+ All Categories
Home > Documents > 21430807 Attrition attrition

21430807 Attrition attrition

Date post: 14-Apr-2018
Category:
Upload: abhi-roy
View: 248 times
Download: 0 times
Share this document with a friend

of 56

Transcript
  • 7/27/2019 21430807 Attrition attrition

    1/56

    Executive summary

    Attrition is one of important problem the IT industries are facing now a

    days. Thus, I have done research on this subject.

    The primary objective of this research is to study the attrition in IT

    industry.

    The secondary objective of this study is to know what are the reasons

    for the employees to leave their jobs, to evaluate how the employees

    are valued to the organization and to prove that the organization

    policies should be supportive to the staffs working there.

    I have used the Descriptive Research design for the research. Also, I

    have collected primary and secondary data to do this research.

    The sampling unit used is the IT industry, the sample size of the

    research is 20.

    I have used Questionnaire for collecting the data.

    Percentage Analysis and Chi square are the two statistical tools used

    for Analysis.

    The study reveals that the employees are leaving the organization

    because of the work stress and the company policies are supportive to

    the employees.

    _______________________________________________________________________

    _

    1

  • 7/27/2019 21430807 Attrition attrition

    2/56

    INTRODUCTION:

    Attrition: A reduction in the number of employees through

    retirement, resignation or death. Employee turnover is an enormous

    problem for any company and creates negative bottom-line impacts.

    The costs associated with employee turnover show up in such areas as

    advertising for new employees and the time and money necessary to

    screen the applicants, training new employees, lost productivity,

    decreased accuracy and quality of work among the employees left

    behind who are upset about their colleagues departure, using

    expensive contract and temporary employees to do the work until a

    permanent employee is hired, and the expenses associated with

    replacing lost business.

    Employee turnover costs can amount to thousands of dollars, annually.

    It can also prevent companies from pursuing their growth opportunities

    and acquiring new business & Attrition rate is the rate of shrinkage in

    size or number

    Types of attrition:There are three types as follows:

    Market Driven based on the demand for a particular skill or ability

    in temporarily low supply (self-correcting in normal markets). The

    typical initial reaction by employers to market driven attrition is to

    increase wages, offer better benefits, escape the market by relocation

    or site migration or relax hiring standards.

    Workload or Stress Driven on the actual capacity to perform the

    work required. This is when there are not enough of the right people.

    Process Driven variables associated with job design and/or the

    organization. In some industries and organizations there is a belief that

    _______________________________________________________________________

    _

    2

  • 7/27/2019 21430807 Attrition attrition

    3/56

    attrition has always been there and always will be there. Addressing

    this scenario produces the most lasting results.

    Attrition Cycle & drivers

    Typically, in organizations experiencing systemic or chronic attrition, a

    cycle develops as:

    Attrition normally brings decreased productivity. People leave causing

    others to work harder. This contributes to more attrition, which

    contributes to increasing costs, lowe revenue. This often forces

    additional cost reductions and austerity measures on an organization.

    This in turn makes working more difficult, causing the best performers

    with the most external opportunities, to leave.

    There are two primary drivers of voluntary attrition. These are, no one

    likes to feel inadequate and, in most organizations, it is easier to leave

    than stay and try to alleviate the problem. People feel inadequate

    when communication is either incomplete or unreliable.

    Choices are either absent or insufficient. Often, the challenges in

    these situations are unclear, unsatisfying or overwhelming. People willgive up trying to change things when promises are not specific, not

    kept or are not fulfilled in a timely manner. Additionally, when

    expectations are thwarted, changed arbitrarily or unfulfilled, people

    will lose motivation.

    Other common demotivators are when commitments are

    unacknowledged, vague or incompatible.

    Rarely do organizations create environments where employees can

    meaningfully participate in activities, which will reduce turnover.

