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EXECUTIVE SUMMARY
Employee Attrition is a global phenomenon that every business enterprise faces
as it tries to capture the talent of human resources available in the market. HR
professionals are breaking their heads to formulate Retention Strategies. This
PROJECT seeks to ascertain the causes of attrition
The objectives of the study include determining whether job content factors or job
context factors affect attrition more and the factors. It also will seek to predict
next years attrition analysis.
A questionnaire was designed and survey was conducted with the target
population. It was pre-coded, pre-tested and edited. A sample was taken using
disproportionate random sampling. The data analysis helped determine the
following factors of attrition.
1. Job Content Factors
Factors pertaining to the tasks, duties and responsibilities of the job that
gives motivation. The main factors in this category are
a) Lack of Awareness of Job Responsibilities
b) Vague career growth plan
c) Mechanical mode of doing the job
2. Job Context Factors
Factors pertaining to the environment of the job that help the employee is
carrying out his tasks, duties and responsibilities.
a) Poor Team characteristics
b) Insufficient compensation package
c) Stressful work environment
CHAPTER 2
TITLE OF THE STUDY
MANAGING ATTRITION IN BPO AND KPO WORLD
1.
2.
3.
4.
5.
6.
7.
8.
9.
CHAPTER 3
LITERATURE REVIEW
In less than two decades, the study and practice of Employee attrition and
Retention have spread apace. Recent reviews of the theoretical and empirical
literatures invariably conclude that the bottle is, at once, half full and half empty
Becker & Gerhart, 1996; & Dyer & Reeves, 1995 in the companion volume
These researchers have determined the efficacy of horizontal and vertical
alignment or fit -- that is, the virtue of bundling HR practices into synergistic
systems that, in turn, interact with extant organizational contexts to produce
desired results. They have tried to explain the importance of the organizational
hierarchy in reducing attrition. They have come to the conclusion that it is either
job content or job context factors that affected attrition. But have not been able to
prove it.
UNIVERSITY OF GEORGIA
Population - private sector firms
Sample n = 297
Factor analysis
Firm characteristics, work force characteristics, location, and employee benefits
practices.
Research Tool
Hierarchical regression analysis
Findings
Benefit practices are associated with turnover, even when controlling for firm
characteristics, firm setting, and work force characteristics, specifically, firms
where benefits were a higher percentage of total labor costs and firms whose
benefits packages were described to be of higher quality experienced less
attrition. Implications of the findings for human resource management are
discussed.
2. WIPRO TECHNOLOGIES
White paper - Suvro Raychaudhuri
Research Tool
Markov Analysis
Findings
The CPP Attrition Instrument is the best one to project or predict the attrition
rates for the next calculation period in an industry.
DEFINING ATTRITION:
"A reduction in the number of employees through retirement, resignation or
death."
Normal and uncontrollable reduction of a work force because of retirement,
death, sickness, and relocation. It is one method of reducing the size of a work
force without management taking any overt actions.
- Dictionary of Business Terms
A gradual reduction in work force without firing of personnel, as when workers
resign or retire and are not replaced.
- Phill and Ralph Peters
or
family
needs
when
necessary.
And
never
leave.
But then there's the real world. And in the real world, employees, do leave, either
because they want more money, hate the working conditions, hate their
coworkers, want a change, or because their spouse gets a dream job in another
state.
BACKGROUND STORY
The IT enabled services (BPO) industry is being looked upon as the next big
employment generator It is however no easy task for an HR manager to bridge
the ever increasing demand - supply gap of professionals. Unlike his software
industry counterpart, the Telecommunication HR manager is not only required to
fulfill this responsibility, but also find the right kind of people who can keep pace
with the unique work patterns in this industry. Adding to this is the issue of
maintaining consistency in performance and keeping the motivation levels high,
despite the monotonous work. The toughest concern for an HR manager is
however the high attrition rate.
In India, the average attrition rate in this sector is approximately 30-35 percent. It
is true that this is far less than the prevalent attrition rate in the US market
(around 70 percent), but the challenge continues to be greater considering the
recent growth of the industry in the country. The US Telecommunication sector is
estimated to be somewhere around three decades old. Keeping low attrition
levels is a major challenge as the demand outstrips the supply of good agents by
a big margin. Further, the salary growth plan for each employee is not well
defined. All this only encourages poaching by other companies who can offer a
higher salary.
