Review ofbterature

REVIEW OF LITERATURE

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 joinec. mnkc him a corporate rcady material

and bring him at par with thc 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.

Employee retention is recognized as an important subject of inquiry by

researchers. The Harvard Business Essentials (2002) defined retention as the converse

of turnover being voluntary and involuntary. Rctention activities may be defined as a

sum of all those activities aimed at increasing organizational commitment of

employees, giving them an overall ambitious and myriad of opportunities where they

can grow by outperforming others (Bogdanowicz & Bailey, 2002). It is a voluntary

move by an organization to create an environment which engages employees for a

long term (Chaminade, 2007).

Employee retention is defined as a systematic effort by employers to create

and foster an environment that encourages current employees to remain with the

organization.

Retention strategies strengthen the ability of businesses to attract and retain

their workforce. Once the right staff persons have been recruited, retention practices

provide the tools necessary to support staff.

Employee retention

Employee retention refers to the ability of an organization to retain its

employees. Employee retention can be represented by a simple statistic (for example,

a retention rate of 80% usually indicates that an organization kept 80% of its

employees in a given period). However, many consider employee retention as relating

to the efforts by which employers attempt to retain employees in their workforce. In

this sense, retention becomes the strategies rather than the outcome.

A distinction should be drawn between low-performing employees and top

performers, and efforts to retain employees should be targeted at valuable,

contributing employees. Employee turnover is a symptom of deeper issues that have

not been resolved, which may include low employee morale, absence of a clear career

path, lack of recognition, poor employee-manager relationships or many other issues.

A lack of satisfaction and commitment to the organization can also cause an employee

to withdraw and begin looking for other opportunities. Pay does not always play as

large a role in inducing turnover as is typically believed.

In a business setting, the goal of employers is usually to decrease employee

turnover, thereby decreasing training costs, recruitment costs and loss of talent and

organizational knowledge. By implementing lessons learned from key organizational

behavior concepts, employers can improve retention rates and decrease the associated

costs of high turnover. However, this isn't always the case. Employers can seek

"positive turnover" whereby they aim to maintain only those employees whom they

consider to be high performers.

 1. Cost of turnover

2. Henberg's theory

3. Retention Programs

4. Retention Tools and Resources

5. Join, Stay, Leave Model

6. Employee Retention Best Practices

7. Outsourcing Employee Retention Program

Cost of turnover

Studies have shown that cost related to directly replacing an employee can be

as high as 50-60% of the employee's annual salary, but the total cost of turnover can

reach as high as 90-200% of the employee's annual salary. These costs include

candidate views, new hire training, the recruiter's salary, separation processing, job

errors, lost sales, reduced morale and a numbcr of other costs to the organization.

Turnover also affects organizational performance. High-turnover industries such as

retailing, food services, call centres, elder-care nurses, and salespeople make up

almost a quarter of the United States population. Replacing workers in these

industries is less expensive than in other, more stable, employment fields but costs

can still reach over $500 per employee.

Henberg's theory

An alternative motivation theory to Maslow's Hierarchy of Needs is the

Motivator-Hygiene (Herzberg's) theory. The theories have overlap, but the

fimdarnental nature of each model differs. While Maslow's Hierarchy implies the

addition or removal of the same need stimuli will enhance or detract fiom the
employee's satisfaction, Herzberg's findings indicate that factors garnering job

satisfaction are separate fiom factors leading to poor job satisfaction and employee

turnover. Herzberg's system of needs is segmented into motivators and hygiene

factors. Like Maslow's Hierarchy, motivators are often unexpected bonuses that foster

the desire to excel. Hygiene factors include expected conditions that if missing will

create dissatisfaction. Examples of hygiene factors include bathrooms, lighting, and

the appropriate tools for a given job. Employers must utilize positive reinforcement

methods while maintaining expected hygiene facton to maximize employee

satisfaction and retention.

Retention Programs

It is important to first pinpoint the root cause of the retention issue before

implementing a program to address it. Once identified, a program can be tailored to

meet the unique needs of the organization. A variety of programs exist to help

increase employee retention.

Career Development - It is important for employees to understand their career path

within an organization to motivate them to remain in the organization to achieve their

personal career goals. Through surveys, discussion and classroom instruction,

employees can better understand their goals for personal development. With these

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developmental goals in mind, organizations can and should offer tailored career

development opportunities to their employees.

Executive Coaching - Executive coaching can be used to build competencies in

leaders within an organization. Coaching can be useful in times of organizational

change, to increase a leader's effectiveness or to encourage managers to implement

coaching techniques with peers and direct reports. The coaching process begins with
an assessment of the individual's strengths and opportunities for improvement. The

issues are then prioritized and interventions are delivered to target key weaknesses.

Assistance is then provided to encourage repeated use of newly acquired skills.

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Motivating Across Generations Today's workforce includes a diverse population

of employees from multiple generations. As each generation holds different

expectations for the workplace, it is important to understand the differences between

these generations regarding motivation and engagement. Managers, especially, must

understand how to handle the differences among their direct reports.

Orientation and Onboarding - An employee's perception of an organization takes

shape during the first several days on the job and continues throughout their first six

months, with 90% of employees still deciding whether or not to stay at the

organization during this time. It is in the best interest of both the employee and the

organization to impart knowledge about the company quickly and effectively to

integrate the new employee into the workforce. In addition, providing continual

reinforced learning through extended onboarding over the first year can increase new

hire retention by 25%. By implementing an effective onboarding process, new hire

turnover rates will decrease and productivity will increase.

Women's Retention Programs - Programs such as mentoring, leadership

development and networking that are geared specifically toward women can help

retain top talent and decrease turnover costs. By implementing programs to improve

worldlife balance, employees can be more engaged and productive while at work.

Exit Interview and Separation Management Programs

Retention Tools and Resources

Employee Surveys - By surveying employees, organizations can gain insight into the

motivation, engagement and satisfaction of their employees. It is important for

organizations to understand the perspective of the employee in order to create

programs targeting any particular issues that may impact employee retention.

Exit Interviews - By including exit interviews in the process of employee separation,

organizations can gain ~~alunblc

insight into the workplace experience. Exit interviews

allow the organization to understand the triggers of the employee's desire to leave as

well as the aspects of their work that they enjoyed. The organization can then use this

information to make necessary changes to thcir cotl~panyto retain top talent. Exit

interviews must, however, ask the right questions and elicit honest responses from

separating employees to be effective.

Employee Retention Consultants - An employee retention consultant can assist

organizations in the process of retaining top employees. Consultants can provide

expertise on how to best identify the issues within an organization that are related to

turnover. Once identified, a consultant can suggest programs or organizational

changes to address these issues and may also assist in the implementation of these

programs or changes.

Join, Stay, Leave Model

For organizations and employers, understanding the environment is the first

step to developing a long-term retention strategy. Organizations should understand

why employees join, why they stay and why they leave an organization. This join,

stay, leave model is akin to a three-legged stool, meaning that without data on all

three, organizations will be unsuccessful in implementing a proper retention strategy.

Why employees join- The attractiveness of the position is usually what entices

employees to join an organization. However, m i t i n g candidates is only half the

problem while retaining employees is another. Understanding what your employees

are looking for in the job while simultaneously making sure your expectations are

correct are both important factors to address in the hiring process. High performing

employees are more likely to be retained when they are given realistic job previews.

Organizations that attempt to oversell the position or company are only contributing

to their own detriment when employees experience a discord between the position and

what they were initially told. To assess and maintain retention, employers should

mitigate any immediate conflicts of misunderstanding in order to prolong the

crnployee's longevity with the organization, New-hire surveys can help to identify the

breakdowns in trust that occur early on when employees decide that the job was not

necessarily what they envisioned.

Why employees stay- Understanding why employees stay with an organization is

equally as important to understanding why employees choose to leave. Recent studies

have suggested that as employees participate in their professional and community life,

they develop a web of connections and relationships. These relationships prompt

employees to become more einbedded in their jobs and by leaving a job; this would

sever or rearrange these social networks. The more embedded employees are in an

organization, the more they are likely to stay.http://www.shrm.or~templatestoolsl

toolkits/pages/managingforemployeeretention.pxAdditionally, the extent to which

employees experience fit between themselves at their job, the lesser chance they will

search elsewhere. Organizations can ascertain why employees stay by conducting stay

interviews with top performers. A stay survey can help to take the pulse of an

organization's current work environment and its impact on their high performing
employees. Employers that are concerned with over-using stay interviews can achieve

the same result by favoring an ongoing dialogue with employees and asking them

critical questions pertaining to why they stay and what their goals are.

Why employees leave- By understanding the reasons behind why employees leave,

organizations can better cater to their existing workforce and influence these decisions

in the future. OAentimes, it is low satisfaction and commitment that initiates the

withdrawal process, which includes thoughts of quitting in search of more attractive

alternatives. If administered correctly, exit interviews can provide a great resource to

why employees leave. Typically, employees are stock in their responses because they

fear being reprimanded or jeopardizing any potential future reference.

The most common reasons for why employees leave are better pay, better

hours and better opportunity. These typical answers for leav'in& often signal a much

deeper issue that employers should investigate krther into. By asking relevant

questions and perhaps utilizing a neutral third party provider to conduct the interview,

employers can obtain more accurate and quantifiable data. Contrary to what most

organizations believe, employees often leave due to relationships with manager andlor

treatment of employees and not compensation, as this is often a response that

employees are uncomfortable expressing to their organization directly. Retention

Diagnostic is a rapid benchmarking process that identifies the costs and can help

uncover what affects employee loyalty, performance and engagement.

Employee Retention Best Practices

By focusing on the fundamentals, organizations cm go a long way towards

building a high-retention workplace. Organizations can start by defining their culture

and identifying the types of individuals that would thrive in that environment.

Organizations should adhere to the fundamental new hire orientation and on boarding

plans. Attracting and recruiting top talent requires time, resources and capital.

However, these are all wasted if employees are not positioned to succeed within the

company. Research has shown that an employee's fint 10 days are critical because

the employee is still adjusting and getting acclimated to the organization. Companies

retain good employees by being employers of choice.

Recruitment- Presenting applicants with realistic job previews during the recruitment

process have a positive effect on retaining new hires. Employers that are transparent

about the positive and negative aspects of the job, as well as the challenges and

expectations are positioning themselves to recruit and retain stronger candidates.

Selection- There are plethora of selection tools that can help predict job performance

and subsequently retention. These include both subjective and objective methods and

while organizations are accustomed to using more subjective tools such as interviews,

application and resume evaluations, objective methods are increasing in popularity.

For example, utilizing biographical data during selection can be an effective

technique. Biodata empirically identifies life experiences that differentiate those who

stay with an organization and those who quit. Life experiences associated with

employees may include tenure on previous jobs, education experiences, and

involvement and leadership in related work experiences.

Socialization- Socialization practices delivered via a strategic on boarding and

assimilation program can help new employees become embedded in the company and

thus more likely to stay. Research has shown that socialization practices can help new

hires become embedded in the company and thus more likely to stay. These practices

include shared and individualized learning experiences, activities that allow people to

get to know one another. Such practices may include providing employees with a role

model, mentor or trainer or providing timely and adequate feedback.

Training and development- Providing ample training and development opportunities

can discourage turnover by keeping employees satisfied and well-positioned for hture

growth opportunities. In fact, dissatisfaction with potential career development is one

of the top three reasons employees (35%) often feel inclined to look elsewhere. If

employees are not given opportunities to continually update their skills, they are more

likely to leave. Those who receive more trainlng are less likely to quit than those who

receive little or no training. Employers that fear providing training will make their

employees more marketable and thus increase turnover can offer job specific training,

which is less transferable to other contexts. Additionally, employers can increase

retention through development opportunities such as allowing employees to further

their education and reimbursing tuition for employees who remain with the company

for a specified amount of time.

Compensation and rewards- Pay levels and satisfaction are only modest predictors

of an employee's decision to leave the organization; however organizations can lead

the market with a strong compensation and reward package as 53% of employees

often look elsewhere because of poor compensation and benefits. Organizations can

explicitly link rewards to retention (i.e. vacation hours to seniority, offer retention
Bonus payments or Employcx stock options, or define benefit plan payouts to years of

services) Research has shown that defined compensation and rewards as associated

with longer tenure. Additionally, organizations can also look to intrinsic rewards such

as increased decision-making autonomy.

