EMPLOYEE RETENTION

Preface
The objective of the thesis is “To study employee retention, identify
areas of excellence and areas needing improvement; and provide suggestions
for such improvement”. The aim of this Thesis is to implement strategies
successfully, analyze their working and performance, and highlight where they
are doing well, while providing suggestions and recommendations for
improvement. Employee retention is very important to study because to survive
in such a competitive market is very difficult without the permanent support of
an employee that is to retain employee.

GROUP MEMBERS
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NAME ROLL NO’S SIGNATURE

ANSARI IRSHAN 112
ANSARI SALMAN 113
ATHANIA MOHAMMED 114
ANSARI TEHSIN 115
SHAIKH ALTAMASH 116
SHAIKH MISBAH 117
KONKARE NEHA 118

“High performers are like frogs in a wheelbarrow-

They can jump out at any time”
-Mc Kinsey & Company Study.

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Contents
Serial number Topics
1) Introduction to retention
2) Employee retention
3) Importance of employee retention
4) What makes employee leave
5) Employee retention strategies
6) Retention determinants
7) Manager role in retention
8) Retention myths
9) Benefits of attrition
19) Retention success mantras
20) Employee turnover
21) Ways to reduce employee turnover
22) Facts about employee turnover
23) Importance of relationship in
employee retention program
24) How to increase employee retention
25) HR management employee retention
26) Employees satisfaction regarding
monetary benefits provided by the
company
27) How to improve employee retention
28) 3 categories of employee
29) Managing employee retention
30) Implement retention strategy
31) Case study1
32) Case study2
33) Conclusion
34) Bibliography

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INTRODUCTION TO “RETENTION”
Executive Summary

Employee retention is a process in which the employees are encouraged to

remain with the organization for the maximum period of time or until the
completion of the project. Employee retention is beneficial for the
organization as well as the employee. Employees today are different. They are
not the ones who don’t have good opportunities in hand. As soon as they feel
dissatisfied with the current employer or the job, they switch over to the next
job. It is the responsibility of the employer to retain their best employees. If
they don’t, they would be left with no good employees. A good employer
should know how to attract and retain its employees.
Most employees feel that they are worth more than they are actually paid.
There is a natural disparity between what people think they should be paid
and what organizations spend in compensation. When the difference becomes
too great and another opportunity occurs, turnover can result. Pay is defined
as the wages, salary, or compensation given to an employee in exchange for
services the employee performs for the organization. Pay is more than "dollars
and cents;" it also acknowledges the worth and value of the human
contribution. What people are paid has been shown to have a clear, reliable
impact on turnover in numerous studies. Employees comprise the most vital
assets of the company. In a work place where employees are not able to use
their full potential and not heard and valued, they are likely to leave because
of stress and frustration. In a transparent environment while employees get a
sense of achievement and belongingness from a healthy work environment,
the company is benefited with a stronger, reliable work-force harboring bright
new ideas for its growth

“Genius begins and labor finishes” is an old saying that would be profoundly significant if
interpreted in the context of corporate and large employers. Concepts, visions and decisions
do take shape within the four walls of corporate boardrooms. However, it is only the
employees that implement and give tangibility to the corporate’s mission. In other words if
it is the highest rung in the corporate hierarchy that has ideas, it is the employees’ rung that
has the chisel to bring the vision to life.

In the best of worlds, employees would love their jobs. Like their co-workers, work hard for
their employers; get paid well for their work, ample chances of advancement and flexible
schedules so they could attend to personal or family needs when necessary. And never
leave.

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But then there’s the real world. And in the real world, employees, do, leave, either
because they want more money, hate the working conditions, hate their co-workers, want a
change, or because their spouse gets a dream job in another state. Unlike inanimate
products and systems that subject themselves to fine tuning without any reaction,
employees would not subject themselves to any measure taken without reaction and
analysis. Hence managing human resources, particularly retaining them, is an art that calls
for special skills and strategies.

Employee turnover is one of the largest though widely unknown costs an organization faces.
While companies routinely keep track of various costs such as supplies and payroll, few take
into consideration how much employee turnover will cost them: Ernst & Young estimates it
costs approximately $120,000 to replace 10 professionals. According to research done by
Sibson & Company, to recoup the cost of losing just one employee a fast food restaurant
must sell 7,613 combo meals at $2.50 each. Employee turnover costs companies 30 to 50%
of the annual salary of entry-level employees, 150% of middle-level employees, and up to
400% for upper level, specialized employees. Now that so much is being done by
organizations to retain its employees, why is retention so important? Is it just to reduce the
turnover costs? Well, the answer is a definite no. It’s not only the cost incurred by a
company that emphasizes the need of retaining employees but also the need to retain
talented employees from getting poached.

Retention involves five major things:

Ø Compensation
Ø Environment
Ø Growth
Ø Relationship
Ø Support
Compensation

Compensation constitutes the largest part of the employee retention process. The
employees always have high expectations regarding their compensation packages.
Compensation packages vary from industry to industry. So an attractive compensation
package plays a critical role in retaining the employees. Compensation includes salary and
wages, bonuses, benefits, prerequisites, stock options, bonuses, vacations, etc. While
setting up the packages, the following components should be kept in mind:

Salary and monthly wage: It is the biggest component of the compensation package. It is
also the most common factor of comparison among employees. It includes

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Basic wage
House rent allowance
Dearness allowance
City compensatory allowance

Salary and wages represent the level of skill and experience an individual has. Time to time
increase in the salaries and wages of employees should be done. And this increase should
be based on the employee’s performance and his contribution to the organization. Bonus:
Bonuses are usually given to the employees at the end of the year or on a festival. Economic
benefits: It includes paid holidays, leave travel concession, etc.Long-term incentives: Long
term incentives include stock options or stock grants. These incentives help retain
employees in the organization's startup stage. Health insurance: Health insurance is a great
benefit to the employees. It saves employees money as well as gives them a peace of mind
that they have somebody to take care of them in bad times. It also shows the employee that
the organization cares about the employee and its family. After retirement: It includes
payments that an Employee gets after he retires like EPF (Employee Provident Fund) etc.
Miscellaneous compensation: It may include employee assistance programs (like
psychological counseling, legal assistance etc), discounts on company products, use of a
company cars, etc.

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EMPLOYEE RETENTION
Employee Retention involves taking measures to encourage employees to remain in the
organization for the maximum period of time. Corporate is facing a lot of problems in
employee retention these days. Hiring knowledgeable people for the job is essential for an
employer. But retention is even more important than hiring. There is no dearth of
opportunities for a talented person. There are many organizations which are looking for
such employees. If a person is not satisfied by the job he’s doing, he may switch over to
some other more suitable job. In today’s environment it becomes very important for
organizations to retain their employees.

The top organizations are on the top because they value their employees and they know
how to keep them glued to the organization. Employees stay and leave organizations for
some reasons.

Employee retention is a process in which the employees are encouraged to remain with
the organization for the maximum period of time or until the completion of the project.
Employee retention is beneficial for the organization as well as the employee.

The picture states the latest statement that corporate believes in “Love them or lose them”

The reason may be personal or professional. These reasons should be understood by the
employer and should be taken care of. The organizations are becoming aware of these
reasons and adopting many strategies for employee retention.

