you really do wantthem to have a life outside of work and achieve a healthy work/life balance.

Foster trust and confidence in senior leaders

. Develop strong relationships with employees from the start to build trust (Stolz, 2008).Employees have to believe that upper management is competent and that the organizationwill be successful. An employer has to be able to inspire this confidence and make decisions

that reinforce it. An employer cannot say one thing and do another. For example, an employer shouldn‘t talk about quality and then push employees to do more work in less time. In

addition, employers need to engage and inspire employees by enacting policies that showthey trust them, such as getting rid of authoritarian style of management (Branham)

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1.15 SIX STRATEGIES TO REDUCING EMPLOYEE TURNOVER

Employee turnover is costly and disruptive to any organisation. While no business canrealistically expect zero employee attrition, there are strategies that you company canimplement to retain the best employees and reduce the likelihood of your employees joining

the proverbial revolving door.

Strategy One – Hire Right

Much like a divorce, the best time to avoid turnover is before engagement. Use an employeeretention tool designed to help accurately identify skill gaps and workloads, and implementyour recruitment plans accordingly. Some of the components of hiring right include:

Behaviour-based testing Competency screening Background checking Organisational fit Capacity for learning Motivation Future Goals

You need to discover whether the employee has the right skills, competency, and character.Are they are good fit for your organisation and culture? Do they have a capacity to keeplearning in the role? Do they have a sufficient degree of motivation? What are their long termcareer goals?

Strategy Two – Design the Best Compensation Package

Tailor compensation packages individually where possible (especially for line manager andexecutive positions) and review them at least annually. Keep up to date with market salaryrates or make sure the HR department is up to speed. Not surprisingly, there is a clear relationship between benefits and turnover rates. Ensure that you provide standard industry

benefits, such as disability insurance, flexible hours, or life insurance where appropriate.

Always be open to negotiation with valuable employees, and tie pay to performance.

Strategy Three – Effective Communication and Morale

As the owner or manager, you set the tone for employee morale. Don‘t set up repetitive

meetings unless they are truly productive and you are open to suggestions from your employees. For maximum employee engagement, ensure that communication is not a one-way cycle in your company. Make an effort to listen to feedback, such as one-on-onemeetings, or anonymous feedback through an effective employee engagement survey, and be

ready to act on the feedback you receive. True employee engagement can be a long-term goaland not necessary achieved overnight.

http://www.coigroup.com/solutions/retention-optimiser/


http://www.coigroup.com/employee-engagement-surveys/

http://www.coigroup.com/employee-engagement-surveys/



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Strategy Four – Career Development and Training

Provide plenty of training opportunities to keep employees interested and in line with professional development standards in the market. Allow for multiple roles or allocatedifferent tasks to encourage variety and motivation. Set goals for employees or involve them

by sitting down with them and asking them about their future aspirations with in theorganisation.

Base promotions on your employee‘s performance and cultivate a perception of fairness incareer progression. If there are ample opportunities for growth and career progression in your organisation and you have demonstrated to employees that they have long term prospective,then your employees will be more likely to stay on.

Strategy Five – Provide a Great Work Environment

Provide an attractive, healthy, and safe work environment for your employees. Make sure

furniture and equipment observe occupational health and safety requirements and set upamenities and rest spaces where employees can take time out. Make your office a pleasant

place to be.

Strategy Six – Culture and Respect

Looking beyond the physical work environment to less tangible factors such as organisationalculture, managers and owners should cultivate a culture of respect, teamwork, and mutualcollaboration. Encouraging healthy competition between employees may help with moraleand motivation. However, this should not be done at the expense of a supportiveorganisational culture. Line managers should be trained to value and encourage culture andrespectfulness.

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1.16 TECHNIQUES TO PREVENT EMPLOYEE ATTRITION

Organizations that experience attrition quickly find themselves without an effective and

productive workforce, resulting in reduced profits. Employees typically leave a company

because of the way it handles its staff members. Focusing on the needs of your employees

will not only prevent attrition, it will enable you to recruit high-performing workers.

1. EXIT INTERVIEW

When an employee resigns, attempt to conduct an exit interview. Exit interviews serve two

purposes. They offer you insight into why the employee is leaving and save you from legal

repercussions should the employee file a lawsuit because of the way he was treated or

because of working conditions. Ask him thorough and open-ended questions as to why he isleaving. Ask him for suggestions for improving the workplace. Employees do not have to

agree to exit interviews and may decline one for any reason.

2.MANAGEMENT

Poor management techniques result in attrition. Managers and supervisors who rule with an

iron fist and push employees too hard can prompt employees to leave for greener pastures. A

drop in employee performance serves as a major sign of overzealous managers and

supervisors. When management comes down excessively hard on employees, those

employees often lack the motivation to perform at a high level and they exhibit fear of taking

risks and accomplishing their goals because of the punishment they could face from failing.Meet with managers and supervisors to explain the effects of overly strict management styles.

Coach them to adjust their management styles to become more personable and friendlier.

