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Employee Attrition Project PDF
Employee Attrition Project PDF
Employee Attrition Project PDF
“EMPLOYEE ATTRITION
Management Decision Problem
To decrease the rate of attrition and retain employees in the organization
Research Problem
To understand the factors central to high rate of attrition in the organization
Objectives
1 To understand the factors which are central to employee attrition
1 To suggest certain activities that might undertake in order to decrease attrition rate
and retain employees.
Area- Faridabad.
Sources of Data
Primary- Employee Survey through structured questionnaire and unstructured
Interviews
Secondary- Resigned Employee Data and other relevant data provided by
company
Sample Size – 38
2
Statistical technique – Chi-square test
INTRODUCTION
Many researches have been done in the past to understand the critical factors responsible
for employee attrition. . Thus, this research has been conducted to know the reasons
behind employee attrition in L&T.
Apart from this the research would also help identify the problems that the employees of
L&T (ENC) are facing and what are their demands and expectations from the
organization.
3
LITERATURE REVIEW
ATTRITION
Attrition rate is defined as the number of employees who leave a company during a
specified time period divided by the average total number of employees over that same
time period. It’s expensive, non-productive and frustrating. Harvard Business Review
article estimated the cost of turnover at around 150% of an employee’s annual salary and
could affect 40% of company profits.
ATTRITION CYCLE
4
Employee attrition, a big cause for concern for firms, ranges between 15 per cent and 20
per cent. A company is not hurt because a certain person has left. The company is hurt
because he/she takes away certain knowledge, and there is no ready replacement in the
market.
Attrition, as such, is not a bad phenomenon. It has been known to exist all along.
However, when jobs were scarce, the technology change was less rapid, voluntary
attrition was small and companies managed it. However, with technology changing
rapidly and manpower costs increasing, attrition is high and hurts badly.
Large players often use money power to lure talent from smaller players. Companies also
use the `location' bait to attract employees. While a certain percentage of manpower
turnover is desirable to keep fresh blood coming in, and removing dead wood, higher
percentages are definitely not good indicators of an organization's culture and people
practices.
It is a challenge to find the right talent within constraints such as location, nature of work,
compensation and benefits.
Fresh graduates joining an organization make it a point to leave within the first year.
They equip themselves not for performing their current job but for attracting a new one.
Many a time, there is migration from bigger companies to smaller companies too, mainly
because of the prestige associated with a certain project or a particular client. In some
cases, smaller companies are even better paymasters than larger brands.
The success rates of retention programs are much higher if the management uses a direct,
employee-focused, approach and is ready to invest resources for the same.
5
PRESENT SCENERIO
Economy boom
Positive news about the economy- after 4-yr recession, the economy appears to be on the
rebound and is showing signs of sustainable momentum. Economic indicators support
this recovery: growth rate over 8%
The current economic forces are creating an environment just right for potential business
disaster - unexpected employee attrition and turnover at a level many businesses have
never experienced. Companies already weakened by downsizing and cost cutting must be
prepared to heed the signs and take action if they are to survive, much less excel. Studies
have revealed the following:
Although some of these factors are beyond company’s direct control. When good talent
walks, chances of finding a suitable replacement are slim.
6
destroyed their reason for being. Little emphasis is placed on preparing for
expansion opportunities as the economy recovers. With a decimated strategy and
no visible commitment or active engagement toward building the future, a
company's high-potential employees have little incentive to stay when a
competitor offers a more compelling future.
Career recession - With the flattening and downsizing of organizations,
opportunities for career growth have been severely limited - both vertically and
laterally. When advancement opportunities appear elsewhere, employees will be
looking. In addition, some are contemplating business ventures of their own.
No investment in managers - When people look for greener pastures, they're not
necessarily looking for a new company. As documented in the groundbreaking
study by the Gallup Organization, the number one reason people look for another
position is to leave their manager, not because they don't like their job or the
company. Reduced investment in management development ultimately leads to
employee dissatisfaction with their manager, their primary reason for leaving.
Disenfranchised employees - Many employees feel they have been taken
advantage of: overworked, stifled, and burned out by excessive hours and stress,
only to be rewarded with reduced benefits and/or pay. Lifetime employment no
longer exists, and company loyalty is becoming a thing of the past.