Employees today are different. They are not the ones who don’t have good opportunities in
hand. As soon as they feel dissatisfied with the current employer or the job, they switch
over to the next job. It is the responsibility of the employer to retain their best employees. If
they don’t, they would be left with no good employees. A good employer should know how
to attract and retain its employees.

Retention involves five major things:

1) COMPENSATION 2) ENVIRONMENT 3) GROWTH

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4) RELATIONSHIP 5) SUPPORT

Employee retention would require a lot of efforts, energy, and resources but the results are
worth it.

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IMPORTANCE OF EMPLOYEE RETENTION

Now that so much is being done by organizations to retain its employees, why is retention
so important? Is it just to reduce the turnover costs? Well, the answer is a definite no. It’s
not only the cost incurred by a company that emphasizes the need of retaining employees
but also the need to retain talented employees from getting poached.

The process of employee retention will benefit an organization in the following ways:

1. The Cost of Turnover: The cost of employee turnover adds hundreds of thousands of
money to a company's expenses. While it is difficult to fully calculate the cost of
turnover (including hiring costs, training costs and productivity loss), industry experts
often quote 25% of the average employee salary as a conservative estimate.

2. Loss of Company Knowledge: When an employee leaves, he takes with him valuable
knowledge about the company, customers, current projects and past history
(sometimes to competitors). Often much time and money has been spent on the
employee in expectation of a future return. When the employee leaves, the
investment is not realized.

3. Interruption of Customer Service: Customers and clients do business with a

company in part because of the people. Relationships are developed that encourage
continued sponsorship of the business. When an employee leaves, the relationships
that employee built for the company are severed, which could lead to potential
customer loss.

4. Turnover leads to more turnovers: When an employee terminates, the effect is felt
throughout the organization. Co-workers are often required to pick up the slack. The
unspoken negativity often intensifies for the remaining staff.

5. Goodwill of the company: The goodwill of a company is maintained when the

attrition rates are low. Higher retention rates motivate potential employees to join
the organization.

6. Regaining efficiency: If an employee resigns, then good amount of time is lost in

hiring a new employee and then training him/her and this goes to the loss of the
company directly which many a times goes unnoticed. And even after this you
cannot assure us of the same efficiency from the new employee.

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WHAT MAKES EMPLOYEE LEAVES?

Employees do not leave an organization without any significant reason. There are certain
circumstances that lead to their leaving the organization. The most common reasons can be:
Job is not what the employee expected to be: Sometimes the job responsibilities don’t come
out to be same as expected by the candidates. Unexpected job responsibilities lead to job
dissatisfaction.

1. Job and person mismatch: A candidate may be fit to do a certain type of job which
matches his personality. If he is given a job which mismatches his personality, then
he won’t be able to perform it well and will try to find out reasons to leave the job.
2. No growth opportunities: No or less learning and growth opportunities in the current
job will make candidate’s job and career stagnant.

3. Lack of appreciation: If the work is not appreciated by the supervisor, the employee
feels de-motivated and loses interest in job.

4. Lack of trust and support in co-workers, seniors and management: Trust is the most
important factor that is required for an individual to stay in the job. Non-supportive
co-workers, seniors and management can make office environment unfriendly and
difficult to work in.

5. Stress from overwork and work life imbalance: Job stress can lead to work life
imbalance which ultimately many times lead to employee leaving the organization.

6. Compensation: Better compensation packages being offered by other companies

may attract employees towards themselves.

7. New job offer: An attractive job offer which an employee thinks is good for him with
respect to job responsibility, compensation, growth and learning etc. can lead an
employee to leave the organization.

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The basic practices which should be kept in mind in the employee retention strategies are:

1. Hire the right people in the first place.

2. Empower the employees: Give the employees the authority to get things done.
3. Make employees realize that they are the most valuable asset of the
organization.
4. Have faith in them, trust them and respect them.
5. Provide them information and knowledge.
6. Keep providing them feedback on their performance.
7. Recognize and appreciate their achievements.
8. Keep their morale high.
9. Create an environment where the employees want to work and have fun.

These practices can be categorized in 3 levels: Low, medium and high level.

<Low> <Medium > <High>

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RETENTION DETERMINANTS

It has been recognized by both employers and employees that some common areas affect
employee retention. If certain organizational components are being provided, than other
factors may affect retention. Surveys of employees consistently show that better
compensation package and better career opportunity are the two most important
determinates of retention. Finally, job design and fair and supportive employee relationship
with others inside the organization contribute to retention. Following are the components
that affect employee retention: -

Career opportunities
1. Training
Continuity.
2. Development &

Rewards
1. Competitive pay & benefits.
2. Performance reward
differentiation.
Organizational Components 3. Recognition.
1. Values and Culture. 4. Special benefit & perks.
2. Strategies & Opportunities.
3. Well managed & results-oriented.
4. Job continuity & security.

Job design & work

1. Job responsibility &
autonomy.
2. Work flexibility.
3. Working conditions.
4. Work/Life balancing.

Employee Relationship
1. Fair/nondiscriminatory
treatment.
These were2.theSupervisory/management
determinants of retention. An affective leadership assumed by the top
management would be a very important feature that keeps the work force intact and loyal.
support.
In fact, the approach to the task of formulation of strategies for employee retention should

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be comprehensive and the honest intention of the employer to implement every stipulation
in the package of appointment should be evident. However, there would, in each employing
corporate, be a section of so-called ‘good employees’, whom it would be unwise to loose.
Special strategies and special kind of efforts are required in the task of retaining them.
Probably it would be the hardest task for the employer to retain them as persons and rivals
would be making relentless bids to woo this section of employees. To counter these
onslaughts from peers, special efforts are called for.

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MANAGER ROLE IN RETENTION

When asked about why employees leave, low salary comes out to be a common excuse.
However, research has shown that people join companies, but leave because of what their
managers’ do or don’t do. It is seen that managers who respect and value employees’
competency, pay attention to their aspirations, assure challenging work, value the quality of
work life and provided chances for learning have loyal and engaged employees. Therefore,
managers and team leaders play an active and vital role in employee retention by creating a
motivating team culture and improving the relationships with team members. This can be
done in a following way:

1. Creating a Motivating Environment: Team leaders who create motivating

environments are likely to keep their team members together for a longer period of
time. Motivation does not necessarily have to come through fun events such as
parties, celebrations, team outings etc. They can also come through serious events
e.g. arranging a talk by the VP of Quality on career opportunities in the field of
quality. Employees who look forward to these events and are likely to remain more
engaged.

2. Standing up for the Team: Team leaders are closest to their team members. While
they need to ensure smooth functioning of their teams by implementing
management decisions, they also need to educate their managers about the realities
on the ground. When agents see the team leader standing up for them, they will
have one more reason to stay in the team.

3. Providing coaching: Everyone wants to be successful in his or her current job.

However, not everyone knows how. Therefore, one of the key responsibilities will be
providing coaching that is intended to improve the performance of employees.
Managers often tend to escape this role by just coaching their employees. However,
coaching is followed by monitoring performance and providing feedback on the
same.

4. Delegation: Many team leaders and managers feel that they are the only people
who can do a particular task or job. Therefore, they do not delegate their jobs as
much as they should. Delegation is a great way to develop competencies.