The much hyped "work for fun" tag normally associated with the industry has in
fact backfired, as many individuals (mostly fresh graduates), take it as a passtime job. Once they join the sector and understand its requirements, they are
taken aback by the long working hours and later monotony of the job starts
setting in. This is the reason for the high attrition rate as many individuals are not
able to take the pressure of work.
The toughness of the job and timings is not adequately conveyed. Besides the
induction and project training, not much investment has been done to evolve a
"continuous training program" for the agents. Motivational training is still to evolve
in this industry. But, in all this, it is the HR manager who is expected to straighten
things out and help individuals adjust to the real world. I believe that the new
entrant needs to be made aware of the realistic situation from day-one itself, with
the training session conducted in the nights, so that they get accustomed to
things right at the beginning.
If a person leaves after the training it costs the company about Rs 60,000. For a
300-seater company facing the normal 30 percent attrition, this translates into Rs
60 lakh per annum. Many experts are of believe that all these challenges can
turn out to be a real dampener in the growth of this industry. This only raises the
responsibility of "finding the right candidate" and building a "conducive work
environment", which will be beneficial for the organization. The need is for those
individuals who can make a career out of this.
All this had induced the companies to take necessary steps, both internally and
externally. Internally most HR managers are busy putting in efforts on the
development of their employees, building innovative retention and motivational
schemes and making the environment livelier. Outside, the focus is on creating
awareness through seminars and going to campuses for recruitment.
HIGH ATTRITION
Another major problem is the high attrition and growth aspirations of the
workforce. At least 60,000 of the 171,000 workforce change jobs every year.
About 80% of them look for better leaders. Team leaders want to upgrade to
supervisors, quality professionals or operations heads. The HR problem
threatens to soon become grave. Good agents are becoming hard to find and
with tardy infrastructure, big moves to the much talked about smaller towns will
take longer. This means costs will rise making it difficult for small VC funded
companies to survive.
Attrition Rates
US 42%
Australia 29%
Europe 24%
India 26.9%
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RECRUITMENT COSTS
1. The cost of advertisements; agency costs; employee referral costs;
internet posting costs.
2. The cost of the internal recruiter's time to understand the position
requirements, develop and implement a sourcing strategy, review
candidates backgrounds, prepare for interviews, conduct interviews,
prepare candidate assessments, conduct reference checks, make the
employment offer and notify unsuccessful candidates. This can range from
a minimum of 30 hours to over 100 hours per position.
3. Calculate the cost of the various candidate pre-employment tests to help
assess candidates' skills, abilities, aptitude, attitude, values and behaviors.
TRAINING COSTS
1. Calculate the cost of orientation in terms of the new person's salary and
the cost of the person who conducts the orientation. Also include the cost
of orientation materials.
2. Calculate the cost of departmental training as the actual development and
delivery cost plus the cost of the salary of the new employee. Note that the
cost will be significantly higher for some positions such as sales
representatives and call center agents who require 4 - 6 weeks or more of
classroom training.
3.
11
2. Calculate the cost of a manager's time spent developing trust and building
confidence in the new employee's work.
12
100 staff at 10% attrition means 10 people leave and are replaced each
year.
13
EMPLOYEE ATTRITION
Employee attrition is a very big problem not only in India but outside India too.
Attrition rate is increasing day by day and its especially the software industry
which is affected the most. Why an Employee leaves a company is the question
asked by most of the employers. Companies even hire Private HR professionals
to study the company's work and find out why an employee is dissatisfied.
HR department does the recruiting of new employees and then send them for
training so that they can understand work and work culture and become better
professionals. Each and every company faces employee turn over problem
whether big or small. An employee leaves his present job for another job to get
better
pay
package
and
good
working
conditions.
Every Company calculates Employee attrition rate and takes measures to reduce
it. The facts and figures are not made public as it may tarnish the image of the
company in front of its own employees and its loyal customers.
