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A PROJECT ON
EFFECTIVENESS OF EMPLOYEE RETENTION
TECHNIQUES IN CONTROLLING ATTRITION
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TABLE OF CONTENTS
SL.NO
TITLE
PAGE NO:
INTRODUCTION
7-9
1
REVIEW OF LITERATURE
10-25
2
PROFILE OF THE ORGANISATION
26-32
3
RESEARCH METHODOLOGY
33-36
4
DATA ANALYSIS AND INTERPRETATION
37-68
5
FINDINGS AND RECOMMENDATIONS
69-73
CONCLUSION
74
APPENDIX
QUESTIONNAIRE 75-80
BIBLIOGRAPH
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INTRODUCTION
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INTRODUCTION
Effective employee retention is a systematic effort by employers to create and foster an
environment that encourages current employees to remain employed by having policies
and practices in place that address their *diverse needs. A strong retention strategy
becomes a powerful recruitment tool. Retention of key employees is critical to the long-
term health and success of any organization. It is a known fact that retaining your best
employees ensures customer satisfaction, increased product sales, satisfied colleagues and
reporting staff, effective succession planning and deeply imbedded organizational
knowledge and learning. Employee retention matters as organizational issues such as
training time and investment; lost knowledge; insecure employees and a costly candidate
search are involved. Hence failing to retain a key employee is a costly proposition for an
organization. Various estimates suggest that losing a middle manager in most
organizations costs up to five times of his salary. Intelligent employers always realise the
importance of retaining the best talent. Retaining talent has never been so important in the
Indian scenario; however, things have changed in recent years. In prominent Indian
metros at least, there is no dearth of opportunities for the best in the business, or even for
the second or the third best. Retention of key employees and treating attrition troubles has
never been so important to companies. In an intensely competitive environment, where
HR managers are poaching from each other, organisations can either hold on to their
employees tight or lose them to competition. For gone are the days, when employees
would stick to an employer for years for want of a better choice. Now, opportunities
abound. It is a fact that, retention of key employees is critical to the long-term health and
success of any organisation. The performance of employees is often linked directly to
quality work, customer satisfaction, and increased product sales and even to the image of
a company. Whereas the same is often indirectly linked to, satisfied colleagues and
reporting staff, effective succession planning and deeply embedded organisational
knowledge and learning. Failing to retain a key employee is a costly proposition for any
organisation. In this scenario, the effective employee retention is a systematic effort by
employers to create and foster an environment that encourages current employees to
remain employed by having policies and practices in place that address their diverse
needs. A strong retention strategy becomes a powerful recruitment tool.
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Retention of key employees is critical to the long-term health and success of any
organization. It is a known fact that retaining your best employees ensures customer
satisfaction, increased product sales, satisfied colleagues and reporting staff, effective
succession planning and deeply imbedded organizational knowledge and learning.
Employee retention matters as organizational issues such as training time and investment;
lost knowledge; insecure employees and a costly candidate search are involved. Various
estimates suggest that losing a middle manager in most organizations costs up to five
times of his salary. Intelligent employers always realise the importance of retaining the
best talent. Retaining talent has never been so important in the Indian scenario; however,
things have changed in recent years. In prominent Indian metros at least, there is no
dearth of opportunities for the best in the business, or even for the second or the third
best. Retention of key employees and treating attrition troubles has never been so
important to companies. In an intensely competitive environment, where HR managers
are poaching from each other, organisations can either hold on to their employees tight or
lose them to competition. For gone are the days, when employees would stick to an
employer for years for want of a better choice. Now, opportunities abound. It is a fact
that, retention of key employees is critical to the long-term health and success of any
organisation.
The study entitled
A study on effectiveness of employee retention techniques in
controlling attrition‖ at big bazaar calicut and the key issue under study was analyzing
why the organization find it difficult to retain its employees and the factors that affect in
retaining them in the organization and also the strategies that adopted by the company.
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CHAPTER 1
REVIEW OF LITERATURE
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REVIEW OF LITERATURE
Employee Retention is the ability of an organisation to retain its best employees and hence
maintain a lower turnover. An organisation is able to achieve this by adopting various
employee retention programs.