5. Extra Responsibility: Giving extra responsibility to employees is another way to get

them engaged with the company. However, just giving the extra responsibility does
not help. The manager must spend good time teaching the employees of how to
manage responsibilities given to them so that they don’t feel over burdened.

6. Focus on future career: Employees are always concerned about their future career.
A manager should focus on showing employees his career ladder. If an employee
sees that his current job offers a path towards their future career aspirations, then
they are likely to stay longer in the company. Therefore, managers should play the
role of career counselors as well.

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RETENTION MYTHS

The process of retention is not as easy at it seems. There are so many tactics and strategies
used in retention of employees by the organizations. The basic purpose of these strategies
should be to increase employee satisfaction, boost employee morale hence achieve
retention. But some times these strategies are not used properly or even worse, wrong
strategies are used. Because of which these strategies fail to achieve the desired results.
There are many myths related to the employee retention process. These myths exist
because the strategies being used are either wrong or are being used from a long time.
These myths prevent the employer from successfully implementing the retention strategies.
Let us have a look on some of these myths:

1. Employees leave an organization for more pay: Money may be the motivating
factor for some but for many people it is not the most important factor. Money
matters more to the low-income-employees for whom it’s a survival issue. Money
can make an employee stay in an organization but not for long. The factors more
important than money are job satisfaction, job responsibilities, and individual’s skill
development. The employers should understand this and work out some other ways
to make employees feel satisfied. When employees leave, management tries to
retain them by offering more money. But instead they should try to figure out the
main reason behind it. Issues that are mainly the cause of dissatisfaction are
organization’s policies and procedures, working conditions, relationship with the
supervisor and salary, etc. For such employees, achievement, growth, respect,
recognition, is the main concern.

2. Incentives can increase productivity: Incentives can surely increase productivity but
not for long term. Cash incentives, volume work targets and speed awards are old
management beliefs. They can generate work speedily and in volumes but can’t
boost employee commitment. Rather speed can hamper the quality of work
produced. What really glues employees to their work and organization is quality
work, meaningful responsibilities, recognition, respect, growth opportunities and
friendly supervisors.

3. Employees run away from responsibilities: It is a myth that employees run from
responsibilities. In-fact employees feel more responsible if they are given extra
responsibilities apart from their regular job. Employees look for variety, greater
control on the processes and authority to take decisions in their present job. They
want opportunities to learn and grow. Management can assign extra responsibilities
to their employees and appreciate them on the completion of these tasks. This will
induce a sense of pride in the employee and will improve the relationship between
the management and the employee.

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4. Loyalty is a thing of the past: Employees can be loyal but what they need is an
employer for whom they can be loyal. There is no reason for the employee to hop
jobs if he’s satisfied with the employer.

5. Taking measures to increase employee satisfaction will be expensive for the

organizations: The things actually required improving employee satisfaction like
respect, career growth and development, appreciation, etc. can’t be bought. They
are free of cost. An employer or management that reacts well to the employee’s
ideas and suggestions is enough for the employees to be retained.

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BENEFITS OF ATTRITION
Attrition is not bad always if it happens in a controlled manner. Some attrition is always
desirable and necessary for organizational growth and development. The only concern is
how organizations differentiate “good attrition” from “bad attrition”. The term “healthy
attrition” or “good attrition” signifies the importance of less productive employees
voluntarily leaving the organization. This means if the ones who have left fall in the category
of low performers, the attrition in considered being healthy.

Attrition rates are considered to be beneficial in some ways:

1. If all employees stay in the same organization for a very long time, most of them will
be at the top of their pay scale which will result in excessive manpower costs.

2. When certain employees leave, whose continuation of service would have negatively
impacted productivity and profitability of the company, the company is benefited.

3. New employees bring new ideas, approaches, abilities & attitudes which can keep
the organization from becoming stagnant.

4. There are also some people in the organization who have a negative and
demoralizing influence on the work culture and team spirit. This, in the long-term, is
detrimental to organizational health.

5. Desirable attrition also includes termination of employees with whom the

organization does not want to continue a relationship. It benefits the organization in
the following ways:
 It removes bottleneck in the progress of the company

 It creates space for the entry of new talents

 It assists in evolving high performance teams

6. There are people who are not able to balance their performance as per expectations,
lack potential for future or need disciplinary action. Furthermore, as the rewards are
limited, business pressures do not allow the management to over-reward the
performers, but when undesirable employees leave the company, the good
employees can be given the share that they deserve.

Some companies believe attrition in any form is bad for an organization for it means that a
wrong choice was made at the beginning while recruiting. Even good attrition indicates loss
as recruitment is a time consuming and costly affair. The only positive point is that the

realization has initiated action that will lead to cutting loss.

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ATTRITION RATES IN INDIA

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RETENTION SUCCESS MANTRAS

1) Transparent Work Culture

In today’s fast paced business environments where employees are constantly striving to
achieve business goals under time restrictions; open minded and transparent work culture
plays a vital role in employee retention.

Companies invest very many hours and monies in training and educating employees. These
companies are severely affected when employees check out, especially in the middle of
some big company project or venture. Although employees most often prefer to stay with
the same company and use their time and experience for personal growth and
development, they leave mainly because of work related stress and dissatisfactions.

More and more companies have now realized the importance of a healthy work culture and
have a gamut of people management good practices for employees to have that ideal fresh
work-life. Closed doors work culture can serve as a deterrent to communication and trust
within employees which are potential causes for work-related apathy and frenzy.

A transparent work environment can serve as one of the primary triggers to facilitate
accountability, trust, communication, responsibility, pride and so on. It is believed that in a
transparent work culture employees rigorously communicate with their peers and exchange
ideas and thoughts before they are finally matured in to full-blown concepts. It induces
responsibility among employees and accountability towards other peers, which gradually
builds up trust and pride. More importantly, transparency in work environment discourages
work-politics which often hinders company goals as employees start to advance their
personal objectives at the expense of development of the company as a single entity.

Employees comprise the most vital assets of the company. In a work place where employees
are not able to use their full potential and not heard and valued, they are likely to leave
because of stress and frustration. In a transparent environment while employees get a
sense of achievement and belongingness from a healthy work environment, the company is
benefited with a stronger, reliable work-force harboring bright new ideas for its growth.

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2) Quality of Work
The success of any organization depends on how it attracts recruits, motivates, and retains
its workforce. Organizations need to be more flexible so that they develop their talented
workforce and gain their commitment. Thus, organizations are required to retain employees
by addressing their work life issues.

The elements that are relevant to an individual’s quality of work life include the task, the
physical work environment, social environment within the organization, administrative
system and relationship between life on and off the job.

The basic objectives of a QWL program are improved working conditions for the employee
and increase organizational effectiveness.

Providing quality work life involves taking care of the following aspects:

1. Occupational health care: The safe work environment provides the basis for the
person to enjoy working. The work should not pose a health hazard for the person.
The employer and employee, aware of their risks and rights, could achieve a lot in
their mutually beneficial dialogue.

2. Suitable working time: Organizations are offering flexible work options to their
employees wherein employees enjoy flexi-timings for dedicating their efforts at
work.

3. Appropriate salary: The appropriate as well as attractive salary has always been an
important factor in retaining employees. Providing employees salary at par with the
other counterparts of above that what competitors are paying motivates them to
stick with the company for long.