3.EMPLOYEE BENEFIT

Employees who feel that they‘re underpaid in comparison to their industry peers experience a

drop in morale and an urge to leave the company for a better-paying employer. In addition, a

lack of benefits, especially health insurance, can cause your workforce to dwindle because of

other employers who offer some kind of insurance benefits. Offer a wealth of benefits and

provide regular raises so that employees feel that you care about them and appreciate the jobs

that they do.

4.COMMUNICATION

Employees need communication for numerous reasons. Communication provides employees

with an idea of what‘s going on with the company, future plans and what the company

expects of them. Almost all successful businesses communicate effectively with employees.

Managers and supervisors must talk to employees daily by acknowledging their

accomplishments, helping them overcome problems and explaining what they need to work on.

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5.WORKPLACE

An unfit workplace, such as one that‘s grimy, noisy and dark, causes employees to look for

new jobs and prevents your company from pulling in additional employees. No one wants to

work in an environment that doesn‘t cater to success and achievement. Improve your

workplace by ensuring that it provides proper lighting and amenities and is clean.

6.DON‘T HIRE OUT OF DESEPERATION

Do not just hire an employee because you needed someone to fill the position yesterday.That is what temporary employees are for. If you are looking for someone to fill the positionlong term, it is best to take some time to do your research. Gather as much information as youcan about a job applicant. Information you would need is contact information for personaland business references, a list of past and present employers, social security number, birthdate and more. These items will help you complete reference checks and to perform

background checks to find out about any past criminal activity. Call on a reference. You arenever too busy for that.

7.OFFER SKILL TESTING

If you want to decrease employee turn-around, you can perform skill tests on your jobapplicants. You can either do this directly through your human resource department or youcan contract this responsibility out to a job placement agency. This is one of the tools thatwill help you determine whether you have found the best fit for each position your companyhas open. Not only that, but it also cuts down on your new applicant recruitment costs. Everycompany has some form of testing or verification. Have a competition with it or an incentive.

8.PROFILE FOR TEMPERAMENT

Each job description should include a consideration of the social aspects of the job. Is the jobtask oriented or people oriented? Does the job require much interaction with the public? Withother co-workers? Temperament profiles can predict which people are best suited for different types of work. Placing people with the right temperament for a particular job can goa long way toward creating stability

9.PAY COMPETITIVE

If you've gone through the trouble of finding great candidates, you want to make sure you can persuade them to come on board and have them stay. Money is not the number one reason people come to a company or leave a company.

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1.17 DIFFERENCE BETWEEN EMPLOYEE ATTRITION AND TURNOVER

Every business that hires employees has to deal with the fact that employees will always becoming and going. "Attrition" and "employee turnover" are both terms that companies useregarding this phenomenon. Companies and human resources departments tend to use both

terms interchangeably, but in certain cases, recognizable distinctions may exist.

Causal Differentiation

One way in which human resources departments may view attrition and employeeturnover as two different things is in regard to how they're caused. When employeesleave a company, it may be due to reasons over which the company has no directcontrol --- such as retirement due to old age --- or it might be due to an avoidablereason, such as conflict in the workplace. Companies may differentiate betweenattrition and turnover by defining attrition as the number of employees who leave a

company due to unavoidable reasons, and turnover as the total number of employeeswho leave a company, regardless of whether the reasons causing them to leave areavoidable or not.

Positive/Negative Differentiation

Another way of differentiating between employee turnover and attrition is to identifyone as a positive force on the total number of employees and the other as a negativeforce. In this way, when a company wishes to measure fluctuations in its total number of employees for a certain period, it can do so by viewing attrition as the number of employees leaving the company during that period, and turnover as the number of employees hired during that period to replace those who have left.

Measuring Attrition and Turnover

To measure a company's attrition or turnover rate for a particular period, take the totalnumber of employees hired or lost --- but not both --- within a certain time frame anddivide that by the total number of employees in the company. Express this figure as a

percentage.

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1.18 NEED FOR DIFFERENTIATION

If you take the differentiation between the two into account, you may find that thenumbers are slightly different. For instance, if a company has trouble findingreplacements for employees it has lost, the total number of employees lost within a

certain period --- attrition --- may be larger than the total number of employees hired,or turnover. Typically, though, the difference is miniscule, and even when it doesexist, it's only a matter of time between losing a worker and finding someone toreplace him.

1. People and Communication

It is often said that employees don‘t leave organizations; they leave people. This is a

commom reason for resignations. Friction or frustration can result from conflictingcommunication styles or misunderstandings between managers and employees or among co-

workers. Is this happening in your organisations? Do you have more attrition from a particular engineering group? Organisational communication styles can also contribute toattrition, particularly if communication with employees and developing employeerelationships are not priorities. Attrition can be with price paid for lack of communicationwith employees. It‘s important to remember that your best and brightest will leave for

organization.