    Attrition is commonly thought of as people

    terminating employment. Another form of classifying types of attrition

    are:

    _______________________________________________________________________

    _

    3

  • 7/27/2019 21430807 Attrition attrition

    4/56

    Empty Chair Attrition: Employees quit and leave

    Warm Chair Attrition: Employees quit and stay.

    In the best of worlds, employees would love their jobs, like their

    coworkers, work hard for their employers, get paid well for their work,

    have ample chances for advancement, and flexible schedules so they

    could attend to personal or family needs when necessary. And never

    leave.

    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 coworkers, want a change, or because their

    spouse gets a dream job in another state. So, what does all that

    turnover cost? And what employees are likely to have the highest

    turnover? Who is likely to stay the longest?

    Defining Attrition: "A reduction in the number of employees throughretirement, resignation or death"

    Defining Attrition rate: "the rate of shrinkage in size or number"

    Attrition is beginning to significantly affect offshore ROI. Just as

    businesses faced a scarcity of talented IT resources during the dotcom

    era, organizations in offshore countries such as India are experiencing

    similar pains. Skilled employees are hopping from job to job and taking

    with them the customer knowledge and technical expertise that any

    company needs. Their salaries are increasing, along with their perks,

    benefits, and bonuses.

    _______________________________________________________________________

    _

    4

  • 7/27/2019 21430807 Attrition attrition

    5/56

    Defining the attrition problem

    Global outsourcing and the astounding amount of foreign direct

    investment pouring into China, Russia, and India have created

    tremendous opportunities and competition for talented IT professionals

    in those countries. The downside of this increased competition is a

    rising rate of attrition, particularly in India. Fiscal third-quarter 2005

    (ended December 2004) results filed by Infosys, Wipro, Satyam, and

    TCS listed attrition rates between 7.6% and 17.7%. Vendors that we

    have interviewed place the numbers much higher, at 25%60%, while

    an April 2005 BusinessWeek article estimated an attrition rate of 60%,

    with some India service providers experiencing up to 80% turnover.

    To put these attrition numbers into perspective, if a company has 100

    programmers and an attrition rate of 25%, then 25 of its IT staff will

    leave each year. Think about the time and money it took to find,

    interview, hire, train, and coach those 25 people. Now think about

    losing them and starting the hiring and training processes anew.

    How do the hiring and training processes break down in terms of total

    costs in India? The typical time for advertising, interviewing, screening,

    negotiating, and hiring a new employee is about two weeks.

    _______________________________________________________________________

    _

    5

  • 7/27/2019 21430807 Attrition attrition

    6/56

    Companies usually allot one week for programmers to become familiar

    with the new business, two more weeks for technical training, and one

    last week for customer training. Now imagine a 25% attrition rate and

    replacing 25 of these programmers each year. Based on a yearly salary

    of $15,000 for the human resource person and $25,000 for the

    programmer, it would cost an additional $63,000 annually in

    acquisition and employee training costs. After considering these

    figures, it quickly becomes apparent why companies are investing in

    strategies to prevent attrition.

    Reasons for attrition

    It is not easy to find out as to who contributes and who has the control

    on the attrition of employees. Various studies/survey conducted

    indicates that every one is contributing to the prevailing attrition.

    Attrition does not happen for one or two reasons. The way the industry

    is projected and speed at which the companies are expanding has a

    major part in attrition.

    For a moment if we look back, did we plan for the growth of this

    industry and answer will be no. The readiness in all aspects will ease

    the problems to some extent. In our country we start the industry and

    then develop the infrastructure. All the major IT companies have faced

    these realities. If you look within, the specific reasons for attrition are

    varied in nature and it is interesting to know why the people change

    jobs so quickly. Even today, the main reason for changing jobs is for

    higher salary and better benefits. But in call centers the reasons aremany and it is also true that for funny reasons people change jobs. At

    the same time the attrition cannot be attributed to employees alone.