Effective Leaders- An employee's relationship with hisher immediately ranking

supervisor or manager is equally important to keeping to making an employee feel

embedded and valued within the organization. Supervisors need to know how to

motivate their employees and reduce cost while building loyalty in their key people.

Managers need to reinforce employee productivity and open communication, to coach

employees and provide meaningful feedback and inspire employees to work as an

effective team. In order to achieve this, organizations need to prepare managers and

supervisors to lead and develop effective relationships with their subordinates.

Executive Coaching can help increase an individual's effectiveness as a leader as well

as boast a climate of learning, trust and teamwork in an organization. to encourage

supervisors to focus on retention among their teams, organizations can incorporate a

retention metric into their organization's evaluation.

Enlployee Engagement- E~nployeeswho are satisfied with their jobs, enjoy their

work and the organization, believe their job to be more important, take pride in the

company and feel their contributions are impactful are five times less likely to quit

than employees who were not engaged. Engaged employees give their companies

crucial competitive advantages, including higher productivity and lower employee

turnover.
Outsourcing Employee Retention Program

Turnover costs can have significant negative impact on a company's

performance. Turnover cost can represent more than 12 percent of pre-tax income for

the average company and nearly 40 percent for companies at the 75th percentile for

turnover rate. Organizations and managers understand the importance of

implementing an effective retention program but aren't proactive in implementing one

and often leave it for another day. That day hardly ever comes, Organizations that

don't have the time or have limited resources can outsource employee retention

programs to specialists. Companies can hire third party specialists to pinpoint the root

causes of their workforce challenges. By identifying the root causes, customized

action plans can be tailored to fit your organization's need to and create a retention

program customized to your organization. Another benefit of outsourcing is that

organizations can get quantifiable justifying the actions needed to improve their

organization.

Need & Importance of Employee Retention

Employee Retention refers to the techniques employed by the management to

help the employees stay with the organization for a longer period of time. Employee

retention strategies go a long way in motivating the employees so that they stick to the

organization for the maximum time and contribute effectively. Sincere efforts must be

taken to ensure growth and learning for the employees in their current assignments

and for them to enjoy their work.

Employee retention has become a major concern for corporates in the current

scenario. Individuals once being trained have a tendency to move to other

organizations for better prospects. Lucrative salary, comfortable timings, better

ambience, p w t h prospects are some of the factors which prompt an employee to

look for a change. Whenever a talented employee expresses his willingness to move

on, it is the responsibility of the management and the human resource team to

intervene immediately and find out the exact reasons leading to the decision.

Why retaining a valuable employee is essential for an organization:

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

make him ready to work nnd understand the corporate culture: A new

joinee 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.

When an individual resigns from his present organization, it Is more

likely that he would join the competitors: In such cases, employees tend to

take all the strategies, policies from the current organization to the new one.

Individuals take all the important data, information and statistics to their new

organization and in some cases even leak the secrets of the previous

organization. To avoid such cases, it is essential that the new joinee is made to
 sign a document which stops him from passing on any information even if he

leaves the organization. Strict policy should be made which prevents the

employees to join the competitors. This is an effective way to retain the

employees.

The employees working for a longer period of time are more familiar with

the company's 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 thc employees are compatible with

each other and discuss things ilmong 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. After striking a rapport with an existing

employee, it is a challenge for the employees to adjust with someone new and

most importantly trust him. It is a human tendency to compare a new joinee

with the previous employees and always find faults in him.

I 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 favour 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 ret

Role of H R in Employee Retention

An organization can't survive if the top performers quit. It needs employees

who are loyal and work hard with full dedication to achieve the organization's

objective. It is essential for the management to retain its valuable employees who

think in favour of the organization and contribute their level best. An employee who

spends a longer duration at any particular organization is familiar with the rules,

guidelines and policies of the organization and thus can adjust better.

The Human Resource team plays an important role in employee retention. Let us

find out their role in the same:

Whenever an employee resigns from his current assignments, it is the

responsibility of the HR to intervene immediately to find out the reasons

which prompted the employee to resign. No one leaves an organization

without a reason. There has to be one and the human resource team must

probe into it. There can be innumerable reasons for an employee to leave his

current job. The major ones being conflict with the superiors, lesser salary,

lack of growth, negative ambience and so on.

It Is the duty of the HR to sit with the employee and discuss the various

issuea face to face. Understand his problems and listen to his side of the story

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as well. Remember the HR should not focus on conducting exit interviews,

rather more emphasis should be laid on retaining the employees.

Try to provide a solution to his problem. Hiring is a tedious process and it is

really very difficult to recruit the right candidate and train him once again. Do

check the track record of the employee who wishes to move on. It is really

essential for the management to retain those employees who have the potential

and are really indispensable for the organization. If they leave and join the

competitors; the organization would be at loss. If one feels that the employee

is not very happy with his team leader, try to shift him to a new team. If the

employee feels his salary is not justified, try to give him a hike but make sure

he is worth it and you don't end up upsetting others.

The HR person must ensure that he is recruiting the right employee who

actually fits into the role. A right person doing the wrong job would never

find his job interesting and certainly look for a change. Make sure every

individual has been assigned responsibilities according to his specialization

and interest. The employees must be clear with their KRAs from the very

beginning. Every individual works for money and the HR must quote a

justified salary acceptable to the other person. Don't compel anyone to join at

a lesser salary. He might join at that moment but would most likely quit after

sometime. The hike should be on the present salary and must match the market

trends and the expectations of the individual.

The human resource department must conduct motivational activities at

the workplace. Organize various internal as well as external trainings which

help the employees to learn something extra apart from their routine work.
Make them participate in extracurricular activities important for their overall

development. Encourage them to interact with each other so that the comfort

level increases.

The HR must launch various incentive schemes for the top performers to

motivate them. This way the employees fcel important for the organization

and strive hard to perform even better the next time. The employees who show

promise should be awarded with cash prizes, lucrative perks and certificates to

make the individual stand apart from the crowd. Send a mail wishing the

employees on their birthdays or congratulating them when they perform

exceptionally well or come out with something innovative. Arrange a small

bouquet for them as a gift from the organization's side. This way the

employees feel attached to the organization and are reluctant to look for a

change. A friendly atmosphere is essential for the employees to feel safe and

secure. Make them participate in various management decision making.

Perforrnancc rcvlcws are a must. The HR along with the respective team

leaders must monitor their team member's performance to ensure

whether they are enjoylng the work or not. The employees look for a

change only when their job becomes monotonous and does not offer any

growth or learning. Job rotation can be one of the effective ways to retain

employees.
Employee turnover Vs Employee retention

Employee turnover refers to the proportion of employees who leave an

organization over a set period (often on a year-on-year basis), expressed as a

percentage of total workforce numbers.

At its broadest, the term is used to encompass all leavms, both voluntary and

involuntary, including those who resign, retire or are made redundant, in which case it

may be described as 'overall' or 'crude' employee turnover. It's also possible to

calculate more specific breakdowns of turnover data, such as redundancy-related

turnover or resignation levels, with the latter particularly useful for employers in

assessing the effectiveness of people management in their organizations

Retention

Retention relates to the extent to which an employer retains its employees and

may be measured as the proportion of employees with a specified length of service

(typically one year or more) expressed as a percentnge of overall workforce numbers.

It is generally believed that the process of employees' turnover is the reversed

transformation process of employees' retention psychology and behaviors.

Grimth et al.'s Turnover Model

Figure - F2.1

Dtm,grapbicl envirooment.con~dkdadjwed variables

Precursor Variables

Rctcntiod Voluntary

influcnt to .
Joh atritudc -... ,.. ..#'

Factors influencing Employee retention in Software Industry

1. Make career paths clearly visible.

The organizations which offer career and not jobs are able to retain employees

to a greater extent. Believe in the strategy of promoting from within, so that other

employees are motivated to stay back for the position they dream of. Moreover, make

these paths and careers easily visible to them.

2. Recognition can fulfill the self-actualization need.

Every person has the need to be appreciated for hisher efforts. Recognizing or

appreciating the work of employee boosts his morale and he feels that he is

contributing something to the organization.

3. Be more flexible

Flexibility in terms of work timing and work itself can offer the advantage of

retaining employees. By allowing some flexibility in an employee's schedule you can

allow his to perform his off job duties as well.

4. Make your company a place where people would want to come to work

The work that is being done in the IT sector is mainly on computer, making

the work tiring and monotonous, creating a work environment which promotes

positivity includes clarifying the mission, communicating positive feelings, being fair

and honest, cultivating a feeling of family, promoting integrity, insisting on workplace

safety, reducing the number of meetings and most importantly- Making work fun

rather than a Load

5. Beginning at the Beginning

Hire correctly--find people who not only look good on paper but are

comfortable with your company's values and corporate culture. Make sure that there

are no surprises on either side by giving full disclosure and ruling out inappropriate

expectations even before the person starts work. Companies should screen for cultural

fit and attitude, among other things, rather than just for skills that new employees can

easily acquire through training.

6. Creating Equitable pay and Performance Processes

Employers should use a variety of hard (monetary) and soft (non-monetary)

employee compensation strategies to make it difficult for other companies to steal

their people away. These include Discussing total employee compensation (salary,
benefits, bonuses, training, etc.) Designing reward systems to stimulate employee

involvement.

7. Work-Life Strategy

Remember, only a happy employee will prove to be a productive employee,

and in spite of offering high salary, if the employee is not able to spend leisure time

with his family, he will not be satisfied with the work. So design policies which can

offer work life balance to employees, which can include compulsory paid leaves,

fixing the time of work, weekends off etc.

Employee Engagement and Employee Retention

Individuals coming together on a common platform to achieve the goals of the

organization as well as to earn a living for themselves are called as employees. The

smooth functioning of an organization depends on its employees and their seriousness

towards work.

What is employee engagement?

Employee engagement refers to a situation where all the employees are

engaged in their own work and take keen interest in the organization's activities.

An engaged employee is one who is focused, enjoys his work and learns something

new each day.

An engaged employee is satisfied with his work and would never think of

quitting his job. He is the one who willingly accepts responsibilities and looks

forward towards a long term association with the organization.

Lack of challenging work is one of the major reasons as to why an employee

decides to move on. An individual should be delegated responsibilities as per his

specialization and background for him to perform up to the mark. An employee

delivers his hundred percent when he does something which interests him. Problems

crop up when individuals have nothing creative and challenging to do, An employee

must foresee a bright future and better growth prospects in the organization for him to

stick to it for a longer duration. An engaged employee always stays motivated in his

current assignments and does not look for opportunities outside. Why does an

individual always look for challenges outside, why can't he improve the conditions in

his own organization? Monotonous work de-motivates an individual and prompts him

to look for a change.

As they say "an empty mind is a devil's workshop". In the same way, idle

employees are the ones who loiter around and spread negativity all over the place.

They are the ones who provoke others to fight amongst themselves. Individuals who

have nothing to do at workplace kill their time by gossiping around and badmouthing

their organization. They always talk negative about the management and encourage

others to move on.

The team leaders and the management must take the initiative to assign

challenging work to the subordinates so that they do not treat their work as a burden.

An employee must be asked to do something innovative every time. An individual

engaged in his work strives hard to deliver his level best and live up to the

expectations of the management every time. He looks forward towards achieving his

organization's targets and thus making it one of the best places to work.

An employee who is busy with his work stays away from nasty politics,

backstabbing and thus maintain the decorum of the office. He prioritizes his work

and does not really get time for controversies. Individuals are reluctant to leave when
they enjoy a cordial relation with their colleagues. Everyone expects a stress free

environment at workplace and tends to leave only when there are constant disputes.

No one likes to carry tensions back home. An engaged employee does not get time to

participate in unproductive tasks instead finishes his assignments on time and benefits

the organization.

The team leaders must monitor the performance of the team members to

ensure whether they are satisfied with their profile or not? Performance reviews are a

must to make sure every one finds his job interesting, Discussions are essential at the

workplace and everyone should have the liberty to express his opinions on an open

forum. Don't impose things on anyone. Let people decide themselves what best they

can do, This way employees are satisfied with their work and never look for a change.