2. Work Assignments

Work assignments are another key to retention. Turnover can result from work that isrepetitive and boring to assignment that don‘t allow sufficient work -life balance. Amongyoung engineers, boredom on the job is often the reason for leaving an organization. For many engineers who are expected to work exclusively on spread sheets and database,

boredom develops quickly. Yet this is often a common initial assignment for engineers tolearn the organization and how it works. While it‘s importan to learn the oraganisation, the

nature of the assignment can result in the intended

3. Perceived or Real Lack of Career Opportunities

If engineers don‘t perceive or know that career opportunities exist, they‘ll seek themelsewhere. Some organisations assume that emplotees know how careers develop. This can be a costly assumption. Other organization believe that communicating how careers developwill be interpreted as a promise promotion; therefore, they avoid these conversations. Again,this can be a costly mistake. It‘s important to communicate how competitive your company is

in these areas.

4. Infrastructure

Organizations tend to lose employees when they don‘t offer competitive compensation.

However, today‘s engineers also looking for professional development, education, andtraining opportunities to remain current in the field. When organisations don‘t invest in their

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employees it becomes challenging to retain top engineering talent. You want engineers on thecutting edge, because their knowledge and skills keep your organization competitive. Wheninvestment isn‘t made in developing people and keeping them competitive in their field, thereare other organisations that will grab this opportunity.

5. The Company

Some engineers leave organizations feo reasons that they can‘t be changed. If someone

decides that they want to work in a different industry, with a different client base, or in adifferent geographic location, retention becomes a bigger challenge.

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1.19 ATTRITION IS NOT ALWAYS BAD

Attrition is not bad always if it happens in a controlled manner. Some attritionia alwaysdesirable and necessary for organizational growth and development. The only concern is howorganizations differentiate ―good attition‖ from ‖bad attrition‖. The term ―healthy attrition‖

or ‗good attrition‖ signifies the importance of less productive employees voluntarily leavingthe organization. This means if the ones who have left fall in the category of low performers,the attrition is considered being healthy.

Attrition rates are considered to be beneficial in some ways:

If all employees stay in the same organization for a very long time, most of them will be at the top of their pay scale which will result in excessive manpower costs.

When certain employees leave, whose continuation of service would have negativelyimpacted productivity and profitability of the company, the company is benefited.

New employees bring new ideas, approaches, abilities, and attitudes which can keepthe organization from becoming stagnant.

There are also some people in the organization who have a negative and demoralizinginfluence on the work culture and team spirit. This, in the long-term, is detrimental toorganizational health.

Desirable attrition also includes termination of employees with whom theorganization does not want to continue a relationship. It benefits the organization in

the following ways:

o It removes bottleneck in the progress of the company.

o It creates space for the entry of new talents.

o It assists in evolving high performance teams.

There are people who are not able to balance their performance as per expectations,

lack potential for furture or need disciplinary action. Furthermore, as the rewards arelimited, business pressures do not allow the management to over-reward theoerformers, but when undesirable employes leave the company, the good employeescan be given the share that they deserve.

Some companies believe attrition in any form is bad for an organization for it meansthat a wrong choice was made at the beginning while recruiting. Even good attritionindicates loss as recruitment is a time consuming and costly affair. The only positive

point is that the realization has initiated action that will lead to cutting loss.

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1.20 MEANING OF EMPLOYEE RETENTION

Employee retention refers to the ability of an organization to retain its employees. Employeeretention can be represented by a simple statistic (for example, a retention rate of 80% usuallyindicates that an organization kept 80% of its employees in a given period). However, many

consider employee retention as relating to the efforts by which employers attempt to retainemployees in their workforce. In this sense, retention becomes the strategies rather than theoutcome.

A distinction should be drawn between low performing employees and top performers, andefforts to retain employees should be targeted at valuable, contributing employees. Employeeturnover is a symptom of a deeper issue that has not been resolved. These deeper issues mayinclude low employee morale, absence of a clear career path, lack of recognition, poor employee-manager relationships or many other issues . A lack of satisfaction andcommitment to the organization can also cause an employee to withdraw and begin lookingfor other opportunities. Pay does not always play as large a role in inducing turnover as is

typically believed. [1]

In a business setting, the goal of employers is usually to decrease employee turnover, therebydecreasing training costs, recruitment costs and loss of talent and organisational knowledge.By implementing lessons learned from key organizational behavior concepts employers canimprove retention rates and decrease the associated costs of high turnover. However, this isn'talways the case. Employers can seek "positive turnover" whereby they aim to maintain onlythose employees who they consider to be high performers.

DEFINITION

1. ―An effort by a business to maintain a working environment which supports current staff inremaining with the company. Many employee retention policies are aimed at addressing thevarious needs of employees to enhance their job satisfaction and reduce the substantial costsinvolved in hiring and training new staff.‖

2.‖Employee Retention is the ability of an organization to retain its employees (especially the best ones)‖.