ATTRITION is not just rampant in the BPO sector, but it is fast catching up in other
traditional sectors such as manufacturing and engineering, public sector undertakings and
services.
7
The "possible vulnerability" of white-collar workers should ring alarm bells for HR
heads. The major pitfalls were found to be lack of growth opportunities, dissatisfaction
with job content, inadequate emphasis on policies and systems and interpersonal
relationships.
There is a crying need for companies to engage the employees' interest by creating a
conducive environment for growth, learning, bolster `we-feeling' and compensate as per
industry standards. As the hidden costs incurred in attracting the right workforce and on-
the-job training, is phenomenal.
While recruitment is up sharply from last year, anecdotal evidence suggests employee
attrition is on the rise again, causing more than a few gray hairs in the manpower
departments of engineering companies. And higher level technology companies such as
chip design firms are finding that the more specific the skill required, the harder it is to
get. These companies also see salaries rising and fear that much of benefits accruing to
Indian firms from lower employee costs may fade, though company heads do not see that
happening in the next five years or so. To be sure, employee costs arising from higher
salaries are rising as they did not during 2001 and 2002, but enough companies are
willing to dole out more.
Some Indian companies are already feeling the pinch. Satyam Computer Services, the
No.4 exporter, last month reported an employee attrition rate of almost 20 percent in the
quarter ended June 30, 2007, compared with about 17 percent a year earlier.
To stem defections, Satyam raised its workers' pay in India and other low-cost countries
by 18 percent in July. Tata Consultancy and Infosys increased wages by 15 percent in
April.
Wage inflation in India- Wages are going up at the rate of 10 to 15 percent year after
year.
8
Losing employees to competitors is common; but now partners are increasingly finding
their employees poached by their own vendors and distributors
The term 'employee poaching' can be defined as an act of enticing key employees to
move from one firm to a competitor. It has emerged as the biggest HR challenge for
enterprises, both big and small, across all industry verticals.
In the recent times, the aviation sector has been the worst hit, and state-owned airlines
have lost several of their in-flight crew and ground staff to the new airlines. Retail is
likely to emerge as the next hotspot for poaching, as large players enter the fray and roll
out their stores.
The IT industry has traditionally been a happy hunting ground for poachers, for obvious
reasons. Attrition rates of engineering, software and BPO companies have always been
steep compared to the rest of the industries.
Job satisfaction and employee loyalty are better in companies that allow their staff the
freedom to unleash their creativity and never fail to appreciate a job well done.
Too much of interference and bossing stifles growth and creativity, the motivation levels
of employees plunges and they look for the exit. An atmosphere of distrust too could lead
to employee attrition.
It is in the institution's interest to provide a congenial atmosphere and take initiatives that
would keep the workforce morale high. Contentment and job satisfaction certainly matter
more than fat pay packets and perquisites though with the usual exceptions.
9
There are many factors that contribute to the problem of employee turnover. Some of
these factors cannot be directly controlled by organizations, such as area economic or
labor market conditions. It appears that the high unemployment rate of graduates looking
for professional work experience is a major force responsible for excessive employee
turnover in India.
The level of turnover may exceed a company's capability to handle it and can force a
strategic crisis - schedule slips, quality degradation, business process breakdown,
delivery delays, and the resulting potential of customer attrition.
The kind of treatment meted out to the new recruit by the organization and co-workers
during this crucial transition period can determine the candidate's decision to either
continue in the job or call it quits.
Considering that it can cost a company between 50 and 150% of an employee's salary to
find a suitable replacement, it is simpler and far more economical to extend the red carpet
treatment to new recruits, and go all out to ensure that they fit in comfortably with the
office culture.
Reports indicate that much of the voluntary turnover of companies takes place within the
first one year of employment, corroborating the widely held belief that first impressions
play a significant role in an organization's ability to find and retain talented employees.
During this time, newcomers are often quietly sizing up the organization and testing
waters to see if the job is an ideal fit. Not surprisingly, organizations that make them feel
wanted and welcome are the ones they choose to build their careers with.
COST OF ATTRITION
10
Around 150% of an employee’s salary (source- Harvard Business Review article)
Tangible recovery costs include recruiting, rehiring, and retraining. In fact, a new
employee typically is a cost to the company until he or she reaches a threshold of
productivity. In higher level technical and management positions this can exceed 6
months. For companies that have cut all expenses not deemed mission critical, such as
training and recruitment efforts, the lag in performance, additional cost, and stress on
remaining employees creates a vicious downward spiral.