    Organizational matters:

    _______________________________________________________________________

    _

    6

  • 7/27/2019 21430807 Attrition attrition

    7/56

    The employees always assess the management values, work culture,

    work practices and credibility of the organization. The Indian

    companies do have difficulties in getting the businesses and retain it

    for a long time. There are always ups and downs in the business. When

    there is no focus and in the absence of business plans, non-availability

    of the campaigns makes people to quickly move out of the

    organization.

    Working environment:

    Working environment is the most important cause of attrition.

    Employees expect very professional approach and international

    working environment. They expect very friendly and learning

    environment. It means bossism; rigid rules and stick approach will not

    suit the call center. Employees look for freedom, good treatment from

    the superiors, good encouragement, friendly approach from one andall, and good motivation.

    Job matters:

    No doubt the jobs today bring lots of pressure and stress is high. The

    employees leave the job if there is too much pressure on performance

    or any work related pressure. It is quite common that employees are

    moved from one process to another. They take time to get adjusted

    with the new campaigns and few employees find it difficult to get

    adjusted and they leave immediately. Monotony sets in very quickly

    and this is one of the main reasons for attrition. Youngsters look jobs

    _______________________________________________________________________

    _

    7

  • 7/27/2019 21430807 Attrition attrition

    8/56

    as being temporary and they quickly change the job once they get in

    to their own field. The other option is to move to such other process

    work where there is no pressure of sales and meeting service level

    agreements (SLA). The employees move out if there are strained

    relations with the superiors or with the subordinates or any slightest

    discontent.

    Salary and other benefits:

    Moving from one job to another for higher salary, better positions and

    better benefits are the most important reasons for attrition. The salary

    and offered from MNC companies in Bangalore, Delhi and Mumbai have

    gone up very high (Rs 15000 to Rs 18000 per month) and it is highly

    impossible for Indian companies to meet the expectation of the

    employees. The employees expect salary revision once in 4-6 months

    and if not they move to other organizations.

    Personal reasons:

    The personal reasons are many and only few are visible to us. Theforemost personal reasons are getting married or falling in love or

    change of place. The next important personal reason is going for

    higher education. Most of the BE, MCA and others appear for GATE

    _______________________________________________________________________

    _

    8

  • 7/27/2019 21430807 Attrition attrition

    9/56

    examination or other examinations and once they get cleared they

    quickly move out.

    Health is another aspect, which contributes for attrition. Employees do

    get affected with health problems like sleep disturbances, indigestion,

    headache, throat infection and gynecological dysfunction for lady

    employees. Employees who have allergic problems and unable to cope

    with the AC hall etc will tend to get various other health problems and

    loose interest to work.

    Poaching:

    The demand for trained and competent manpower is very high.

    Poaching has become very common. The big companies target

    employees of small companies. The placement agencies have good

    days for doing more business.

    The employees with 4-6 months experience have very good confidence

    and dare to walk out and get a better job in a week's time. Most of the

    organizations have employee referral schemes and this makes peopleto spread message and refer the know candidates from the previous

    companies and earn too.

    Employees advocate:

    _______________________________________________________________________

    _

    9

  • 7/27/2019 21430807 Attrition attrition

    10/56

    One of the main reasons why employees leave companies is

    because of problems with their managers. An HR professional can be

    termed an employees advocate and a bridge between top

    management and employees at all levels. There is a huge gap between

    HR professionals and employees in terms of understanding challenges

    and delivering requirements. HR has not really understood the

    problems associated with employees careers and jobs. The companys

    overall plans and strategies also depend on HR professionals as they

    voice employees problems and requirements. The HR department

    should have genuine interest in the employees welfareit is

    responsible for making sure that their expectations are met. By doing

    this it is easier to meet the companys business targets.

    How Insights Can Help Build Strong Manager/Employee

    Relationships:

    The Insights Discovery System is based on perspectives and attitudes

    relevant to understanding organizational and cultural requirements

    and needs of people in relation to motivation and leadership. The

    understanding of individual differences that Insights provides is

    fundamental to improving communication, co-operation and building

    effective and high morale teams. This understanding is what bridgesthe gap between manager and employee.

