Professional Documents
Culture Documents
Theories:
Efficiency, effectiveness and survival of any organization anywhere, whether big or small,
depend on the recently discovered human capital. Thus acquisition of qualified human
resources, developing them and maintaining them becomes all the more important. Employee
turnover not only reduces the human capital in an organization but also organizational
productivity besides incurring the cost of acquiring human resources for replacement and
developing them. Hence increased emphasis is being laid on retention of human resources now
a days specially with the onset of recent Revolutions such as Information Technology, which is
labor intensive in nature, supported by increased globalization.
Economic theory argues that performance based compensation contracts increase employees’
incentives to exert effort, resulting in improved performance ( Milgrom and Roberts 1992;
Prendergast 1999). Previous empirical and laboratory studies on this topic have compared
across compensation schemes or examined how changes to a more performance-sensitive
incentive scheme influence employees’ compensation and performance ( Waller and Chow
1985; Lazear 2000; Banker et al. 2001). Yet, no research has addressed the impact of changes
to less performance-sensitive plans on employee performance. In the real world, many
companies use or switch to less performance-sensitive incentive schemes. Examples include
Sears( Driscoll 1994), the shoe manufacturing industry (Freeman and Kleiner 1998), and
Fujitsu (Tanikawa 2001). Our study contributes evidence on how a switch to a less
performance-sensitive incentive scheme affects an individual employee’s productivity and
compensation. Furthermore, we examine whether employee ability affects their productivity in
light of the plan change and which employee group is affected most by such a change.
The mission statement of any organization is the first and foremost tool to attract the clients,
customers, donors, funders, volunteers and employees to an organization. Experts recognize
that relying on the mission as management tool is an effective strategy to improve performance
(Drucker 1990, Garner 1989, Herman and Heimovics 1991, Knauft, Berger and Grey 1991,
Mason 1996, Pearce and David 1987, Sawhill and Williamson 2001, Sheehan 1996). Warren
Bennis, an authority on non profit organizations, recognized the significance and importance of
missions when he stated the following: “ At the heart of every great group is a shared dream.
All great groups believe that … They could change the world … That belief is what brings the
necessary cohesion and energy to their work “ ( Hesselbein and Cohen 1999 p.317)
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A mission statement identifies operational objectives, gives staff goals to direct its behavior,
describes performance standards, and speaks to organizational survival and vision for the
future ( Smith, Heady, Carson, and Carson 2001 ). The presence of a salient mission statement
reminds employees of the purpose of their work and helps managers guide employees in the
fulfillment of that mission. Several studies have investigated employee perceptions of
organizational values ( for example, Kristof 1996). Consistently, those studies have found that
a better match between employees and organizational values predicts commitment and
satisfaction ( O’ Reilly, Chatman, and Caldwell 1991).
Concepts:
A multitude of factors explains why employees remain in or leave an organization, but scholars
have consistently recognized employees’ expressed intentions to stay as a reliable precursor to
actual turnover and as reflective of employee commitment to the organization ( Maertz and
Campion 1998, Hom and Griffeth 1995, Hom and Kinicki 2001 ). The researchers investigated
factors such as satisfaction with compensation, supervisors, and coworkers, in addition to
overall attitudes of satisfaction (Griffeth, Horn, gaertner 2000). They found that overall
satisfaction was negatively associated with turnover intentions. Satisfaction with pay or
compensation is of particular interest because it may be the counterpart to relying on the
mission to motivate and keep employees (Preyra and Pink 2001). The nature of nonprofits
places an expectation on employees to work for the cause, not the paycheck. An additional
consideration is that employees’ dispositional and descriptive characteristics explain tendencies
toward positive and negative attitudes towards the organization. For example, age, tenure, and
position have all been shown to influence employees’ commitment and satisfaction ( Griffeth,
Horn, and Gaertner 2000 ). Older, longtime, and managerial –level employees tend to express
more commitment to the organization.
awareness, agreement, and alignment at least three basic principles influence employee
attitudes towards the mission: awareness, agreement, and alignment. First the organization’s
purpose ( that is, its mission ) must be salient in the employees’ minds. Are they and their
coworkers aware of the organization’s mission and values? Second, employees must agree with
the expressed purpose and values of the organization. If employees are going to work diligently
for what may be lower compensation, they need to perceive agreement between their values
and the organization’s ( Kristof 1996 ). Third, employees must perceive a connection between
their work and the fulfillment of the mission ( Mason 1996 ).