Equally critical to an organization's viability are its Vital Intangibles (VIs), which can
take the form of informal relationships, networking connections, or a web of favors a key
employee has spun during his or her tenure - favors from vendors or other business
contacts that can be called in as needed. VIs are hard to identify and may be even harder
to recoup. Many companies will take the steps to protect trade secrets, intellectual
property, copyrights and patents, but intangible assets are less obvious, though no less
critical to an organization, and their loss is no less damaging.
Undocumented workarounds, tricks, tips and "the knack" that come from experience in
multiple roles within the organization make up another collection of VIs. These are the
subtleties that allow an employee to do a task more efficiently, thereby increasing their
performance - and the company's. How much is this knowledge worth to your business?
1. Cost of the person(s) who fills in while the position is vacant. This can be either
the cost of a temporary or the cost of existing employees performing the vacant
job as well as their own.
2. 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.
3. Cost of conducting an exit interview to include the time of the person conducting
the interview, the time of the person leaving, the administrative costs of stopping
11
payroll, benefit deductions, benefit enrollments, COBRA notification and
administration, and the cost of the various forms needed to process a resigning
employee.
4. Cost of the manager who has to understand what work remains, and how to cover
that work until a replacement is found.
5. Cost of training your company has invested in this employee who is leaving.
Include internal training, external programs and external academic education.
6. Impact on departmental productivity because the person is leaving.
7. Cost of severance and benefits continuation provided to employees who are
leaving that are eligible for coverage under these programs.
8. Cost of lost knowledge, skills and contacts that the person who is leaving is taking
with them out of your door.
Recruitment Costs
1. Cost of advertisements
2. Cost of the 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. Cost of the hiring department (immediate supervisor, next level manager, peers
and other people on the selection list) time to review and explain position
requirements, review candidates’ background, conduct interviews, discuss their
assessments and select a finalist. Also include their time to do their own sourcing
of candidates from networks, contacts and other referrals. This can take upwards
of 100 hours of total time.
4. Cost of the various candidate pre-employment tests to help assess a candidates'
skills, abilities, aptitude, attitude, values and behaviors.
Training Costs
12
1. Cost of orientation
2. Cost of departmental training
3. Cost of supervisory time spent in assigning, explaining and reviewing work
assignments and output. This represents lost productivity of the supervisor.
Consider the amount of time spent at 7 hours per week for at least 8 weeks.
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. Cost of coworkers and supervisory lost productivity due to their time spent on
bringing the new employee "up to speed."
2. Cost of mistakes the new employee makes during this elongated indoctrination
period.
1. 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,
business cards, internal and external publicity announcements, telephone
hookups, cost of establishing email accounts, costs of establishing credit card
accounts, or leasing other equipment such as cell phones, automobiles.
SITUATION IN L&T
L&T is facing a high attrition rate of over 25%. L&T is the only Indian Engineering
multinational company with such a great potential and talent, and it should try to improve
its performance by retaining this talent. Change in policies and strategy due to this is
ultimately going to benefit the company, which has already started Talent crisis.
13
L&T will always attract good people but the only question mark is whether it will retain
them.
05-06:
[11]/ [(35+102)/2]
=17.5%
06-07:
14
[38]/ [(102+187)/2]
=26.29%
April 07- 4
May 07- 7
Chapter 2
The study was conducted on employees of L&T- Engineering and Construction Division,
Faridabad. Employees were interviewed with questionnaires which had structured
questions on their importance attached to various factors behind employee attrition.
15
Time: The primary data collection and analysis was conducted between 2nd April 2007
and 2nd June 2007.
2.2 Hypothesis
Data was collected from both primary as well as secondary sources. Firstly,
secondary data available was reviewed to know the current scenario in the
industry, calculation of attrition rate, the cost of attrition, the most common
reasons behind attrition. The resigned employee data was also analyzed.
This was followed by a primary survey to find the problems that the employees
are facing and the importance they attach to various factors behind attrition.
The questionnaire was designed based on the literature review done as well as
with the views of the industry experts.
16
The questions in the questionnaire helped us correlate and find out the relative
importance of various factors that are responsible for attrition. The relationship
has been found using chi-square test.