One should always remember that offices are meant to work and not for

fun. For an individual, his work should come first and everything else later. The

employees who do not take ownership of their work blame others and the

organization for the poor show. Cowards leave the organization at its bad times, the

one who really has the potential to make it big stick to it and make things happen

there only.

Why employee retention?

Hiring an employee is only a first step. Building awareness of the importance

of employee retention is essential. The costs associated with employee turnover can

include lost customers and business as well as damaged morale. In addition, there are

costs incurred in screening, verifying credentials and references, interviewing, hiring

and training a new employee. The direct and indirect costs associated with employee

turnover can range between 70 and 200 per cent of salary.

 A strategic approach to employee retention may include adopting effective

methods of engagement, safe and healthy workplaces and mating flexible work

arrangements. Retention practices help create an inclusive and diverse workforce

where barriers are reduced and individuals can participate in the workplace.

Workplaces that demonstrate the value they place in their employees and that

put into place policies and practices that reflect effective retention practices will

benefit, in turn, fiom worker commitment and productivity.

Creative strategies that go beyond pay and benefits can be employed to attract

and retain employees. Recognition, flexible work arrangements, work-life balance,

employee engagement, health and safety, communication, workplace diversity, formal

wellness programs, il~clusion and employee development are some examples of

approaches that can become a part of the mix when developing retention strategies.

Challenges in Employee Retention

In the current scenario, a major challenge for an organization is to retain its

valuable and talented employees. The management can control the problem of

employees quitting the organization within no time to a great extent but can't put a

complete full stop to it. There are several challenges to it.

Let us understand the challenges to employee retention:

Monetary dissatisfaction is one of the major reasons for an employee to

look for a change. Every organization has a salary budget for every employee which

can be raised to some extent but not beyond a certain limit. Retention becomes a

problem when an employee quotes an exceptionally high figure beyond the budget of

the organization and is just not willing to compromise.

 The organization needs to take care of the interests of the other employees as

well and can't afford to make them angry. The salaries of the individuals working at

the same level should be more or less similar to avoid major disputes amongst

employees.

A high potential employee is always the center of attention at every workplace

but one should not take any undue advantage. One should understand the limitation of

the management and quote something which matches the budget of the organization.

An individual should not be adamant on a particular figure, otherwise it becomes

difficult for the organization to retain him. Remember there is a room for negotiation

everywhere.

In the current scenario, where there is no dearth of opportunitleo,

stopping people to look for a change is a big challenge. Every organization tries its

level best to hire employees from the competitors and thus provide lucrative

opportunities to attract them. Employees become greedy for money and position and

thus look forward to changing the present job and join the competitors. No amount of

counseling helps in such cases and retaining employees becomes a nightmare,

Individuals speak all kind of lies during interviews to get a job. They

might not be proficient in branding but would simply say a yes to impress the

recruiter and grab the job. It is only later do people realize that there has been a

mismatch and thus look for a change. Problems arise whenever a right person is into a

wrong profile. An individual loses interest in work whenever he does something out

of compulsion. The human resource department should be very careful while

recruiting new employees. It is really important to get the reference check done for

better reliability and avoid confusions later.

 Some individuals have a tendency to get bored in a short span of tlme.

They might find a job really interesting in the beginning but soon find it monotonous

and look for a change. The management finds it difficult to convince the employees in

such cases.

Individuals must also understand that every organization has some or the other

problem and adjustment is required everywhere, so why not in the present

organization? It becomcs really difficult for the HR Department to find out what

exactly is going on in the minds of the individual. An individual should voice his

opinions clearly to make things easier for the management.

Unrealistic expectations from the job also lead to employees looking for n

change. There is actually no solution to unrealistic expectations. An individual must

be mature enough to understand that one can't get all the comforts at the workplace

just like his home. Individuals fkom different backgrounds come together in an

organization and minor misunderstandings might arise but one should not make an

issue out of it.

An individual must not look for a change due to small issues. One needs time

to make his presence fcel at the organization and must try his level best to stick to it

for a good amount of time and ignore petty issues.

The below Picture depicts that employee retention is hight in gobal IT gaints

like IBM,HP,Intel & Microsoft.

 Figure - F2.2

Employee
Retention

Most effective retention initiatives by Generation: Executives Vs

Employees

Businesses may be able to erect a firewall to limit on employee's access to

Facebook, Twitter, and YouTube. But they can't erect a fence high enough or deep

enough to prevent dissatisfied and disengaged young workers from leaving their jobs

despite a weak job market.

According to a recent Deloitte survey, nearly one-in-three (30%) employeas

are actively working the job market and nearly half (49%) are at least considering

leaving their current jobs. Academic research indicates that 44% of these employees

will actually act on these turnover intentions.

Employers, on the other hand, hardly see what may be coming. For example,

only 9% of surveyed executives expected voluntary turnover to increase significantly

among Generation X employees in the 12 months following the recession. That stands

in sharp contrast to Deloitte's survey results: about one-in-five surveyed Generation

 ro
3~66
X employees (22%) have been actively job hunting over the last year and only 37%

plan to remain with their current employers. Members of Generation Y also have their

sights set on better opportunities, with less than half of those surveyed (44%)

reporting they plan to stick with their jobs.

Among the executives surveyed, 65% expressed concern about losing high

potential employees and critical talent to competitors in the year following the

recession. Nearly half (46%) recall that voluntary turnover increased following the

2001-2002 recession. Nevertheless, only 35% have an updated retention plan in place

to keep hold of talent as the recovery strengthens.

In Deloittc's white paper, "Has the great recession changed the talent game?",

they include an excellent overview ranking effective retention initiatives by

generation, comparing executive perceptions vs employee wants:

Figure - F2.3

I*drpImmhdydk.k~m?

Top Tactics for Turning the Turnover Tide

Nearly Eight in 10 CFOs Taking Steps to Boost Employee Retention as

Economy Improves.
 New research from Accountcmps suggests it may be a good time to ask for

that raise or promotion. To keep workers from jumping ship, 63 percent of chief

financial officers (CFOs) interviewed recently said they are promoting top

performers, and 52 percent are raising salaries. In tota1,79 percent of the CFOs polled

are taking steps to improve employee retention as the economy recovers.

The survey was developed by Accountemps, the world's first and largest

specialized staffing service for temporary accounting, finance and bookkeeping

professionals. It was conducted by an independent research firm and is based on

interviews with more than 2,200 CFOs from a stratified random sample of companies

in more than 20 of the largest U.S.metropolitan areas.

CFOs were asked, "Which of the following steps are you taking or do you plan

to take to retain your employees as the economy improves?" Their responses:

Figure - F2.4

CFO8wereatked,Uh(eh of the following #tapue you tnkiqor do

you plan to take to retain your employeasa8 the economy lmprovaf
 "Businesses can lose their competitive edge if they don't have key players in

place as new growth opportunities arise," said Bill Driscoll, a district president of

Accountemps. "Employers who aren't actively engaging with their best people and

providing competitive salaries risk losing them to other offers."

Driscoll added, "To attract and retain employees, regularlyevaluate

compensation levels to ensure they're in line with other firms in your industry and

region, and, when possible, pay slightly more than your competitors."

Talent Retention Tied to Purpose of work at the Fortune 100 Best

Companies to work for.

While companies of all sizes struggle with growing talent defections, the best

workplaces have found a way to cut athition in half. Their secret? It's not the lavish

perks often linked with great workplaces. 140, the strongest factor associated with

employees' desire to stay at these companies "for a long time" is a sense of meaning at

work. This link between people retention and purpose on the job is among the

findings as research and consulting firm Great Place to Work(R) and Fortune

announce the 19th annual list of the 100 Best Companies to Work For (R).

"The best workplaces know that retaining talent goes beyond perks and other

rewards," said Michael Bush, CEO of Great Place to Work(R). "At the best

workplaces, employees' desire to stay is most closely associated with the meaning

they find on the job, the pride they feel at work and whether they feel they make a

difference."

Applicant companies opt to participate in the selection process for the Fortune

100 Best Companies to Work For (R) list, which includes an employee survey and an

in-depth questionnaire about their programs and company practices. Great Place to
Work(R) then evaluates each application using its unique methodology. Great Place to

Work(R) has found that employees believe they work for great organizations when

they consistently trust the people they work for, have pride in what they do and enjoy

the people they work with.

Among the 2016 Fortune 100 Best Companies to Work For(R), voluntary

turnover rates are approximately half those of industry peers--in keeping with the

trend of low turnover among these high-trust organizations year over year. A new

Great Place to Work(R) study concludes that the ability of these top employers to

retain employees is closely associated with pride and meaning at work. The

report, Connecting People and Purpose: 7 Ways High-Trust Organizations Retain

Talent, includes practical suggestions for companies of all sizes and industries to

enhance employees' sense of purpose on the job.

Employee Retention - How to Keep Millennials Motivated and Happy

One way small or growing businesses can gain a competitive edge is to focus

on employee retention. Frequent voluntary turnover has a negative impact on

employee morale, productivity, and company revenue. Recruiting and training a new

employee requires staff time and money. Some studies predict that every time a

business replaces a salaried employee, it costs 6 to 9 months' salary (see: Cost of

Losing an Employee). And turnover is especially high with the Millennia1 generation

(employees born between -1 980 and 2000, and also known as Gen Y).

So, what are Millennials looking for in a job? And, how can small businesses

adapt their employee retention strategies to retain younger employees?

What Millennials Are Looking for in a Job

As with previous generations, employees attach importance to pay and career

track record. Younger generations value this too, but they also want to feel supported

and appreciated in return for their contributions -- praised even. Millennials are also

more motivated to stay with an employer if they feel their work has a strong economic

or social purpose. Here's a run-down of what Millennials are looking for in a job.

Positive Atmosphere: Is it a positive, action-oriented office environment?

Camaraderie: Are people in the office just coworkers or are they friends?

Mentorship: Is there someone to coach them through their job, and their

career?

Growth: Is there room to grow within the company?

r Praise: Are their good works acknowledged, and appreciated?

A Cool Boss: Are company managers strong leaders? Do they lead by

example? Are they relatable and authoritative? Do they take time to listen to

new ideas?

Flexible Benefits: When it comes to healthcare, 401k, and paid time off,

studies show younger generations are more attracted to choice and flexibility.

Small Business Retention Strategies for Keeping Millennials Happy and Motivated

Given what Millennials are looking for in a job, here are five practical strategies for

retaining the younger generations of employees.

1. Open up opportunities in the workplace

No matter the size of your company, create opportunities to grow

professionally, and personally. Add extra exposure to employees' normal workday

routines. Offer additional work thst challenges your employees, and satisfies their

curiosity for more experiences. These opportunities could come in the fonn of small

projects, such as writing occasional articles for a company blog, or researching new

technology or data available in the industry.

2. Give employees a clear sight on their careers

Allow young employccs to be exposed to top-level management in the

company, even as early as during training. Many larger companies have new

employees shadow management to observe how management works through high-

level challenges. A small business may not have the freedom or time for a new

employee to be taken away from daily tasks, but in small businesses it is usually

easier for top-level management to stay in close communication with entry-level

employees. As such, keep the communication open, so that new employees have an

idea of what goes on throughout the entire company.

3. Give their work purpose

Help your employees find meaning in their work. Even if your company is

several steps removed from the value they contribute to society, it's possible to bring

meaning and fulfillment to any job.

4. Allow for "reverse mentoring*

Along with training the new employee, allow the employee to share his or her

knowledge and skills with the company. This could help your company update its
technology or social media, and you might be surprised what other skills younger

employees have to offer.

5. Provide health benefits that gives employees choice

Consumer driven health plans, such as pure defined contribution plans, are

becoming a growing trend for small businesses. Younger employees value health

benefits that are flexible and fit into their personal lifestyle.

Want more ideas for keeping Millennials happy and motivated? Here's an

interesting graphic that reflects some of these ideas above, and offers a few new ideas

as well.

Figure - F2.5

What CM are Doingto Kcep Gcn Y Happy

WORKPLACE
INNWTION E I wlm=UR!

