HUMAN RESOURSE MANAGEMENT PROJECT

PT-PGPM APRIL 2011 BATCH, Section B, TERM-III

RETENTION OF EMPLOYEE
Introduction Meaning of Employee Retention Bad Effects of Poor Employee Retention Need & Importance of Employee Retention Strategies to retain Employees 3 best strategies by group discussion. Conclusion
SUBMITTED BY: Group -5 Rahul yadav (60) Santosh Aman (77) Surender Midha (86) Vikram Dutta (99) Vivekanand (101) Varun Sood (92) Submitted to: Prof. J.K. Jain MDI Gurgaon

Introduction
Employee retention has become very important topic of research & as well as practical importance for HR practitioners .Each industry has employee iteration as one of its biggest problem.

Bigger is the problem, biggest is the challenge to solve it .Each company management is also trying to trade off between this challenge & fulfilling the business short term as well as long term objectives. So, as a group we took challenge to study this topic religiously within the short allotted time & bring out some sensible learning out of our study topic. At the start we set our objective as study of various method of employee retention & based on group discussion decide subjectively the best 3 methods generally in practice.

First of all we decided the methodology, which is as follow:1. Study the meaning of employee retention in detail & study why employee need to be retained. This will help us to find more constructive solution & will provide solution congruency to our objective.

2. Study the related material from various books & through internet for further clarity on way of proceeding. 3. Collection of data of various employee retaining practices of our self companies in which we are working presently. Our group is a heterogeneous group in term of employments, means 2 persons are from software sector, 2 are from manufacturing company & 1 is in marketing field & 1 is associated with Indian NAVY. So group itself represent large part of industry. After data collection we decide to compare various practices. 4. Data analysis & discussion of each practice in detail & rank based on our subjective discussions & selection of first 3 practices which are most impactful for employee retention. 5. At last we decided to discuss various other methods or practices which HR & management can adopt to further strengthen their practices & initiate new to retain good employee. To find out this we decided to ask our self some questions. Following question we decided to ask to ourselves in a group 5.1) Why we think to leave the present employer? 5.2) Why we left our past employer? 5.3) What are the bad practices our companies are doing, which annoy & bring frustration among employees? We thought about introducing some format to collect information & data, but as it will bring in various constraints along with it & will kill the individual creativity & innovation. So we decided to collect information & data in free format & based on ones access to HR practices. So, due to limited time we cannot claim our study & conclusion is comprehensive, but we tried to do justice with the subject & put our hard work to collect correct & concise information related with this subject. During this process we faced some difficulties also which we want to jot down so that if this material is referred by someone ,the reader will be

ready for the challenges & plan his / her course of actions by keeping in mind the challenges faced by this group. 1. As topic heading was already decided, we jumped directly to the course of action without deciding the concrete objective of group. This resulted in wastes of precious time. So it is imperative to decide the ultimate objective concretely before start of work. 2. Decide the mile stone, this will help one to work consistently & more effectively .Based on these milestones it is necessary to decide the group meetings. This will bring self discipline in the group. During Group discussion our discussion inadvertently turns in to exploring need of employees & employers. Employee has some set of expectation from the employer & at the same time of employer is also having some sort of stated & unstated expectations. The employer who are capable enough to match these two types of expectation from two different perspective ,are able to retain their employees & in turn also grab places for the surveys like most sought employer or First 10 Good companies to work.

What is Employee Retention?

Employee retention refers to the various policies and practices which let the employees stick to an organization for a longer period of time. Every organization invests time and money to groom a new joiner, make him a corporate ready material and bring him at par with the existing employees. The organization is completely at loss when the employees leave their job once they are fully trained. Employee retention takes into account the various measures taken so that an individual stays in an organization for the maximum period of time. One question is always a puzzling one whether efforts to be limited to few good employees or to all .2nd question is which level is most important to organization. 2nd question is relatively easy to answer because organization is group of peoples working at different level & performing different level of tasks. So each level is important to organization & Good employee need to retain despite of level & position. As need of different level person is different making policies of wide array of employees is challenge for HR professional. It is biggest challenge to keep policies simple & yet comprehensive to satisfy the need of all level employees. So formulating strategies for Employees

retention is very complicated process, but it is very much important for the survival of any organizations. How important employees retention is for any organization can be derived if one is able to see the effects of poor retention. Some of the effect we have listed down below.