3.―Retention is a voluntary move by an organization to create an environment which engagesemployees for a long term‖

http://en.wikipedia.org/wiki/Employee_retention#cite_note-1




http://en.wikipedia.org/wiki/Turnover_%28employment%29


http://www.businessdictionary.com/definition/business.html


http://www.businessdictionary.com/definition/maintain.html

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http://www.businessdictionary.com/definition/environment.html

http://www.businessdictionary.com/definition/current.html

http://www.businessdictionary.com/definition/staff.html

http://www.businessdictionary.com/definition/company.html

http://www.businessdictionary.com/definition/policy.html

http://www.businessdictionary.com/definition/need.html

http://www.businessdictionary.com/definition/employee.html

http://www.businessdictionary.com/definition/job-satisfaction.html

http://www.businessdictionary.com/definition/substantial.html

http://www.businessdictionary.com/definition/costs.html

http://www.businessdictionary.com/definition/training.html

http://www.businessdictionary.com/definition/training.html

http://www.businessdictionary.com/definition/costs.html

http://www.businessdictionary.com/definition/substantial.html

http://www.businessdictionary.com/definition/job-satisfaction.html

http://www.businessdictionary.com/definition/employee.html

http://www.businessdictionary.com/definition/need.html

http://www.businessdictionary.com/definition/policy.html

http://www.businessdictionary.com/definition/company.html

http://www.businessdictionary.com/definition/staff.html

http://www.businessdictionary.com/definition/current.html

http://www.businessdictionary.com/definition/environment.html

http://www.businessdictionary.com/definition/worker.html

http://www.businessdictionary.com/definition/maintain.html



http://en.wikipedia.org/wiki/Turnover_%28employment%29



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1.22 NEED AND IMPORTANCE OF EMPLOYEE RETENTION

Employee Retention refers to the techniques employed by the management to help theemployees stay with the organization for a longer period of time. Employee retentionstrategies go a long way in motivating the employees so that they stick to the organization

for the maximum time and contribute effectively. Sincere efforts must be taken to ensuregrowth and learning for the employees in their current assignments and for them to enjoytheir work.

Employee retention has become a major concern for corporates in the current scenario.Individuals once being trained have a tendency to move to other organizations for better

prospects. Lucrative salary, comfortable timings, better ambience, growth prospects are someof the factors which prompt an employee to look for a change. Whenever a talentedemployee expresses his willingness to move on, it is the responsibility of the managementand the human resource team to intervene immediately and find out the exact reasons leadingto the decision.

Let us understand why retaining a valuable employee is essential for an organization.

Hiring is not an easy process:

The HR Professional shortlists few individuals from a large pool of talent, conducts preliminary interviews and eventually forwards it to the respective line managers whofurther grill them to judge whether they are fit for the organization or not. Recruitingthe right candidate is a time consuming process.

An organization invests time and money in grooming an individual and make himready to work and understand the corporate culture:

A new joinee is completely raw and the management really has to work hard to trainhim for his overall development. It is a complete wastage of time and money when anindividual leaves an organization all of a sudden. The HR has to start the recruitment

process all over again for the same vacancy; a mere duplication of work. Finding aright employee for an organization is a tedious job and all efforts simply go wastewhen the employee leaves.

In such cases, employees tend to take all the strategies, policies from the currentorganization to the new one. Individuals take all the important data, information andstatistics to their new organization and in some cases even leak the secrets of the

previous organization. To avoid such cases, it is essential that the new joinee is madeto sign a document which stops him from passing on any information even if heleaves the organization. Strict policy should be made which prevents the employees to

join the competitors. This is an effective way to retain the employees.

The employees working for a longer period of time are more familiar with thecompany‘s policies, guidelines and thus they adjust better:

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They perform better than individuals who change jobs frequently. Employees who

spend a considerable time in an organization know the organization in and out andthus are in a position to contribute effectively.

Every individual needs time to adjust with others:

One needs time to know his team members well, be friendly with them andeventually trust them. Organizations are always benefited when the employees arecompatible with each other and discuss things among themselves to come out withsomething beneficial for all. When a new individual replaces an existing employee,adjustment problems crop up. Individuals find it really difficult to establish a comfortlevel with the other person. After striking a rapport with an existing employee, it is achallenge for the employees to adjust with someone new and most importantly trusthim. It is a human tendency to compare a new joinee with the previous employees andalways find faults in him.

It has been observed that individuals sticking to an organization for a longer span aremore loyal towards the management and the organization:

They enjoy all kinds of benefits from the organization and as a result are moreattached to it. They hardly badmouth their organization and always think in favour of the management. For them the organization comes first and all other things later.

It is essential for the organization to retain the valuable employees showing potential:

Every organization needs hardworking and talented employees who can really comeout with something creative and different. No organization can survive if all the top

performers quit. It is essential for the organization to retain those employees whoreally work hard and are indispensable for the system.The management mustunderstand the difference between a valuable employee and an employee who doesn‘t

contribute much to the organization. Sincere efforts must be made to encourage theemployees so that they stay happy in the current organization and do not look for achange.

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1.23 RETENTION STRATEGIES

There are a wide range of strategies employers can use to retain valued employees with andwithout disabilities. Before implementing these strategies employers may find it useful toassess their current workplace culture through workplace climate surveys or exit interviews,

to determine the organizational factors that may be leading to employee exit.