SOaAL CHANGE CAREER PATH

pmmrnun mmns aatngccnvaaw
lmeotrfplton
enployrrrm-
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How to Measure Employee Retention

Measuring how many employees chose to stay or leave your organization is,

on the surface, a straight-forward measure. But for this metric to be valuable in

shaping your practices, and therefore worth the effort of measuring, requires some

clear judbynents about who you want to retain and why.

The basic measure of employee retention is often referred to as turnover. This

is calculated in the following way:

Number of employees leaving the organization

Total Number of employees

(Note: Contract or temporary staff are usually excluded from both the top and bottom

number. Part-Time staff would usually be included.)

Multiplying this number by 100 will express your turnover as a percentage. It

is important that you calculate the top and the bottom number over the same time

period. Looking at this number quarterly is usually sufficient for most organizations.

To get an annual turnover perccntagc you should average the results for your four

quarters.

Although this number is fairly simple to calculate it does not tell you anything

really useful. The key with turnover is to look at who you are losing, from where and,

if possible, why. This is where your measurement discipline starts to focus more on

"coding" or describing the information you are processing rather than simply

processing high level data.

To make your retention measure meaningful you should be able to identify

how much of your turnover is:

Voluntary and involuntary

Due to retirement

Due to people leaving laterally to other jobs

Due to people leaving into promoted roles,

At different tenure stages such as less than 1 year, 1-3 years, 3-5 years, etc

People identified as critical to the business for their skills or succession

potential

From different levels within the organization such as entry level, individual

contributor, supervisor 1 manager, executive, senior executive etc.

From hard to fill roles

From new hires

This list is a short indication of what you can look at. Deciding which three to

five factors are the most important is where your judgment and organizational

knowledge is key. Only oncc you know what is critical can you design your data

collection process to capture this information.

The simplest way to capture this information is to include your three to five

factors with standard descriptions on the forms required to process an employee exit.

This requires the manager to provide this information in order to complete their

responsibilities. It will be much harder to gather once the person has left or the final

pay check has been written.

Your three to five factors, once tracked and used to calculate your scores, will

start to show you the pattern of retention within your organization. However they will

not answer the crucial question of why these patterns exist. This is best done through

49
employee survey questions or effective anonymous exit interviews. This combination

of quantitative and qualitative data will provide the information required to develop

and track the effectiveness of your retention efforts.

The best retention strategies focus on "turnover red zones"

As turnover intentions have shifted from a broad-based to a more targeted

concern, employers should also shift their retention strategies to focus on specific

employees who present high turnover risks. Employees who possess skills critical to

organizational goals are often in high demand and short supply even in a turbulent

economy. Furthermore, with leadership development and succession planning being a

top concern for employers, they should target retention strategies toward high-

potential employees as well.

In conjunction with looking at populations with turnover risk, companies need

to focus on the clear turnover red zones emerging with respect to rates of turnover in

certain cohorts of employees, where there is a high risk of departure primarily for

both those under two years on the job and those in the Millennia1 generation.

Employees who have been less than two years on the job expressed the strongest

turnover intentions (34 percent indicating they expect to leave within a year) and just

over a quarter (26 percent) of Millennials reported that they plan to leave within the

next year.

In our most recent survey, Deloitte asked employees to choose the three most

significant factors that would cause them to seek new employment. Responses

clustered around five issues only one of which is related to money. Lack of career

progress topped the list at 27 percent, followed by new opportunities in the market
and dissatisfaction with the manager or supervisor, each at 22 percent, and lack of

challenge in the job and lack of compensation increases at 21 p-t.

What would encourage you to look for new employment?

Figure - F2.6

Dbutisfrtlonwhh rmrugcr a synrvlwn

Lack of compensation increases

Interestingly, the incentives to get employees to stay are not exactly thc same

as the factors that would cause them to leave. The top five retention incentives for

employees are additional bonuses or financial incentives (44 percent), promotion/job

advancement (42 percent), additional compensation (41 percent), flexible work

arrangements (26 percent), and support and recognition from supervisors or managers

(25 percent)

What would keep you with your current employer?

Figure - F2.7

W a m r k arrangnnrntr 26%

Support and recognitionfmm s u p d ~ f i

or manapen
 As turnover concerns grow more targeted, executives are asking two critical

questions: Who is leaving? And how do we hold on to key employees?

Turnover red zone:

The survey results suggest that employee tenure is negatively correlated to

turnover intentions. Simply put, the longer employees stay with a company, the less

likely they are to look for a new job. A full 85 percent of employees who have been

with their current employers for five years or more plan to stay with their

organization. Perhaps not surprisingly, newer employees those who have been with

their organization two years or less are most likely to express intentions to leave their

current job. Just over a third (34 percent) of surveyed newer employees said they do

not plan to stay with their employer for the next 12 months, compared to 15 percent of

surveyed employees who have been with their employer for more than five years.

As companies prepare their retention strategies, it might also be worthwhile to

pay attention to satisfaction levels in the early years of an employee's tenure.

According to the survey, satisfaction seems to dip during the one-to three year range,

with 27 percent of employees in their first year strongly agreeing that they are

satisfied, compared to only 13 percent in the one-to-two year range and 18 percent in

the two-to-three year range.

Do you epect to stay with your current employer for the next 12 months are

longer?
 Figure - F2.8

This data on satisfaction levels positively correlates to other data in the survey

on how employees feel their skills and abilities are being used (29 percent in first

year, 13 percent in the one-to-two year range; and 18 percent in the two to three year

range). Both metrics, for satisfaction and for use of talent and abilities, jump up to 19

percent after both five and 10 year periods. These patterns also extend to trust in

leadership. Surveyed employees report much higher levels of trust after five years on

the job.

Given that employees with shorter tenures are more likely to leave,

organizations should consider effective on boarding programs that can increase long-

term employee commitment.

Digging deeper: Millennials appear to be advancing up the career ladder faster than

their co-workers. Nearly half (44 percent) report that they received a promotion over

the past year, compared to 21 percent of Generation X employees and 16 percent of

Baby Boomers. This could, however, be a result of Millennials entering their

organizations at lower, entry-level positions and thus having a number of shorter

stages through which to advance.

 -
Figure F2.9

Baby Boomers
I plan to bspln lodrlng for 23%
,
/ new employment wthh the lCcnetatlMl X
noat I2 months -4196 n Mlllennkls
4 4 9 6

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I am currantly reeking
new mp~oyment
-32%
-
Rapondents who I have bPan Ktlvoly koklng 26%
are Nannlng to fw new emplgmsntfa tho -23%
stay 80% Ps112rnOnb 1 8 %

In figure F2.10 below, current employee attitudes toward exit triggers are

compared to what executives believe to be top retention incentives. With some

important exceptions in the Baby Boomer generation, employees and employers

appear to be aligned on top retention priorities. However, despite this alignment,

executives underestimate how important some retention priorities are to employees.

For example, 33 percent of surveyed executives chose "promotion/job advancement"

as one of the top three retention initiatives for Millennials, while 47 percent of the

surveyed Millennials chose "promotion/job advancement" as one of their top three

retention initiatives (with almost the same intensity gap for Gen X). Surveyed

executives also underestimate the importance of "additional bonuses and financial

incentives." It was chosen as a top retention incentive by 44 percent of surveyed Gen

X employees but by only 31 percent of surveyed executives.

 -
Figure F2.10

IndMdUnHrrd Tk:Addlticd Mdkbnal Addlllmal

caree~pbmlng compensation bmuresu bonu~w
(within ywr (4196)and fmdd Rmdd
'
mnpany) (27%) Additional incmtiw (31%) incentives (44%)
bonvvl a
tined
lncntker (41%)

&&pmmt mnprnlakn
pm(lramrO996) (309b)
and M b k work

Turning Around Employee Turnover

Costly chum can be reduced if managers know what to look for -- and they usually

don't

Anna recently quit her job. She had held the same job for 19 years and never

registered a complaint, so her resignation came as quite a shock to her manager. It

shouldn't have. Turnover can be

predictable if you know what to

look for. MONEY IS IMPORTANT, BUT IT DOESN'T

BUY EMPLOYEE LOYALTY.
"When I turned in my letter,

[the manager] said he was

surprised and wanted to know what it would take to make me stay," says Anna "I said
that the working conditions were not conducive to effective performance, because I

couldn't say the truth - that he made us all miserable. So two days later, he comes

back with a new offer. I could have more money or fewer hours, but nothing else was

any different. It's still the same toxic atmosphere."

Unfortunately, this is a common problem -- and a common management

response. According to Gallup research, which included a meta-analysis of 44

organizations and 10,609 business units, Gallup Polls of the U.S. working population,

exit interviews conducted on behalf of several companies, and Gallup's selection

research database, most people quit for a few explainable reasons. What's more, a set

of engagement elements explains 96% of the attitudes that drive voluntary turnover

rates for work units. But the reasons people leave might not be what most bosses

think.

Money can't buy love -- or loyalty

According to James K. Harter, Ph.D., Gallup's chief scientist for workplace

management, people leave companies because of factors that filter through the local

work environment. At least 75% of the reasons for voluntary turnover can be

influenced by managers. Still, many bosses think -- like Anna's does -- that all

tumover comes dowu to money.

Money is important, but it doesn't buy employee loyalty. Gallup conducted

two polls in 2006 regarding turnover. Of those who quit their jobs, 82.8% left their

companies, while 17.2% moved to a new position in the same company. When those

who quit voluntarily were asked why they quit, "pay and benefits" was the second

most common answer, but only 22.4%of respondents mentioned it.

 Figure F2.11

r.., .". u
.. ".I --

TOP VOLUWtAlY [email protected] 11UIO*@

managerial respondents was between FOR cnfittoma IMI

$25,000 and $35,000. When asked if their

pay, Erom an objective viewpoint, was

appropriate for the work they do, 42.9%of

engaged workers said it was, compared to

15.2% of not engaged workers and 13% of b!wp

actively disengaged employees.

The most common answer respondents gave for why they were moving on

was for career advancement or promotional opportunities (3 1.5%), while 20.2% said

they lacked job fit. And 16.5% said they were leaving, like Anna did, because of

management or the general work environment. Much smaller percentages quit

becausc of flexibility or scheduling (7.7%) or job security (1.7%).

Notice a pattern? Most of the reasons employees cited for their turnover are

things that managers can influence. And managers who can't or won't alter the factors

that drive turnover can expect to be writing help-wanted ads in the near future. But

there are additional ways to predict turnover in a business unit.

Where there's smoke. ..
Work units with high potential for turnover send up signal flares, but you have

to know where to look to see them. According to Gallup research, if the people in a

work unit say their manager's expectations are unclear; that the manager provides

inadequate equipment, materials, or resources; and that the opportunities for progress

and development are scanty, there will be trouble. There are other indicators too.

Workers in roiling departments often say they don't fit their job, that their coworkers

aren't committed to quality, that their pay and benefits are bad, and that they aren't

connected to the purpose of the organization or to senior management. (See graphic

"The Top Five Predictors of Turnover.")

Work units with high potential for turnover send out warning signals,

according to Gallup research, but managers and executives must know where to look:

1. The immediate manager. If employees report that their manager's expectations are

unclear; or that thcir manager provides inadequate equipment, materials, or resources;

or that opportunities for progress and development are few and far between, watch

out: Trouble is on the way.

2. Poor fit to the job. Another sign of trouble appears when employees perceive that

they don't have opportunities to do what they do best every day.

3. Coworkers not committed to quality. Watch for employees who perceive that

their coworkers are not committed to a high standard of work.

4. Pay and benefits. Engaged employees are far more likely to perceive that they are

paid appropriately for the work they do (43%), compared to employees who are

disengaged (15%) or actively disengaged (13%). And pay and benefits become a big

issue if employees feel that their coworkers aren't committed to quality; they may feel
entitled to extra compensation to make up the difference or to make them feel like

they are truly valued by their employer.

5. Connection to the organization or to senior management. Another key sign that

turnover may be looming appears when employees don't feel a connection to the

organization's mission or purpose or its leadership.

Source: Gallup research, including meta-analysis, employee opinion polls, and exit

interview studies conducted over the past 30 years

Interestingly, pay and benefits are a bigger issue if workers feel that their

coworkers aren't committed to quality. "Inequity in effort likely drives greater

emphasis on pay as a determinant of perceived value," says Harter, who

coauthored 12: The Elements of Great Managing. In other words, people who believe

that their coworkers aren't doing their share of the work may feel entitled to extra

compensation to make up thc difference or to make them feel like they are valued by

their employer.