    The Insights Discovery System generates reports that reveal personal

    preferences or triggers of each individual - including issues that cause

    stress. In essence, Insights can bring about a closer relationship

    _______________________________________________________________________

    _

    10

  • 7/27/2019 21430807 Attrition attrition

    11/56

    between employee and manager to enable both parties to better

    adapt, connect and understand one another.

    An employee may be highly competent but his or her style may be

    different from that of the direct manager. The "Value to a Team"

    section of an Insights report provides crucial information to a manager

    who tends to evaluate all employees against one set of standards.

    Insights can help managers recognize the value and uniqueness of

    each person's contributions then reward them accordingly.

    Insights also serve as a communication vehicle for discussions about

    an employee's current and future interests. Insights help managers

    and employees better identify what values (needs) are most important

    to each individual and how these values impact the person's attitude

    towards work. Values can range from an employee feeling stable and

    secure to someone enjoying challenge.

    The Insights Discovery System is a powerful workforce enhancementtool. It can:

    - Enhance the effectiveness, commitment and retention of an

    incumbent workforce though increased understanding of human

    behavior

    - Motivate and retain employees whose basic monetary and material

    needs may have been satisfied, but who are seeking their internal

    drives

    - Improve HR planning and development

    - Identify motivational and managerial issues related to interpersonal

    style

    _______________________________________________________________________

    _

    11

  • 7/27/2019 21430807 Attrition attrition

    12/56

    - Reduce the impact of turbulence and organizational transition on

    employee commitment and productivity.

    How to save high attrition rates?

    How much would you invest to keep your employees focused

    and happy?

    This is the question on the minds of CEOs and managers worldwide as

    the technology boom lifts and the employment market opens.

    _______________________________________________________________________

    _

    12

  • 7/27/2019 21430807 Attrition attrition

    13/56

    From the employer's perspective, employees are an investment. You

    interview to make sure an individual has good work ethic, motivation,

    and drive. Most of the time, employees are considered a financial

    investment. Yet there's much more to it than that. There is a

    significant emotional investment that is crucial to accelerating

    business strategies and reaching organizational goals.

    You probably know someone who owns an outdated, overused vehicle

    but won't entertain the thought of trading it in even though they can

    afford to upgrade. Why, you might ask, do they keep it? Well, the

    owner has probably invested substantial time, money and care into

    keeping it in top condition, not to mention the dependability that has

    taken them to countless doctors appointments, baseball practices and

    events. It seems senseless to throw it away. The cost of replacing the

    vehicle would be enormous compared to the cost of upkeep on the old

    one. Even with inanimate objects, we become accustomed to

    personality and quirks and develop a common trust.

    When this same logic is applied to employees, we find the cost of

    replacing employees comparable to that of investing in a new

    automobile. Recruitment, hiring, benefits and administrative costs put

    an organization upside down on the investment.

    Thankfully, companies have come to realize that keeping employees is

    more cost-effective than replacing them. Retaining valuable employees

    has other benefits - retaining the vault of knowledge that's been

    accumulated, skills learned and trust and relationships they have built

    _______________________________________________________________________

    _

    13

  • 7/27/2019 21430807 Attrition attrition

    14/56

    with customers and co-workers.

    People Are Not Easily Replaced

    Even though today's pool of unemployed workers is deep,

    organizations choose to spend more time and resources on retaining

    existing employees than starting from scratch. Yes, there are financial

    reasons behind this focus on retention. However, there are many other

    contributing factors such as the effect attrition has on customer

    service, corporate culture and employee morale and loyalty. All these

    factors can and will be effected by turnover. Basically, when good

    people leave an organization they take their training and knowledge

    and often times, relationships with them.

