This action might not be possible to undo. Are you sure you want to continue?
1. Introduction 1.1 1.2 1.3 1.4 2. What Is Retention Why People Leave Why People Stay Importance Of Retention
Research Objectives and Hypothesis Research Methodology
3.1 3.2 Primary Data Secondary Data
4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 Strategies to Retain Employees Why to Retain? Its Pros and Cons Retention Myths Process of Retention Managing Employee retention Retention Management Manager’s Role In Retention Employee Retention In New Millennium
5. 6. 7. 8.
Tips For Employee Retention What are the Best Retention Practices? Data Analysis and Interpretation Observations and Prime Findings
Conclusions & Recommendation
10. Appendix (Sample Questionnaire) Bibliography
1.2 What is Retention?
“Employee Retention” is the buzzword that one could hear in all the companies. Hiring a talented employee and retaining them is one of the major concerns faced by the companies. The employees with more experience in an organization are always an asset to the company, the reason being they are much familiar with the company culture. Employee retention is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until the completion of the project. Employee retention is beneficial for the organization as well as the employee. Employee retention refers to policies and practices companies use to prevent valuable employees from leaving their jobs. How to retain valuable employees is one of the biggest problems that plague companies in the competitive marketplace. Not too long ago, companies accepted the "revolving door policy" as part of doing business and were quick to fill a vacant job with another eager candidate. Nowadays, businesses often find that they spend considerable time, effort, and money to train an employee only to have them develop into a valuable commodity and leave the company for greener pastures. In order to create a successful company, employers should consider as many options as possible when it comes to retaining employees, while at the same time securing their trust and loyalty so they have less of a desire to leave in the future. Employees today are different. They are not the ones who don’t have good opportunities in hand. As soon as they feel dissatisfied with the current employer or the job, they switch over to the next job. It is the responsibility of the employer to retain their best
employees. If they don’t, they would be left with no good employees. A good employer should know how to attract and retain its employees. Employee Retention involves taking measures to encourage employees to remain in the organization for the maximum period of time. Corporate is facing a lot of problems in employee retention these days. Hiring knowledgeable people for the job is essential for an employer. But retention is even more important than hiring. There is no dearth of opportunities for a talented person. There are many organizations which are looking for such employees. If a person is not satisfied by the job he’s doing, he may switch over to some other more suitable job. In today’s environment it becomes very important for organizations to retain their employees. The top organizations are on the top because they value their employees and they know how to keep them glued to the organization. Employees stay and leave organizations for some reasons.
that corporate believes in “Love them or lose them” The reason may be personal or professional. These reasons should be understood by the employer and should be taken care of. The organizations are becoming aware of these reasons and adopting many strategies for employee retention.
1.3 What Makes Employee Leave?
Employees do not leave an organization without any significant reason. There are certain circumstances that lead to their leaving the organization. The most common reasons can be: # Job is not what the employee expected to be: Sometimes the job responsibilities don’t come out to be same as expected by the candidates. Unexpected job responsibilities lead to job dissatisfaction. # Job and person mismatch: A candidate may be fit to do a certain type of job which matches his personality. If he is given a job which mismatches his personality, then he won’t be able to perform it well and will try to find out reasons to leave the job. # No growth opportunities: No or less learning and growth opportunities in the current job will make candidate’s job and career stagnant. # Lack of appreciation: If the work is not appreciated by the supervisor, the employee feels de-motivated and loses interest in job. # Lack of trust and support in coworkers, seniors and management: Trust is the most important factor that is required for an individual to stay in the job. Non-supportive coworkers, seniors and management can make office environment unfriendly and difficult to work in. # Stress from overworks and work life imbalance: Job stress can lead to work life imbalance which ultimately many times lead to employee leaving the organization. # Compensation: Better compensation packages being offered by other companies may attract employees towards themselves.
# New job offer: An attractive job offer which an employee thinks is good for him with respect to job responsibility, compensation, growth and learning etc. can lead an employee to leave the organization.
1.4 How to Make Them Stay?
Companies have now realized the importance of retaining their quality workforce. Retaining quality performers contributes to productivity of the organization and increases morale among employees. Four basic factors that play an important role in increasing employee retention include salary and remuneration, providing recognition, benefits and opportunities for individual growth. But are they really positively contributing to the retention rates of a company? Basic salary, these days, hardly reduces turnover. Today, employees look beyond the money factor.
Employee Rewards Employee retention can be increase by inculcating the following practices: 1. Open Communication: A culture of open communication enforces loyalty among employees. Open communication tends to keep employees informed on key issues. Most importantly, they need to know that their opinions matter and that management is 100% interested in their input. 2. Employee Reward Program: A positive recognition for work boosts the motivational levels of employees. Recognition can be made explicit by providing awards like best employee of the month or punctuality award. Project based recognition also has great significance. The award can be in terms of gifts or money.
3. Career Development Program: Every individual is worried about his/her career. He is always keen to know his career path in the company. Organizations can offer various technical certification courses which will help employee in enhancing his knowledge. 4. Performance Based Bonus: A provision of performance linked bonus can be made wherein an employee is able to relate his performance with the company profits and hence will work hard. This bonus should strictly be productivity based. 5. Recreation facilities: Recreational facilities help in keeping employees away from stress factors. Various recreational programs should be arranged. They may include taking employees to trips annually or bi-annually, celebrating anniversaries, sports activities, et al. 6. Gifts at Some Occasions: Giving out some gifts at the time of one or two festivals to the employees making them feel good and understand that the management is concerned about them.
1.5 Importance of Employee Retention
Now that so much is being done by organizations to retain its employees, why is retention so important? Is it just to reduce the turnover costs? Well, the answer is a definite no. It’s not only the cost incurred by a company that emphasizes the need of retaining employees but also the need to retain talented employees from getting poached. The process of employee retention will benefit an organization in the following ways: 1. 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. 2. Loss of Company 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 a future return. When the employee leaves, the investment is not realized. 3. 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 severed, which could lead to potential customer loss. 4. Turnover leads to more turnovers: When an employee terminates, the effect is felt throughout the organization. Co-workers are often required to pick up the slack. The unspoken negativity often intensifies for the remaining staff.