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Ideas:
A strong retention strategy becomes a powerful recruitment tool: Effective employee retention
is a systematic effort by employers to create and foster an environment that encourages current
employees to remain employed by having policies and practices in place that address their
diverse needs. A strong retention strategy becomes a powerful recruitment tool. Employee
retention matters, as, organizational issues such as training time and investment, costly
candidates etc., are involved. Hence , failing to retain a key employee is a costly proposition
for any organization. Various estimates suggest that loosing a middle manager in most
organizations, translates to a loss of up to five times his salary. This might be worse for BPO
companies where fresh talent is intensively trained and inducted and then further groomed to
the successive stages. In this scenario, the loss of a middle manager can often prove dear.
salary and lower commission rates. This change was in response to the requirement of the 1998
Taiwanese Labor Law amendment. Our database includes 4,392 pieces of detailed, individual-
level data (e.g., salespersons’ compensation, sales quantities, performance ratings, and
demographic information) and firm-level data (e.g., turnover rates, new hires) for a period of
56 months.
Respect, Recognition and Rewards: These are known as 3 R’s of employee retention strategy
package. These three basic ingredients which correspond to the physiological, social and
economical needs of a human being are very important factors in winning the heart, mind and
soul of any individual. If we place them in order it makes a pyramid where reward is placed at
the bottom, recognition in the middle and respect at the top of the 3 R’s pyramid. The order in
which they are arranged or placed shows the importance in retention strategy. By following
this strategy organization is rewarded with Increased Productivity, Reduced Absenteeism, A
More Pleasant Work Environment & Improved Profits.
Kei’s Employment Retention Wheel: The first step to improving employee retention is to
understand why employees stay with their current employer. Many “ experts ” dwell on the
reasons employees leave, which is not as important or revealing as the reasons they stay.
Companies have tried many different programs and perks to hold onto good employees.
However, studies show that these efforts are not enough to retain good employees when the
support that is needed to achieve job success is not adequate.
1. It is difficult for employers to retain good employees if they don’t have a process to
hire the right people in the first place.
2. Retention processes must directly support the reasons that successful, satisfied
employees stay.
Kei’s concentration on the center of the employee retention wheel provides employers
with internet-based tools that give employees systematic, ongoing support to be
successful in their work and satisfied with their employment.
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Get your employees to fall in love with your organization: How do you get your employees
fall in love with your organization? This is a great question. Some recently conducted research
lists these Top Ten Strategies.
1. TREAT YOUR EMPLOYEES LIKE YOU TREAT YOUR MOST VALUABLE CLIENTS
4. RETENTION IS MUCH MORE EFFECTIVE WHEN YOU PUT THE RIGHT PERSON
INTO THE RIGHT JOB. KNOW THE JOB! KNOW THE EMPLOYEE AND THEIR
MOTIVATIONS.
5. MONEY IS IMPORTANT BUT IT IS NOT THE ONLY REASON PEOPLE STAY WITH
AN ORGANIZATION
10. KNOW THE TRENDS IN BENEFIT PACKAGES. DO YOUR TO OFFER THE ONES
YOUR EMPLOYEES NEED
Issues:
Myths about Employee Morale Prevent Companies from Achieving Retention Success:
Despite years research that point to far different solutions, many companies use the wrong
tactics when trying to improve employee morale, satisfaction and retention. These myths
prevail, in part, because business have used these methods, however wrong, for a very long
time and have become used to trying the same ideas.
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Myth # 2: Incentive programs produce long-term profits and improve productivity and morale.