    Drivers of Turnover

    Turnover is often driven by corporate restructuring and tight

    competition for key talent. For many firms, surprise employee

    departures can have a significant effect on the execution of businessplans and may eventually cause a parallel decline in productivity. This

    phenomenon is especially true in light of current economic uncertainty

    and following corporate downsizing when the impact of losing critical

    employees increases exponentially.

    When managers or supervisors are asked why good people leave, most

    respond, "Its about money." Or, they dismiss the departure matter-of-

    _______________________________________________________________________

    _

    14

  • 7/27/2019 21430807 Attrition attrition

    15/56

    factly by stating the employee "received a better offer." Contrary to

    popular belief, research indicates that money is not even on the list of

    top five reasons employees give when asked why they are leaving an

    organization.

    When viewed from the employees' perspective, a healthy organization

    is one in which people are generally satisfied with the quality of their

    work life. On most days they feel good about going to work. They feel

    empowered to help shape decisions that affect them, they have the

    resources and skills to satisfy customer needs and they are generally

    confident in the abilities of the leadership team.

    From the organization's perspective, the organization is healthy if it is

    viable as measured by profitability, competitive market position and

    customer satisfaction. A healthy organization also responds well to the

    need for change; it is adaptive and thereby ensures its future -

    meaning that following a major upheaval or transition, the healthy

    organization rebounds and employees remain committed.

    Bottom line, it is the role of the manager, that most influences an

    employee's decision to stay or depart from an organization. People will

    leave if they don't like their manager - even when they are well paid,

    receive recognition and have a chance to learn and grow. In fact,

    disliking or not respecting the boss is the primary reason for talent

    loss.

    _______________________________________________________________________

    _

    15

  • 7/27/2019 21430807 Attrition attrition

    16/56

    Research shows the reasons for employee departures are:

    1. Employee/manager relationship

    2. Inability to use core skills

    3. Not able to impact the organization's goals, mission

    4. Frequent reorganizations; lack of control over career

    5. Inability to grow and develop

    6. Employee/organization values misalignment

    7. Lack of resources to do the job

    8. Unclear expectations

    9. Lack of flexibility; no 'whole life balance'

    10. Salary/benefits

    It is very important to know that the above factors are often NOT the

    ones mentioned in most attrition studies published by individual

    organizations. Additionally, this information does not match the data

    frequently obtained during an employee's exit interview when asked

    about the reasons for departing. The rationale behind this discrepancy

    is that exit interviews are frequently conducted by the departingemployee's manager or HR manager, hindering honest responses.

    Typically, employees are hesitant to tell these company

    representatives the truth for fear of burning bridges or getting a bad

    reference.

    _______________________________________________________________________

    _

    16

  • 7/27/2019 21430807 Attrition attrition

    17/56

    How to curb attrition?

    Money is not everything

    Although the importance of higher packages is slowly diminishing,

    among fresher or laterals with less than three years of work

    experience, money is still considered to be the highest priority.

    Employees want not only work recognition, but also extra perks." A

    number of professionals are looking at more challenging jobs. "In

    several cases, faced with a choice between more money and a

    challenging job, employees have opted for the latter as it allows them

    to learn new technology and increase domain expertise." People

    analyze the training programmes of prospective companies with those

    of their current organization, which means that how an organization

    grooms an employee is weighed to a greater extent. This is because

    they know that developing next-level skills will keep them ahead in the

    job market, and finally result in better compensation. They also look for

    a job with higher levels of responsibility, better learning opportunities.

    Vision and objectives

    The next level of communication, a crucial part of retention,

    starts with acquainting employees with the companys vision and

    objectives. Organizations successful in retaining employees clearly

    pass on their goals and achievements. Conducting regular meetings

    and updating employees, especially new entrants, about the

    companys status and achievements is a must. They should

    concentrate on leadership and brand building as people prefer to be

    associated with a brand. Respect for the job should be created by

    _______________________________________________________________________

    _

    17

  • 7/27/2019 21430807 Attrition attrition

    18/56

    BPOs. The youth should feel proud to be a part of the billion-dollar

    industry.