5. Goodwill of the company: The goodwill of a company is maintained when the attrition rates are low. Higher retention rates motivate potential employees to join the organization. 6. Regaining efficiency: If an employee resigns, then good amount of time is lost in hiring a new employee and then training him/her and this goes to the loss of the company directly which many a times goes unnoticed. And even after this you cannot assure us of the same efficiency from the new employees.
Chapter-2 Research Objectives:
1. Why people stay in the organization? 2. Why people quit from an organization? 3. What are the motivating factors for an employee? 4. What makes an employee to perform his/her best? 5. What makes an employee to not to perform his/her best?
• • • • • Human Resource is the most important resource of the company. Cost of employee turnover adds a lot to the company’s expense. High attrition rate is not always bad for the company. Study the retention policy strategies in today’s scenario Process of retention and steps taken to retain valuable employees in IT industry.
Chapter-3 Research Methodology: 3.1 Primary Data:
I’ve collected most of the secondary data from various websites relating to the HRM.. The main objective was to obtain basic reasons for retention for the employees in a particular organization.
3.2 Secondary Data:
This data was collected through the responses, which I got through questionnaire. The responses were first analyzed thoroughly and I went for the tabulation of all collected data. After that charts and relevant graph has been drawn to go for the final interpretation.
Chapter-4 Strategic Elements:
4.1 Strategies to Retain Employees:
The basic practices which should be kept in mind in the employee retention strategies are: 1. Hire the right people in the first place. 2. Empower the employees: Give the employees the authority to get things done.
3. Make employees realize that they are the most valuable asset of the organization. 4. Have faith in them, trust them and respect them. 5. Provide them information and knowledge. 6. Keep providing them feedback on their performance. 7. Recognize and appreciate their achievements. 8. Keep their morale high. 9. Create an environment where the employees want to work and have fun.
These practices can be categorized in 3 levels: Low, medium and high level.
Low Level Employee Retention Strategies:
# Appreciating and recognizing a well done job # Personalized well done and thank-you cards from supervisors # Congratulations e-cards or cards sent to spouses/families # Voicemails or messages from top management # Periodic days off for good performance # Rewards (gift, certificates, monetary and non monetary rewards) # Recognizing professional as well as personal significant events
* Wedding gifts * Anniversary gifts * New born baby gifts * Scholarships for employee’s children * Get well cards/flowers * Birthday cards, celebrations and gifts # Providing benefits * Home insurance plans * Legal insurance * Travel insurance * Disability programs # Providing perks: It includes coupons, discounts, rebates, etc * Discounts in cinema halls, museums, restaurants, etc. * Retail store discounts * Computer peripherals purchase discounts # Providing workplace conveniences * On-site ATM * On-site facilities for which cost is paid by employees o laundry facility for bachelors o Shipping services * Assistance with tax calculations and submission of forms * Financial planning assistance * Casual dress policies * Facilities for expectant mothers o Parking o Parenting guide o Lactation rooms o Flexi timings
# Fun at work * Celebrate birthdays, anniversaries, retirements, promotions, etc * Holiday parties and holiday gift certificates * Occasional parties like diwali, holi, dushera, etc * Organize get together for watching football, hockey, cricket matches * Organize picnics and trips for movies etc * Sports outings like cricket match etc * Indoor games # Occasional stress relievers * “Casual dress” day * “Green is the color” day * Handwriting analysis * Tattoo, mehandi, hair braiding stalls on weekends * Mini cricket in office * Ice cream Fridays * Holi-Day breakfast
# Employee support in tough time or personal crisis * Personal loans for emergencies * Childcare and eldercare services * Employee Assistance Programs (Counseling sessions etc) * Emergency childcare services
Medium Level of Employee Retention Strategies:
* Appreciating and recognizing a well done job * Special bonus for successfully completing firm-sponsored certifications * Benefit programs for family support * Child adoption benefits * Flexible benefits * Dependents care assistance * Medical care reimbursement # Providing conveniences at workplace # Gymnasiums # Athletic membership program # Providing training and development and personal growth opportunities * Sabbatical programs * Professional skills development * Individualized career guidance
High level Strategies:
# Promoting Work/Life Effectiveness # Develop flexible schedules # Part-time schedules # Extended leaves of absence # Develop Support Services # On-site day care facility etc. # Understand employee needs: This can be done through proper management style and culture # Listen to the employee and show interest in ideas * Appreciate new ideas and reward risk-taking * Show support for individual initiative * Encourage creativity # Encouraging professional training and development and/or personal growth opportunities: It can be done through: * Mentoring programs * Performance feedback programs * Provide necessary tools to the employees to achieve their professional and personal goals * Getting the most out of employee interests and talents * Higher study opportunities for employees * Vocational counseling * Offer personalized career guidance to employees
# Provide an environment of trust: Communication is the most important and effective way to develop trust. * Suggestion committees can be created * Open door communication policy can be followed * Regular feedbacks on organization’s goals and activities should be taken from the employees by: o Management communications o Intranet and internet can be used as they provide 24X7 access to the information o Newsletters, notice boards, etc. # Hire the right people from the beginning: employee retention is not a process that begins at the end. The process of retention begins right from the start of the recruitment process. * The new joinees should fit with the organization’s culture. The personality, leadership characteristics of the candidate should be in sync with the culture of the hiring organization. * Referral bonus should be given to the employees for successful hires. They are the best source of networking. * Proper training should be given to the managers on interview and management techniques. * An internship program can be followed to recruit the fresh graduates.
4.2 WHY TO RETAIN? ITS PROS AND CONS.
The most important factor in running a business is “Employee Allegiance”. Now-a-days companies are finding very hard to retain their key employees. In the current global market, you could a very talented employee with good talent and attitude for a good salary package and working environment.