After effects of poor employee retention:

Every organization invests its time and money in training a new joiner to bring him at par with the existing employees. The organization is at a complete loss when the employees quit all of a sudden. Hiring needs to be done all over again and still there is no surety whether the new joiner would be apt for the profile or not? One wrong person hired and the output of the entire team and eventually the organization goes for a toss.

Employees who spend a considerable amount of time in any organization know it in and out and thus can perform better. They are well familiar with the company policies and adjustment is never a problem. Employees who come and go find it very difficult to settle down in a new environment and are thus always in a state of dilemma.

Individuals who have the habit of changing jobs frequently never get attached to any particular organization. They just treat the organization as a mere source of earning money. They are never serious about their work and fail to accomplish the tasks within the desired time frame. It hardly matters to them whether the organization is performing well or not? In cases of poor retention policies, employees are just not bothered about the reputation of their office and avoid taking initiative to do something new. The employees who are there for a long time in the organization are trustworthy and the management can rely on them anytime.

When individuals leave any organization, they are more likely to join the competitors. Sometimes they tend to take confidential data along with them to create an impression in their new organization. This way the plans of the organization get leaked even

before implementation and they fail to do anything great. An organization cant perform well if the employees speak negative about it. It is essential to have a group of loyalists who play an important role in furthering the brand image of the company.

Employees working with an organization for a long time never badmouth it and are somewhat emotionally attached to it. People leaving in a short span always speak ill about their previous organizations. The loyalty factor is almost zero and no one is ready to take ownership of work.

Considering the above effects, it is clear that good employee need to be retained. Let us understand why retaining a valuable employee is essential for an organization.

Need & Importance of Employee Retention

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

An organization invests time and money in grooming an individual and makes him ready to work and understand the corporate culture: A new joiner is completely raw and the management really has to work hard to train him for his overall development. It is a complete wastage of time and money when an individual leaves an organization all of a sudden. The HR has to start the recruitment process all over again for the same vacancy; a mere duplication of work. Finding a right employee for an organization is a tedious job and all efforts simply go waste when the employee leaves.

The employees working for a longer period of time are more familiar with the companys policies, guidelines and thus they adjust better: They perform better than individuals who change jobs frequently. Employees who spend a considerable time in an organization know the organization in and out and thus are in a position to contribute effectively.

Every individual needs time to adjust with others: One needs time to know his team members well, be friendly with them and eventually trust them. Organizations are always benefited when the employees are compatible with each other and discuss things among themselves to come out with something beneficial for all. When a new individual replaces an existing employee, adjustment problems crop up. Individuals find it really difficult to establish a comfort level with the other person.

It has been observed that individuals sticking to an organization for a longer span are more loyal towards the management and the organization: They enjoy all kinds of benefits from the organization and as a result are more attached to it. They hardly badmouth their organization and always think in favor of the management. For them the organization comes first and all other things later.

It is essential for the organization to retain the valuable employees showing potential: Every organization needs hardworking and talented employees who can really come out with something creative and different. No organization can survive if all the top performers quit. It is essential for the organization to retain those employees who really work hard and are indispensable for the system.

For an organization to do well and earn profits it is essential that the high potential employees stick to it for a longer duration and contribute effectively. The employees who spend a considerable amount of time tend to be loyal and committed towards the management and always decide in favor of the organization. The management cant completely put a full stop

to the process of employees quitting their jobs but can control it to a large extent.

Common strategies to retain an employee:

Work should never become monotonous and must offer a new learning each day. An employee should be able to upgrade his skills and enhance his knowledge at the workplace. Employees leave the organization whenever there are no chances of further growth. An individual must be made to do something which really excites him and most importantly matches his background. The employees must be asked to accomplish the tasks in the most innovative way for them to enjoy their work. No one should be asked to do anything out of compulsion. The team leader must not force anyone to work. Let them accept assignments willingly. The moment work becomes a burden for the employees, they look for a change.