    Mentoring and handholding new recruits from day one to four months

    are important tasks; during this period, they should be familiarized

    with the culture of the company. It is at this time that new entrants

    experiment with different options. Hence they should be exposed to

    the best values the company has. If they are informed about regular

    happenings in the company, employees will be confident about the

    future and not try to look for better options.

    Treat employees like Customers

    Even while companies strive to understand which organizational, job,

    and reward factors will contribute to holding back employees, industry

    experts have found several loopholes at the top management and HR

    management level. Companies should have a similar approach to

    employees and customers. If a company strives to retain an employee

    in the same way it tries to retain a customer, him leaving the

    organization could be out of question.

    Since software professionals have different priorities at different points

    of time, organizations need to structure their offer-mix while recruiting

    new hires, as well as promoting potential ones. Communication is the

    foundation for the entire process of managing attrition. Thiscommunication begins right from recruitment. In cases of peer

    pressure, an employee aims to join a well-known company. This could

    be achieved by brand building, which attracts the right talent and

    helps in retention as well.

    _______________________________________________________________________

    _

    18

  • 7/27/2019 21430807 Attrition attrition

    19/56

    Understanding an employees needs at various levels is a

    recommended HR practice.

    Firing

    Sometimes, firing can look like attrition. Looking at firing and attrition

    together in a different light, firing can be an excellent tool to contain

    attrition. Attrition can simply be defined as employee leaving his

    current job due to reasons like, job pressure, health problems, personal

    reasons, inefficient boss, lack of job security etc. All the above reasons

    are interlinked and can be the reasons for good workers to quit. If the

    team has under-performers who despite given sufficient support and

    training is unable to perform, but they continue to be part of the team

    damage the morale of the team. A performer will not want to be part of

    the team, which has non-performers because he will have to

    compensate for the non-performer, thereby increasing his job

    output/pressure. A continuous job pressure results in health problems.

    Having frequent health problems not only reduces his performance,

    but also affects him financially. At this juncture, the performer realizes

    that he is working with an inefficient manager who is not capable of

    cleaning up the team by firing non-performers. With the above, the

    performer employee feels insecure and resigns. Firing non-performers

    can be an efficient tool to contain attrition.

    Consider feedback

    It is important to take feedback from employees through different

    means and work with the HR department to iron out differences. As

    _______________________________________________________________________

    _

    19

  • 7/27/2019 21430807 Attrition attrition

    20/56

    industry experts point out, feedback can be got in two waysduring

    the employees tenure, and through exit interviews. Inputs can be

    secured from existing employees through various employee

    relationship management tools. The Wipro Listens and Responds

    initiative at Wipro aims to capture the concerns and grievances of its

    employees.

    The feedback we get through this tool will be analyzed, and action will

    be taken on it. Our employees are very excited that their feedback is

    being taken seriously, says Sahoo. Exit interviews help management

    learn the reasons why employees leave the company; based on their

    revelations, the organization can address the problems of existing

    employees, thereby curb attrition.

    Spend Time Developing and Benchmarking Incentives

    Whenever the demand for a professional in a particular field heats up,

    the perks associated with the job start to pile up. Standard perks for an

    India-based "fresher" (a new entrant in the IT services industry with

    little work experience) typically include free transportation, educational

    assistance, healthcare benefits, performance-based bonuses, onsite

    cafeteria, stock options, and interest-free loans to absorb the cost of

    relocation or maybe to finance the purchase of a two-wheeler.

    According to Wipro's web site, its employees even have access to an

    agency that will handle such "domestic chores" as paying bills, thereby

    giving IT workers more free time.