Organizations should understand and know the value of its people. Technocrats who invent new things, managers with very good team control and effective team management, executives who bring up good production levels, and sales people who outperform and bring more customers to the business, these employees bring more profit and success to the company. That is why employers love to retain their key employees. Here are the top three advantages in retaining the employees,
Risk on hiring a new employee is minimized The expenses on hiring a new resource, training them and bringing up to speed up the work could be minimized Retention helps to retain customers. A study released by “The Radclyffe Group” found that there is a strong correlation between the employee satisfaction and the customer satisfaction. Those companies with great employee satisfaction have the greatest customer satisfaction
However, there is a downside of retaining the employees for a long time. The companies need to pay more benefits, health care etc to the employees. If the employee stays long in a company, it is quite normal that the management expects more performance and productivity from them.
4.3 RETENTION MYTHS
The process of retention is not as easy at it seems. There are so many tactics and strategies used in retention of employees by the organizations. The basic purpose of these strategies should be to increase employee satisfaction, boost employee morale hence achieve retention. But some times these strategies are not used properly or even worse, wrong strategies are used. Because of which these strategies fail to achieve the desired results. There are many myths related to the employee retention process. These myths exist because the strategies being used are either wrong or are being used from a long time. These myths prevent the employer from successfully implementing the retention strategies. Let us learn about some of these myths. 1. Employees leave an organization for more pay: Money may be the motivating factor for some but for many people it is not the most important factor. Money matters more to the low-income-employees for whom it’s a survival issue. Money can make an employee stay in an organization but not for long. The factors more important than money are job satisfaction, job responsibilities, and individual’s skill development. The employers should understand this and work out some other ways to make employees feel satisfied. When employees leave, management tries to retain them by offering more money. But instead they should try to figure out the main reason behind it. Issues that are mainly the cause of dissatisfaction are organization’s policies and procedures, working conditions, relationship with the supervisor and salary, etc. For such employees, achievement, growth, respect, recognition, is the main concern. 2. Incentives can increase productivity: Incentives can surely increase productivity but not for long term. Cash incentives, volume work targets and speed awards are old management beliefs. They can generate work speedily and in volumes but can’t boost employee commitment. Rather speed can hamper the quality of work produced. What really glues employees to their work and organization is quality work, meaningful responsibilities, recognition, respect, growth opportunities and friendly supervisors.
3. Employees run away from responsibilities: It is a myth that employees run from responsibilities. In-fact employees feel more responsible if they are given extra responsibilities apart from their regular job. Employees look for variety, greater control on the processes and authority to take decisions in their present job. They want opportunities to learn and grow. Management can assign extra responsibilities to their employees and appreciate them on the completion of these tasks. This will induce a sense of pride in the employee and will improve the relationship between the management and the employee. 4. Loyalty is a thing of the past: Employees can be loyal but what they need is an employer for whom they can be loyal. There is no reason for the employee to hop jobs if he’s satisfied with the employer. 5. Taking measures to increase employee satisfaction will be expensive for the organizations: The things actually required to improve employee satisfaction like respect, career growth and development; appreciation, etc. can’t be bought. They are free of cost. An employer or management that reacts well to the employee’s ideas and suggestions is enough for the employees to be retained.
4.4 PROCESS OF RETENTION
Four Building Blocks of the Retention Process
Many organizations are feeling the pinch of low unemployment and high turnover. Maybe yours is one of them. Keeping good employees is critical to organizational success. However, many organizations look at this area as a series of tasks to be performed. This is a process, not a set of tasks…and once that mindset is taken, a comprehensive, ongoing system can be developed to ensure your retention goals are realized. Here are four areas to consider when developing your systemic process.
Building Block 1: Recruit To Retain
Use behavior based interviewing (see last quarter's issue). Ensure that all interviewers are "in-sync"; that is, they're reading off the same sheet of music. Look at the competencies that will be needed to reach strategic goals, and then hire people who posses those competencies. Use indicator assessments to help you better screen candidates and ensure that the job fit is correct. Realistically preview jobs; neither overselling nor underselling benefits the interviewee or the organization. And, don't forget reference and credential checks. In certain positions, full background checks may be needed. Carefully evaluate each position, especially when one becomes vacant. Is a replacement truly needed? Are there better ways of structuring positions? Look for employee input as well as management input. How does your organization stack up against the competition? If salaries, benefits and other "maintenance" factors aren't keeping up with the market, the other areas don't matter. Consider getting outside market surveys for comparative data.
Building Block 2: Make Everyone a Part of the Family
Set up orientation programs that embrace new employees. Look at orientation as a longterm process, not just the first day or week of employment. Use your orientation process to build employee involvement and commitment. That means making it interactive from the beginning, and involving all parts of the organization. Use a buddy system for that critical introductory period time (or some other time parameter). It's nice to have a buddy to explain the ropes and to have someone to have lunch with. Check back regularly with new employees to "see how it's going". Find out if what was described during the formal orientation day is indeed what they're experiencing at their worksite. Don't wait for the resignation that triggers an exit interview to find out what caused an employee to leave. Don't wait for the exit interview to find out where the organization has some opportunities for improvement. Use both formal and informal systems. For example, "Pulse Check" interviews done at three or four months after hire date can give a standardized indication of what's going well and where improvements can be made. Culture and climate surveys provide indicators, and focus groups can provide in-depth information on specific areas. "MBWA", managing by Walking Around, is a great way to get up close and personal with employees. It gives you first hand information, and allows you to view the workplace "as it is", rather than your perception from your office.
Building Block 3: Develop Current and Future Competencies
Skill development is for everyone - old and new employees alike. Proactively assist employees in setting goals that link their development to the organization's overall goals. Provide opportunities for both the short term and long term. Reward and recognize employees based on results achieved pertaining to that skill. It isn't enough just to learn it. Determine tangible results based on mastering the skill. If you don't already have a
mentor program, consider this for every employee. Mentors can help to guide and develop every employee, and the relationship is invaluable in raising the comfort level of employees and the productivity standard bar in the organization. Managers are critical in retention efforts, so think about what you're doing to develop yours. Employees don't leave companies; they leave their managers! Make your managers are ones that employee will stick to like glue! But be forewarned, management development is an individualized, long-term commitment. It's not a few programs that the organization mandates every manager must attend. Use a variety of tools and methods for developing employees. Assessments, web-based training, classroom instruction, team learning and on-the-job training are just a few of the methods. Each person is different in how they take in and process information. Find out what works best with each person, and then capitalize on it.