Arguments:
10 Factors That Affect Employee Retention: Most managers understand the importance of
employee retention and its impact on the overall health and vitality of the organization. The
importance of retaining top organizational talent will only increase over the coming years as
the massive cohort of baby boomers begin to reach retirement age making it easy for younger
employees to find work. Furthermore, this study goes beyond related prior studies by
investigating how employee ability affects their performance when a company changes its
compensation plan to a less performance sensitive one. We capture employees ability by using
both continuous variables (i.e., number of cars sold and reciprocal of time to the first
promotion since he/she joined the dealership) and categorical variable (i.e., employee annual
performance rating). The employee ability measure not only helps us identify specific
performance groups that are most affected by the compensation plan change but also provides
additional insights into causes of employee separation after the plan change. These findings
have managerial implications since they can help top management anticipate possible impacts
on incentives and efforts of different employee groups as well as on employee recruitment and
separation due to the compensation plan change to a less performance sensitive one.
Text books on HRM suggest that retention problem is caused by (i) organizational factors
( such as inappropriate organizational culture and values, devaluation of people, barriers to the
use of individual capabilities, lack of respect for people, lack of trust, lack of visionary
leadership, lack of effective management, ignoring employee ideas, lack of open and honest
communication, improper decision-making, absence of job continuity and security, etc; (ii)
lack of competitive compensation and rewards (such as competitive pay, competitive benefits,
performance linked compensation recognizing performance differences, etc; (iii) inappropriate
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job design and work (such as inadequate selection screening efforts, lack of good working
conditions, etc; (iv) lack of safe working environment, lack of work flexibility, organizational
workload pressure, etc; (v) lack of good employee relationships in the organization (such as
reasonableness in human resource policies, absence of fairness of disciplinary actions,
inappropriate means used to decide work assignment and opportunities, unreasonably
restrictive policies, inconsistent application of policies, inadequate supervisory or management
support, poor relationship with co-workers and their support, etc; (vi) attractiveness of overseas
migration, entrepreneurial opportunities due to the availability of easy venture capital finding,
stress, frequent traveling and hectic schedule, lack of role models or mentors or advisors in
work places, etc.
The prescriptions of text books or retention intervention are: (i) presenting the realistic job
preview during the recruitment process; (ii) matching applicants to jobs; (iii) effective
orientation and training after selection; (iv) giving competitive, fair and equitable pay; (v)
create opportunities for career advancement; (vi) fair and non-discriminatory treatment and
enforcement of HR policies; (vii) improving employee relations through looking after
employees’ interests, representation of employees in decision-making, encouraging
constructive criticism, protection of workers, etc; (viii) designing a suitable reward system of
competitive pay and incentive with appropriate timing, accuracy and frequency; (ix) improving
the quality of work life; (x) monetary motivation; (xi) satisfying the psychological needs of the
employees; (xii) implementing entrepreneurship like program; (xiii) reducing job hopping by
giving autonomy, flexibility and challenge at work; (xiv) match worker with the work; (xv) job
sculpting; (xvi) harmonious boss-subordinate relationship; (xvii) developing the competency of
the employee; (xviii) developing the empowerment skills and self-control etc.
- BEWARE OF BURNTOUT
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Solution for the problem: There is no such word exists “ impossible “ in business management,
it can be difficult, late and slow to achieve but not outright unreachable. Every problem has a
solution which may vary from trade to trade, industry to industry, situation to situation. A long
lasting solution can only be achieved if root cause is searched and taken care of. A few very
basic solution probe methodologies are given below:
Have a survey among employees to find reasons for attrition. If possible, have exit
interviews to know the reasons for resignations. If a key employee resigns, it should be
taken up on a priority basis and the senior management should meet the employee to
discuss his reasons for leaving and evaluate whether his issues bear merit and whether
they can be resolved.
Though, it is impossible to scrap problems total, there are certain ways by which BPO
managements can tackle attrition. Since every organization is unique, these companies
need to develop innovative ways to tackle these problems.