A survey has found out that there are various reasons for Employee Attrition 1. Higher Pay Package in another company
2. Good working Conditions
3. Opportunities for growth in new company
4. Change of Place problem
5. A better Boss in new company
6. Brand Image of the new company
Employee attrition costs a lot to the company. There are various costs which are
borne by the company at the start when the employee is under training period.
Costs such as 1. Conveyance Cost
2. Cost of lodging of the new employee
3. Trainers cost
4. Cost of venue where training will be conducted
5. Materials to be supplied during training process
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15
HR Heads are worried about employees leaving their organizations. Not only is it
costly to lose trained employees but their replacements are not easy to come by.
Hence
the
HR
strives
hard
to
keep
attrition
at
the
minimum.
I came across a public poll that was conducted at Cite HR (a popular meeting
point for HR professionals) to find the opinion of the HR community on the
reasons for attrition. The poll was titled 'Who will held responsible for
attrition?' and participants have to chose an option responsible for attrition. The
options were:
1. Employee
2. Supervisor or Line Manager
3. Compensation and Job Profile
The Poll Results: The HR community welcomed the poll and a large number of
them participated. The results of the poll on a specific date were as follows (The
poll still continues and numbers of voters have increased, however, the result
remains more or less same).
16
% of respondents
08.03%
38.15%
53.82%
17
From the above table, we can deduce that for the year ended 2007, the attrition
rate in some sectors is grim. It is 50% in Retail Sector and Voice-based BPOs.
On an average, the attrition rate in Indian economy is around 20% where as
global average is around 24%.
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19
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training. Hence the industry players consider the present attrition as a positive
attrition which is serving the industry by keeping the cost low.
Few of the motivation factors as to why BPO is gaining ground are:
Economy of Scale
Superior Competency
Utilization Improvement
21
Telemarketing Services
Our telesales and telemarketing outsourcing services target interaction with
potential customers for prospecting like either for generating interest in products
and services, or to up-sell / promote and cross sell to an existing customer base
or to complete the sales process online.
Employee IT Help-desk Services
Our employee IT help-desk services provide technical problem resolution and
support for corporate employees.
BRAND EQUITY:
22
People still consider BPO to be low brow, thus making it difficult to attract the
best talent.
ROLE OF HR DEPARTMENT
Attrition Rate is good for the organization as long as the rate is at normal level.
This will help the 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, the HR personnel try to bring
right candidate to the right job. Similar is true even when the attrition rate is
abnormal, so they have a very crucial role to play.
Following are some of the tips to reduce attrition rate: -
Hiring individuals who are truly fit to succeed in the position for hire will
dramatically increase the 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 basis of communication skills and
educational qualifications.
Communication of employee's roles, job description and the responsibilities
within the organization, new policies will help to retain employees.
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.
24
The tremendous turnover rate is undeniably one of the main problems faced by
the BPO industry globally. HR specialists at the Nasscom 2004 summit
brainstormed on various approaches to handle this bugbear- either declare war
on attrition and tackle it head on, or adopt a more scientific analytical approach.
Pay cheques alone are not enough to retain employees. Management also
needs to consider other aspects like secure career, benefits, perks and
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Companies need to go in for a diverse workforce, which does not only mean
race, gender diversity, but also include age, experience and perspectives.
Diversity in turn results in innovation and success. The 80:20 rule also applies to
recruitment, she quipped, since studies showed that 80 percent of the company's
profit comes from the efforts of 20 percent of the employees. So BPOs need to
focus on roles, which have the most important impact.
According to experts, the cost of attrition is 1.5 times the annual salary. Age
should not be a barrier for training employees and could in fact bring in more
stability to the company.
BENEFITS OF ATTRITION
Attrition is not bad always if it happens in a controlled manner. Some attrition is
always desirable and necessary for organizational growth and development. The
only concern is how organizations differentiate good attrition from bad attrition.
The term healthy attrition or good attrition signifies the importance of less
productive employees voluntarily leaving the organization. This means if the ones
who have left fall in the category of low performers, the attrition in 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.
New employees bring new ideas, approaches, abilities & attitudes which
can keep the organization from becoming stagnant.