Building Block 4: Learn From the Past with an Eye on the Future
Even with the best work environments, employees do leave for a variety of reasons. Find out why your voluntary terminations resign by conducting structured exit interviews. Then, use that data to make positive changes in your workplace. If recurring themes come up, verify them with existing employees. Ask employees to form teams to develop recommendations to improve those areas. As for involuntary terminations….study them carefully. Are there trends? Do certain supervisors have a higher than normal percentage of involuntary terminations? What are the reasons? How can these be avoided in the future? By implementing principles of the Four Building Blocks, you can build a strong process for holding on to your employees. This, of course, is by no means exhaustive… but it's a heckuva good start!
4.5 Managing Employee Retention:
The task of managing employees can be understood as a three stage process: 1. Identify the cost of employee turnover 2. Understand why employee leave 3. Implement retention strategies Identify the cost of employee turnover: The organizations should start with identifying the employee turnover rates within a particular time period and benchmark it with the competitor organizations. This will help in assessing the whether the employee retention rates are healthy in the company. Secondly, the cost of employee turnover can be calculated. According to a survey, on an average, attrition costs companies 18 months’ salary for each manager or professional who leaves, and 6 months’ pay for each hourly employee who leaves. This amounts to major organizational and financial stress, considering that one out of every three employees plans to leave his or her job in the next two years. Understand why employees leave: Why employees leave often puzzles top management. Exit interviews are an ideal way of recording and analyzing the factors that have led employees to leave the organization. They allow an organization to understand the reasons for leaving and underlying issues. However employees never provide appropriate response to the asked questions. So an impartial person should be appointed with whom the employees feel comfortable in expressing their opinions.
Implement retention strategy: Once the causes of attrition are found, a strategy is to be implemented so as to reduce employee turnover. The most effective strategy is to adopt a holistic approach to dealing with attrition. An effective retention strategy will seek to ensure: * Attraction and recruitment strategies enable selection of the ‘right’ candidate for each role/organization * New employees’ initial experiences of the organization are positive * Appropriate development opportunities are available to employees, and that they are kept aware of their likely career path with the organization * The organization’s reward strategy reflects the employee drivers * The leaving process is managed effectively
4.6 Retention Management:
Most of us would agree that today’s environment is considerably more complex than that which existed in 1980s and 1990s. Consequently, organizations have been introducing change to cope with the challenges of the environment and competition. This, in turn, led to change in job demands and employee skills. Thus, human skills and talents are in great demand than that of other resources. Organizations started offering attractive pay packages in order to lure the employees with scarce skills. This, in turn led to increase in external mobility. Therefore, organizations started adapting strategies to retain employees with scarce skills and talents. Retention management, thus, acquired significance.
Organizations started designing and implementing retention strategies in order to keep the valued employees. In fact, organizations prefer to retain employees rather than recruiting a new employee due to the following reasons: # Existing employee skills, talents, values, aptitude, commitment and contribution is known better based on performance # Potential of new employee, sometimes, may be a myth # Existing employees’ culture fit is judged and tested # Existing employees’ aspirations and expectations are clear # Existing employees’ family members already adjusted to the company’s community environment # Existing employees has already completed the adjustment stage and is in contributing and performance stage # Existing employees is familiar with the company and community environment and climate # There won’t be further cost of recruitment, relocation and training, in case of existing employees.
4.7 MANAGER’S ROLE IN RETENTION
When asked about why employees leave, low salary comes out to be a common excuse. However, research has shown that people join companies, but leave because of what their managers’ do or don’t do. It is seen that managers who respect and value employees’ competency, pay attention to their aspirations, assure challenging work, value the quality of work life and provided chances for learning have loyal and engaged employees. Therefore, managers and team leaders play an active and vital role in employee retention. Managers and team leaders can reduce the attrition levels considerably by creating a motivating team culture and improving the relationships with team members. This can be done in a following way: * Creating a Motivating Environment: Team leaders who create motivating environments are likely to keep their team members together for a longer period of time. Motivation does not necessarily have to come through fun events such as parties, celebrations, team outings etc. They can also come through serious events e.g. arranging a talk by the VP of Quality on career opportunities in the field of quality. Employees who look forward to these events and are likely to remain more engaged. * Standing up for the Team: Team leaders are closest to their team members. While they need to ensure smooth functioning of their teams by implementing management decisions, they also need to educate their managers about the realities on the ground. When agents see the team leader standing up for them, they will have one more reason to stay in the team. * Providing coaching: Everyone wants to be successful in his or her current job. However, not everyone knows how. Therefore, one of the key responsibilities will be providing coaching that is intended to improve the performance of employees. Managers often tend to escape this role by just coaching their employees. However, coaching is followed by monitoring performance and providing feedback on the same.
* Delegation: Many team leaders and managers feel that they are the only people who can do a particular task or job. Therefore, they do not delegate their jobs as much as they should. Delegation is a great way to develop competencies. * Extra Responsibility: Giving extra responsibility to employees is another way to get them engaged with the company. However, just giving the extra responsibility does not help. The manager must spend good time teaching the employees of how to manage responsibilities given to them so that they don’t feel over burdened. * Focus on future career: Employees are always concerned about their future career. A manager should focus on showing employees his career ladder. If an employee sees that his current job offers a path towards their future career aspirations, then they are likely to stay longer in the company. Therefore, managers should play the role of career counselors as well.
4.8 EMPLOYEE RETENTION IN NEW MILLENNIEUM:
Today's labor force is different. Supervisors must take responsibility for their own employee retention. If they don't, they could be left without enough good employees. A wise employer will learn how to attract and keep good employees, because in the long run, this workforce will make or break a company's reputation. What's Different? New supervisors must be prepared to be collaborative, supportive, and nurturing of their people. The old style of "my-way-or-the-highway" style of management is a thing of the past. Most new supervisors need training to understand what it really takes to retain employees. Employee retention involves being sensitive to people's needs and demonstrating the various strategies in the five families detailed in Roger Herman's classic book on employee retention, Keeping Good People. 1. Environment 2. Relationship 3. Support 4. Growth 5. Compensation Employee retention takes effort, energy, and resources...and the results are worth it.