Harter's research team discovered that a worker's responses to the items on

Gallup's 412 employee engagement survey explain at least 96% of the meta-analytic

relationship between teams' overall satisfaction with their company and later turnover

rates for the same teams. The research shows that an employee's attitude about the

workplace is important and predictive of turnover. But it's possible for enlployees to

report high levels of engagement and still quit -- or feel actively disengaged and stay -

- depending on the way the engagement elements interact.

According to Gallup's research, 9 of the 12 workplace elements consistently

predict turnover across business units, regardless of an organization's size. These

elements are: having clear expectations, having the materials and equipment to do the
job right, having the opportunity to do what you do best every day, the belief that

someone at work cares, the belief that someone encourages your development, a sense

that your opinions count, the mission or purpose of the company making you feel that

your job is important, a belief that your coworkers are committed to quality, and

having opportunities to learn and grow at work. If these needs are met, as shown by

higher scores on these employee engagement items, turnover is likely to be low. If

not, keeping people may be the hardest part of a manager's job.

Low-engagement workplaces

When it comes to predicting turnover, the remaining three 412 elements come

into play depending on the overall engagement of the workplace. In workplaces where

engagement levels are high, those three elements -- recognition, progress discussions,

and the presence of a best friend at work -- add significant value, and turnover is
much less likely. But in workplaces where engagement is low, high scores on those

three elements don't have much effect on keeping people. "I think this is because the

overall culture supports or contradicts the local culture when it comes to feedback

systems," says Harter. "When there is a contradiction between local and broad culture,

people sense a lack of authenticity."

For instance, in a workplace with low overall engagement, recognition and

praise have no effect on reducing turnover. But in a company with moderate to strong

engagement levels, teams that report they receive adequate recognition have 19% less

turnover than teams that say they don't receive enough recognition. "It's likely that

employees perceive recognition as authentic when the overall culture is supportive --

and inauthentic or even conhsing when the culture is miserable," says Harter.
 The research revealed a similar pattern when it comes to discussions about an

employee's progress. In low-engagement workplaces, these discussions don't have

much effect on turnover. But in moderately to highly engaged workplaces, teams with

employees who report they have discussed their progress with their manager in the

past six months also report 19% less turnover, Harter says this is probably because "In

cultures where engagement is low, progress discussions turn into performance

evaluations. But when the team is engaged, progress discussions actually do what

they're meant to do: help an employee to progress."

The 412 element "I have a best friend at work" can have a particularly

important relationship to retention, depending on the quality of the work environment.

In a negative culture, best friends may leave together; teams with many best friends

have 8% more tumover than those with few fiiends. In a moderately to highly

engaged atmosphere, friends stay together, and tumover is 18% less per year for

teams with many best fiiends, in comparison to those with few best friends.

None of this is a surprise to Anna, the woman who quit her job after 19 years.

"The last time someone talked to me about my progress was six or seven years ago,

when [the last manager] left," she said. "I'd be scared to death if the [manager] there

now wanted to talk to me." The best friends issue hasn't yet applied to Anna; she says

most of her best friends are at her old job, and none of them have yet resigned. But

praise? "We understood praise to mean continued employment. If you weren't getting

fired, you must be doing okay," she says.

Red flags

Employees may choose to work for a company for high-minded or practical

reasons. But many opt to work in a role that gives them an opportunity to do their
best. Harter's research found that turnover is lower in work units in which the

manager adjusts jobs based on individual talents and strengths and actively removes

unnecessary barriers. Perhaps it's the opportunity to do what one does best that

explains this westing number: Organizations that select people who psychologically

fit their jobs can reap significant gains in retention. In these companies, 20% to 40%

fewer managers and skilled or semi-skilled einployees quit than in companies that

don't select for talent.

That's likely what kept Anna in her job for nearly two decades. Though she

says the work environment was awfbl, her job let her do what she did best to the point

that she's renowned for it in her professional circle. "[The manager] doesn't really

know what I do," says Anna, "and that probably kept him fiom telling me what to do.

That helped a lot." Ultimately, the negative work environment drove Anna to resign.

One of the best predictors of turnover is whether an employee has had

opportunities at work to learn and grow. Harter's research team found a telling fact

about people who strongly agree with the 412 items "There is someone at work who

encourages my development," "In the last six months, someone at work has talked to

me about my progress," "My supervisor, or someone at work, seems to care about me

as a person," and "At work, my opinions seem to count." Workers who strongly agree

with these four items were twice as likely to say they have opportunities at work to

learn and grow. What's more, 92% say they plan to be with their companies a year

later.

The costs of turnover

The U.S. Bureau of Labor Statistics has found that the U.S.voluntary turnover

rate is 23.4% annually. It's generally estimated that replacing an employee costs a
business onehalf to five times that employee's annual salary. So, if 25% of a business'

workforce leaves and the average pay is $35,000, it could cost a 100-person firm

between $438,000 and $4 million a year to replace employees.

It's going to take a considerable amount of money to replace Anna. "A new

person will have to learn the job, prove herself or himself [in the industry], and learn

to recognize the subtleties of the job. And that will take time. Meanwhile, the backlog

will grow," she says. Anna estimates it will cost her organization $45,000 to $1 50,000

to replace her, and that money certainly wasn't in the budget.

Not all turnover is bad; new blood is healthy, and new employees can bring

fresh ideas to their companies. But losing a valuable employee costs a business in

time, money, and stress to other employees. Like all unnecessary blood loss, it should

be stemmed whenever possible.

Sadly, too many managers have tied all tourniquets around the wrong limbs,

yet they're wondering why their teams keep bleeding. The beauty of Harter's research

is that it shows companies where to look for problems. The value of the research is

that it gives clues to how those problems can be corrected, if managers have the

courage to fix them.

ITSR 2015: Executive Summary by NASSCOM

As the saying goes "All great changes are preceded by chaos." And this could

not be truer for the global economy today. Beginning with economic turmoil, the

ripple effects of which are still being felt today, to the ongoing political upheavals

across the world. From the erratic movements in global commodity prices, inflation

and unemployment and the constantly shifting business and technology landscape,

volatility is now an ongoing reality than an exception. At the same time, businesses all

over the world now face the digital, connected customer- one who is informed,

decisive and influential. Organizations have no choice but to use technology to

undergo a digital transformation themselves. Digitization can extend reach of

organizations, enhance management decisions, and accelerate development of new

growth engines.

Thus unpredictable economic conditions and rapidly evolving customer

requirements is influencing how and where each dollar is spent; as firms not only look

to get more with less, but also get new, yet unrealized benefits. Customers today

expect technology not only to enable efficient operations, but also creating new

avenues of growth. This scenario is both challenging and exciting, and is ensuring a

dual role for technology, which will be used for both traditional applications that are

anchored around stability and efficiency, and modem systems that focuses on agility,

rapid application evolution, and tighter alignment with business units, This is likely to

dictate global technology spend with an increased need for enterprise digital

transformation as the new way to engage and serve customers.

Global IT-BPM industry:

These trends have immensely impacted the IT-BPM sector along with the

overall effect of changing customer expectation, digitisation and regulatory changes

across the globe. In such a scenario, the worldwide IT-BPM spend was nearly USD

2.3 trillion, a growth of 4.6 per cent over 2013. Software products, IT and BPM

services continued to lead, accounting for over USD 1.25 trillion-55 per cent of total

spend. Hardware spend at USD 1 trillion, accounted for balance 45 per cent. While

Americas remained the largest market, APAC recorded highest growth of 5.1 per

cent, driven by faster growth in BPM services.

Emerging verticals like healthcare, communication and media, government

were key growth drivers for the IT segment during 2014. 2014 saw renewed demand

for overall global sourcing, which grew by 9-10 per cent over 2013, nearly twice the

global technology spend growth. India maintained its leadership position in the

sourcing arena with a share of 55 per cent. New global delivery centres added in 2014

recorded an impressive growth of 49 per cent with over 27 per cent additions being in

India.

Figure 2.12
Indian IT-BPM industry: A nearly USD 150 billion industry

The Indian IT-BPM industry is relentlessly continuing its growth path. The

industry demonstrated flexibility and resolve to adjust to turbulent economic

conditions and experience double digit growth. Overall revenue (exports + domestic)

for FY2015 is expected at USD 146 billion, a growth of -13 per cent over last year,

an overall y-o-y addition of -USD 17 billion. Industry contribution relative to India's

GDP is set to touch an estimated 9.5 per cent and share in total services exports >38

per cent.

Exports (incl. hardware) are likely to record a 12.3 per cent growth to reach

over USD 98 billion, up by -USD 11 billion last year. Domestic IT-BPM market at

USD 48 billion is set to grow faster than exports market at 14 per cent, driven largely

by the addition of eCommerce into the picture. IT services is the largest segment, with

a share of -47 per cent followed by BPM with share of -18 per cent. Soflware

products, ER&D and product development segments together have >16 per share

followed by ecommerce (9.5 per cent) and hardware (-9 per cent). The industry

currently employs >3.5 million - India's largest private sector employer. It is also

playing a key role in promoting diversity within the industry - women employees

(>34 per cent share), 170,000 foreign nationals and a greater share of employees from

non-Tier I Indian cities.

Exports market:

FY2015 is expected to see the exports market at over USD 98 billion,

recording a 12.3 per cent growth over last year. ER&D and product development

segment is the fastest growing at 13.2 per cent, driven by higher value-added services

from existing players and an increased business from GICs. IT services exports are to
grow at industry rate of 12.6 per cent, Value-added services around SMAC -

upgrading legacy systems to be SMAC enabled, greater demand for ERP, CRM,

mobility from manufacturing segment and user experience technologies in retail

segment is driving growth in IT services. BPM is being driven by greater automation,

expanding omni-channel prescnce, application of analytics across entire value chain,

etc.

Exports to USA, the largest market grew above industry average, aided by an

economic revival and higher technology adoption. Demand from Europe remained

strong during the first half of the year, but softened during the second half due to

currency movements and economic challenges. Manufacturing, utilities and retail

growth remained strong as clients increase discretionary spend on customer

experience, digital, analytics, ERP updates and improving overall efficiency. BFSI,

the most mature market experienced cost pressures affecting growth.

The industry is attempting to shift from a linear to a non-linear growth model

and has therefore been following a differentiated growth path. These strategies

include both inward- and outward-looking initiatives. One of the primary strategies

focuses on productIIP development; this is hrther being supported by their

verticalised offerings. Expertise developed in specific verticals is enabling IT-BPM

firms to deliver innovative products and services to customers that in turn facilitates

entry into new markets/ geographies, access to customers, etc. Rapid upscaling of

capabilities around SMAC and other emerging technologies is enabling it to expand

services to existing customers and also attract new customers,

Domestic market:

The need for Indian firms to effectively compete in a globalized world

presents an immense. untapped opportunity for the supply side. As an economy, India

is beginning to stabilise post elections. Overall business confidence is picking up with

the new government in place and its clear policies and economic growth agendas

particularly - Digital India and Make in India, have helped drive a vision of a
technology enabled India.

India is jumping the technology maturity curve and is already a well-

established digital economy - a trend driven largely by consumers. >75 per cent of the

population is mobile enabled, 278 million intemet users (overtaking the US) and a

rapidly multiplying online population, and a USD 14 billion ecommerce market,

which is growing at an average of >30 per cent.

A further push in this direction is coming fiom the government's Digital India

campaign which envisages a USD 20 billion investment covering mobile connectivity

throughout thc country, re-engineering of government process via technology and

enabling e-delivery of citizen services.

The domestic IT-BPM market is rapidly approaching the USD 50 billion

mark. In FY2015,the market is expected to be a little over USD 48 billion, an annual

growth of 14 per cent. This is faster-than-industry growth that is largely being driven

by the growth in ecommerce segment.

IT services (>USD 13 billion) and software products (>USD 4 billion)

segments are the next fast growing segment at 10 per cent and 12 per cent

respectively. IT services is being driven by SMAC-cloud enablement, custom

developing application for mobile; with the return of focus on infrastructure projects
(largely in later half of 2014). there is an uptick in demand for SI and IT consulting.