1. Employee Supporto Ensure employees have the tools, time and training necessary to perform their

job well, through: An effective orientation program or on-boarding process Realistic job previews Training

2. Management Recognitiono Require managers to meet with new employees to learn about their abilities,

knowledge, skills and talents to ensure that they feel welcomed andacknowledged.

3. Workplace Structures that Facilitate Communicationo Provide constructive feedback to employees and solicit their input to foster an

environment in which everyone is comfortable offering ideas and is committedto continuous improvement.

o Develop Employee Resource Groups (ERGs) to encourage diversity andinclusion.

4. Flexible Workplace Policieso Allow employees to flex their work schedules as needed to accommodate

appointments or to work from home or remotely. Flexible policies canincrease an employee's productivity and morale, and the company's overallsuccess.

o 5. Talent and Skill Development.o Offer and encourage employees to pursue training opportunities.o Create career development path.o Provide managers with the training necessary to develop high quality

employee relationships.o

6. Career Advancemento Provide opportunities for career growtho Initiate committee involvement and participation in employee resource groupso Encourage attendance in seminars and other staff development and training

opportunities so employees feel valued as team members and part of the futureof the organization

http://www.hr-survey.com/EmployeeClimate.htm

http://www.businessballs.com/exitinterviews.htm

http://askearn.org/refDesk/Workplace_Culture/Employee_Resource

http://workplaceflexibility2010.org/index.php/policy_components/flexible_work_arrangements/






http://askearn.org/refDesk/Workplace_Culture/Employee_Resource

http://www.businessballs.com/exitinterviews.htm

http://www.hr-survey.com/EmployeeClimate.htm

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1.24 CALCULATION OF EMPLOYEE RETENTION

Calculating Monthly and Annual Turnover

Attention all non-math majors: These calculations are easy. To ease into it though, we willstart with verbal explanations.

Monthly turnover is the number of employee separations in one month divided by the averagenumber of active employees at the worksite during the same period. We‘ll make it easy andsay we have one site of operations.

Written as a math formula, here is the same calculation:

monthly turnover rate = no.of separation during month * 100

average number of employee during the month

Now to pull numbers into our formula for monthly turnover:

m = 4 *100 m = 2% monthly employee turnover rate200

Annual employee turnover is calculated by adding up the monthly turnover for a 12-month period. Makes sense, right? Okay, the next step follows.

Using the same example, if four employees leave each month, a yearly total of 48 leave.Plugging those numbers into the formula:

a = 48 * 100 a = 24% annual employee turnover rate

200

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ROLE OF HR IN EMPLOYEE RETENTION:

The Human Resource team plays an important role in the employee retention. Their role inthe same are as follows:

Whenever employee resigns from his current assignment, it is the responsibility of HR to intervene immediately to find out the reasons which prompted the employee toresign.

It is the duty of HR to sit with the employee and discuss the various issues face toface.

The HR person must ensure that he is recruiting the right employee who actually fitsinto the role.

The human resource department must conduct motivational activities at the work place.

The HR must launch various incentive schemes for the top performers to motivatethem.

Performance review are must. The HR along with the respective team leaders mustmonitor their team member‘s performance to ensure whether they are enjoying the

work or not.

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1.24 CHALLENGES FACED BY THE BPO INDUSTRY TODAY

BPOs have proved a grand success. However, certain problems have cropped up in the process for which long-term solutions are necessary.

AREAS FOR CONCERN IN BPO‘S

Working in a BPO, many feel is a job that does not require much skill. Any body possessing a basic education, good communication skills is employable after sometraining. Companies do not mind taking in people who are middle aged, andhomemakers. There is no sense of accomplishment among the employees.

Financial desperation on the part of some people leads them to take up jobs in BPOs-People out of college join BPOs to earn money to finance their higher education,some as a way of improving their life styles. Some others join because they could notfind anything else. In short, very few people take up employment in BPOs for the loveof it.

The tasks that BPOs perform are diverse: telemarketing, technical support service,customer support service, insurance processing, data entry and conversion services,

bookkeeping and accounting and online researching, and form processing. The problem that this creates is that there can be no standardized training program suitableto all the BPOs that can be given to the prospective employees before they areactually absorbed into the company.

High expectations from the outsourcing companies tend to de-motivate the workers.

In many cases, the outsourcers think only of achieving targets. They are obsessed withquality work, business continuity, time frame, security of information. However,satisfying them is not always possible. The expectations should be realistic taking intoaccount the work ethics of the region of the service provider, as well as, its cultureand polity.

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1.25 ATTRITION IN BPO’S

The single largest worry of the BPO industry is attrition. In the outsourcing context,?attrition' means a gradual reduction in the number of people working in a company dueto retirement, resignation, or death. The rate of attrition in the BPO industry in India iscurrently nearly 50%. Attrition in individual firms varies from 15% in the larger firms toup to 40% in the smaller ones. Analysts believed that if this left unchecked, there would

be a shortage of professionals.