Findings:
Use psychometric tests to get people who can work at night and handle the monotony
Make clear of performance enhanced incentives and other benefits. Keep those
Promises, later
- AT THE OFFICE
An employee’s work must be communicated to him clearly and thoroughly
Make sure that employees know that their work is important for the organization
Implement competency models, which are well integrated, with HR processes like
selection & recruitments, training, performance appraisal and potential appraisal
- NIGHT SHIFTS
Have doctors to advise them about health problems and the ways and means to deal
with them
Organize programs where people from other professions, who have night shifts talk to
BPO employees about their experiences
If needed, provide special lights in the office/workplace to ensure that their bodies get
sufficient vitamin D
Methodological Approaches:
Employee Recognition Increases Retention: The truth is that recognizing employees for their
hard work is one of the least expensive and easiest ways to improve the level of employee
retention in your organization. The return on investment for a manager’s time and limited
expenses can be incredible. Hollenbeck and Williams (1986) pointed out an important
distinction between the frequency and functionality of turnover. While the former refers to the
number of turnover separations, the latter refers to the implication of those separations for an
organization. Using a meta-analysis of 55 studies, William and Livingstone (1994) reported
that poorer performers tended to leave when the pat was based on performance and to stay
when it is not. The implications of their findings is that performance-based compensation plans
can lead to functional turnover. Lazear (2000) reported that about one-third of improved
performance can be attributed to selection effects, i.e., less-productive workers leave the
company and are replaced by more-productive workers. In Banker et al. (2001), results showed
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that a performance-based scheme in a retail firm attracted and retained more productive
salespersons, while the performance of the less productive sales staff declined before they left.
Efficiency, effectiveness and survival of any organization anywhere, whether big or small,
depend on the recently rediscovered human capital. Thus acquisition of qualified human
resources, developing them and maintaining them becomes all the more important. Employee
turnover not only reduces the human capital in an organization but also organizational
productivity besides incurring the costs of acquiring human resources for replacement and
developing them. Hence increased emphasis is being laid on retention of human resources now
a days especially with the onset of recent Revolutions such as Information Technology, which
is labor intensive in nature, supported by increased globalization. Paper attempts to rediscover
the Indian wisdom on HRM with special reference to the causes of employee turnover and the
retention strategies as spelt out more than 5000 years ago in panchatantra, a classical work on
management, yet very relevant to this day.
Retention Strategies Help to Drive Revenue Growth: Employee satisfaction is essential to any
effective employee retention strategy – any good HR manager knows that. However few
managers think of the impact that employee satisfaction has on their customers and ultimately
on their company profits. One can assume that happier, more productive employees will make
more sales, treat customers better, and ultimately make more money for the company, but few
companies have analyzed this assumption to the extent that Sears, Roebuck and Company has.
Sears has put this common assumption to the numbers test and the results are intriguing to say
the very least. Companies design compensation schemes not only to induce more employee
effort but also to attract potential employees. Recent studies suggest that performance-based
incentive plans effectively sort employees by ability (Lazear 2000; Banker et al. 2001).
Selection effects include recruiting and separation effects. The former relates to the type of
employees who join the company and the latter to the type of employees who leave. Lazear
(200) showed that contracts with higher piece rates attract high-ability employees. In a review
paper, Prendergast (1999) argued that compensation contracts are important means for a
company to recruit more capable workers, since they will benefit more from a performance-
sensitive compensation plan than the less capable will. In turn, the more capable will be more
likely to be attracted to the company than the less capable; therefore, the company will have a
higher percentage of high performers.
Study Suggests Employees Leave Bosses, Not Jobs: It has been said more than once, and for
good reason, that employees leave their bosses – not their jobs. A Florida State University
study scheduled for full release in the Fall - 2007 issue of Leadership Quarterly confirms this.
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The study shows that 40% of employees work for bad bosses based on survey results. The
reasons that employers score poorly are varied and many:
- 31% said their supervisor gave them “ silent treatment” during the past year
- 27% report their supervisor made negative comments about them to other employees or
managers
- 23% said their supervisor blamed other to cover up personal mistakes or minimize
embarrassment.
- Management effectively
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Bibliography:
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Vision Statements. Minneapolis: Amherst H. Wilder Foundation, 2001.
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Accounting Research 10: 119-131
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effects of financial incentives on performance in laboratory tasks: Implications for
management accounting. Journal of Management Accounting Research 12: 19-64
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13. Freeman, R.B., and M.M. Kleiner. 1998. The last American shoe manufacturers:
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