QWL consists of opportunities for active involvement in group working arrangements or

problem solving that are of mutual benefit to employees or employers, based on labor
management cooperation. People also conceive of QWL as a set of methods, such as
autonomous work groups, job enrichment, and high-involvement aimed at boosting the
satisfaction and productivity of workers. It requires employee commitment to the
organization and an environment in which this commitment can flourish.

Providing quality at work not only reduces attrition but also helps in reduced absenteeism
and improved job satisfaction. Not only does QWL contribute to a company's ability to
recruit quality people, but also it enhances a company's competitiveness. Common beliefs
support the contention that QWL will positively nurture amore flexible, loyal, and motivated
workforce, which are essential in determining the company's competitiveness.

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3) Supporting Employees
Organizations these days want to protect their biggest and most valuable asset and they
want to do this in a way that best suits their organizational culture. Retaining employees is a
difficult task. Providing support to the employees acts as a mantra for retraining them.
Employers can also support their employees by creating an environment of trust and
inculcating the organizational values into employees.

The management can support employees directly or indirectly. Directly, they provide
support in terms of personal crises, managing stress and personal development.
Management can support employees, indirectly, in a number of ways as follows:

1. Manage employee turnover: Employee turnover affects the whole organization in

terms of productivity. Managing the turnover, hence, becomes an important task. A
proactive approach can be adopted to reduce attrition. Strategies should be framed
in advance and implemented when the times arrives. Turnover costs should also be
taken into consideration while framing these strategies.

2. Become employer of choice: What makes a company an employer of choice? Is the

benefit it offers or the compensation packages it gives away to its employees? Or is
it measured in terms of how they value their employees or in terms of customer
satisfaction? Becoming an employer of choice involves following a road map which
tells where to go as a brand.

3. Engage the new recruits: The newly hired employees are said to be least engaged in
the organization. Keeping them engaged is an important task. The fresh talent
should be utilized to maximum before they start feeling bored in the organization.

4. Optimize employee engagement: An organization’s productivity is measured not in

terms of employee satisfaction but by employee engagement. Employees are said to
be engaged when they show a positive attitude toward the organization and express
a commitment to remain with the organization. Employee satisfaction also comes
with high engagement levels. So, organizations should aim to maximize the
engagement among employees.

5. Coaching and mentoring: Employees whose work performance suffers due to poor
interpersonal relationships or because of lack of interpersonal skills should be
provided proper coaching by their superiors. Planed coaching sessions help an
individual to work through issues, maximize his potential and return to peak
performance.

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4) Feedback
Feedback acts as a channel of communication between the employee and his manager. The
amount of information employees receive about how well or how poorly they have
performed is what we call feedback. It is a dialog between a manager and an employee
which acts as a way of sharing information about the performance. It suggests where the
employee performance is effective and where performance has to improve.

Managers can provide either positive feedback or negative feedback to employees. This
feedback helps the employee assess his performance and identify the improvement areas.

Positive feedback communicates managerial satisfaction. Positive recognition for good

performance boosts up morale of employees and results in performance improvement to a
higher productivity level. It is believed that positive feedback is the only type of feedback
that generates performance above the minimum acceptable level.

Negative feedback obviously communicates manager’s dissatisfaction. However, negative

feedback sometimes make employee to put more efforts to improve his performance. But
such times are very rare. Moreover this improvement is short term.

Some managers do not provide any kind of feedback to their employees. Due to no
feedback, employees may assume that they are performing productively or they may feel
that the manager is satisfied with their performance. Studies reveal the performance tends
be same or even decreases if no feedback is provided.

Thus, feedback is necessary because:

1. It builds trust and enhances communication between manager and employee.
2. It gives managers and employees a way to identify and discuss skills and strengths.
3. Positive feedback leads to employee retention and motivation.
4. It helps in identifying performance areas that need improvement and specific ways
to improve them.
5. It acts as an opportunity to enhance performance by identifying resources for skill
development.
6. It is an opportunity for managers and employees to assess and identify career and
advancement opportunities.
7. It helps employees to understand the effectiveness of their performance and
contributes to their overall knowledge about the work

Managers have tendency to ignore good performances of their employees. Providing no

feedback may de-motivate employees and may lead to employee absenteeism. Input from
manager’s side is necessary as it help employees to improve their performance and increase
productivity.

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5) Communication between Employee and Employer

Communication is the solution to almost everything in this world. Same applies to employee
retention also. Straight-from-the-shoulder communication is what the employees need from
their employers. Employees look for organizations where communication and process are
transparent. Nothing is hidden and shared with the employees. Communication is also the
way to win the employees trust in the organization. Employees trust the employers who are
friendly and open to them. This trust leads to employee loyalty and finally retention.
Employers also feel that the immediate supervisors are the most authenticated and trusted
source of information for them. So the organizations should hire managers who are active
communicators.

Communication mediums
1. Open door policy: Organizations should support open door policies so that the
employees feel comfortable and are able to express their doubts and feeling to their
employers.
2. Frequent meetings and Social gatherings
3. Emails, Newsletters, Intranet and many more.

So there should be effective communication across the organization & this communication
should be two-way. Communication alone can lead to unimaginable heights of employee
retention.

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 EMPLOYEE RETENTION

EMPLOYEES TURNOVER
Employee’s turnover has always been a sensitive issue for all organizations. Calculating
employee turnover rate is not that simple as it seems to be. No common formula can be
used by all the organizations. A formula had to be devised keeping in view the nature of the
business and different job functions. Moreover, calculating attrition rate is not only about
devising a mathematical formula. It also has to take into account the root of the problem by
going back to the hiring stage.

Employees Turnover rate or Attrition rate means:

In terms of numbers:
Total number of resigns per month (whether voluntary or forced) divided by (Total Number
of employees at the beginning or the month plus total number of new joiners minus total
number of resignations) multiplied by 100.

If calculating in monetary terms, it includes the following:

Costs Due to a Person Leaving

1. Calculate the cost of the person(s) who fills in while the position is vacant. Calculate
the cost of lost productivity at a minimum of 50% of the person’s compensation and
benefits cost for each week the position is vacant, even if there are people
performing the work. Calculate the lost productivity at 100% if the position is
completely vacant for any period of time.

2. Calculate the cost of conducting the exit interview to include the time of the person
conducting the interview, the time of the person leaving, the administrative costs of
stopping payroll, benefit deductions, benefit enrollments.

3. Calculate the cost of the manager who has to understand what work remains, and
how to cover that work until a replacement is found.

4. Calculate the cost of training your company has invested in this employee who is
leaving.

5. Calculate the impact of departmental productivity because the person is leaving.

Who will pick up the work, whose work will suffer, what departmental deadlines will
not be met or delivered late.

6. Calculate the cost of lost knowledge, skills and contacts that the person who is
leaving is taking with them out of your door. Use a formula 50& of the person’s
annual salary for one year of service, increasing each year of service by 10%.

7. Subtract the cost of the person who is leaving for the amount of time the position is
vacant.

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 EMPLOYEE RETENTION

Recruitment costs
1. The cost of advertisements; agency costs; employee costs; Internet posting costs.

2. The cost of internal recruiter’s time to understand the position requirements,

develop and implement a sourcing strategy, review candidates backgrounds, prepare
for interviews, conduct interviews, prepare candidate assessments, conduct
reference checks, make the employment offer and notify unsuccessful candidates.
This can range from a minimum of 30 hours to over 100 hours per position.