An employee retention program involves steps starting from identifying the major
contributors in the organisation, and designing schemes to involve them with the organisation
to ensure that they do not leave. The success of these programs is measured by simple metrics
like retention ratio, and turnover.
The advantages of high employee retention are as follows:
1.
A lot of investment is needed to train an employee and to make him productive.
If such an employee leaves the organisation, they lose the money invested and
also an employee who could have contributed significantly to the organisation.
2.
If a person employed in a critical role leaves, then it disturbs the functioning of
the organisation. Also, to replace such an employee involves huge costs.
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.
A distinction should be drawn between low-performing employees and top performers, and
efforts to retain employees should be targeted at valuable, contributing employees. Employee
turnover is a symptom of deeper issues that have not been resolved, which may include low
employee morale, absence of a clear career path, lack of recognition, poor employee-manager
relationships or many other issues. A lack of satisfaction and commitment to the organization
can also cause an employee to withdraw and begin looking for other opportunities. Pay does
not always play as large a role in inducing turnover as is typically believed.
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 organizational knowledge.
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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 whom they consider to be high performers.
Importance of employee retention
The process of employee retention will benefit an organization in the following ways:
The cost of turnover: The cost of employee turnover adds hundreds of thousands of
money to a company‘s expenses. While it is difficult to fully calculate the cost of turnover
(including hiring costs, training costs and productivity loss), industry experts often quote 25%
of the average employee salary as a conservative estimate.
Loss of company’s knowledge: When an employee leaves, he takes with him valuable
knowledge about the company, customers, current projects and past history (sometimes to
competitors). Often much time and money has been spent on the employee in expectation of
future return. When the employee leaves, the investment is not realized.
Interruption of customer service: Customers and clients do business with a company in
part because of the people. Relationships are developed that encourage continued sponsorship
of the business. When an employee leaves, the relationships that employee built for the
company are served, which could lead to potential customer loss.
Turnover leads to more turnovers: When an employee terminates, the effect is felt
throughout the organization. The unspoken negativity often intensifies for the remaining
staff.
Goodwill of the company: T he goodwill of a company is maintained when the attrition
rates are low. Higher retention rates motivate potential employees to join the organization.
Regaining efficiency: If an employee resigns, the good amount of time is lost in hiring a
new employee and then training an employee and this goes to the loss of the company
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directly which many a times goes unnoticed. And even after this companies cannot assure us
of the same efficiency from the new employee.
Benefits of Employee Retention
Without qualified people who are good at what they do, any company would be in serious
trouble. In the long run, the retention of existing employees saves companies money. As
Beverly Kaye and Sharon Jordan Evan stated
the cost of replacing lost talent is 70 to 200
percent of that employee‘s annual salary. There are advertising and recruiting expenses,
orientation and training of the new employee, decreased productivity until the new employee
is up to speed, and loss of customers who were loyal to the departing employee. Finding,
recruiting, and training the best employees represents a major investment. Once a company
has captured talented people, the return-on-investment requires closing the back door to
prevent them from walking out.‖
When an employee leaves a company for a direct competitor, there is always a chance that
they will take important business strategies and secrets with them to be explained by the
competition. This is yet another reason why the retention of employees is so crucial to some
businesses. While this practice seems a bit unscrupulous, it still happens quite frequently. As
Bill Leonard stated in HR Magazine:
Because employers know that the best-qualified
applicants will come directly from competitors, recruiting and hiring employees away from
mother of inventive and sometimes controversial business practices. Recruiting and hiring
from your competitors is probably is as old as business itself. But what is new - and a hot
topic among employers is how to attract and retain qualified candidates in a highly
competitive labor market while also preventing their own intellectual capital from winding up
in the hands of competitors.
One way for a company to prevent employees from giving valuable information to
competitors is to make it a policy to enforce strict non-compete and confidentiality
agreements amongst its employees. The existence of such agreements could in fact deter a
competitor from hiring a valuable employee because they might not want to risk possible
legal entanglements with the other company. Of course, all this could possibly lead to
animosity with the employee who could feel that his or her options are being limited. Many
employees don‘t always remember signing such a document, so a copy of it should always be
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kept on file for the employee to refer to. This area could prove to be a highly sensitive one
between employer and employee, so extreme caution is suggested in all instances.