There are also some people in the organization who have a negative and
demoralizing influence on the work culture and team spirit. This, in the
long-term, is detrimental to organizational health.
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fund
and
gratuity,
and
not
during
the
employment
period.
higher portion is allocated to allowances like housing/rent and not base salary.
Proficiency in English
Talent retention
31
Talented workforce
Pharmaceuticals
Financial services
32
The future of KPOs is not restricted to the ITES sector alone. The major
segments in a KPO include legal services, financial services, engineering, R&D,
market research, analytics, education, training, content development, healthcare
services, pharmacy, and biotechnology, etc.
BENEFITS OF KPO
The primary benefit of KPOs remains the same i.e cost savings, but it does not
end there. KPOs allow the added advantage of leveraging the expertise and
experience of seasoned professionals, experts and specialists in their specific
areas. Outsourcing your knowledge intensive projects or parts of your projects
allow you the time, flexibility and resources to take on more and more
challenging projects. Hence knowledge process outsourcing provides you more
than traditional cost feasibility.
annum growth in the KPO industry till 2010 and lucrative areas include
engineering, design, biotechnology, pharmaceuticals, basic data search and
integration and management.
The global economy is increasingly driving towards knowledge intensive
processes and hence, the creation, protection and monetization of knowledge is
becoming increasingly important. BPO services are process intensive while KPO
services are more domain knowledge intensive.
It has been established within most leading Indian BPO companies that BPO
services alone can keep the profits flowing. Though BPO services remains the
support business of many KPO services offer a 15-20 % higher profit margin than
pure and plain BPO work such as data entry, mortgage processing and customer
support. Global markets are becoming more flexible and products more complex,
creating a demand for higher level of analysis of trends based on technical data.
Hence, growth is more or less parallel to delivery of high-end competency on
demand.
Niche KPOs in areas such as decisions support services and financial data
services are built on domain capabilities and will thus remain unaffected by any
future advance in BPO services. It can be safely said that a business model
based solely on the execution of outsourced non core tasks cannot sus sustain a
company anymore as it is in BPO outsourcing. The money spinners are the
knowledge based, domain expertise intensive processes. Which is why niche
KPO companies are battling higher competition and attrition of clients to newbie
KPOs.
CHAPTER 4
COMPANY PROFILE
Syntel
34
Company History
as
TeamSourcing.
1988: Syntel begins providing full lifecycle maintenance, development, and
migration services, which later evolve into the IntelliSourcing service
offering.
35
1992: Syntel opens its first two Global Development Centers in Mumbai and
Chennai India, making it one of the first U.S.-based IT service companies
to employ a global delivery model.
1994: Syntels revenues top $50 million and employs over 1,000 staff.
1994: Syntel opens a third Global Development Center in Cary, North Carolina,
which serves as US hub for Syntel's global voice and data network.
1997: Syntel becomes a public company in August, as the stock begins trading on
NASDAQ as SYNT; 3.45 million shares floated in its Initial Public Offering
(IPO); Syntel opens offices in London and Singapore; revenues pass the
$100 million mark.
1998: Syntel's Mumbai and Chennai Global Development Centers earn ISO 9001
certification; Syntel ranked #2 in Forbes 200 Best Small Companies in
America
2000: Syntel begins exploring BPO service offerings by migrating its own HR,
Finance and Helpdesk operations from the US to India.
2001: Syntels Global Development Centers assessed at SEI CMM Level 5,
making Syntel one of only 15 U.S. companies to achieve this standard;
Syntel opens healthcare-focused Global Development Center in Nashville,
TN and a regional office in Munich, Germany.
FACT SHEET
Energy
Financial Services
Insurance
Health Care
Industries Served
Manufacturing/Automotive
Retail
Telecommunications
Logistics
Quality Certifications
Services
CHAPTER 5
RESEARCH METHODOLOGY
METHODOLOGY
Methodology is the process how the study is done. It is very necessary to design
proper methodology for the project which should be scientific, realistic and
economical to arrive at reliable inferences relevant to the subject in line with the
aim and objective of the project.