3. Calculate the cost of the various candidate pre-employment tests to help assess
candidates’ skills, abilities, aptitude, attitude, values and behaviors.

Training costs
1. Calculate the cost of orientation in terms of the new persons’ salary and the cost of
the person who conducts the orientation. Also include the cost of orientation
materials.

2. Calculate the cost of departmental training as the actual development and delivery
cost plus the cost of the salary of the new employee. Note that the cost will be
significantly higher for some positions such as sales representatives and call center
agents who require 4-6 weeks or more of classroom training.

3. Calculate the cost of the person(s) who conduct the training.

4. Calculate the cost of various training materials needed including company or product
manuals, computer or other technology equipment used in the delivery of training.

Lost productivity costs

As the new employee is learning the new job, the company policies and practices, etc. they
are not fully productive. Use the following guidelines to calculate the cost of this lost
productivity:

1. Upon completion of whatever training is provided, the employee is contributing at a

25% productivity level for the first 2-4 weeks. The cost therefore is 75% of the new
employees’ full salary during that time period.

2. During weeks 5-12, the employee is contributing at a 50% productivity level. The cost
is therefore 50% of full salary during that time period.

3. During weeks 13-20, the employee is contributing at a 75% productivity level. The
cost is therefore 25% of full salary during that time period.

4. Calculate the cost of mistakes the new employee makes during this elongated
indoctrination period.

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 EMPLOYEE RETENTION

New Hire Costs

1. Calculate the cost of bring the new person on board including the cost to put the
person on the payroll, establish computer and security passwords and identification
cards, telephone hookups, cost of establishing email accounts, or leasing other
equipment such as cell phones, automobiles.

2. Calculate the cost of a manager’s time spent developing trust and building
confidence in the new employee’s work.

Lost Sales Costs

1. Calculate the revenue per employee by dividing total company revenue by the
average number of employees in a given year. Whether an employee contributes
directly or indirectly to the generation of revenue, their purpose is to provide some
defines set of responsibilities that are necessary to the generation of revenue.
Calculate the lost revenue by multiplying the number of weeks the position is vacant
by the average weekly revenue per employee.

The cost of employee’s turnover or attrition is:

(Total staff * employee’s turnover rate/attrition rate %) * (annual salary *

80%)

The ‘rule of thumb’ appears to be very inaccurate indeed and, while it depends upon the
category of staff, it is probably better to estimate around 80% of salary as a truer rule of
thumb- and this will be on the conservative side.

What kind of strategies would be effective in producing the desired results of maximum
‘Employee Retention’ and minimum ‘Employee Turnover’? The answer is obvious. It should
be the aim of each employee to keep his work force fully satisfied with no room for
disgruntlement.

Retention of employees has become a primary concern in many organizations foe several
reasons. As a practical matter, with lower turnover, every individual who is retained means
one less person to have to recruit, selects, and trains. Also, the continuity employees who
know their job, co-workers, organizational services and products and firm’s customers
enhance organizational and individual performance. One survey of supervisor and workers
found that losing high performance made it more difficult for organizations to reach their
business goals. Additional continuity of employees provides better “Employee image” for
attracting and retaining other individuals.

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 EMPLOYEE RETENTION

WAYS TO REDUCE EMPLOYEE TURNOVER

Following are some of the ideas to reduce employee turnover:

1. Hire the best candidate.

2. Welcome new employees. Customize your induction program for new employees
according to the requirements. Same induction program can not be applied to all the
candidates. Make them feel welcomed.

3. Produce quality managers who can really manage employees well.

4. Provide employees with work schedules that are flexible enough to suit their needs.

5. Don’t be too demanding. You re hiring human beings who have their own life and
family commitments. Respect them.

6. Provide career counseling and development.

7. Discuss your future plans regarding the candidate with the candidate. Let them know
that the management is interested in retaining them and cares for them.

8. Take proper feedback from employees regarding their grievances.

9. Remember your former employees. They can be helpful to you in future. It is also a
part of employee retention.

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 EMPLOYEE RETENTION

FACTS ABOUT EMPLOYEE TURNOVER

It is difficult to accept when organizations say they have zero attrition rates. Companies may
have healthier turnover rates, however, there is no such thing as zero attrition. There are
other such facts about turnover, about which most of us are not aware. Some of such facts
have been highlighted below:

1. Turnover always happens: Companies who believe in zero attrition rates only fool
themselves. This happens because employees keep on moving due to reasons like
marriage or further education. Nothing can stop these employees from moving on.
So, rather than achieving zero attrition companies should focus on identifying whom
they want to keep so that they have healthy attrition rate.

2. Some Turnover is Desirable: Zero attrition is not desirable mainly because of two
reasons. Firstly, if all employees continue to stay in the same organization, most of
them will be at the top of their pay scale which will result in excessive manpower
costs. Secondly, new employees bring new ideas, approaches, abilities & attitudes
which can keep the organization from becoming stagnant.

3. Turnover includes costs: Turnover always includes some costs. Consider the costs of
replacing the key employee who falls in to the category of high performers. This
includes the costs of recruitment advertisement, referral bonuses, selection testing,
training costs, etc. Moreover, turnover results in loss of time & efforts, low
productivity, loss of morale, loss of knowledge and so on.

4. High salary doesn’t work: Most managers assume that a high salary package is
enough to keep employees loyal to their organization. Employees may face other
problems like low job satisfaction, low engagement levels, no recognition, poor
working conditions, less support from superiors and so on. Salaries are not always
the solution to attrition. Managers should try to identify y the roots of the problem
and then find a feasible solution.

5. The manager can reduce attrition: Managers should take primary responsibility for
retaining their employees. Much of the employee’s perception of job satisfaction
stems from the relationship they share with their immediate supervisor. Managers
should try to support their subordinates and give proper feedback on performance.
HR managers should work in collaboration to make the key employees last in their
organization.

6. Reducing Turnover takes Commitment: Reducing turnover takes an investment in

coaching, developing, motivating, mentoring & listening to people. There should be
universal acceptance of the goal of reducing turnover along with top management
commitment and dedication.

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 EMPLOYEE RETENTION

Importance of Relationship in Employee

Retention Program
Retention Home » Relationship
Sometimes the relationship with the management and the peers becomes the
reason for an employee to leave the organization. The management is sometimes not able
to provide an employee a supportive work culture and environment in terms of personal or
professional relationships. There are times when an employee starts feeling bitterness
towards the management or peers. This bitterness could be due to many reasons. This
decreases employee’s interest and he becomes de-motivated. It leads to less satisfaction
and eventually attrition.

A supportive work culture helps grow employee professionally and boosts employee
satisfaction. To enhance good professional relationships at work, the management should
keep the following points in mind.

Respect for the individual: Respect for the individual is the must in the organization.

Relationship with the immediate manager: A manger plays the role of a mentor and a coach.
He designs ands plans work for each employee. It is his duty to involve the employee in the
processes of the organization. So an organization should hire managers who can make and
maintain good relations with their subordinates.

Relationship with colleagues: Promote team work, not only among teams but in different
departments as well. This will induce competition as well as improve the relationships
among colleagues.