2.6 Sampling
2.6.1 Sampling Design – The employees were sampled on the basis of Random
Sampling.
2.6.2 Sample Size – The sample size for the employee survey was 38 which
would be approximately 20% of the target population.
For the purpose of data collection both primary as secondary data would be used.
For the purpose of primary data collection of employee research, employees were
administered with a questionnaire which had structured questions. Also few
unstructured interviews were carried out. Secondary data of resigned employees
and other relevant information was provided by the company.
17
Chapter 3
Data Presentation
L&T is into several business lines, ENC being one of them. A part of the ENC division in
Faridabad is L&T Engineering (LTen), which had a high rate of attrition.
Secondary data: 38 employees resigned in the year 06-07. Data of these resigned
employees was collated and analyzed to form a hypothesis.
Primary data: Data collected from unstructured interviews and employee survey was
analyzed to test the hypothesis.
18
3.1 SECONDARY DATA PRESENTATION
3.1.1 STRENGTH DATA
Total Employee Data
05-06:
MARCH
'05 35
APR '05 6 0 41
MAY '05 6 0 47
JUN '05 6 2 51
JUL '05 6 0 57
2005 – 2006
AUG '05 7 1 63
SEP '05 4 1 66
OCT '05 3 0 69
NOV '05 1 2 68
DEC '05 8 2 74
JAN '06 3 0 77
FEB '06 14 3 88
MAR '06 14 0 102
TOTAL 78 11
06-07:
MARCH
'06 102
2006 –
19
JUL '06 12 2 114
AUG '06 29 2 141
SEP '06 11 3 149
OCT '06 23 3 169
NOV '06 14 3 180
DEC '06 12 2 190
JAN '07 1 2 189
FEB '07 2 4 187
MAR '07 13 13 (1 ADV) 187
TOTAL 125 40 (2 ADV)
20
APPOINTMENTS
05-06:
14
12
10
8
No of app
6
0
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
'05 '05 '05 '05 '05 '05 '05 '05 '05 '06 '06 '06
Month
06-07:
30
25
20
No of app 15
10
0
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
'06 '06 '06 '06 '06 '06 '06 '06 '06 '07 '07 '07
Month
21
RESIGNATIONS
05-06
2.5
No of resg 1.5
0.5
0
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
'05 '05 '05 '05 '05 '05 '05 '05 '05 '06 '06 '06
Month
06-07:
12
10
No of resg 6
0
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
'06 '06 '06 '06 '06 '06 '06 '06 '06 '07 '07 '07
Months
22
STRENGTH
05-06:
120
100
80
Tot strength 60
Series1
40
20
0
APR JUN AUG OCT DEC FEB
'05 '05 '05 '05 '05 '06
Month
06-07:
200
180
160
140
120
Tot strength 100
80
60
40
20
0
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
'06 '06 '06 '06 '06 '06 '06 '06 '06 '07 '07 '07
Month
23
This data suggests that in the year 05-06 there has been a heavy recruitment drive
and few resignations. Strength of the company increased three fold from previous
year. On the other hand, in the year 06-07 there has been a heavy recruitment drive
but still the strength has not matched the set targets as there are many resignations
during the year.
24
3.1.2 RESIGNED EMPLOYEE DATA
Department
10
9
8
7
6
5
4
3
2
1
0
CIVIL MECH INSTRU PIPING PROC ELEC PROJ
Dept
25
Time-span with highest rate of attrition
Time Span
Grade Wise
16
14
12
10
No of resg emp 8
6
4
2
0
E1 E2 E3 MI TO M5 TO S JS
M4 M9
There are three divisions of grade in the company. Supervisory grade is given to diploma
holding employees, executive grade is given to degree holding employees and managerial
26
grade is higher than executive grade. Executive Grade has highest attrition (24) followed
by Supervisory Grade (8). Very few resignations are from Managerial Grade (6).
Findings: Employees have left from each grade. However highest number of employees
have left from Executive grade. Managerial grade faces lowest attrition. The probable
reason for this is ESOPS being offered to them.
QUALIFICATION
ENG
DRAFT
31
27
MONTH WISE RESIGNATIONS
12
10
No of resg 6
0
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
'06 '06 '06 '06 '06 '06 '06 '06 '06 '07 '07 '07
Months
MARCH month had highest attrition (12) followed by FEBRUARY (4) and MAY (4).