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 and 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 * Dearness allowance City compensatory allowance
Salary and wages represent the level of skill and experience an individual has. Time to time increase in the salaries and wages of employees should be done. And this increase should be based on the employee’s performance and his contribution to the organization. Bonus: Bonuses are usually given to the employees at the end of the year or on a festival. Economic benefits: It includes paid holidays, leave travel concession, etc. Long-term incentives: Long term incentives include stock options or stock grants. These incentives help retain employees in the organization's startup stage. Health insurance: Health insurance is a great benefit to the employees. It saves employees money as well as gives them a peace of mind that they have somebody to take care of them in bad times. It also shows the employee that the organization cares about the employee and its family. After retirement: It includes payments that an Employee gets after he retires like EPF (Employee Provident Fund) etc. Miscellaneous compensation: It may include employee assistance programs (like psychological counseling, legal assistance etc), discounts on company products, use of a company cars, etc.
Growth and Career:
Growth and development are the integral part of every individual’s career. If an employee can not foresee his path of career development in his current organization, there are chances that he’ll leave the organization as soon as he gets an opportunity. The important factors in employee growth that an employee looks for himself are:
Work profile: The work profile on which the employee is working should be in sync with his capabilities. The profile should not be too low or too high. Personal growth and dreams: Employees responsibilities in the organization should help him achieve his personal goals also. Organizations can not keep aside the individual goals of employees and foster organizations goals. Employees’ priority is to work for them and later on comes the organization. If he’s not satisfied with his growth, he’ll not be able to contribute in organization growth. Training and development: Employees should be trained and given chance to improve and enhance their skills. Many employers fear that if the employees are well rained, they’ll leave the organization for better jobs. Organization should not limit the resources on which organization’s success depends. These trainings can be given to improve many skills like:
* Communications skills * Technical skills * In-house processes and procedures improvement related skills * C or customer satisfaction related skills * Special project related skills Need for such trainings can be recognized from individual performance reviews, individual meetings, employee satisfaction surveys and by being in constant touch with the employees.
Lack of support from management can sometimes serve as a reason for employee retention. Supervisor should support his subordinates in a way so that each one of them is a success. Management should try to focus on its employees and support them not only in their difficult times at work but also through the times of personal crisis. Management can support employees by providing them recognition and appreciation. Employers can also provide valuable feedback to employees and make them feel valued to the organization. The feedback from supervisor helps the employee to feel more responsible, confident and empowered. Top management can also support its employees in their personal crisis by providing personal loans during emergencies, childcare services, employee assistance programs, counseling services, et al. Employers can also support their employees by creating an environment of trust and inculcating the organizational values into employees. Thus employers can support their employees in a number of ways as follows: # By providing feedback # By giving recognition and rewards # By counseling them # By providing emotional support
Sometimes the relationship with the management and the peers becomes the reason for an employee to leave the organization. The management is sometimes not able to provide an employee a supportive work culture and environment in terms of personal or professional relationships. There are times when an employee starts feeling bitterness towards the management or peers. This bitterness could be due to many reasons. This decreases employee’s interest and he becomes de-motivated. It leads to less satisfaction and eventually attrition. A supportive work culture helps grow employee professionally and boosts employee satisfaction. To enhance good professional relationships at work, the management should keep the following points in mind.
Respect for the individual: Respect for the individual is the must in the organization. Relationship with the immediate manager: A manger plays the role of a mentor and a coach. He designs ands plans work for each employee. It is his duty to involve the employee in the processes of the organization. So an organization should hire managers who can make and maintain good relations with their subordinates. Relationship with colleagues: Promote team work, not only among teams but in different departments as well. This will induce competition as well as improve the relationships among colleagues. Recruit whole heartedly: An employee should be recruited if there is a proper place and duties for him to perform. Otherwise he’ll feel useless and will be dissatisfied. Employees should know what the organization expects from them and what their expectation from the organization is. Deliver what is promised.
Promote an employee based culture: The employee should know that the organization is there to support him at the time of need. Show them that the organization cares and he’ll show the same for the organization. An employee based culture may include decision making authority, availability of resources, open door policy, etc. Individual development: Taking proper care of employees includes acknowledgement to the employee’s dreams and personal goals. Create opportunities for their career growth by providing mentorship programs, certifications, educational courses, etc. Induce loyalty: Organizations should be loyal as well as they should promote loyalty in the employees too. Try to make the current employees stay instead of recruiting new ones.
It is not about managing retention. It is about managing people. If an organization manages people well, employee retention will take care of itself. Organizations should focus on managing the work environment to make better use of the available human assets. People want to work for an organization which provides # Appreciation for the work done # Ample opportunities to grow # A friendly and cooperative environment # A feeling that the organization is second home to the employee
Organization environment includes
• • • • • • • •
Culture Values Company reputation Quality of people in the organization Employee development and career growth Risk taking Leading technologies Trust
Types of environment the employee needs in an organization * Learning environment: It includes continuous learning and improvement of the individual, certifications and provision for higher studies, etc. * Support environment: Organization can provide support in the form of work-life balance. Work life balance includes:
• • • • • •
Flexible hours Telecommuting Dependent care Alternate work schedules Vacations Wellness
* Work environment: It includes efficient managers, supportive co-workers, challenging work, involvement in decision-making, clarity of work and responsibilities, and recognition. Lack or absence of such environment pushes employees to look for new opportunities. The environment should be such that the employee feels connected to the organization in every respect.