SMEs are also increasingly opting for managed and data centre services as a cost

saving measure. Software products is growing on the back 8 The IT-BPM Sector in

India: Strategic Review 2015 of demand for mobile app development, security

software, system software, customer analytics products, etc. BPM segment is likely to

grow 8 per cent to USD 3.5 billion; although there is growing demand for knowledge

services, particularly analytics, it remains a CIS dominated segment. BPM is seeing

continuous demand for outsourcing from home-bred firms in the BFSI, telecom,

healthcare, retail, etc.

Figure F2.13

Indian TT-BPM (Domestic+Export) R~wnues

Software Sector Analysis Report:

The global IT sourcing grew by 9%-10% in FYI 5. This was 2x faster than the

growth in total IT spend. Indian IT-BPM industry grew by 13% in FY 15 as per

NASSCOM. The growth projection for FYI6 is 12%-14%. The growth will be driven

by new digital technologies. The adoption of these technologies will bring disruption

to the industry's traditional business model.

 Indian IT companies had a good year in terns of financial performance, driven

by factors like such as digitization, and non-linear models, and the depreciation of the

Indian rupee. Indian IT firms continue to move up the value chain by providing more

end-to-end solutions and engaging more closely with clients. The drive towards

internal cost optimization to improve profitability gathered steam in FYI5 The

industry is unlikely to add employees in the same numbers as it did before.

India's IT industry can be divided into six main components, viz. Software

Products, IT services, Engineering and R&D services, ITESIBPO (IT-enabled

serviceslBusiness Process Outsourcing), Hardware, and e-commerce. Export revenues

continue to drive growth with IT Services. This accounts for about Rs 68 bn of total

revenues followed by BPM at Rs 26 bn, Engineering services at Rs 18 bn,

e-commerce at Rs 14 bn, hardware at Rs 14 bn and Software Products at Rs 6 bn. The

growth in e-commerce (33% YoY) was unprecedented and has given a boost to the

BPM industry. The Indian IT sector will benefit significantly from the government's

schemes like Digital India, Make in India, and Start Up India.

The Indian software sector's value proposition remains unmatched in the

world. Entry level wages remain 8x-lox lower than in developed nations. The

numbers of global delivery centers (GDC) have increased to about 640 in FYI5 in

about 78 countries. About 27% of incremental GDCs were set up in India. India's

global market share grew to 55% by the end of FY 15.

Increasing competition, pressure on billing rates of traditional services and

increasing commoditization of lower-end services are among the key reasons forcing

the Indian software industry to make a fast move up in the software value chain. The
new digital technologies like social media, mobility, analytics, and cloud computing

(SMAC) will permanently change the way Indian IT firms do business.

The new Indian government is emphasizing on better technology enabled

delivery mechanisms for a multitude of government projects. Further, with the new

digital India and start up Indian initiatives being launched, the domestic market for

software services looks bright.

Key points:

Supply: Abundant supply across segments, mainly lower-end, such as ADM.

Lower supply in higher-end areas like ITlBusiness Consulting, but competition is

very tough.

Demand: The global downturn had put considerable pressure on global IT

spending but the situation is now improving.

Barriers to entry: Low, particularly in the ADM & BPO segments as these are

prone to relatively easy commoditization. It's high in value-added services like

ITIBusiness Consulting and R&D where in-domain expertise creates a bamer.

The size of a particular company/scalability and brand-image also creates baniers

to entry; as such firms have built up long-term relationships with major clients.

Competition: Competition is global in nature and stretches across boundaries and

geographies. It is expected to intensify due to the attempted replication of the

Indian off shoring model by MNC IT majors as well as small startups.

Substitution of IT services and products: IT continues to be a driving force

towards all aspects connected with our lives. While a particular technology may

become obsolete and a particular company specializing in it may suffer, the

 obsolete technology can only get substituted by a newer technology offered by the

sameJdifferent player in the ITIITES industry.

Financial Year '15:

r The Indian IT/ITES industry earned revenue of over US$146 bn during FY 15.

Out of this, exports accounted about 67% of the industry's revenue.

In terms of growth by industry verticals, BFSI, TelecodHi-Tech,

Manufacturing, and Retail are the most important at 41 %, 18%, 16%, and 10%

shares respectively.

The USA accounts for about 62% of the export revenue followed by the UK

and Continental Europe, with 17% and 1 1% respectively. Other regions such as

Asia Pacific are catching up, with a contribution of 8%.

At the end of FY15, India's share in the global outsourcing market stood at

55%.

Prospects:

As per NASSCOM, the Indian ITIITES industry is expected to maintain a

growth of 12-14% in FY2016. NASSCOM has also envisaged the Indian ITIITES

industry to achieve a revenue target of USD 225 bn by 2020.

As the global sourcing industry continues to grow and as Indian IT companies

continue to increase market share, outlook for the sector remains robust.

r Emerging protectionist policies in the developed world are expected to affect

the Indian IT companies. Due to US restrictions on visas as well as rising visa

costs, most Indian IT companies are increasingly subcontracting onsite jobs to

local employees in the US. This has adversely affected margins of Indian IT

companies.

Indian IT companies are increasingly adopting the global delivery model. They

are setting up development centers in Latin America, South East Asia and

Eastern European countries to take advantage of low cost and also cater to the

local market. In the US, such centers will help mitigate the risks of the new

immigration bill and increase the probability of winning projects in highly

regulated sectors such as healthcare, government services, utilities etc.

ADM services, which used to provide major chunk of revenues to the domestic

IT players, are getting affected due to the falling billing rates. Hence, the

companies are now venturing into new high value services such as the new

digital services. Large Indian companies like Infosys, TCS, Wipro, Tech

Mahindra, HCL Technologies, and Mindtree will benefit the most from this

trend.

Billing rates are expected to remain under pressure due to commoditization of

traditional services. Therefore, companies are expected to preserve their

margins through effective cost containment measures like shifting more wore

work offshore, improving employee utilization and the increasing use of

automation software.
Retention Strategies in US industries

You go to considerable trouble and expense to identify, interview, and hire

great employees for your organization. So retaining them should also be a top priority.

Luckily, most good retention practices are inexpensive to implement.

Effective retention

To understand how to retain good employees, you first need to know what

they're looking for. Today, the best employees want:

4 Career development opportunities and a chance to grow in their chosen field

J Regular feedback on how both they and the company are doing

4 A chance to contribute directly to the organization and be recognized for doing

SO

J Flexible work schedules that recognize their need for workllife balance

J A good salary or wage and an opportunity to increase it over time

J Benefits tailored to their individual needs

Key strategies

Good retention starts from the time you hire employees to the time they leave

your company. See how tweaking some of your employment practices can have a big

impact on employee retention:

Recruitment and hiring

It's worth spending time and effort on recruiting. When there's a good match

between employees and your organization, retention is less likely to be an issue.

Orientation and on boarding. Again, it's worth having good practices in place.

Treating employees right in the critical early stages of employment has been proven

to enhance retention.

Training and development. Training and development are key factors in helping

employees grow with your company and stay marketable in their field.

Performance evaluation. When employees know what they're doing well and where

they need to improve, both they and your organization benefit.

Pay and benefits. While today many employees tend to rate factors such as career

development higher than pay, good pay and benefits still count.

Internal communication. Effective communication can help ensure that employees

to want to stay with your company. Employees need to know and be reminded on a

regular basis-how the organization is doing and what they can do to help.

Termination and outplacement. Employees who leave on good tenns are much

more likely to recommend your company, and in doing so, help you attract and retain

future employees.

Engage employees to increase retention

Engaging your einployees that is, making sure that they are committed and

productive in their work can benefit you as much as it benefits employees.

If you hire the right employees, chances are good they'll be engaged committed to

your business and happy in their work. But to ensure ongoing engagement, you as an

employer must play a major role, particularly when it comes to communication.

Consider these five strategies:

 & clear on what your business stands for. Your company's mission and

vision and brand must be front and centre in everything you do.

Communicate well and often. Your employees need to know on a continuous

basis how both they and your company are doing.

Understand generational differences. To get the best out of all your

employees, know what motivates different generations.

r Find out what your employees need. Ask your employees on a regular basis

how they're doing, and be ready to follow up on their input.

Empower all employees to do their best. Provide the leadership, resources,

and training your employees need to realize their potential.

Understanding what engages employees can help during all phases of the

employment cycle from recruitment to training to performance assessment and

beyond. It's also much easier to rctain employees who arc engaged and committed to

your company's success.

Strategies for Retaining Employees and Minimizing Turnover

Employees leave organizations for many reasons; oftentimes these reasons are

unknown to their employers. Employers need to listen to employees' needs and

implement retention strategies to make employees feel valued and engaged in order to

keep them. These retention methods can have a significant and positive impact on an

organization's turnover rate. Here we'll take a look at some of these strategies.

According to strategic planning consultant Leigh Branham, SPHR, 88% of

employees leave their jobs for reasons other than pay: However, 70% of managers
think employees leave mainly for pay-related reasons. Branham says there are seven

main reasons why employees leave a company:

1. Employees feel the job or workplace is not what they expected.

2. There is a mismatch between the job and person.

3. There is too little coaching and feedback.

4. There are too few growth and advancement opportunities.

5. Employees feel devalued and unrecognized.

6. Employees feel stress from overwork and have a workllife imbalance.

7. There is a loss of trust and confidence in senior leaders.

Turnover Facts and Figures

Turnover is costly. According to Righ~Management, a talent and career

management consulting firm, it costs nearly three times an employee's salary to

replace someone, which includes recruitment, severance, lost productivity, and lost

opportunities. Life Work Solutions, a provider of staff retention and consulting

services, provides the following turnover facts and rates:

r Over 50 % of people recruited in to an organization will leave within 2 years.

One in four of new hires will leave within 6 months.

Nearly 70% of organizations report that staff turnover has a negative financial

impact due to the cost of recruiting, hiring, and training a replacement

employee and the overtime work of current employees that's required until the

organization can fill the vacant position.

r Nearly 70 % of orgai~izationsreport having difficulties in replacing staff

 Approximately 50% of organizations experience regular problems with

employee retention.

From these statistics it's clear that it's important to develop a retention plan to retain

employees and keep turnover low.

Retention Methods

As explained by EA Consulting Group in a recent white paper, the dilemma

facing organizations is whether to invest more time and money fine-tuning their

recruitment strategy or to pay extra attention to retaining the talent they already have.

Recruiting new staff is expensive, stressful and time-consuming. Once you have good

staff it pays to make sure they stay (Main, 2008).

Think of retention as re-recruiting your workforce. Recognize that what

attracts a candidate to a particular job is often different from what keeps that person

there. While salary certainly is a key consideration for potential employees, pay alone

won't keep them in a job (Angott, 2007). Advantageous aspects other than strictly

compensation attract good employees; something more than a number retains them.

Today employees are looking for a career package, including a comfortable company

culture, career path, diversity of responsibilities, and a workllife balance (Grifiths,

2006).

Here are some effective methods employers utilize in order to keep employees

happy and part of thcir organization instead of looking for employment opportunities

elsewhere.

Training. Training employees reinforces their sense of value (Wingfield, 2009).

Through training, employers help employees achieve goals and ensure they have a

solid understanding of their job requirements (Maul, 2008).

78
Mentoring. A mentoring program integrated with a goal-oriented feedback system

provides a structured mechanism for developing strong relationships within an

organization and is a solid foundation for employee retention and growth (Wingfield).

With a mentoring program, an organization pairs someone more experienced in a

discipline with someone less experienced in a similar area, with the goal to develop

specific competencies, provide performance feedback, and design an individualized

career development plan (Goldenson, 2007).

Instill a positive culture. A company should establish a series of values as the basis

for culture such as honesty, excellence, attitude, respect, and teamwork (IOMA,

2008). A company that creates the right culture will have an advantage when it comes

to attracting and keeping good employees (Main).

Use communication to build credibility. No matter what the size of the

organization, communication is central to building and maintaining credibility. Many

employers get communication to "flow up" through a staff advisory council (or

similar group) which solicits andlor receives employees' opinions and suggestions

and passes them on to upper management (IOMA). It's also important for employees

to know that the employer is really listening and responds to (or otherwise

acknowledges) employee input.