Retention Programs
It is important to first pinpoint the root cause of the retention issue before implementing a
program to address it. Once identified, a program can be tailored to meet the unique needs of
the organization. A variety of programs exist to help increase employee retention.
Career Development It is important for employees to understand their career path within an
organization to motivate them to remain in the organization to achieve their personal career
goals. Through surveys, discussion and classroom instruction, employees can better
understand their goals for personal development. With these developmental goals in mind,
organizations can - and should - offer tailored career development opportunities to their
employees.
Executive Coaching Executive coaching can be used to build competencies in leaders
within an organization. Coaching can be useful in times of organizational change, to increase
a leader‘s effectiveness or to encourage managers to implement coaching techniques with
peers and direct reports. The coaching process begins with an assessment of the individual‘s
strengths and opportunities for improvement. The issues are then prioritized and interventions
are delivered to target key weaknesses. Assistance is then provided to encourage repeated use
of newly acquired skills.
Motivating Across Generations - Today‘s workforce includes a diverse population of
employees from multiple generations. As each generation holds different expectations for the
workplace, it is important to understand the differences between these generations regarding
motivation and engagement. Managers, especially, must understand how to handle the
differences among their direct reports.
Orientation and On Boarding An employee‘s perception of an organization takes shape
during the first several days on the job. It is in the best interest of both the employee and the
organization to impart knowledge about the company quickly and effectively to integrate the
new employee into the workforce. By implementing an effective on boarding process, short-
term turnover rates will decrease and productivity will increase.
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Women’s Retention Programs Programs such as mentoring, leadership development and
networking that are geared specifically toward women can help retain top talent and decrease
turnover costs. By implementing programs to improve work/life balance, employees can be
more engaged and productive while at work.
Exit Interview and Separation Management Programs.
Retention Tools and Resources
Employee Surveys By surveying employees, organizations can gain insight into the
motivation, engagement and satisfaction of their employees. It is important for organizations
to understand the perspective of the employee in order to create programs targeting any
particular issues that may impact employee retention.
Exit Interviews By including exit interviews in the process of employee separation,
organizations can gain valuable insight into the workplace experience. Exit interviews allow
the organization to understand the triggers of the employee‘s desire to leave as well as the
aspects of their work that they enjoyed. The organization can then use this information to
make necessary changes to their company to retain top talent. Exit interviews must, however,
ask the right questions and elicit honest responses from separating employees to be effective.
Employee Retention Consultants An employee retention consultant can assist organizations
in the process of retaining top employees. Consultants can provide expertise on how to best
identify the issues within an organization that are related to turnover. Once identified, a
consultant can suggest programs or organizational changes to address these issues and may
also assist in the implementation of these programs or changes.
Employee Retention Best Practices
By focusing on the fundamentals, organizations can go a long way towards building a
high-retention workplace. Organizations can start by defining their culture and identifying
the types of individuals that would thrive in that environment.
Organizations should adhere to the fundamental new hire orientation and on boarding
plans. Attracting and recruiting top talent requires time, resources and capital. However,
these are all wasted if employees are not positioned to succeed within the company.
Research has shown that an employee‘s first 10 days are critical because the employee is
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still adjusting and getting acclimated to the organization. Companies retain good
employees by being employers of choice.
Recruitment - Presenting applicants with realistic job description during the recruitment
process have a positive effect on identifying new hires. Employers that are transparent
about the positive and negative aspects of the job, as well as the challenges and
expectations are positioning themselves to recruit and retain stronger candidates.
Selection - There are plethora of selection tools that can help predict job performance and
subsequently retention. These include both subjective and objective methods and while
organizations are accustomed to using more subjective tools such as interviews,
application and resume evaluations, objective methods are increasing in popularity. For
example, utilizing biographical data during selection can be an effective technique. Bio-
data empirically identifies life experiences that differentiate those who stay with an
organization and those who quit. Life experiences associated with employees may include
tenure on previous jobs, education experiences, and involvement and leadership in related
work experiences.