Findings: Employees have left in each month. Most employees have left in the month of
March, almost thrice the number from other months.
28
Month Wise Attrition Rate
4
Percentage
3
0
APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
'06 '06 '06 '06 '06 '06 '06 '06 '06 '07 '07 '07
Month
Rating wise
29
Rating
18
16
14
12
10
No of resg em p
8
6
4
2
0
TOP MIDDLE LOWER OTHERS
Rating
Employees in L&T are rated after the completion of 11 months of their service in the
organization. Ratings given are Top, Middle, Lower and people who were not rated fall
in the Others rating category.
Highest attrition was from OTHERS Rating (17) followed by MIDDLE Rating (8).
Findings: Employees of each rating have left. However highest number of employees
have left from the OTHERS rating i.e. they were not rated before leaving the organization
as the rating of employees is done after completion of 1 year of service in the month of
January . Some TOP rated people have also left the organization which means highest
loss to an organization.
30
Reason Wise
18
16
14
12
No of resg 10
emp 8
6
4
2
0
SAL BEN JOB OPP SUP PEE LOC MGM RES
Reason
Reasons were asked from the nine factors: salary, benefits, job content, opportunity for
development, relationship with supervisor, relationship with peers, location of work
place, management policies and work culture, resources to do the job
Among resigned employees, 17 employees gave salary, 16 employees gave opportunity
for development and growth, 2 gave management policies and 1 gave location of work
place as a reason for leaving.
Findings: Salary and Opportunity for development and growth are the reasons given by
most employees for leaving the company.
31
DATA FROM UNSTRUCTURED INTERVIEWS
Areas of Dissatisfaction
32
3.8 Total Employees Covered in Survey
12
<1yr
18
1to 2yrs
>2yrs
The sample for survey consisted of 18 people whose time span in the organization was <1
yr, 12 people whose time span was 1-2 yrs and 8 people whose time span was >2 yrs.
E
11 M
S
23
The sample for survey consisted of 23 people from E band, 11 people from M band and 4
people from S band.
Survey Results
33
Tabulation of 1st most important reason and 2nd most important reason given by each of
the 38 employees surveyed along with their grade and time span in the organization.
SURVEY RESULTS
34
24 opp for dev job content E <1 yr
35
1st Reason Frequency
1
11
2
Opp for dev
1
12 Salary
Job Content
R/S w ith supr
7
R/S w ith peers
Benefits
Resources
Mgmt
13
13 people said that 1st most important reason for attrition was salary, 12 said opportunity
for development and 7 said job content.
2
3
0 Opp for dev
2 Salary
14
Job Content
4 R/S w ith supr
Location
Benefits
Resources
5
Mgmt
8
14 people said that 2nd most important reason for attrition was opportunity for
development, 8 said salary and 5 said job content.
Time-Span Wise
36
Less than 1 yr
6%
17%
sal
opp
job
49%
ben
28%
FINDINGS: Among the people who have been working in the organization for less than
1 yr, most (49%) feel salary is the most important reason for attrition, some (28%) feel
opportunity for development and growth is the most important reason. Some (17%) also
feel job content is the most important reason and few (6%) feel benefits are most
important.
1 to 2 yrs
25%
37%
sal
opp
mgmt
job
13%
25%
37
FINDINGS: Among the people who have been working in the organization for l to 2 yrs,
most (37%) feel salary is the most important reason for attrition, some (25%) feel
opportunity for development and growth is the most important reason. Some (25%) also
feel job content is the most important reason and few (13%) feel management policies are
most important.
8% 17%
job
17%
opp
res
supr
8% peer
8% 42% sal
FINDINGS: Among the people who have been working in the organization for more than
2 yrs, most (42%) feel opportunity for development and growth is the most important
reason for attrition, some (17%) feel job content is the most important reason. Some
(17%) also feel relationship with peers is the most important reason, few (8%) feel
relationship with supervisor is most important and very few (8%) feel salary is most
important.
Grade Wise
38
Executive Grade
4% 13%
sal
4% 44% opp for dev
benefits
management
job content
35%
FINDINGS: Among the people from Executive Grade, most (44%) feel salary is the most
important reason for attrition, some (35%) feel opportunity for development and growth
is the most important reason. Some (13%) also feel job content is the most important
reason and few (4%) feel benefits are most important. Very few (4%) feel management
policies are most important.
