Hrm Project Employee_retention

HRM Project 1

EMPLOYEE RETENTION Submitted by: Group 6 Section B 09P061 09P082 09P084 09P093 09P098 09P108

Abhinav Narula Harsha Muzumdar Hitesh Yeolekar Mohit Rungta Pallavi Madan Gagan Rajpal

Employee Retention Employee Retention is the tools and policies that are adopted by an organization to encourage employees to remain in the organization for the maximum period of time. Key employee retention is critical to the long term health and success of your business. It is important to retain the talent in the company. Retention is sometimes more important than hiring of employees. The employee satisfaction has become an important factor for a company as well as employee. Decent salaries, bonuses and allowances are the top expectations of an employee towards the company. Additionally, challenging and interesting roles and responsibilities are also aspirations of employees. If a person is not satisfied with his job, he may leave the organization as in present corporate world, employee has number of options available for more suitable jobs. Managers readily agree that retaining your best employees ensures customer satisfaction, product sales, satisfied coworkers and reporting staff. The basic factors which makes employee retention important are: • If an employee resigns, a good time and resource is required to look for new employees able to fulfill particular requirements. •

The expected level of talent and efficiency is difficult to obtain in the new employee.

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Sudden resignation of employee brings current business process to standstill. Hence new hiring becomes immediate necessity.

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The resignation can also trigger a chain reaction in other workforce to look in the same direction of better opportunities.

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At higher hierarchy level, retention is also important not to get shared some in house information and strategies to other competitive firms.

The cost of loosing talent involves the time and resources that are utilized to hire new employees. The costs are both direct and indirect. There are the direct costs to recruit and train new workforce. It is hard to get the same level of talent back, additionally for a new employee, it also takes time to adjust to new working conditions and environment resulting in low level of efficiency in early stage which results in a greater indirect costs and loss of productivity. Less obvious are the costs of maintaining morale when there are change and threats of job cuts. According to the American Management Association, the cost to replace an employee who leaves is, conservatively, 30 percent of their annual salary. For those with skills in high demand, the cost can rise to a frightening 1.5 times the annual salary to replace them. Roger Herman, in his classic book on employee retention, has described that Employee retention involves being sensitive to people's needs and demonstrating the various strategies in the five families. The five families are:

1. Environmental 2. Relationship 3. Support 4. Growth 5. Compensation These families are actually various factors that may affect the employee. To retain employees in an organization, it is important to recognize which factor is working significantly to affect employees. When the cause factor is recognized, it is easier to address the factor. Employee retention approaches also differ at different level of operations. Since the problem differs at different levels, the solutions also differ. It is easier to provide lower level incentives with limited resources while to provide high level benefits, higher resource and time needs to be utilized. At lower level, the occasional gifts, scholarships for children, personalized appreciations etc help to motivate workers and employers to remain in the organization. While at higher level, approach for employee retention are various memberships, sabbatical leaves, benefits and insurance schemes etc. The highest level of employee retention strategies involve mentorship workshops, vocational councelling and personalized career guidance by experts. ECP model of employee retention: HOWATT consulting provides a simple model to understand the importance of employee retention. In today’s economy, the bottom line in business is profits. The model use this underlined concept including employee retention in importance. E---Employee retention and employee satisfaction. When you have satisfied employees (who are not caught up in the quagmire of bureaucracy and leave), they are more able to help the customer. C— Customer retention. The more effective the customer services the greater the customer retention. P— Profit. Employee Satisfaction + Customer Satisfaction = Increased Profits The equation is simple from this point on. When we keep customers that are satisfied, and continue to add more, the corporation has increased the likelihood of increased profits. Modern Model for employee retention(ERC’s retention model): ERC or employee retention connection is the recent mission by James Rolo and Ingrid Bens to work with organizations to attract, develop and retain their most valuable resource: their employees.

It designs three basic drivers of employee retention. The basic drivers with their key attributes are: 1: Stimulating Work • Variety of assignments •

Autonomy to make decisions

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Resources and support provided to do good work

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Opportunity to learn

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Feedback on results

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Understanding the significance of one's personal contributions

2: Motivational Leadership Champion change and are open to new ideas • Inspire a share vision of organization direction •

Motivate and recognize contributions

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Develop the capabilities of others

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Model behavior that reflects organization values

3: Recognition & Reward • Say "Thank you" for a job well done •

Reinforce desired behaviors

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Create an emphasis and focus on recognition

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Celebrate successes

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Build self-esteem

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Enhance camaraderie and teamwork

There are various reasons for an employee to leave an organization. • Employee does not believe that they have been given the tools needed to do the job •

Employees feel unappreciated and there is lack of meaningful feedback and information as to what they are doing. Many employees know that they need to be responsible for their own career planning, though it is still important for employee sto be acknowledged for what they are doing that is proactive and positive.