Show appreciation via compensation and benefits. Offering things like competitive

salaries, profit sharing, bonus programs, pension and health plans, paid time off, and

tuition reimbursement sends a powerful message to employees about their importance

at the organization. The rewards given to employees must be meaningful in order to

impact their perception of the organization and therefore have a marked influence on
its retention efforts. Moreover, if an organization promises a reward, it should keep

that promise (Gberevbie, 2008).

Encourage referrals and recruit from within. Having current employees offer

referrals could help minimize confusion of job expectations. Current employees can

realistically describe a position and the environment to the individual hdshe is

referring. Another way an employer can lessen the impact of turnover is to hire from

within, since current employees have already discovered that they are a good fit in the

organization (Branham, 2005).

Coachingtfeedback. It's important for companies to give feedback and coaching to

employees so that their efforts stay aligned with the goals of the company and meet

expectations. During an employee's first few weeks on the job, an employer should

provide intensive feedback. Employers should also provide formal and informal

feedback to employees throughout the year (Branham).

Provide growth opportunities. An organization should provide workshops,

software, or other tools to help employees increase their understanding of themselves

and what they want from their careers and enhance their goal-setting efforts

(Branham). It's important to provide employees with adequate job challenges that

will expand their knowledge in their field (Levoy, 2007). According to Right

Management, employees are more likely to stay engaged in their jobs and committed

to an organization that makes investments in them and their career development.

Make employees feel valued. Employees will go the extra mile if they feel

responsible for the results of their work, have a sense of worth in their jobs, believe

their jobs make good use of their skills, and receive recognition for their contributions

(Levoy),
Employees sbould be rewarded at a high level to motivate even higher

performance. The use of cash payouts could be used for on-the-spot recognition.

These rewards have terrific motivational power, especially when given as soon as

possible after the achievement. It's important for employers to say "thank you" to

employees for their efforts and find different ways to recognize them. Even

something as simplc as a free lunch can go a long way towards making employees

feel valued.

Listen to employees and ask for their input as to what rewards might work best

at your organization. Conduct meetings and surveys to enable employees to share

their input (Branham). Most team members will work harder to cany out a decision

that they've helped to influence.

Lower stress from overworking and create worktlife balance. It's important to

match worklife benefits to the needs of employees. This could be in the form of

offering nontraditional work schedules (such as a compressed work week,

telecommuting, and flextime) or extra holidays. When work-life balance is structured

properly, both the employee and employer come out ahead. For example, the

employer will experience more productivity in the workplace because employees will

be less stressed, healthier, and thus, more productive (Wingfield). Encouraging

employees to set worwlife goals, such as spending more time with their children,

communicates that you really do want them to have a life outside of work and achieve

a healthy worwlife balance.

Foster trust and confidence in senior leaders. Develop strong relationships with

employees from the start to build trust (Stolz, 2008). Employees have to believe that

upper management is competent and that the organization will be successfil. An

employer has to be able to inspire this confidence and make decisions that reinforce

it. An employer cannot say one thing and do another. For example, an employer

shouldn't talk about quality and then push employees to do more work in less time. In

addition, employers need to engage and inspire employees by enacting policies that

show they trust them, such as getting rid of authoritarian style of management

(Branham).

Conclusion

It's clear that having proper retention strategies is key in order to retain

employees. According to Mike Foster, founder and CEO of the Foster Institute, in

order to foster an environment that motivates and stimulates employees, managers

need to incorporate motivation-building practices into their corporate culture. These

practices include listening to employees and respecting their opinions, basing rewards

on performance, and being available to them for everything from listening to their

ideas and concerns to assisting them with their career advancement.

Employees need to feel valued and appreciated, be given feedback, provided

with growth opportunities, be given work-life balance options, and have trust and

confidence in their leaders (Branham). All of these retention strategies are beneficial

when an employer wants to keep employees within an organization and keep costs of

turnover low.

5 ways to increase employee retention and reduce turnover

If you want to be a successful business you need to hit your goals. To hit your

goals you need more than the right talent, you need that talent to perform and to keep

on performing; to stay committed. You can't hit your goals without a committed

team.
 This is why it's important to ensure you make not only the right hire, but that

you create a culture that will make them want to stay.

With a job market full of candidates (congrats, college graduates - sorta!) -

why should you care about reducing turnover when you can just replace headcount?

I . On average, it costs you their salary x 150% to replace each person. (250% if

you're an executive).

2. You lose in-house knowledge that is not easily or cheaply replaced.

3. You've lost momentum towards rcaching your goals.

Hiring someone who is a skills and culture fit to join your team is only half the

battle. To get talent to stay - reduce turnover - you need to make sure your culture

supports engaging and retaining your talent.

So how can you increase employee retention and reduce turnover?

1. Communication - Create a culture of transparent and open communication.

Maintaining open lines of communication between leadership and employees goes a

long way to increasing employee commitment. Employees need opportunities to feel

heard. Allowing for interdepartmental communication, reducing silos, also makes

employees feel less isolated. Open communication also helps employees see how their

work contributes to the bigger picture.

2. Recognition - I've said it before and I'll say it again - recognize, recognize,

recognize! People have a fundamental human need to feel valued, heard and

appreciated - particularly when they feel they've done a great job. If you're not sure

how to recognize for a job well done - ask your people. Without an understanding of
your people, behaviors, and what engagement and rewards strategies work for best for

your culture, reducing turnover can be even more difficult.

-
3. Processes Your people are just as likely as your customers to get pissed off by

poor or redundant processes. If you want to reduce turnover, develop transparent and

easy to follow processes - and train your people on how to execute them. You want to

design processes that help bolster a high performance culture not inhibit one.

4. Leadership - According to one study 80% of employee turnover resulted from the

environment created by a manager as opposed to the company at large. So it's critical

to work closely to make sure there's a consistent open line of communication between

employees and managers, and that managers are working collaboratively and

positively with their employees to reduce turnover. Trusted relationships are key.

Leadership should be authentic, approachable, hotlest, and supportive.

5. Training - For employees to remain engaged and committed, they need to feel they

have the skills to do their job. To help determine what type of training may be needed,

think about what types of knowledge and learning opportunities can help them better

perform their jobs? Most employees don't want to perform poorly, they often just

haven't been provided with the training needed. Ask what types of knowledge and

learning opportunities make them feel challenged as individuals? Collect the data and

act on it. Offer options based on cmployee input. One of the quickest ways to reduce

turnover and increase performance is to increase engagement.

At the end of the day - you're only as successful as your people. Do what you

can to reduce employee turnover and keep the good talent. Not only will your budget

thank you, but so will your employees and customers.

Previous research studies on Employee Retention

Iksearch studies were analyzed, where appropriate, to present past findings

and linkages to the cment study or gaps in the studies that present opportunities for

future research.

Edie V. Slugoski in 2008 through his research study "EMPLOYEE

RETENTION: DEMOGRAPHIC COMPARISONS OF JOB EMBEDDEDNESS,

JOB ALTERNATIVES, JOB SATISFACTION, AND ORGANIZATIONAL

COMMITMENT" recommended the below.

The first recommendation is for Crown leaders to create employee retention

programs based on the overall findings of this study and customize the programs

giving consideration to the particulars of the findings for the study. The reports show

intent to stay, rankings, and employee ratings of the factors and sub-factors

significantly related to intent to stay.

The vast differences in findings among the demographic variables suggest a

need for employers to recognize and understand the varying needs of their employees

when creating programs and policies to improve employee retention in their

organizations. one common plan for all employees will likely not address all

employees' needs. Rather, using the findings from this study to build general

employee retention programs with customized elements that focus on targeted

demographic categories should improve the overall effectiveness of the programs.

The second recommendation for is, after targeting, researchingdeveloping, and

implementing employee retention programs based on the findings of this study, to

track results by replicating the study in the same six organizations. Ongoing

r~licationmay provide the particulars for m n t i n ~ o ui~m p v m e n t of mployee

retention Programs and policies as well as provide information regarding changes and

trends in employee retention motivations.

The third recommendation is to investigate the reasons employees who are

Traditionalists, have some high school education, or are executive level stay. Without

understanding the reasons enlployees in these three categories stay, leaders may have

difficulty creating effective employee retention programs for these groups.

Recommendations for Corporate Leaders, Human Resource Practitioners, and

Policy Makers Corporate leaders, human resource practitioners, and policy makers

should ascertain the reasons for staying from their employees, including the effects of

job satisfaction, job alternatives, job embeddedness, and organizational commitment

on intent to stay, by demographic category, prior to creating and implementing

employee retention programs and policies

Adrian Butler in his Doctoral research (WHY THEY STAY: FACTORS

THAT INFLUENCE INFORMATION TECHNOLOGY EMPLOYEES'

RETENTION DURING MERGERS, ACQUISITIONS, AND DIVESTITURES) in

2009 concluded that for those employers who are concerned about retention, focus on

methods to enhance employees' positive work experiences as they relates to these

factors is warranted. If employees are not satisfied, they are more likely to leave the

organization.

It is incumbent upon management to figure out what it takes to keep them.

and Fmatt in their 2000 study of retention and career motives of IT

employees, present a model based on the theory of psychological contracts; the

purpose of their study was to investigate IT employees' staying and leaving

behaviors. They found that variables including (a) career Stage, (b) p r e f m d length of

relationship, and (c) mp]oyee motives were important individual factors that helped

86
form the psychological contract and exhibited a significant effect on the employees'

intent to stay or leave their current employer.

Thomas Lee and Terance Mitchell developed the "unfolding model of

voluntary turnover'' (1994, p. 52.). They posited that turnover is affected by a string of

events: a shock, a script, an image violation, job satisfaction variances, and

searchlevaluation of alternatives. The model outlined that the majority of employees

who voluntarily leave a job do so because of a shock (Spreitzer & Mishra, 2002). A

shock is a traumatic event, such as a merger, acquisition, or divestiture which triggers

thoughts of quitting a job. An engaged script follows the shock in which the employee

engages a preexisting plan of action after experiencing the shock. Next, the image

violation occurs when the employee's "values, goals, and strategies for goal

attainment" (Lee, Mitchell, Holtom, McDaniel, & Hill, 1999, p. 451) do not fit within

the new realities caused by the shock. Job satisfaction is affected when employees do

not believe the job provides them with the benefits (psychological, financial, and so

forth) they wish to have (Niederman et al., 2006).

Vohra Shweta Vaibhav from Pune University through her Research(2016)

"A study of employee engagement practices in select IT companies in and around

Pune" Proposed that almost all IT companies are quite passionate about the concept

and the practice of 'Engaging' their employees, It appears that these organizations

have realized how much important this concept of 'Engagement' is, not only for

achieving its ultimate goals but also for sustaining itself in a market scenario where

both attracting as well as retaining human talent is becoming challenging day by day.

Since Employee Engagement has gained a lot of importance in the recent years, the IT

companies are spending a substantial amount of their time, effort and resources in

those p r a a i m which are assumed to improve Employee Engagement. In such a

scenario, it b~comesimportallt to do a reality check as to w h e h r the practices are

yielding the right results Or not. Similarly it also throws light on h e Drivers that play

a more important role in 'Engaging' various levels of IT employees viz. Junior Level,

Middle Level and Senior Level. In the end the rewards that can be expected out of

such streamlined and focused 'Engagement' efforts are many. An engaged workforce

is a happy and a loyal workforce. It definitely gives an extra edge to the organization

helping it remain competitive.

Bharagavi VR in her Research study (2016) "A Study on Employee

Engagement and Its Impact on Organizational Effectiveness In Select Global

Companies In Bangalore City" concludes that The study indicates that employees are

not highly engaged because of aspects such as discontentment regarding the

organization culture, inadequate resources support, lack of co-employee's support,

dissatisfaction in the actions and behavior of the senior management, annoyance

concerning company Human Resources policies and procedures and distressing

opportunities. With reference to Organizational Effectiveness a majority of the

employees' agreement level with regard to return on investment, retention of

employees and corporate social responsibility was found to be at moderate level.