Socialization - Socialization practices delivered via a strategic on boarding and
assimilation program can help new employees become embedded in the company and
thus more likely to stay. Research has shown that socialization practices can help new
hires become embedded in the company and thus more likely to stay. These practices
include shared and individualized learning experiences, activities that allow people to
get to know one another. Such practices may include providing employees with a role
model, mentor or trainer or providing timely and adequate feedback.
Training and development - Providing ample training and development opportunities
drop in turnover by keeping employees satisfied and well-positioned for future growth
opportunities.
In fact, dissatisfaction with potential career development is one of the top three reasons
employees (35%) often feel inclined to look elsewhere. if employees are not given
opportunities to continually update their skills, they are more likely to leave. Those who
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receive more training are less likely to quit than those who receive little or no training.
Employers fear that providing training will make their employees more marketable. They
feel that increase turnover can offer job specific training, which is less transferable to
other contexts. Additionally, employers can increase retention through development
opportunities such as allowing employees to further their education and reimbursing
tuition for employees who remain with the company for a specified amount of time.
Compensation and rewards - Pay levels and motivation are only modest predictors of
an employee‘s decision to leave the organization; however organizations can lead the
market with a strong compensation and reward package as 53% of employees often look
elsewhere because of poor compensation and benefits. Organizations can explicitly link
rewards to retention (i.e. vacation hours to seniority, offer retention Bonus payments or
Employee stock options, or define benefit plan payouts to years of services) Research has
shown that defined compensation and rewards as associated with longer tenure.
Additionally, organizations can also look to intrinsic rewards such as increased decision-
making autonomy.
Effective Leaders - An employee‘s relationship with his/her immediately ranking
supervisor or manager is equally important for keeping and making an employee feel
embedded and valued within the organization. Supervisors need to know how to motivate
their employees and reduce cost while building loyalty in their key people. Managers
need to reinforce employee productivity and open communication, to coach employees
and provide meaningful feedback and inspire employees to work as an effective team. In
order to achieve this, organizations need to prepare managers and supervisors to lead and
develop effective relationships with their subordinates. Executive Coaching can help
increase an individual‘s effectiveness as a leader as well as boast a climate of learning,
trust and teamwork in an organization. To encourage supervisors to focus on retention
among their teams, organizations can incorporate retention metric into their
organization‘s evaluation.
Employee Engagement - Employees who are satisfied with their jobs, enjoy their work
and the organization, believe their job to be more important, take pride in the company
and feel their contributions are impactful are five times less likely to quit than employees
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who were not engaged. Engaged employees give their companies crucial competitive
advantages, including higher productivity and lower employee turnover.
Factors affecting employee retention
Most companies believe that hiring fresher from top colleges is a kind of guarantee that
they will stick to the job for a relatively longer duration. While offering a good pay check
is important, companies need to go that extra mile to make sure their attrition rate is low.
Progressive HR functions are now ensuring that fresher‘s establish a long-term
association with the company beyond the pay check. Here are a few strategies they are
employing:
Well defined career path
Employees, whether fresher‘s or ones with experience, want to understand how the
leadership of an organisation can facilitate their growth. They want to see tangible
examples of how their counterparts have grown in the firm. For many, growth is not just a
vertical ladder. A lateral lattice is equally important. The young workforce is keen on
having early experiences of doing different things rather than being sandboxed into one
job role. Hence, it is important for companies to chart out well-defined career paths that
factor in a variety of work. .
Compensation
Compensation constitutes the largest part of the employee retention process.
The employees always have high expectations regarding their compensation packages.
Compensation packages vary from industry to industry. So an attractive compensation
package plays a critical role in retaining the employees. Compensation includes salary,
wages, bonuses, benefits, prerequisites, stock options, bonuses vacations, etc
While setting up the packages, the following components should be kept in mind:
Salary and monthly wage: It is the biggest component of the compensation
package. It is also the most common factor of comparison among employees. It
includes:
Basic wage
House rent allowance
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