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Employee is unclear or unmotivated to obtain the company's goals. The corporate goals are not in line with the employees’. It is important that all employees be responsible for their own goals, so that they can build them to be congruent with the company's.

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Employees do not see any opportunities to grow and advance in their positions

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Employees will leave due to personality conflicts. The number one reason employees leave is not money; it is conflict with their direct supervisor. Most personality conflicts are rooted in poor communication and a lack of communication skills focused on achieving agreement.

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Employees will not stay if they are not involved in decision making, especially if it is in their area of expertise. They see themselves as devalued in this case.

Ways of retention of employees: • High salaries and incentives is the primary tool for employee retention. Most of the companies attract the employees by paying them high salaries and other incentives time to time. Monetary packages are able to attract and retain talent, however, in long run it becomes limiting for the organization to pay huge cash. •

The best and foremost HR practice to retain employees is proper and tangible recognition and appreciation to employees for their individual performance. The tools like employeer of the year/month, best performer/trainee of the project etc are those appreciations which not only retain employees but also encourage them for better performance.

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For employee satisfaction, the most important aspect to take care by the organization is that the job profiles offered should match with individual capabilities and aspirations. This makes the employee feel satisfied and glad in his job.

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Better work culture is also very important where the relationship between employee and employer is such that individual problems and conflicts are properly addressed with time.

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Excellent career growth should be provided to the employees to move on the vertical ladder of organizational hierarchy. The most common reason for leaving the job is the expectation of higher level of responsibility and position.

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Work-life balance initiatives are important. Innovative and practical employee policies pertaining to flexible working hours and schemes, granting compassionate and urgency leave, providing healthcare for self, family and dependants, etc. are important for most people. Work-life balance policies would have a positive impact on retaining skilled employees, as well as on attracting high-calibre recruits.

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Organised training, counselling and development programmes for employees also used to motivate them for their work. Best performers ahould be encourage to share their experiences with others and guide others. The emphasis is to create the desire to learn, enjoy and be passionate about the work they do.

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On the cases of talent leaving the organization, fundamental reasons for the same need to be seeked upon. It provides the organization an opportunity to learn from possible loopholes in its own HR strategy.

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Sometimes employee actually leaves its supervisor or employer rather the organization. Reasons may be individual conflicts or miscommunication in a team. Hence The employee should be made independent to address his problems and complaints freely. Mentorship programs are employed to provide freedon to employees regarding individual contentions.

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In any circumstance, the employee should never be threatened about his job or income. Whatever be the issue, it should be shared in a mature manner and underperformance should be addressed in fruitful manner.

Employee retention and employee engagement: Willian A kahn has given a concept of employee engagement which now a days in present competitive corporate have replaced the employee retention policy and brought it to higher level. It was termed as ‘harnessing of organizational members’. In engagement, people employ and express themselves physically, cognitively, and emotionally during role performances. It brings high level of employee satisfaction in organization culture. When people are emotionally attached to their work, team and organization, the target of employee retention becomes easier. Additionally, it also brings high level of effectiveness in the work. ATTRITION RATE: Attrition rate/ churn rate is a measure of the number of individuals or items moving into or out of a collection over a specific period of time. It is a reduction in the number of employees through retirement, resignation or death. Thus we can see that attrition rate and retention rate are very closely related and loosely speaking attrition rate is inverse of retention rate. Calculating attrition rate: Attrition rate has always been a sensitive issue for all organizations. No common formula can be used by all organizations. Formula has to be designed keeoing in view the nature of business and the different job functions. However a general formula used by most organizations is: Attrition = (No. of employees who left in the year / average employees in the year) x 100 The difference arises while calculating the values of No. of employees who left in the year and average employees in the year. Some firms may not include attrition of freshers who leave because of higher studies or within three months of joining. Various types of attrition rates used by organizations for performance measurement are: • Fresher attrition that tells the number of freshers who left the organization within one year. It tells how many are using the company as a springboard or a launch pad.