Recruit whole heartedly: An employee should be recruited if there is a proper place and
duties for him to perform. Otherwise he’ll feel useless and will be dissatisfied. Employees
should know what the organization expects from them and what their expectation from the
organization is. Deliver what is promised.
Promote an employee based culture: The employee should know that the organization is
there to support him at the time of need. Show them that the organization cares and he’ll
show the same for the organization. An employee based culture may include decision
making authority, availability of resources, open door policy, etc.
Individual development: Taking proper care of employees includes acknowledgement to the
employee’s dreams and personal goals. Create opportunities for their career growth by
providing mentorship programs, certifications, educational courses, etc.
Induce loyalty: Organizations should be loyal as well as they should promote loyalty in the
employees too. Try to make the current employees stay instead of recruiting new ones.

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 EMPLOYEE RETENTION

How To Increase Employee Retention

Companies have now realized the importance of retaining their quality workforce.
Retaining quality performers contributes to productivity of the organization and increases
morale among employees.

Four basic factors that play an important role in increasing employee retention include
salary and remuneration, providing recognition, benefits and opportunities for individual
growth. But are they really positively contributing to the retention rates of a company?
Basic salary, these days, hardly reduces turnover. Today, employees look beyond the money
factor.
employee retention can be increase by inculcating the following practices:

Open Communication: A culture of open communication enforces loyalty among

employees. Open communication tends to keep employees informed on key issues. Most
importantly, they need to know that their opinions matter and that management is 100%
interested in their input.
Employee Reward Program: A positive recognition for work boosts the motivational levels of
employees. Recognition can be made explicit by providing awards like best employee of the
month or punctuality award. Project based recognition also has great significance. The
award can be in terms of gifts or money.
Career Development Program: Every individual is worried about his/her career. He is always
keen to know his career path in the company. Organizations can offer various technical
certification courses which will help employee in enhancing his knowledge.
Performance Based Bonus: A provision of performance linked bonus can be made wherein
an employee is able to relate his performance with the company profits and hence will work
hard. This bonus should strictly be productivity based.
Recreation facilities: Recreational facilities help in keeping employees away from stress
factors. Various recreational programs should be arranged. They may include taking
employees to trips annually or bi-annually, celebrating anniversaries, sports activities, et al.
Gifts at Some Occasions: Giving out some gifts at the time of one or two festivals to the
employees making them feel good and understand that the management is concerned
about them.

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 EMPLOYEE RETENTION

Human Resources Management - Employee Retention

Directory A best-of-breed in staff retention Staff turnover can cost
companies dearly. Learn about one telecommunications giant's best-of-breed staff retention
approach and the many ways it's paying off for both the staff and the company.
Bankruptcy Key employee retention plans (KERP), employee retention and bankruptcy:
Balancing stakeholder interests.
Employee Retention People Leave Managers, Not Companies: How To Increase Employee
Retention
Employee Retention - Talent Management Retaining employees involves understanding
the intrinsic motivators of them which many organizations unable to identify. In this
context organizations need to dig novel approaches to retain the most effective manpower.

Employee What?! Introductory chapter, that will: Look at exactly what “employee
retention” is and examine three trends that are currently shaping employee retention
strategies.
Employer Attitude - The Foundation of Employee Retention One of the foundation
stones of companies which attract, retain and motivate high performing employees is a
positive and valuing attitude toward them.
Keeping a cut above the rest - Employee retention strategies Rather than fight a futile
“war for talent”, leaders should “build talent” by looking within their organisations for the
critical skills, knowledge and attributes required to execute their company's most important
roles.
Key Employee Retention Bonuses: An Uncertain Future? Retention bonuses in the context
of bankruptcy: Retention bonuses, also known as pay-to-stay bonuses, have become
common practice since the early 1990's and have been heralded by courts, debtors, and
creditors alike as an important and useful way to help reorganization by maintaining those
most valuable employees.
Managing Employee Retention as a Strategy for Increasing Organizational Competitiveness
Research indicates that the total cost of employee turnover is about 150% of an
employee’s salary. Because of this high cost of turnover, the organization that is the focus of
this article sought to understand their employee’s turnover intentions and the reasons for
the potential turnover.
Retaining Talent: A Benchmarking Study Executive Summary of a study. This study
examines the challenges that organizations face with employee retention in an increasingly
competitive labor market.
Retention success tied to money, but it's much more than salaries There's no denying that
money keeps tech staff in their current jobs, but competitive salaries aren't the lone factor
in reducing turnover. As this case study illustrates, other uses of the money are also very
effective.
Understand Why Employees Come and Why They Stay How long do you think good,
talented people stick around at places that treat them like draftees? Not long. David Russo
explains why employees are your most valuable asset -- by far. This chapter is from the book
17 Rules Successful Companies Use to Attract and Keep Top Talent: Why Engaged
Employees Are Your Greatest Sustainable Advantage
Voluntary turnover……….Losing too many of your keepers? The question is, why are some of
our best employees choosing to leave and what is being done?

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 EMPLOYEE RETENTION

Why Do People Leave? Most of us believe our employees leave us for money reasons.
How many times have you said, “If only I could have paid her more, she would have stayed.”
Yes, you’ve lost people because of money, but the majority of contemporary research finds
that people leave for one major reason and several subordinate ones.

Love 'em or Lose 'em: Getting Good People to Stay

by Beverly Kaye , Sharon Jordan-Evans
Because finding the ideal person for every workplace position has become an increasingly
difficult task, the retention of top employees has become every manager's concern. This
bookproposes that this "race for talent" can be effectively run only by those who adopt
programs and policies that truly support their personnel. It then shows how to do so, even
in organizations reluctant to participate actively.

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 EMPLOYEE RETENTION

EMPLOYEE’S SATISFACTION REGARDING MONETARY

BENEFITS PROVIDED BY THE COMPANY.

Retention Management

Abstract: Background: retention management is a highly topical subject and an

important dilemma many organizations might face in the future, if not facing it
already. We believe that the leader plays a key role in employee retention and
retention management. The concept of retention management can both have a
narrow, and a broader significance. Both parts of its significance are generally
included in this thesis. The background of the thesis present a few articles that
discuss issues that makes it important for the organization, and the leaders, to work
hard with retention management. The research is based on the leaders in the Finnish
case company Tradeka. Following key questions are intended to be answered: What
are the consequences between leaders actions and employees retention? Which is
the leader’s role when it comes to retaining employees? Purpose statement: The
purpose of the thesis is to investigate and analyze how company leaders today can
retain their key employees. How can the provision of key human resources develop a
long-term relationship that makes top employees stay in the company? The study
aims to establish the procedure leaders apply to retain employees. The purpose is to
compare the qualitative study, made at the case company, with findings from the
thesis theoretical framework. Research method: The study is a qualitative, as well as
a theoretical study where empirical findings and theories has been compared. The
intention of investigating and using the Finnish company Tradeka Limited as a case
company, is to make the information from the theories more valid, and also the
interest in how retention management works in practice. Eleven qualitative
interviews were conducted at Tradeka?s financial department, both with supervisors
and employees to get a broader view at the phenomenon retention management.
Result: Leaders and their skill in creating a culture of retention, has becoming a key
in why people stay and what usually drives them away from a company. The leader
has become the main factor in what motivates people’s decision to stay or leave. For
organizations to keep its key employees their number one priority should be to look
at their management, because people leave managers and not companies.
Characteristics in a leader that are of importance, as the leader plays a key role in
retention management is: trust builder, esteem builder, communicator, talent
developer and coach, and talent finder. The leader’s relation to the employees plays
a central role in retaining employees, because employees need to feel involvement,
and that their presence count. When retention is a core value, good things happen
for customers, employees, and the company.