Chapter-5 Tips for employee Retention
In today’s competitive hiring market, employee retention has become an important issue for all employers. As a small business owner, you are aware that it’s harder than ever to find and keep good people. You also understand that your ability to retain quality workers can make or break your business. Fortunately, there are many ways to keep your prized employees happily on board. Here are some tips to help improve employee relations and ensure that your company keeps the best of the best: 1. Compensate fairly. Money isn’t the only reason people stay, but it does play a significant role in job satisfaction. You must offer your employees a competitive salary and honor their service and tenure with raises, bonuses, and other monetary rewards. Fair pay shows that you respect them. In addition, offer a good benefits package, which can induce employees to stay committed to your business. 2. Be open to their ideas. In a high-performance workplace, some of the best ideas come from the employees themselves. Make sure to keep the lines of communication open. Good leaders listen to their employees and treat them as valuable team members. 3. Treat people as equals. If you really want employees to feel a sense of loyalty and commitment, treat them as partners, not hired hands. Give your employees a sense of ownership, and keep them engaged. 4. Provide growth opportunities. It’s estimated that 50 percent of an employee’s skill set becomes outdated in just two years, so make sure you provide your staff with opportunities for personal and professional growth. Allow your employees to take classes and attend professional development seminars. Challenge them with new responsibilities that help them acquire new skills.
5. Say thanks. Just taking the time to say "thank you" is a simple yet effective way to show employees that they're valued and appreciated. 6. Make time. Make an effort to spend one-on-one time with individual employees. Take them to lunch. Show each person that you’re personally committed to keeping and growing his or her talent by inquiring what other positions the employee might be interested in as their career develops. 7. Be flexible. It’s important to help each employee achieve a balance between their work life and personal life. Allow them to attend their children’s activities or tend to sick relatives when necessary. 8. Encourage creativity. Employees need to enjoy the work they do, and you need to provide a creative and challenging work environment, or all the other great things the company does won’t matter. If you micromanage and stifle creativity, don’t expect to keep good people. 9. Keep them healthy and happy. Encourage good health and wellness of body, mind, and spirit. You can be creative. Bring in a yoga instructor for morning meditation, or give gift certificates for massages. Allow for restful breaks. Learn about your employee’s outside interests. Feed their minds with books, magazine subscriptions, and concert or theater tickets. 10.Lead with the heart. Win your employees over. Excellence is impossible without their affection and respect. Whether it’s through sharing a compelling vision with them, paying attention to work/life balance, or simply providing a positive, uplifting work environment, if you want to keep great employees, find some way to tap into their hearts. The positive word-of-mouth about your company’s culture will go a long way in both retaining good workers and attracting new ones.
What Are The Best Retention Practices?
The best way to improve employee retention is to understand what employees want and need from the workplace and provide it. Companies must meet employee demands within limits, of course. Management can not just dish out indiscriminate amounts of money to employees or give them a four day work week in many cases. Yet surprisingly, many employee retention practices do not have to cost a cent. Studies show that many employees leave for reasons that have nothing to do with money or benefits, but rather with issues such as feeling unappreciated or feeling they have a very limited chance for advancement. Other complaints include not enough honest feedback, the actual job does not match with what they were told in initial interviews, and/or there is a lack of challenge/learning/training. Employers can resolve these sorts of issues in cash-free ways to help increase their employee retention rates. Promoting from within whenever possible often means greater employee retention. Moreover, many employees are better motivated to succeed in the firm if they feel they have a possibility of being promoted. Professional development of workers can easily be worked into managers' review processes. Professional development works best as an employee retention practice when the employee is involved in planning his or her growth plan. The best employee retention practice of all may be to take the time to hire the right person for the job in the first place. But when employees do resign, conducting exit interviews can help in future employee retention. Employers find out useful information during exit interviews, allowing them to make changes that may retain other employees thinking of leaving for similar reasons. Of course, some employees do leave simply because of low pay and/or a lack of benefits. However, companies can be competitive in these areas and still stay within budget
constraints. Allow employees to choose between the benefits the company is considering. Staying competitive in wages is an excellent employee retention practice as it helps one get and keep the top employees in their fields. These employees are likely to stay if they would get less money in similar firms of the same size.
Employee Engagement & Retention Employee engagement illustrates the commitment and energy that employees bring to work and is a key indicator of their involvement and dedication to the organization. Employees who are engaged are more productive, content and more likely to be loyal to an organization. When organizations put sound HR practices in place, they are more likely to discover that employees feel satisfied, safe and will work to their full potential...and that means they are more likely to stay put.
Employee Retention: What Employee Turnover Really Costs Your Company It's one of the largest costs in all different types of organizations, yet it's also one of the most unknown costs. It's employee turnover. Companies routinely record and report costs such as wages and benefits, Workman's Compensation Insurance, utilities, materials, and space, yet most companies have no and report the cost of employee turnover. It can be much higher than you think. How much is it costing you? Several well-regarded studies have recently estimated the cost of losing an employee:
SHRM, the Society for Human Resource Management, estimated that it costs $3,500.00 to replace one $8.00 per hour employee when all costs -- recruiting, interviewing, hiring, training, reduced productivity, et cetera, were considered.
SHRM's estimate was the lowest of 17 nationally respected companies who calculate this cost!
Other sources provide these estimates: It costs you 30-50% of the annual salary of entry-level employees, 150% of middle level employees, and up to 400% for specialized, high level employees!
Do a quick calculation: Think of a job in your organization where there has been some turnover, perhaps supervisors. Estimate their annual average pay and the number of supervisors you lose annually. For example, if their average annual pay is $40,000, multiply this by .125% (or 125% of their annual pay, a reasonable cost estimate for supervisors). This means it costs $50,000 to replace just one supervisor. If this company loses ten supervisors a year, then 10 times $50,000 equals $500,000 in replacement costs for just supervisors. This is the bottom line cost. The top line cost? If the company's profit margin is 10%, then it costs $5,000,000 in revenues to replace these ten supervisors.
Do These Numbers Seem Unbelievable? Here's an actual calculation from a well-regarded organization in my community. The HR Manager of this human services organization (housing for disabled persons, sheltered workshops, etc.), estimated that 30 entry level people leave his organization on average every quarter. This averages out to ten people per month. Let's be extra conservative and shave SHRM's estimate (see above) down to $3,000.00 to replace each employee. This amounts to $30,000 per month, or $1,000.00 in employee turnover costs every day of the month! Annually, this totals $360,000.00. Actual turnover costs are usually much higher than we think they are -- until we estimate them.