Constant disputes among employees encourage them to go for a change. Conflicts must be avoided to maintain the decorum of the place and avoid spreading negativity around. Promote activities which bring the employees closer. Organize outdoor picnics, informal get together for the employees to know each other better and strengthen the bond among them. Let them make friends at the workplace whom they can really trust. Friendship among employees is one strong factor which helps to retain employees. Individuals who have reliable friends at the workplace are reluctant to move on for the sake of friendship. No one likes to leave an organization where he gets mental peace. It is essential to have a cordial environment at the workplace.

The human resource department must ensure that it is hiring the right candidate. Frustration crops up whenever there is a mismatch. A finance professional if is hired for a marketing profile would definitely end up being frustrated and look for a change. The right candidate must be hired for the right profile. While recruiting a new candidate, one should also check his track record. An individual who has changed his previous jobs frequently would also not stick to the present one and thus should not be hired.

Employee recognition is one of the most important factors which go a long way in retaining employees. Nothing works better than appreciating the employees. Their hard work must be acknowledged. Monetary benefits such as incentives, perks, cash prize also motivate the employees to a large extent and they prefer sticking to the organization. The performers must have an upper edge and should get a special treatment from the management.

Performance appraisals are also important for an employee to stay motivated and avoid looking for a change. The salary hike should be directly proportional to the hard work put by the employees. Partiality must be avoided as it will demotivate the talented ones and prompt them to look for a better opportunity.

The companys rules and regulations should be made to benefit the employees. They should be employee friendly. Allow them to take a leave on their birthdays or come a little late once or twice in a month. It is important for the management to understand the employees to gain their trust and confidence. The consistent performers must also have a say in the companys decisions for them to feel important.

An over burdened worker never finds his job interesting and would always be eager for a change. It is the duty of the manager to distribute the work equally among all the employees. The manager should not be partial to anyone and treat all his members as one. He should not let negativity creep in the team. Nothing productive comes out of disputes, rather it demotivate the individuals and prompt them to look for some another opportunity.

Rules and regulations should be same for everyone. Avoid granting special favors to anyone.

The superiors must maintain transparency in communication. Every team member should get the same information from their boss for them to remain satisfied and loyal towards the organization.

Every individual should enjoy privacy at the workplace. The superiors must ensure that no employee interferes in each others work. Team members sitting at adjacent desks should not overhear their colleagues conversation or check any confidential documents. These things lead to severe demotivation and prompt an individual to look for a change. Discussion is important but one should not irritate anyone. The team manager should also not make his team members life hell. Just give them deadlines and ask them to complete the assignments within the desired time frame. Motivate them to deliver their best but dont be after their life. Remember everyone is mature enough to understand that work comes first, and everything later.

The seniors must be reachable to their subordinates in case of queries. The hierarchy should not be too complicated and transparency in communication is important at all levels. Manipulation of truth should be strictly avoided as it leads to severe misunderstandings and eventually conflicts. Employees look for a change when there are unnecessary disputes at the workplace. The team leader once in a week must make sure to meet all the team members on an open forum to address their concern. The meeting should not be made too formal. Everyone should be allowed to bring their cups of coffee. Such interaction strengthens the bond among the employees and also avoids friction among individuals. It is essential to have a positive ambience at the workplace for people to stick to it for a longer time.

The management must formulate employee friendly policies. The employees must be allowed to take one or two leaves in a month so that they get time to rejuvenate. Dont call the employees on weekends. Let them enjoy. The human resource department must take the initiative to celebrate birthdays of employees at the workplace. This way people come closer, make friends, develop trust and are thus reluctant to go for a change. Major festivals should also

be celebrated at the organization for employees to get attached to the organization.

Incentives, cash prizes, trophies, perks should be given to deserving employees to motivate them to perform up to the mark every time. The salaries of the high potential employees must be appraised from time to time as monetary dissatisfaction is one of the major reasons for employees quitting their jobs. The hard work of the workers must be appreciated. The slow learners must not be criticized but should be inspired to gear up for the next time.

The performers must be made to participate in the decision making process. They should have a say in the major strategies of the organization for them to feel important and trust the management. Discipline is a must at the workplace. If the office timing is 9.30 am, every employee regardless of designation must punch his card at 9.30 am sharp or before that. No relaxation should be given to anyone. Partiality is something which does not work in the corporate world. It is important to maintain the decorum of the office to make the organization a better place to work.