Major reasons for staff attrition in BPOs are outlined below.

BPOs do not present attractive career prospects. They are not challenging enough for the employees after a period. Most of them are stuck for good in their present

placement once they start working in call centers.

People join BPOs because of the lucrative salaries offered to them. They do not havethe slightest hesitation in leaving their current employees for a firm offering a bigger

paycheck. They do not experience a sense of obligation toward their employers. Higher education in countries like India is expensive. A lot of money has to be

deposited as capitation fees in professional colleges. Young men and women just outschool and graduates join BPOs as a means to earn and save money to finance their higher studies. The trend is for them to slog for 2-3 years in a BPO and get out of itfor studies.

BPO employees suffer from many health problems. The strain of working in changingshifts, of meeting deadlines and realizing targets take a toll on their wellbeing. Someof them end up being jittery and still others clinically depressed.

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Social life eludes most BPO employees. The nature of their employment is such that

they are left with little time and energy for their family and friends.

The miseries of the employees are compounded by managers who are not supportive andsympathetic towards their sub-ordinates, by policies that are unfriendly and ill advised. The

employees do not feel secure in their job.

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1.26 FACTSHEET UPDATED IN SEPTEMBER 2013

This factsheet was last updated in September 2013.

Employee turnover

Employee turnover refers to the proportion of employees who leave an organisation over a set period (often on a year-on-year basis), expressed as a percentage of total workforce numbers.

At its broadest, the term is used to encompass all leavers, both voluntary and involuntary,including those who resign, retire or are made redundant, in which case it may be describedas ‗overall‘ or ‗crude‘ employee turnover. It is also possible to calculate more specific

breakdowns of turnover data, such as redundancy-related turnover or resignation levels, with

the latter particularly useful for employers in assessing the effectiveness of peoplemanagement in their organisations

Retention

Retention relates to the extent to which an employer retains its employees and may bemeasured as the proportion of employees with a specified length of service (typically oneyear or more) expressed as a percentage of overall workforce numbers.

Latest turnover trends

Our annual Resourcing and talent planning survey report gives a median ‗crude‘ or ‗overall‘employee turnover rate for the UK sample collected, as well as the median turnover figurerelating purely to those who ‗left voluntarily‘ (that is, resignations).

While voluntary turnover rates have decreased recently as a result of challenging economicconditions, the flip side of this coin is that redundancy-related turnover has become morecommon.

However, skills shortages persist for certain occupational groupings even during troubledeconomic times, so it is important to be aware of trends in turnover rates for different groupsrather than simply focusing on ‗headline‘ figures.

Turnover levels can vary widely between occupations and industries. The highest levels aretypically found in retailing, hotels, catering and leisure, call centres and among other lower

paid private sector services groups.

Levels also vary from region to region. The highest turnover rates tend to be found whereunemployment is lowest and where it is relatively easy for people to secure desirablealternative employment.

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1.27 CASE STUDY : ZIONS FIRST NATIONAL BANK

Zions First National Bank, a subsidiary of Zions Bancorporation, manages more than $15 billion in assets and employs more than 2,300 people at 135 full-service branches and 185ATMs throughout Utah and Idaho. Zions offers a comprehensive array of investment,mortgage, and insurance services, as well as a network of loan origination offices for small

businesses nationwide.

What was the issue?

Employee turnover is extremely costly to companies with large numbers of employees. Inthe banking industry, employee turnover can also mean the loss of valuable customer relationships.Understanding this, Zions Bank traditionally monitored employee satisfactionusing periodic paper-based surveys and by encouraging employees to manually submitcomments and suggestions. Unfortunately, by the time the surveys were collected andanalyzed, the results were often outdated. This made it difficult to gauge employeesatisfaction or address issues in a timely manner.

How did Allegiance help?

To solve this problem, Zions Bank selected EmployeeVoice and EmployeePulse from

Allegiance, Inc., the premier provider of Enterprise Feedback Management solutions that link feedback to profits. An on-demand, open communication system, EmployeeVoice facilitatescontinual input from employees. EmployeePulse surveys employees regularly to measuretheir stress levels and passion for their work. Together, these tools provide information tohelp improve workplace culture, create greater employee loyalty, and reduce employeeturnover.

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After the implementation

In April 2007, Zions Bank noticed an upswing in employee complaints submitted throughthe Allegiance system. Using employee satisfaction scores from EmployeeVoice, the bank found the highest percentage of complaints (17 percent) was related to employee benefits. In

comparison, training, work schedule, and company policy represented only 2, 3 and 6 percent of all complaints, respectively. Additionally, monthly EmployeePulse surveysrevealed that satisfaction with employee benefits consistently ranked below average.