You may be thinking, "Some employee turnover is unavoidable, even desirable." You're right. Some turnover is necessary, to replace marginal or poor employees with more productive ones and to bring in people with new ideas and expertise. However, high turnover costs are both avoidable and unnecessary. This is where companies need to focus their efforts. The goal is to retain valued performers while replacing poor ones. Most companies group both types of performers together when looking at turnover. By doing so, they're missing the cost and significance of replacing the good performers.
Why Don't More Companies See This as a Costly Problem? There are a variety of reasons this is not seen as a problem, all of which cost companies in expertise and dollars. How many of these occur in your organization? 1. No process is in place to tabulate costs. One survey found that only 44% of its respondents had a process in place to estimate turnover costs; 43% of companies relied on intuition, and 13% had no process at all. (1) 2. Costs are not reported to top management. It's a business axiom that one of the best ways to get top management's attention is to show them what something costs. However, most top management never gets to see turnover cost estimates because most companies don't measure them -- or if they do, they don't report them to top management. 3. It's an inescapable cost of doing business. Except, it's not! While some turnover is unavoidable and desirable, most turnover, especially among your better and top performers, is largely avoidable. Thinking that turnover is just a normal cost of doing business is the same quality of thinking which says that accidents are just an inescapable part of being in the construction business.
4. It's an HR problem. While HR needs to be a key partner in reducing turnover cost, this is a strategic issue requiring top management's attention and actions, in addition to HR's efforts, to resolve it. 5. Costs are underestimated, and so they register less concern. If costs are underestimated because the organization doesn't agree on or know what to measure, the statistics generated either register less concern than they should, or are disputed and held in disregard. What Costs need to be fully estimated? A comprehensive program measures the following costs:
• • • • • • • • • • • • •
Exit costs Recruiting Interviewing Hiring Orientation Training Compensation & benefits while training Lost productivity Customer dissatisfaction Reduced or lost business Administrative costs Lost expertise Temporary workers
There needs to be advance agreement among Human Resources, Finance, and Operations as to which cost measures will be considered valid. Then, it has to be measured and reported. 6. Waiting until there's a crisis. I was amazed when the executive director of one organization told me she knew that one of her capable managers was unhappy, but
decided it wasn't necessary to take action because she hadn't received a letter of resignation yet. Prevention is what works best. Begin to measure your turnover costs and, very importantly, look at who is leaving so you'll know if you're retaining your best people. The time to do this is now. Waiting until there's a crisis to take action limits your options and success rate. It also often triggers the common response of offering more money to get someone to stay, instead of fixing the original problem.
Why Do So Many Retention Efforts Fail? These are among the most common reasons company retention efforts fail, even when they're implemented by capable people. 1. No assessment, so ineffective solutions are chosen. In their hurry to correct a costly problem, companies often forgo conducting a relatively brief and cost-efficient assessment in order to correct the situation faster. However, implementing a solution without diagnosing who is leaving, and why they're leaving often results in solutions that are incapable of solving the root causes behind turnover. Diagnosing the reasons behind turnover always pays for itself. Don't start without an assessment. 2. Implementing too many solutions instead of the most effective solutions. Managers often brainstorm a number of plausible solutions, then implement many of them --especially those favored by top management. However, what is most needed is to select and implement a limited number of solutions which will be most effective at solving the problem. Implementing too many solutions, even good ones, will diffuse your resources and weaken your efforts and success.
3. No way of measuring success to know what works. How do you know which retention solutions you've implemented are working effectively and which aren't, where you need to make refinements, and what strategies you need to drop if you don't have a way of measuring your results?
How Do We Do a Better Job of Retaining Employees -- Especially Our Most Valuable Ones? First, rank your employees in three categories: best performers, middle performers, and lowest performers. Your objective is to retain your top performers; develop and retain your middle performers, turning them into near-top or top performers if possible; and potentially replace your lowest performers. Second, agree internally on the measures you'll use to calculate turnover costs. Be certain you're taking all costs into consideration. Most organizations greatly underestimate them. Third, report turnover costs to top management on a monthly, quarterly, and annual basis. When turnover costs are unacceptably high, or higher than your industry's average, do an assessment. Find out who is leaving and why they're leaving. Exit interviews can help you find out why. You need to know if it is your top, middle, or lowest performers who are leaving so you can gauge the expertise level leaving your organization. You're obviously going to employ (and pay for) different strategies if your top performers are voluntarily leaving, compared to middle or lowest level performers. Develop solutions capable of solving the problems you uncover, and only implement a limited number of them. Measure the success of your retention efforts, and refine them.
Two Very Key Strategies to Save a Large Amount of Time and Money: Very key strategy # 1: Don't wait until turnover costs become unacceptably high before you implement an ongoing retention program. Put a retention program in place before you have crisis situation. You not only must find out why employees leave your organization, you must also find out why others stay. Very key strategy # 2: Survey your top performers now in order to find out what keeps them there, why they might leave, what type of competitive offers they may find attractive, and what they need to be happier and more productive in their jobs. You'll do a better job of keeping them (along with their expertise and value). You'll also find out highly beneficial information about improvements your organization needs. This means driving improvements in your organization by what your best people tell you, instead of focusing on taking care of the ever-present complainers in every organization. Just How Valuable are Retention Efforts? One source estimated that a 10% reduction in employee turnover was worth more money than a 10% increase in productivity, or a 10% increase in sales! Retain and gain.
DATA ANALYSIS AND INTERPRETATION:
Ques. 1: What keep you interested at your present job?
No. of em ployees
Challenging job assingm ents Salary Flexibility Friends No tim to look for new job e Location is convenient Relationships Feel appreciated Makes m feel good e Career opportunities 0 2 4 6 8 10 12 14 16 No. of em ployees
From the above graph it is clear that most of the employees are interested at their present job due to challenging job assingments. Other then this location and working hours are also the reasons to stay at their present job.