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Infant mortality that is the percentage of people who left the organization within one year. This indicates the ease with which people adapt to the company.

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Critical resource attrition which tell the attrition in terms of key personnel like senior executives leaving the organization.

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Low performance attrition: It tells the attrition of those who left due to poor performance.

Attrition rates in India: The below graph shows the attrition rate of employees in different sectors

Certain facts about employee turnover: (source: research report on india employee turnover study by CII and CSEND CII-Confederation of Indian industries CSEND-centre of socio economic development) • Managerial staff is high in regard to turnover. Executive ranks are perceived as relatively stable. Clerical and operational workers are reported to have increased turnover as well. •

Knowledge workers in today’s India exhibited the highest tendency for voluntary job change across different categories of employees.

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Years of employment in the company did make a difference regarding turnover. The highest turnover occurs between 1-4 years of employment.

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Salary, career development and individual relationships are the major reasons for employee leaving a job. Job content, recognition etc comes later.

CASES: ESOPS: NEED AND EFFECTS During the mid-1990s, corporates across the world were going through a peculiar phase while many of them were downsizing heavily, others were struggling hard to hold on to their best employees. As employee turnover rates increased, employee retention (especially technically skilled personnel) became one of the key issues for companies and human resource (HR) officials across the world. The boom in the information technology (IT) industry in the late 1990s was in a major way responsible for this situation. In the 1990s, the job market was extremely vibrant and the demand for skilled people reached an all time high during this period. As a result, companies started paying exorbitant salaries and perks to retain their existing employees. However, after a certain level, even increased salaries could not arrest the employee turnover. It was reported that companies in the Silicon Valley invested around $ 4 billion annually to retain employees and still, around 1,60,000 jobs were left unfilled. Organizations started to devise new ways to retain their employees. It was the emergence of ESOPS which is one of the innovative measures to keep talent in the company. ESOPs can be defined as contribution of the employee pay package for investing in the stocks of the employer company. ESOPs enable the employees to buy shares of the company for which they work, at or below the market prices. They can gain from future increase in the stock price.It provided a type of ownership to the employees in the company. The concept of ESOPs was also present earlier from 1920s in form of stock bonus plans. It was 90s when the concept was efficiently utilized. Pespi was the company to first utilize esops as a key to retain talented employees in the company. • Most of IT companies were having exceptional performance in the period and additionally their stock prices were in bull. This made the ESOPs very attractive for employees. •

It overcome the limitations of IT companies to provide heavy cash to the employees.

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Also the company did not have to pay anything directly and it also in turn helped in rise of their own equity share prices.

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ESOPs also provided tax benefits to employees to make it more attractive.

MICROSOFT INDIA: BEST PLACE TO WORK

In 2008, Microsoft India was ranked first in best places to work rankings. It was the result of effective retention schemes employees by Microsoft. According to Microsoft India's HR growth model, HR was ultimately expected to be a change leader and business driver. Talent management had been a key issue for Microsoft. Aligning the HR practices with company mission and vision was also an important issue for Microsoft. The major actions and policies of Microsoft are: Microsoft India recruited both fresh graduates from academic campuses and experienced professionals in the IT industry. It provided blend of all talent in company. Microsoft India provided both vertical and lateral growth prospects for its employees in all the six business units present in India. A flexi-time policy enabled the employees to work according to their convenience liberating them from rigid work timings Microsoft Global Technical Support Center (MSGTSC) For employee retention, Microsoft India initiated various programs particularly in MSGSTC, Bangalore, where work was carried out around the clock (24 X 7) in order to provide technical support services to its customers Microsoft India followed a candid process while evaluating the performance of employees and regarding their compensation packages. The process was transparent so as to enable employees to identify their performance levels and have a clear idea of what was required in terms of performance in order to reach to the next level. In 2007, Microsoft India launched a program called 'Bring Your Child To Work' in a move to improve work-life balance among its employees.

REFERENCES: • http://www.retentionconnection.com •

http://retention.naukrihub.com/high-level.html

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http://www.howatthr.com/images/pdf/pplmgmt/Employee%20Retention%20A %20Discussion%20Model.pdf

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www.wikipedia.com

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http://www.strategic-change.com/erc/about.html