Group discussion & selection of 3 best strategies

Intention to leave and actual turnover are often highly correlated As group we discussed about our companies & our intention to leave Based on self analysis by asking what are the good & bad practices from individual point of view & further refining with group discussion we were able to select 3 best strategies which any organization can adopt to have better employee retaining ratio. These are as follow:

1) Creating positive & nurturing work environment where each employee

is able to engage & attach oneself to the job & can clearly see his/her future. As per 2011 Employee Engagement Report, In organizations every individual is accountable for his or her

own engagement; anyone with direct reports must coach team members to higher levels of engagement and manage his or her own engagement; and executives set the tone for high morale and motivation plus shoulder the responsibilities of individuals and managers. This will create positive work environment. This report clarifies those roles and responsibilities. Individuals: Ownership, clarity and action. Individuals need to know what they want and what the organization needs and then take action to achieve both.

Managers: Coaching, relationships and dialogue. Managers must understand each individuals talents, interests and needs and then match those with the organizations objectives while at the same time creating personal, trusting relationships. Furthermore, they need to discuss engagement often.

Executives: Trust, communication and culture. Executives have to demonstrate consistency in words and actions, communicate a lot (and with a lot of depth), and align all business practices and behaviors throughout the organization to drive results and engagement. Whether you play one, two or three of the roles described above, the 2011 Employee Engagement Report is designed to shed light on your quest for creating a more meaningful, productive work experience for you and your colleagues. 2) Creating company image in the eyes of employee, customer should be good, supplier & all stakeholders. If image is good & have brand value, employees will tend to work longer. Product & process technology should be advance as per industry norm. 3) Transparency in business with its stakeholder. Especially with employees organization should take care so that employees have trust in management. Country cultural values & HR policies should be in congruence with each other.

These are the 3 foremost important strategies from our group point of view, but strategies can be selected based on actual situation.

Conclusion:
Thus, this study concluded that organizations could reduce turnover rate by Improving the organizational climate. Any of the organizational climate dimensions that perceived to be negative may trigger employees intention to quit their jobs, more so for the less dominant and less sociable employees. To reduce employee turnover rates, an organization should eliminate unnecessary rules and procedures that are ineffective and burdensome. High-performance employees should be empowered to make decisions. Giving adequate decision-making authority makes employees feel that they are valued and treated respectfully and hence will continue to serve the organization. Meanwhile, organizations should practice fair and equitable performance-based rewards system and employees should be paid what they are worth and not what the organization guidelines require. Besides, if employees are working in an environment, that they can express themselves and being developed with more interpersonal support and opportunities for career advancement, the employees are more likely to stay in the organizations. Therefore organizations should then provide broad-skill training, organize mentoring programs and succession planning. These activities motivate the good employees to stay as it Increases the promotion from within opportunities and provides employees a greater sense of connection to the organizations. The understanding of people develop perceptions of fit over time needs to be emphasized. Perceptions drive individuals behaviors and choices and employees tend to stay in organizations that perceived compatible with their personalities. Hence, the management team needs to be observant enough to understand the characteristics of employees they have and make necessary changes and customize policies and systems accordingly. In a nutshell, this study has demonstrated that Management should form an organization that promote positive organizational climate which includes well-defined job responsibilities and policies with flexible structure, fair and equitable rewards system as well as a supportive and friendly work atmosphere. Positive organizational climate exerts and enhances employees job satisfaction and hence less likely to look for jobs somewhere else. Keeping good employees is critical to business success and organizations should make employee retention a part of corporate culture.

References
Downey, H.K., Hellriegel, D., Slocum, J.W. 1975, Congruence between Individual Needs, Organizational Climate, Job Satisfaction and Performance, Academy of Management Journal, pp. 149-155. Hong & Kaur 10 Roseman, E. 1981, Managing Employee Turnover: a Positive Approach http://www.managementstudyguide.com/employee-retention.htm http://en.wikipedia.org/wiki/Employee_retention http://indiaattritionstudy.com/about_the_study/context_introduction.htm http://retention.naukrihub.com/attrition-rates-in-different-sectors.html