Managerial Grade
18%
28% job
9% sal
opp
res
supr
9%
18% peer
18%
39
FINDINGS: Among the people from Managerial Grade, most (28%) feel job content is
the most important reason for attrition, some (18%) feel opportunity for development and
growth is the most important reason, some (18%) feel relationship with peers is the most
important reason. Some (18%) also feel salary is the most important reason and few (9%)
feel relationship with supervisor is most important. Very few (9%) feel resources to do
the job are most important.
Supervisory Grade
25%
25%
FINDINGS: Among the people from Supervisory Grade, most (50%) feel opportunity for
development and growth is the most important reason for attrition, some (25%) feel
salary is the most important reason. Some (25%) also feel job content is the most
important reason.
Thus, if we combine the data then we get that overall the most critical reason
responsible for employee attrition is Opportunity for development and growth. Next
important reason is Salary followed by Job content and Relationship with
supervisor.
40
Points Given to Each Reason by Each Employee in the Questionnaire
Tabulation of the points allotted to each factor by each of the 38 employees surveyed
2 17 7 12 16 15 14 8 8 11
3 14 1 17 17 13 11 10 14 11
4 17 14 8 12 15 9 17 11 5
5 16 8 13 16 13 11 8 10 13
6 15 8 14 16 10 9 11 12 13
41
7 15 13 12 12 12 10 15 8 11
8 8 13 12 16 13 11 9 12 14
9 16 14 9 15 11 10 8 12 13
10 15 9 15 14 11 10 9 11 14
11 12 16 9 15 13 13 9 9 12
12 14 9 11 17 15 12 4 12 14
13 14 9 17 16 6 6 8 14 18
14 13 8 14 14 14 11 10 11 13
15 11 9 16 15 11 11 7 13 15
16 10 12 11 11 15 14 8 16 11
17 15 10 14 17 18 0 8 11 15
18 11 2 13 15 11 17 9 14 16
19 14 11 11 16 12 10 12 10 12
20 14 10 12 16 14 8 9 11 14
21 23 10 7 13 15 10 8 10 12
22 14 7 16 18 12 10 7 13 11
23 19 5 13 17 11 10 10 10 13
24 12 8 17 17 13 8 8 13 12
25 17 9 13 12 10 8 11 15 13
26 8 7 18 17 13 11 8 13 13
27 15 12 13 15 9 9 10 13 12
28 18 7 17 15 12 10 10 7 12
29 17 13 14 15 14 13 1 13 8
30 20 12 15 16 13 10 5 9 8
31 11 9 13 15 13 13 8 15 11
32 17 6 13 14 13 13 10 12 10
33 19 3 20 19 8 9 6 8 16
34 10 7 16 17 12 15 5 9 17
35 14 7 18 13 13 9 13 12 9
36 18 4 19 15 12 9 8 10 13
37 14 9 12 16 13 11 9 12 12
38 10 10 13 15 15 16 7 13 9
42
Total 553 342 516 578 478 397 332 438 470
600
500
400
Points 300
200
100
0
Sal Ben Job Opp sup peers Loc Mgm Res
Reason
Finding:
The survey results reveal that Opportunity for development and growth is the most
important factor behind employee attrition as it has the highest score. Second important
reason is Salary. Third important reason is Job content. Fourth important reason is
Relationship with supervisor.
Chapter 4
Ho: Salary is the most important reason why people leave the organization.
H1: Salary is not the most important reason why people leave the organization.
43
Chi-Square Calculations
The computed value is higher than the critical value. Hence we reject the null hypothesis.
The hypothesis is rejected and hence we accept the alternate hypothesis that salary
is not the most important reason why employees leave an organization.
FINDINGS
Although salary is important, but it is not the most important reason for employee
attrition in the organization
Most important reason for attrition is opportunity for development and growth
Next important factor came out to be Salary followed by Job content and
Relationship with supervisor
44
Almost every one surveyed from the <1 yr time-span category said salary was the
most important reason responsible for attrition. Almost none from >2 yr time-
span said Salary was most important
Among the people who said salary was the most important reason, most were
from E and S Grade and very few from M grade
Chapter 5
The most important factor that has come as a result of the employee survey and
unstructured interviews is Opportunity for development and growth. This is one
reason why many people leave. This is one area that needs immediate attention.