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 EMPLOYEE RETENTION

How to Improve Employee Retention

People want to enjoy their work so make work fun and enjoyable.
Understand that employees need to balance life and work so offer flexible starting
times and core hours. Provide 360 feedback surveys and other questionnaires to
foster open communication. Consider allowing anonymous surveys occasionally so
employees will be more honest and candid with their opinions. Provide
opportunities within the company for career progression and cross-training. Offer
attractive, competitive benefits and 401(k)s.

Organizations should target job applications for employees who have characteristics
that fit well with the organizational culture. Upon conducting an interview, seek out
traits, such as loyalty. Also, ask the potential employee what motivates them on the
job. Having more information about the potential employee’s expectations can help
retain them, should they get hired into the company.

Rewards and Recognition

Employees want to be recognized for a job well done. Rewards and recognition
respond to this need by validating performance and motivating employees toward
continuous improvement. Rewarding and recognizing people for performance not
only affects the person being recognized, but others in the organization as well.

Through a rewards program, the entire organization can experience the

commitment to excellence. When the reward system is credible, rewards are
meaningful; however, if the reward system is broken, the opposite effect will occur.
Employees may feel that their performance is unrecognized and not valued, or that
others in the organization are rewarded for the wrong behaviors. Unrecognized and
nonvalued performance can contribute to turnover. Recognition for a job well done
fills the employees' need to receive positive, honest feedback for their efforts.
Need for Rewards and Recognition
Recognition should be part of the organization's culture because it contributes to
both employee satisfaction and retention. Organizations can avoid employee
turnover by rewarding top performers. Rewards are one of the keys to avoiding
turnover, especially if they are immediate, appropriate, and personal. A Harvard
University study concluded that organizations can avoid the disruption caused by
employee turnover by avoiding hiring mistakes and selecting and retaining top
performers.

One of the keys to avoiding turnover is to make rewards count. Rewards are to be
immediate, appropriate, and personal. Organizations may want to evaluate whether
getting a bonus at the end of the year is more or less rewarding than getting smaller,
more frequent payouts. Additionally, a personal note may mean more than a generic
company award. Employees should be asked for input on their most desirable form
of recognition. Use what employees say when it comes time to reward for
performance (St. Amour, 2000).
Designing a Rewards and and Recognition Solution

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 EMPLOYEE RETENTION

In designing a rewards and recognition program, the following guidelines should be

considered.
Rewards should be visible to all members of the organization.
Rewards should be based on well-defined, credible standards that have been
developed using observable achievements.
Rewards should have meaning and value for the recipient.
Rewards can be based on an event (achieving a designated goal) or based on a time
frame (performing well over a specific time period).
Rewards that are spontaneous (sometimes called on-the-spot awards) are also
highly motivating and should also use a set criteria and standard to maintain
credibility and meaning.
Rewards should be achievable and not out of reach by employees.

Nonmonetary rewards, if used, should be valued by the individual. For example, an

avid camper might be given a 10-day pass to a campsite, or, if an individual enjoys
physical activity, that employee might be given a spa membership. The nonmonetary
rewards are best received when they are thoughtfully prepared and of highest
quality. Professionalism in presenting the reward is also interpreted as worthwhile
recognition.

Rewards should be appropriate to the level of accomplishment received. A cash

award of $50 would be inappropriate for someone who just recommended a process
that saved the organization a million dollars. Determining the amount of money
given is a delicate matter of organizational debate in which organizational history,
financial parameters, and desired results are all factors. Recognition for a job well
done can be just as valued and appreciated as monetary awards.

Formal recognition program can be used with success. First Data Resources, a data
processing services company that employees more than 6,000 individuals in Omaha,
Nebraska, uses a formal recognition program (Adams, Mahaffey, and Rick, 2002).
Rewards are given on a monthly, quarterly, and yearly basis, and range from
Nebraska football tickets, gift certificates, pens, plaques, mugs, and other items. One
of the most popular awards at First Data is called the "Fat Cat Award" that consists
of: $500 gift check

Professional portrait of the employee

Appreciation letter from the CEO and senior management
E-mails, phone calls, and notes from peers
In addition to nonmonetary rewards, employees can be rewarded using money in
numerous ways. Cash is a welcome motivator and reward for improving
performance, whether at formal meetings or on the spot. Variable bonuses linked to
performance are another popular reward strategy. Profit sharing and pay-for-skilis
are monetary bonus plans that both motivate individuals and improve goal
achievement. Small acts of recognition are valuable for employee daily Retention.
Sometimes a personal note may mean more than a generic company award. In one
survey, employees cited the following as meaningful rewards (Moss, 2000):

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 EMPLOYEE RETENTION

Employee of the month awards Years of service awards

Bonus pay (above and beyond overtime) for weekend work
Invitations for technicians to technical shows and other industry events
Meaningful and Retentional Rewards

What gives meaning to rewards and recognition? What makes them effective? First,
rewards and recognition should be based on a clear set of standards, with
performance verifiable or observable. The standards for the reward should also be
achievable. If the reward is based on an unachievable result, such as a production
goal that is beyond employees' power, then those employees will not be motivated.
Meaningful rewards and recognition that are achievable have the greatest impact.

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 EMPLOYEE RETENTION

There are 3 categories of employees:

A: Who will leave their current employer in 3 years of their employment
B: Who have a probability of leaving their current employer in next 3 years
C: Who will stay with their current employer in the next 3 years
Category A: These are the employees who lack communication with their
employers.Category C: These are the employees who have proper, well structured
communication with their employers.Communication is also the way to win the
employees trust in the organization. Employees trust the employers who are friendly
and open to them. This trust leads to employee loyalty and finally retention.
Employers also feel that the immediate supervisors are the most authenticated and
trusted source of information for them. So the organizations should hire managers
who are active communicators.Communication mediums
Open door policy: Organizations should support open door policies so that the
employees feel comfortable and are able to express their doubts and feeling to their
employers.
Frequent meetings and Social gatherings
Emails, Newsletters, Intranet and many more

So there should be effective communication across the organization and this

communication should be two-way. Communication alone can lead to unimaginable
heights of employee retention.

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 EMPLOYEE RETENTION

Managing Employee Retention

The task of managing employees can be understood as a three stage process:

1. Identify cost of employee turnover.

2.Understand why employee leave.
3.Implement retention strategies

The organizations should start with identifying the employee turnover rates within a
particular time period and benchmark it with the competitor organizations. This will
help in assessing the whether the employee retention rates

are healthy in the company. Secondly, the cost of employee turnover can be
calculated. According to a survey, on an average, attrition costs companies 18
months’ salary for each manager or professional who leaves, and 6 months’ pay for
each hourly employee who leaves. This amounts to major organizational and
financial stress, considering that one out of every three employees plans to leave his
or her job in the next two years.
Understand why employees leave :

Why employees leave often puzzles top management. Exit interviews are an ideal
way of recording and analyzing the factors that have led employees to leave the
organization. They allow an organization to understand the reasons for leaving and
underlying issues. However employees never provide appropriate response to the
asked questions. So an impartial person should be appointed with whom the
employees feel comfortable in expressing their opinions.