―Compared to other age groups, who were either moderately satisfied or very satisfied with benefits, satisfaction scores were noticeably lower for the 25 to 34 age group (2.74 out of a possible 5),‖ said George Myers, senior vice president of human resources for Zions Bank.―In addition to filtering by age groups, EmployeeVoice helped us determine that non-officersat the bank were less satisfied with employee benefits than junior or senior employees.‖

EmployeeVoice also flagged a relationship between tenure and satisfaction. People who hadworked at the bank for less than a year had higher satisfaction scores (3.18) than those whohad worked at the bank for 1-3 years (2.95) or 3-5 years (2.92). Satisfaction again increasedfor employees with more than five years at the bank.

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Allegiance Case Study

―During the honeymoon period everyone was happy, but sometime after their first year

something changed,‖ Myers observed. ―In fact, by matching demographics and satisfaction

levels with EmployeeVoice‘s ‗turnover intent‘ scores, it became clear that employees with 1to 5 years of service were more likely to be looking for a new job than any other category.‖

Armed with the data from EmployeeVoice and EmployeePulse, as well as other sources,Zions Bank invited representatives from the target demographic categories to participate infocus groups. During the discussions, Myers and his team explained their ideas for improving employee benefits and listened to suggestions from the employees. ―The focus

groups were an important ‗next step‘ in the process of raising overall satisfaction, becausethey enabled us to reach out to individuals and groups who were least satisfied,‖ Myers said.

―Though these people represented a small number of employees, they were pulling overall

morale down by sharing their concerns with their peers. Once we addressed their concerns,word spread throughout the bank. Within a month, we saw a favorable change in theEmployeeVoice employee satisfaction and turnover intention scores. Since then, satisfactionscores have continued to rise.‖ The result By using EmployeeVoice to quickly identify the

downtrend in employee satisfaction and correlate that information with demographics andturnover data, Zions Bank was able to address an issue before it turned into a major problem.

―If we hadn‘t used the Allegiance system to pull the data together, it is likely that the

downward trends related to benefits would have continued,‖ Myers noted. ―We‘re confident

that the satisfaction numbers will continue to improve as more of our 2,300 employees learn

about the benefits and enroll in the new programs.‖ The findings indicate that by providing aforum for capturing feedback, communicating with the target demographic and listening totheir suggestions, Zions helped resolve concerns that triggered a change in employeesatisfaction. For Zions, the end result is lower employee turnover. With the average voluntaryturnover rate in the U.S. near 23 percent , and the average cost of turnover in the U.S. roughly25 percent of a person‘s salary, the benefits of reducing turnover are substantial.

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1.28 CASE SUMMARY

The Organization

Zions First Nations Bank, subsidiary of Zions Bancorporation (Nasdaq: ZION)Salt Lake City, Utah www.zionsbank.com

The Challenge

To accurately know the intentions of Zions‘ 2,300 employees as it relates to job satisfaction

and turnover. Zions traditionally conducted paper-based surveys to discover this information,

but this provided results too late to impact change and reduce turnover, costing the companymoney in lost productivity, replacement and retraining costs.

The Allegiance Solution

Deployed Allegiance EmployeeEngage solutions, including Employee Pulse andEmployeeVoice, to better collect real-time, actionable data and use the information to adjust

policies, benefits packages and other offerings. Combined with focus groups and benefitschanges, Zions succeeded in fixing the problem early on, before it became a real issue thatsignificantly impacted revenues.

The Results

• Eliminated feedback lag-time; collected employee feedback in real-time• Identified at-risk employee target group• Introduced new programs to address the issues • Satisfaction scores rose dramati

http://www.zionsbank.com/

http://www.zionsbank.com/

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IT, ITES sectors witnessing highest attrition rate in India

NEW DELHI: The information technology (IT) and healthcare sectors are witnessing thehighest attrition rates among talented employees, making retention of critical manpower

resources a key challenge, says a survey.

According to a study conducted by MyHiringClub.com, the IT and ITES sectors saw thehighest attrition rate of 23 per cent in the first quarter of 2010-11.

In contrast, the banking and financial services sector witnessed an attrition rate of 18 per cent, followed by healthcare (12 per cent), FMCG (11 per cent) and automobiles andmanufacturing (11 per cent).

"Attrition is a major problem with India Inc and it suddenly got increased in the first quarter of the current fiscal year. The major reason behind (this) was that firms had started payingmore to newly hired employees.

"Beside pay packages, career level growth and relationships with supervisors are the other reasons for higher job attrition," MyHiringClub.com Founder and CEO Rajesh Kumar said.

The main reason for switching a job is pay packages (21 per cent), followed by career levelgrowth (16 per cent), dissatisfaction with supervisors (15 per cent) and work pressure (14 per cent).

Employees with experience of up to five years had the highest attrition rate of 39 per cent,

while it was 27 per cent for those with 5-10 years of experience and 22 per cent in the 10-15years' experience bracket.

http://economictimes.indiatimes.com/photo/9283685.cms

http://economictimes.indiatimes.com/photo/9283685.cms

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Interestingly, senior-level employees (experience more than 15 years) had a very low attritionrate of 15 per cent.

"Entry level and young blood employees want to reach on higher pay packages as soon as possible to fulfill there need and avail good facilities of life.