45
Another very important factor is Salary. Salary is not competitive. This point has
been pointed out by many employees.
Suggestions:
46
Benefits like retention bonuses etc should be given
General
CONCLUSION
47
Study of HR practices and employee attrition in the organization was a great learning
experience. It helped in understanding the intricacies of HR role in an organization. The
study helped in finding out the most critical reasons responsible for employee attrition in
the organization. It brought various concerns of the employees to the forefront. Apart
from the project there was also a lot of on-the-job training which helped enhance HR
skills and gain a better understanding of the functioning of HR. It was an effective
learning in combining the theoretical and practical aspects relating to project.
There has been immense learning in the field of employee retention. The basics about
attrition and retention, attrition calculation, cost of attrition, consequences of high
attrition rate and reasons for attrition.
The study helped in understanding the relative importance of various factors responsible
for employee attrition, also revealed the fact that that opportunity for development and
growth is most important for the employees of the organization. There is a crisis in
human capital management. We need fundamental reform in order to address this crisis
and ensure long-term ability to hire and manage a high-quality, high-performing
workforce. Most employees are not motivated solely by money. Historically, firms have
used money and financial rewards to retain employees. High tech employees are enjoying
the fastest salary progression of almost any profession, yet they are changing jobs
constantly. Today’s employees seek more than monetary compensation. Research
conducted in the company revealed that opportunity for development, salary, job content,
relationship with supervisor are important reasons for employee attrition. The myth that
salary is the most important reason for employee attrition was clarified as employees are
more concerned about opportunity for development. Salary is also important, salary
needs to be competitive with the market rates, other wise there is a high risk of loosing
your employees to your competitors. I also learned that even though the salary might be
high, an employee would be willing to change job for better development opportunity.
L&T can retain employees and reduce attrition rate by dealing with the two important
factors behind attrition, Opportunity for development and growth and Salary. More focus
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on employee training and employee recognition is required. Salary needs to be made
more competitive. To retain employees it is important to provide sufficient opportunities
for development and growth, competitive salary, challenging jobs that use employee
skills efficiently and good managerial guidance, among other things. We are in a time of
manpower shortages that will not abate in the near term. Employers have to work smarter
and permit employees to work smarter.
ASSUMPTIONS
LIMITATIONS
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The study suffers from some limitations due to the problems encountered during the
project study.
Sample size was limited to one business unit, thus the results cannot be
generalized to other business units.
The study is limited to a small time frame of two months and hence the results
may be biased.
Some of the respondents were reluctant to part with certain information on the
text of sensitivity of the information and also, in some case the policy of the company
came in the way for a free revelation of the desired input.
Some of the employees were not candid enough to divulge all the required
information.
The magnitude of the influence of these limiting factors can have a bearing on the report,
but is too little to alter the basic objectives of the report.
Annexure 1
Questionnaire
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The objective of this questionnaire is to co-relate the important attributes that
Allocate 3 points between the two alternative reasons in each pair based on
perceived importance in the following fashion
0 or 1 or 2 or 3
3 2 1 0
1 Job content
Resources to do the job
2 Salary
Benefits (like telephone, medical entitlement)
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10 Job content
Location of work place
14 Salary
Location of work place
15 Job content
Relationship with supervisor
20 Job content
Salary
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Opportunity for development and growth
24 Job content
Benefits (like telephone, medical entitlement)
26 Salary
Resources to do the job
29 Job content
Management policies and Work culture
32 Job content
Opportunity for development and growth
33 Salary
Relationship with peers
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Employee Profile
Time-span in organization:
□ <1 yr □ 1-2 yrs □ >2 yrs
Grade:
□E □S □M
REFERENCES
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Mondy, R. Wayne, and Noe, Robert M. (1996). Human Resource Management.
Upper Saddle River, Prentice-Hall.
Nadler, Leonard, and Wiggs, Garland D. (1986). Managing Human Resource
Development. San Francisco: Jossey-Bass.
Decenzo, D.A. and S.P. Robbins.1988. Human Resource Management. New
Delhi: Prentice- Hall of India Pvt. Ltd.
William, B.W. and Keith Davis. 1993. Human Resource and Personnel
Management. MC Grow - Hill.
The Hindu
www.google.com
www.humancapital.com
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