39
SOURCES OF DATA:
INFORMATION SOURCES:
The information collected for this study is categorized mainly into two
sources:
TYPE OF STUDY
40
SAMPLE SIZE
The target population of this study includes employees at BPO and KPO
companies. The sample will be distributed among 50 employees is to covered.
The samples will be picked through judgment and quota sampling so as to
ensure appropriate representation survey of a cross section of employees and
thus to have a holistic picture.
SAMPLE STUDY
A survey questionnaire is designed to cover different aspects that influences and
mould the motivational levels of individuals. Said questionnaire were hand
delivered to the participants; and sufficient time of about one week was given to
them so as to facilitate mature, rational and realistic responses from them. The
filled in questionnaire were collected in the subsequent week.
Besides the questionnaire, some information was also gathered through personal
interactions/ Informal interviews with some more employees.
ANALYSIS OF DATA
The method used for analysis is of simple averages
A. The composite score is calculated using arithmetic mean of the
Average score of each factor separately.
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X = x/N
Where,
X = mean score in %
x = mean individual score
N = number of question under each factor
CHAPTER 6
ANALYSIS AND INTERPRETATION OF THE DATA
COMPENSATION PACKAGE
42
DESCRIPTION
RATING (%)
32
AGREE (A)
12
NOT APPLICABLE/
NO COMMENTS (NA)
13
DISAGREE (D)
20
23
43
As seen from the above plot the responses on the compensation package given
KPO companies and BPO companies are very encouraging and are an
invaluable asset in the evident above table, that the employees feel satisfied of
being working here in this sector from last many years, majority of employees
feel that they work with full enthusiasm. The minor components of disagreement
in the responses on the subject may be taken as the qualitative feedback for
detailed analysis and corrective action if necessary.
CAREER GROWTH
44
RATING (%)
36
AGREE (A)
NOT APPLICABLE/
NO COMMENTS (NA)
14
DISAGREE (D)
16
28
45
always make them assured that they are having a bright future in the
organization.
NATURE OF ASSIGNMENT
It is very important to ensure assignment of right kind of job to the right person at
the right time for the active participation for the job in the management and also
for the effective accomplishment of the organization goals.
DESCRIPTION
RATING (%)
40
AGREE (A)
16
NOT APPLICABLE/
NO COMMENTS (NA)
22
DISAGREE (D)
12
10
.
46
The Agree and Strongly Agree options put together constitute an overwhelming
percentage i.e.56% which shows that they are satisfied with their assignment. As
majority of disagreement is coming from the BPO sector as the type of job being
dine by the employees are repeated and in which quantity is come into the
picture rather than quality which finally become monotonous in nature thats why
a person leave the jobs within months.
SKILLS
Timely refresher training are being provided to the employees so that they can
compete with the market demand in the area of skills and education, technology
etc,
DESCRIPTION
RATING (%)
56
AGREE (A)
18
NOT APPLICABLE/
NO COMMENTS (NA)
16
DISAGREE (D)
47
As it is evident from the figure, the percentage score of the options Agree and
Strongly Agree put together is comparatively very high i.e.56%, thus indicating a
highly satisfies group of employees most of the employees feel that they are
being allowed to develop their skills are fulfilling the need of the current job to
help the organization and to meet the prevailing marketing challenges and also
the mechanisms, and training the person to improve their skills are in place.
The company also takes care that in long hours of continuous work they dont
become monotonous. Company always try to give a responsible task to each
individual so that the company can check there style of workings and are they
competent enough to handle there work up to the companies standards.
GRIEVANCES
DESCRIPTION
RATING (%)
28
AGREE (A)
10
NOT APPLICABLE/
NO COMMENTS (NA)
14
DISAGREE (D)
24
24
48
It is evident from the figure, the percentage score of the option Disagree and
Strongly Disagree put together is comparatively very high, thus indicating a
highly dissatisfied group of employees most of the employees feel that their
complaints and problem are not listened in the organization by this they faces
much problem.
Company do not always try to give a look on day to day issues which are faced
by the employees in the BPO sectors like working in night shift, are not suitable
now days, several cases are being coming on time to time basis but no action is
taken by any company regarding it.