Akinfemisoye Tolulope Motunrayo from University of Leeds - 2015 through

his research "Employee engagement practices and job satisfaction in Britain :

theoretical and empirical contributions" suggest that British employees are more

likely to be satisfied with different facets of the job when allowed to participate and

influence final decisions and rewarded for effort individually which helps in retaining

employees, The effects of these engagement practices are strengthened whm

employees work in non-discriminatory environments. Rwvaluating individual forms

of mgagement practices in the context of the demand-control model, we

obsewe from the logic estimations that mployccs are more likely to be satisfied in

low strain jobs than in high strain jobs. Further, Equal Opportunities (EO) policies an

observed to be important practices in the workplace. These results are achieved by

extending and testing the demand-control model, accounting for job demand, control

and EO policies.

Sandhya S through her research(2015) "A study on role of leadership in

Recognition and retention management With special reference to it industry in

Kamataka region" concluded that The major outcomes of this study are, Leaders

recognize employees irrespective of gender, age, years of service, position andlor

monthly income in the company. The compensation packages being offered, career

development opportunities, motivating work environment, improving employee

relationships, workplace conveniences, employee benefit programs, rewards and

recognitions ,employee recreational facilities implemented by the leaders in the

organization are not up to the expectations of the employees. However, top

management support throuj& supervision and leaders work practices are on par with

the expectations of the employees.

Hendriatta Chau yuan Wong (University of Manchester - 2015) through the

research "The influence of employer branding on employee performance" mentioned

the key observations as Five themes emerged to reflect the employer brand promise

content factors that could influence performance and retain employee in the

Organization. They are the factors of personal sustainability, personal connectedness

and belonging, opportunities and growth, personal stake and influence, as well as

sipificance and esteem. Three themes emerged to reflect the employment benefit

materialization factors. They are brand championship, branding control, and

st&eholder selection and interaction. Quantitative results suggest that as a whole,

statistically significant, positive, and generally weak to moderate influence exists

between employees' perceived level of employer brand promise fulfillment and their

organizational citizenship performance. The influence on task perfommce is much

weaker.

sudheendra Rae (2014) through his research has proposed that IT

organizations should concentrate on Flexible work hours, employee engagement,

creating sense of ownership and boosting employees performance so that employee

does not feel the need of quitting companies and thus an environment for employee

retention is created.

Heather Rowley in 2014 though the research "Employee ownership:

evaluating the factors contributing to successful employee engagement" concludes

that concludes that employee engagement enhances the experience of employee

ownership, and employee ownership influences employee engagement which inturn

helps the employers to retain their employees. Evidence presented confirms the claims

of Postlethwaite et al. (2005) and Matrix Evidence (2010) that employee ownership is

influential to employee engagement

Sujata Bolake though her research (2014) "Study on employee job satisfaction

in IT Industry Pune" concluded that if the company can create a work -culture where

the employees share their knowledge, get respect as well as appreciation, the

employees will be more encouraged to share knowledge with others peers. Which in

turn will improve the competitiveness of the organization and employer can become

employer of choice and employee will become loyal to employees which helps

Organization to retain the employee. Thus, it is observed that linkages successfhlly

demonstrate their interactive and interdependent dynamic characteristics of the

 37 b610
determinants. Finally, the study has resulted into two innovative Job Satisfaction

models for eventually accomplishing organizational excellence.

Tamer F Elewa in 2013 from Robert Gordon University through the research
"Globalizing employee engagement : myths and reality : a Middle East" concludes

that current approaches to measuring employee engagement are taking engagement

drivers as common for granted, and this concept should be revised. The author

recommends that leaders should investigate and run an analysis of engagement drivers

before any engagement survey is undertaken which will help in identifying the

catalyst for employee retention. A new tool has been presented by the research and

was tested by a number of organizations. This tool takes into account building

engagement questionnaires based on key drivers analyzed from specific work

cultures.

R. Shanmugham (2012) though his study "Attrition in IT industry - An

analytical approach with special reference to Chennai" said that the most important

aspect of inculcating the retention culture is to emphasize upon the employees that the

company values them.

Allan (2004) highlighted the accrued benefits of retention strategies to include

reduction in cost of labour turnover, keeps company knowledge, saves interruption of

service/production; improves organizational goodwill, enhances efficiency of business

and operation, However, Mitala (2003) in his work on retention strategies and

recruitment provided what should be the focus of any retention strategy in Africa

which are job security, competitive pay, education and training or going education,

recognition and reward, placement, job involvement and adequate facilitation work

environment and leadership style.

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91 Fii
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 2011 W a l d Alnaqbi from Edith Cowan University through his research

"The ~ I a t i o n s hbetween
i~ human resource practics and employe retention in public

organisations : an exploratory study conducted in the United Arab Emirates"

concluded that The current high rate of employee turnova in the UAE is expensive.

The role of HR departments is to satisfy the needs of employees through the provision

of training, rewards systems, equality of treatment, and benefits, among others, to

foster employee commitment and reduce the rate of employee turnover.

In 2009 Barbara Slavich through the research "DISCIP1,MINO

CREATIVITY: SOCIAL MECHANISMS AND HUMAN RESOURCE

MANAGEMENT PRACTICESIN CREATIVITY-DRIVEN ORGANIZATIONS"

suggested that To survive in a hypcrcompetitive, uncertain and dynamic business

context, organizations require innovation. Nowadays, creativity has been recognized

as the real engine of this renewal and the vital source of firms' competitive advantage.

This is particularly true for the cultural industry, which finds its origin in individual

creativity and where creativity is the central input for the production process. This

kind of Innovation and creativity process engines can keep the employee stick to the

Organizations.

In 2013 Santoshi Sen Gupta, Erom JAYPEE INSTITUTE OF

INFORMATION TECHNOLOGY, NOIDA through her research " Employee

Attrition and Retention: Exploring the Dimensions in the urban centric BPO Industry

Synopsis " suggested the below strategies.

Karen L. Ferguson from University of Louisville through her research

"Human resource management systems and firm performance" in 2006 suggests that

there is positive associations between employee skills, motivation, job performance,

and organizational performance. Further, motivation and human resource

organizational culture which play a major role in shaping m p l o y ~ cengagement. 7'he

shdy has contributed in identifjing organizational integration, supervisory

communication, personal feedback, corporate information, communication climate,

co-worker communication, media quality and subordinate communication as critical

divers of organizational communication- satisfaction of employees, which also

increase employee engagement. This research has shown that employee engagement

can be ascertained by thrcc important dimensions. The study revealed that employee

engagement is highest among the co-operative banks, followed by nationalized and

private banks which shows employee retention is high in these organizations.

Christopher M. Harris from the University of Texas through his research(in

2009) "Strategic human resource management at the crossroads: Relationships among

human resource capital, overlapping tenure, behaviors, and performance " addresses a

gap in the strategic human resource management literature by examining human

resource behaviors. Following thc systems perspective of strategic human resource

management this study tested relationships among human capital, social capital,

human resource behaviors, loyalty and performance.

Reciprocity is the key, Retention must be part of the organization's DNA,

Loyalty is never given, organizations must be seen as employers of choice. Stars

include more than just the top 10% or 1, Each generation of employees has different

reasons for staying. Mentor widely and in both directions, Train intelligently, Create

a development culture, Recognize managers who keep employees.

Three major developments in employee retention research in the 1990s and

2000s included a new theory, a new model, and a new construct. First, was the

creation of a three-component theory of organizational commitment, including

affective, continuance, and normative commitment components, along with scales for
m e m ~ n gthe three WmPonents (Meycr & Allen, 1997). Mcyn. md Allm's lhmy

has been recognized as a valid and reliable measure of organizational commitmmt

(Tayyeb & Riaz, 2004).

Second, Lee et al. (1999), developing a new model called the unfolding model

of employee turnover, found the reasons employees leave were different h m job

dissatisfaction and job alternatives (Lee et al., 1999). Maertz and Campion (1998) and

Peterson (2004) recognized the unfolding model as influential in bringing new

perspectives to employee turnover.

The third major development was a new construct of employee retention

called job ernbeddedness, capturing reasons employees stay with employers that were

different from job satisfaction, organizational commitment, and lack of job

alternatives (Mitchell et al., 2001b). Holtom and Inderrieden (2006) claimed the

theory of job embeddedness added richness to the st:idy of employee turnover.

Research on employee tumover was dispersed and disorderly. Price (1977)

undertook a comprehensive codification of variables from literature found to correlate

with employee turnover, a study later identified by Lee and Mowday (1987) as

significant in advancing employee retention research. Price (1977) distinguished

between correlates of tumover, "indicators which are related to turnover", and

determinants, "analytical variables which are believed to produce variations in

turnover" and emphasized the goal was to create "an orderly and compact

arrangement of substantive findings" ,not procedures. Correlates were deemed factual

in nature, where determinates were subjective and varied among individuals.

From literature review it is recognized that human resource management play

pivotal role in retention. Researchers' finds that human resource

management practices in compensation Br rewards, job security, training %

96
developments, supenisor support culhue, work environment and organization justice

can help to rduce absenteeism, employee retention and better quality work (Meyer

and Allen, 1991; Solomon, 1992; Snell and Dean, 1992; Arthur, 1994; Snell and

~ o u n d t 1995;
, MacDuffie, 1995; Delaney and Huselid, 1996; Ichniowski, Shaw and

Premushi, 1997). According to Accenture (2001) study on high performance issue

find that organization strategy regarding employee retention primarily start from US,

Europe, Asia than Australia. According to Osteraker (1999), the employee satisfaction

and retention are considered the cornerstone for success of organization. Past study

divided it into social, mental or physical Dimension. The grouping is based on social

contacts at works, characteristics of the work task or the physical and material

circumstances associated with work. The retention factors of the mental dimension are

work characteristics, employees are retaining by flexible tasks where they can use

their knowledge and see the results of their efforts. The social dimension refers to the

contact employees have with other people, both internal and external. The physical

dimension consists of working conditions and pay. In Factors Affecting Employees

Retentions Abasyn Journal of Social Sciences; Vo. 4 No.] Muhammad lrshad 86

order to retain employees the organization need to gain information about the

dynamics that characterized the motivation to work. Van Knippenberg (2000),

suggested that employee become more loyal and stay in the organization when they

identify themselves within a group and contribute to the performance as a group. This

suggestion relies on work performed by Locke and the goal setting theory he

developed.
The goal is team performance and the individual feeling part of the group. The

focus of Locke was on the goal, but in order to reach the goal one must associate

oneself with the group and task. Glen (2006),de~cribaanother f i t ~ ~ ~ e wmanager

ork
can use when communiating with its employees to know that the cause of retention
cmnsist of nine different predictors; organizational processes, role challenge, values,

work, life balance, information, stakdle~eragdteco~nition,

management, work

environment and product or service. Fitz-enz (I 990) recognized that only one factor is

not responsible in management of employee's retention, but there is several factors

influenced in employee's retention which need to manage congruently i.e.

compensation & rewards, job security, training & developments, supervisor support

culture, work environment and organization justice etc. Accordingly, organization

utilizes extensive range of human resource manngctnent factors influence in employee

commitment and retention (Stcin, 2000; Beck, 2001; Clarke, 2001; Parker and

Wright, 2001). This study also have objective to find out the factors which is more

influence in employees retention, for this purpose these factors are categorized into

organizational factor i.e, supervisor support, organizational justice, organization

image and work environment and Human resource factors i.e. employee value match,

training & development, remuneration & reward, job security and employees

promotion aspect.

The present study focuses on how the demographic variables affect employees

perception on the employee retention strategies and this particular area was not been

focused by the previous research studies. The current study sheds light on which of

those employee retention strategies are more prominent in the current IT industry and

the feedback of employees on those strategies to an extent that which one is working

and which one is not. This study analyses the employee's responses on the retention

sbategies and proposes suggestions, recommendations on those strategies where

employees felt that is a need to improve. The past studies have not completely

focused on this point and hence finding out the strategies which needs more emphasis
& weightage formed the basic premise of this research. The most important aspect of

this research is that the previous studies focused on tier I & 2 companies having

thousands of employees. Whereas this research study is focused on organizations

which are CaptivesIGlobal in-house centers having employee strength between 250

and 600, which is comparatively lower than that of top tier companies.