Implement retention strategy :

Once the causes of attrition are found, a strategy is to be implemented so as to
reduce employee turnover. The most effective strategy is to adopt a holistic
approach to dealing with attrition. An effective retention strategy will seek to
ensure:
Attraction and recruitment strategies enable selection of the ‘right’ candidate for
each role/organization
New employees’ initial experiences of the organization are positive
Appropriate development opportunities are available to employees, and that they
are kept aware of their likely career path with the organization
The organization’s reward strategy reflects the employee drivers

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 EMPLOYEE RETENTION

CASE STUDY 1
Kei Hiring Solutions Package greatly improves recruiting results and saves
client $64,000 in first 12 months.

SITUATION
For three consecutive years, this 100 employee financial services client was
experiencing above industry average employee turnover, so a formal internal
committee had been established to address the problem.
The President assigned the goal of reducing their turnover rate to a level that
was ten percentage points below the industry average.
Committee members had conducted an employee survey and were seeking
expert advice for interpreting the survey results prior to taking corrective
action.
Two committee representatives enrolled to attend KEi's spring 1999 employee
retention seminar, after which KEi made a presentation to the full turnover
committee and the President, who then engaged the services of KEi to support
the committee efforts.

ACTION
KEi employee retention specialists gathered essential background information
from the committee members and reviewed the results from the recently
completed employee survey.
A series of specific action steps were recommended that would prioritize the
client's employee retention initiatives and generate the greatest return on
investment.
Step one created an employee satisfaction gap analysis using KEi's online
automated tool for gathering input from a representative cross section of the
workforce. The data collection time requirement per employee was only 15
minutes.
This tool asked employees to rate the most critical areas where they need to
be supported if they are to achieve individual job success. It also asked
employees to rate how well this client was providing these support needs to
their employees. The resulting gaps between the importance ratings and the
support provided ratings highlighted employee dissatisfaction and pointed to
the sources of turnover vulnerability.
Step two introduced Behavioral Competency Interviewing to all supervisors
and managers. One full day of training was delivered that introduced them to
KEi's tool for identifying the Behavioral Competencies that lead to long-term

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 EMPLOYEE RETENTION

success in each of the clients job categories. They also learned the techniques
for conducting effective behavior-based interviews that gain proof of job
applicant abilities.
Step three was the implementation of KEi's online Attitude/Behavior screening
questionnaire for screening applicants in the highest turnover job categories.
This tool allowed the Human Resources staff to efficiently eliminate nearly
one-third of job applicants who did not match the company culture. Prior to
using this tool, these misfits were getting through initial screening and were
included in the more costly phases of the interview process. In some cases,
their "interviewing talents" were even getting them hired.
Step four implemented KEi's online Background Verification tool. This tool
moved the client from a source taking 4-5 days for turnaround to a source that
delivered results in 1-2 days.

RESULT
The Human Resources department, for the first time, was able to ensure that
all supervisors used a common, reliable process for interviewing job applicants
and selecting which candidates to hire.
The supervisors applauded the significantly improved screening processes that
Human Resources now used to screen out the misfits so that their valuable
interviewing time and money was no longer wasted.
Documented savings from the implementation of these tools showed a Return
on Investment ratio of 4:1, translating to $64K saved in the first year.

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Case Study 2
August 2002
KEi Attitude/Behavior screening saves client $60,000 on $2,500 investment.

SITUATION
This health services client has 300 employees, 200 of which are in a high
turnover job category. The turnover rate for this group was twenty percentage
points above the industry average.
Considerable time and money was being spent interviewing and orienting
applicants who when offered employment would not show up on the first day
of work.
KEi was engaged to reduce the cost of this unwanted turnover.

ACTION
The client agreed to refine the applicant screening process. KEi recommended
adding a standardized approach to screen-in only those candidates who match
the basic attitude and behavioral criteria that is required to be successful in
this work category.
KEi coached the client in the selection of the appropriate combination of KEi's
web-based attitude/behavior screening questionnaires to be given to all job
applicants as one of the earliest steps in the screening process.
The Human Resources staff had no difficulty implementing the online
questionnaires and the time required for each applicant to complete them was
only 15 to 20 minutes.
Secure, confidential results of the scoring were available to the Human
Resources representative immediately after each applicant finished answering
the final question.
The client was instructed in the interpretation of the score and to use the
score as one of several criteria for making their ultimate hiring decision…never
saying to an applicant that they were not being hired because of the
questionnaire score.
The client measured the success of this screening process by conducting an
internal comparison of the actual performance record of those hired that had
been scored RECOMMENDED by the screening questionnaire vs. those that
had been scored NOT RECOMMENDED.

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RESULT
After six months of implementing the online screening questionnaire, more
than one-third of all applicants had received NOT RECOMMENDED scores.
66% of the RECOMMENDED candidates were still working vs. 47% of the NOT
RECOMMENDED candidates.
6.5% of those RECOMMENDED did not finish orientation or did not show up for
work vs. 40% of those NOT RECOMMENDED.
2.5 % of those RECOMMENDED had later been dismissed for cause vs. 13% of
those NOT RECOMMENDED.
In the second six-month period, the client stopped hiring applicants with a NOT
RECOMMENDED or a MARGINAL score. This saved a considerable HR
department time that was re-directed to other priority duties.
The investment of less than $2,500, that paid for the cost of the questionnaires
plus the time of the HR administrator, returned a savings of more than $60,000
by eliminating the orientation for those applicants who received a NOT
RECOMMENDED score.
This translates to an impressive Return on Investment ratio of 24:1.
In addition to these continuing financial benefits that the client enjoys,
improved employee morale was evident due to reduced frustration with the
performance of new recruits.

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Conclusion
Retention is an important concept that has been receiving considerable
attention from academicians, researchers and practicing HR managers.
In its essence, Retention comprises important elements such as the need
or content, search and choice of strategies, goal-directed behavior,
social comparison of rewards reinforcement, and performance-
satisfaction. The increasing attention paid towards Retention is justified
because of several reasons. Motivated employees come out with new
ways of doing jobs. They are quality oriented. They are more productive.
Any technology needs motivated employees to adopt it successfully.
Several approaches to Retention are available. Early theories are too
simplistic in their approach towards Retention. For example, advocates
of scientific Management believe that money is the motivating factor.
The Human Relations Movement posits that social contacts will motivate
workers. Mere knowledge about the theories of Retention will not help
manager their subordinates. They need to have certain techniques that
help them change the behavior of employees.One such technique is
reward. Reward, particularly money, is a motivator according to need-
based and process theories of Retention. For the behavioral scientists,
however, money is not important as a motivator. Whatever may be the
arguments, it can be stated that money can influence some people in
certain circumstance. Being an outgrowth of Herzberg’s, two factor
theory of Retention, job enrichment is considered to be a powerful
motivator. An enriched job has added responsibilities. The makes the job
interesting and rewarding. Job enlargement refers to adding a few more
task elements horizontally. Task variety helps motivate job holders. Job
rotation involves shifting an incumbent from one job to another.

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BIBLIOGRAPHY
www.google.com

www.scribd.com

www.yahoo.com

a2zmba.blogspot.com

hrmba.blogspot.com

mbafin.blogspot.com

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