PERSONAL POLICIES
Personal policies is the crucial part of the organization as every organization
takes care of it systematically during the time of policy making, it is also shows
the true picture of the organization. Thats why every employee always take care
of it.
49
DESCRIPTION
RATING (%)
40
AGREE (A)
10
NOT APPLICABLE/
NO COMMENTS (NA)
18
DISAGREE (D)
14
18
Related to personal policies in which it is evident from the above figure, the
percentage score of the option Agree and Strongly Agree put together is
comparatively very high i.e. 50%, thus indicating a highly satisfied group of
employees majority of employees were agree with it and they think that policies
are flexible in nature. And company also wants that there should not be
absenteeism in the company.
SUGGESTIONS ACCEPTANCE
50
RATING (%)
33
AGREE (A)
NOT APPLICABLE/
NO COMMENTS (NA)
30
DISAGREE (D)
13
18
As in BPO companies mostly the projects are handled thats why its not possible
that every suggestion is accepted, as well as there is high possibility of variation
of feedback. The figures in the graph are quiet balanced and shows that the
employees are equally proportioned with the prevailing reward system. However,
51
INTERPERSONAL RELATION
Interpersonal relation plays a vital reason for attrition among the employees.
Above 55% employees feel that they have good relations with their employers
and subordinates.
DESCRIPTION
RATING (%)
36
AGREE (A)
20
NOT APPLICABLE/
NO COMMENTS (NA)
14
DISAGREE (D)
12
18
Most of the employees have expectations linked with the performance based and
with the performance based and to job targets. Again rewards can be monetary
52
and non monetary. Also having a good relationship with boss and subordinates is
must.
The chart shows that the employees are satisfied with the prevailing reward
system as there expectations are being fulfilled by the organization. Some
exception are reflecting the component of disagreement, on the subject in the
responses may be taken as qualitative feedback for detailed analysis and
corrective measures if necessary for retaining the employees.
CHAPTER 8
CONCLUSION
rate can be lowered, so that the expenditures towards hiring and training an new
joiner which exceeds the cost of retaining an employee can be drastically brought
down.
54
55
CHAPTER 9
ANNEXURES
QUESTIONNAIRE
SA
Strong
ly
DESCRIPTION
Agree
A
Agre
e
NA
Not
applicab
le
D
Disagr
ee
SR.
NO.
1. The compensation packages of the employees in
the company are at par with the market.
2. I am satisfied with the remuneration package and
other benefits that I receive
3. The salary I receive commensurate with my
qualification, experience and performance.
4. Do you feel that there are the possibilities for
carrier growth for employees in your organization
5. I believe there are sufficient opportunities for
career growth for all in the organization
6. Do you feel very well supported in your
professional growth and learning
7. Training, skills and competencies are given due
weightage in career growth.
8. Assignments are given as per individuals skills,
competencies and attitudes.
9. I feel satisfied with the sense of accomplishment
after successful execution of my job.
56
SD
Strongl
y
S
A N
Disagr
A
A
ee
S
D
S
A
N
A
Would you like to suggest any measures which may be useful towards
reducing the attrition rate?
MALE
BELOW
30
FEMALE
BETWEEN
30 - 40
57
BETWEEN
40-50
ABOVE
50
S
D
** This exercise is purely academic in nature. The data so collected from the individuals will be
solely used for academic work only.
SL.NOS
.
PARAMETERS
QUESTION NOS.
COMPENSATION PACKAGE
1,2,3
CAREER GROWTH
4,5,6,7
NATURE OF ASSIGNMENT
8,9
SKILLS
10,11
GRIEVANCES
12
INTERPERSONAL RELATIONS
13,14
PERSONAL POLICIES
15
CHALLENGES IN JOB
16,17,18
10
FEEDBACK MECHANISM
19,20,21
58
CHAPTER 10
BIBLIOGRAPHY
LIST OF BOOKS
1. K.Aswathappa
Human Resource Management
Published by Tata McGraw-Hill Publishing Co. Ltd.
Third Edition, 2003
2. S.V. Gankar & C.B. Mamoria
Personnel Management
WEBSITES
www.citehr.com
www.businessworlindia.com
www.icfai.com
www.google.com
www.bpoindia.com
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