Ques. 2: How would you rate the supervisors you work for now?
Most of the employees consider their employee good or very good in every aspect of work.
Ques. 3: How important is company loyalty to you?
Most of the employees consider company loyalty as highly important and also no employee consider company loyalty as not important to them.
Ques. 4: What would be the things your company could do to improve retention?
Most of the employees believe that one thing their company could do to improve retention is to listen to their employees more, some also think that company should train their managers better to improve retention.
Ques. 5: How important is feeling appreciated for your work by your coworkers and supervisors?
Appreciation is highly important for employees for their good work by their seniors or coworkers.
Ques. 6: On a scale of 1 to 10, how would you rate the efforts of your company to retain good people?
Many employees think that their company’s efforts to retain good employees are either average or good.
Ques. 7: How confident are you that you can find a better job somewhere else?
Most of the employees are confident enough that they will get a better job somewhere else.
Ques. 8: What causes you the greatest dissatisfaction at work?
Dissatisfaction at workplace is the main cause for quitting the job for any employee. Here most of the employees think the cause for greatest dissatisfaction is lack of recognition for their work and also lack of incentives and other benefits and recreational activities.
Ques. 9: Does your supervisor, or someone at work, seem to care about you as a person?
The feeling of belongingness is very important for any employee to stay at the present job. Here most of the employees think that only sometimes their seniors care about them as persons and not as resources.
Ques. 10: To improve your workplace environment, what would you like to see your executives do?
Recognition for work is important that’s why most of the employees believe that to improve workplace environment, they need better recognition for their work by their seniors and coworkers.
Ques. 11: In the last 1 year, have you had the opportunities at work to learn and grow?
In the above graph it is clear that many employees think that in the last 1 year most of the time they had opportunities to learn and grow while many think sometimes they had opportunities to learn and grow.
Ques. 12: At work do your opinions seem to count?
Most of the employees think that at workplace only sometimes their opinions seems to count which could be a sign of lack of listening to employees by the seniors.
1. There is no definition of satisfaction of the employees but it is a process, which is carried out by the mutual understanding of the employees and the employer for the betterment of both of them. 2. Retention should not be always considered to be a strategy but it should be bitterly considered to be a continuous process that has to e carried out a grass root level by the company. 3. There can be numerous reasons for the employee to be retained in particular organization. 4. Employee retention does not mean to invest huge amount in the welfare of the concerned employees. 5. Where as employee retention consist of keeping a track of the employees and also to take care of the various factors that are responsible for keeping the employee loyal to the organization. 6. The company should not be always target oriented, they should set the target according to real ground situation. The employees should not be given nonachievable targets because non-achievable may bring depression in to them, and it can be the hurdle in process of retention. 7. It is necessary for the organization to provide regular incentives, bonus to all performing employee, it can be helpful for building loyalty in the employees and also to create an attitude for the achievement of goal of the organization. 8. Money is important but it is not the only reason people stay with an organization. 9. Treat your employees like you treat your most valuable clients. 10. Retention is much more effective when you put the person into the right job! Know the person and their motivation.
1. It is cheaper to keep your good employees than it is to hire and train new ones. So company should always try to retain their good and productive employees rather than depending and continuing to hire new employees 2. Strong retention strategies become strong recruiting advantages. 3. Retention is much more effective when you put the right person into the right job. Know the job! Know the employee and their motivation. So it is necessary for the company to always find the best match for their respective vacancy or position at initial stages of the recruitment only, otherwise it can be a major problem of employees. 4. Money is important but it is not the only reason people stay with an organization. So this should be the crust of the story that only money cannot keep the employee to stay in the organization, but it is the kind of relationships and satisfaction that keep the employees to stay for longer time in the organization. 5. Recognition, in various forms, is a powerful retention strategy. This means that company tries to include the employees in the various decisions that the company takes and should also try to make them a indispensable part of the management and a whole organization. So that they should always feel appreciated. 6. Company should always keep a watch on the structure of wages and salary on the overall industry basis so that they can redefine and restructure their policy regarding this. From time in order to provide most competitive wages and salaries to their employees.
Chapter-10 Appendix (Sample Questionnaire):
1. What keep you interested at your present job?
i. ii. iii. iv. v. vi. vii. viii. ix. x.
Challenging job assignments Salary Flexibility in work hours Have friends at work No time to look for another job Location is convenient Relationships Feel appreciated for what I do Makes me feel good Career opportunities
2. How would you rate the supervisors / managers you work for now? i. ii. iii. iv. v. Poor Average Good Very good Exceptional
3. How important is company loyalty to you? i. ii. iii. iv. Not important Important Very important Highly important
4. What would be the things your company could do to improve retention? i. ii. iii. iv. v. Train their managers better Listen to employees more Pay more Hire better people Other benefits
Provide education loans/sponsorships
5. How important is feeling appreciated for your work by your coworkers and supervisors? i. ii. iii. iv. Not important Important Very important Highly important
6. On a scale of 1 to 10, how would you rate the effort of your company to retain good people? i. ii. iii. iv. 1 to 3 3 to 6 6 to 8 8 to 10
7. How confident are you that you can find a better job somewhere else? i. ii. iii. iv. Not confident Confident Very confident Highly confident
8. What causes you the greatest dissatisfaction at work? i. ii. iii. Pay scale Long working hours Lack of recognition for your work
Attitude of coworkers and supervisors Lack of recreational activities
9. Does your supervisors, or someone at work. Seem to care about you as a person? i. ii. iii. iv. Never Sometimes Most of the time All the time
10. To improve your workplace environment, what would you like to see your supervisors do? i. ii. iii. iv. v. More money Better recognition More time off More staff Better promotion
11. In the last 1 year, have you had the opportunities at work to learn and grow? i. ii. iii. iv. Never Sometimes Most of time All the time
12. At work do your opinions seem to count? i. ii. iii. iv. Never Sometimes Most of the time All the time
www.retention.naukrihub.com www.humanresources.com Books: Human Resource Management by P. Subba Rao Human Resource Management by T. N. Chabbra
This action might not be possible to undo. Are you sure you want to continue?