"If they continue with the same job, they can get a 10-20 per cent salary hike, but if theyswitch jobs, they can easily get somewhere around a 25-40 per cent salary hike from currentCTC. A higher attrition rate causes panic among employers and the direct impact of a higher attrition rate comes in hiring costs," Kumar added.

The survey was conducted by MyHiringClub -- an Asia and Gulf/Middle East recruitmenttendering platform -- among 11,800 employees and 249 employers between May and Junethis year.

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1.29 CONCLUSION

Study of HR practices and employee attrition in the o rganization was a great

learning experience. It helped in understanding the intricacies of HR role in an organization.The study helped in finding out the most critical reasons responsible for employee attrition inthe organization. It brought various concerns of the employees to the forefront.Apart from the project there was also a lot of on-the-job training which helpedenhance HR sk i l l s and g a in a be t t e r unders t and ing o f th e fun c t ion ing o f HR. I t was an e f f e c t iv e learning in combining the theoretical and practical aspectsrelating to project. There has been immense learning in the field of employeeretention. The basics about a t t r i t io n and re te nt io n, a t t r i t io n ca lc ula t i on,c o st o f at t ri t io n , co n s eq u en c es o f h i gh attrition rate and reasons for attrition.

The study helped in understanding the relative importance of various factors responsible for employee attrition, also revealed the fact that that o pportunity for developmentand g rowth i s mos t impor tan t fo r the employees o f th e o rgan iza t ion .There is a crisis inhuman capital management. We need fundamental reform inorder to address this crisis and ens ur e l ong -t erm abi l i t y to hir e a ndma na ge a hi gh -q u al it y, hi gh -p er fo rm in g workforce. Most employees are notmotivated solely by money. Historically, firms have used money and financial rewards toretain employees. High tech employees are enjoying the fastest salary progressiono f a l m o s t a n y p r o f e s s i o n , y e t t h e y a r e c h a n g i n g j o b s c o n s t a n t l y .

T o d ay ‘s emp lo y ees seek mo re th an mo n e ta ry co mp en sa t io n . Research

conducted in the company revealed that opportunity for development, salary, job content,relationship with supervisor are important reasons for employee attrition. The myth thatsalaryis the most important reason for employee attrition was clarified as employees are m o r ec o n c e r n e d a b o u t o p p o r t u n i t y f o r d e v e l o p m e n t . S a l a r y i s a l s o i m p o r t a n t ,s a la r y needs to be competitive with the market rates, otherwise there is a highrisk of losing your employees to your competitors. I also learned that even though thesalary might be high, an employee would be willing to change job for better developmentopportunity.

L&T can retain employees and reduce attrition rate b y dealing with the twoimportant factors behind attrition, Opportunity for development and growth and Salary.

More focus on employee training and employee recognition is required. Salary needs to bemade more competitive. To retain employees it is important to provide sufficientopportunities for development and growth, competit ive salary, challen ging jobsthat use employee skills efficiently and good managerial guidance, among other things.

We are in a time of manpower shortages that will not abate in the near term. Employers haveto work smarter and permit employees to work smarter.

http://www.allegiance.com/documents/ZionsEmployeeCaseStudyFIN.pdf#page=1

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1.31 EXIT INTERVIEW QUESTIONS

Listed below are samples of the types of exit interview questions that employers commonlyask departing employees.

Exit Interview Questions - Samples

Listed below are samples of the types of exit interview questions that employers commonlyask departing employees.

What is your primary reason for leaving?

Did anything trigger your decision to leave?

What was most satisfying about your job?

What was least satisfying about your job?

What would you change about your job?

Did your job duties turn out to be as you expected?

Did you receive enough training to do your job effectively?

Did you receive adequate support to do your job?

Did you receive sufficient feedback about your performance between merit reviews?

Were you satisfied with this company's merit review process?

Did this company help you to fulfil your career goals?

Do you have any tips to help us find your replacement?

What would you improve to make our workplace better?

Were you happy with your pay, benefits and other incentives?

What was the quality of the supervision you received?

What could your immediate supervisor do to improve his or her management style?

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Based on your experience with us, what do you think it takes to succeed at thiscompany?

Did any company policies or procedures (or any other obstacles) make your job more

difficult?

Would you consider working again for this company in the future?

Would you recommend working for this company to your family and friends?

How do you generally feel about this company?

What did you like most about this company?

What did you like least about this company?

What does your new company offer that this company doesn't?

Can this company do anything to encourage you to stay?

Before deciding to leave, did you investigate a transfer within the company?

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1.32 BIBLIOGRAOHY & WEBLIOGRAPHY

HUMAN RESOURCE MANAGEMENT – Vipul Prakashan.

EMPLOYEE ATTRITION – Peter W. Hom.

www.google.com

www.scribed.com

Academic.edu.com

www.ehow.com

Studymode.com

Scholararchieve.om

www.bms.co.in

http://www.google.com/


http://www.scribed.com/


http://www.ehow.com/


http://www.bms.co.in/






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