    An important part of designing incentives is aligning them with market

    benchmarks. As far as salaries, HR firm Hewitt Associates reports that

    India showed the largest overall salary increase in the Asia-Pacific

    region in 2004. Salaries in India grew by 11.6% overall, while China

    _______________________________________________________________________

    _

    20

  • 7/27/2019 21430807 Attrition attrition

    21/56

    trailed with a 6.4%8.4% hike, the Philippines showed a 7.4%7.7%

    increase, and Korea saw wages jump by 6.4%6.8%. Salary increases

    for middle managers in India were even more dramatic: Nasscom,

    India's software association found that salaries for middle managers

    rose by as much as 30% in the last two years. These salaries are often

    paired with expansive benefit packages that include standard entry-

    level benefits as well as special services such as help finding and

    buying a home or enrolling children in school.

    Captive centers and IT service providers have to offer innovative

    compensation and benefitsor risk losing valued employees to

    competitors. Nonstop evaluation and benchmarking are "need to do"

    activities for IT managers.

    Subsidize Education and Certification

    In the United States, many companies reimburse employees for

    advanced degrees or certifications that relate to their area of

    expertise. Until recently, the opposite was true in India, but that trend

    has begun to change as businesses have discovered that a significant

    portion of their attrition problems stem from employees leaving to

    pursue a master's degree. Several offshore service providers have

    teamed with universities to offer their workers management-level

    master's courses at a subsidized rate, and watched attrition rates drop

    as a result.

    For example, Cognizant Technology Solutions, an IT service firm with

    17,000 employees, partially reimburses Indian staff that pursues

    master's degrees at BITS, a higher-education institution located in

    Pilani, India. Business process outsourcing (BPO) player 24/7 Customer,

    _______________________________________________________________________

    _

    21

  • 7/27/2019 21430807 Attrition attrition

    22/56

    in association with the Indian Institute of Management Bangalore,

    launched a management-education seminar series called "Beyond

    Knowledge," through which 24/7 aims to educate employees about the

    BPO industry and discuss related careers. Multiple providers have

    followed the lead of Cognizant and 24/7.

    In several offshore countries, advanced degrees are considered crucial

    to social standing. It's important for U.S. firms with little international

    experience to recognize this desire among employees and design

    programs accordingly.

    Change Locations

    The high prices and resource crunch in top-tier Indian cities such as

    Bangalore and Mumbai have led many companies to execute

    alternative location strategies. Many vendors are sending work to tier-

    two cities (Hyderabad or Chennai) or even tier-three cities (Noida or

    Chandigarh), where labor and real estate costs as well as attrition may

    be cut in half. Such benefits come at a price: The infrastructure quality

    lags that of more advanced cities, and the search to find qualified

    people may take longer.

    Another option to combat the rising attrition rates in India is to locate

    in other countries. Sykes Enterprises, for example, disclosed that it is

    relocating the customer contact management work at its Bangalore,

    India, facility because the center delivered an inadequate return and alimited competitive advantage. The Tampa-based company thinks the

    work is better suited for the other Asia-Pacific offshore centers in its

    portfolio, such as China. Sykes expected to incur total charges of

    approximately $0.8$1.5 million for its plan to relocate work.

    _______________________________________________________________________

    _

    22

  • 7/27/2019 21430807 Attrition attrition

    23/56

    Rotate Employees

    Employees who don't feel challenged by their work often leave. In

    response, companies such as TCS have programs that rotate

    employees into different disciplines about every two years and expose

    them to new locations, projects, and technologies. L&T InfoTech, a

    software solutions provider with 4,000 employees and six development

    centers in India, has implemented a similar program.

    Offshore employees are asking for a clear career path with increased

    responsibility and frequent recognition of achievement. Established

    U.S. and European multinational companies have long had learning

    programs that set expectations for performance goals such as learning

    a particular tool or proprietary software. Companies practicing off

    shoring need to provide new challenges and opportunities for skills

    development through training or job rotation. It may become the only

    reason your best employees stay with you.

    Combat Poaching by Encouraging Referrals

    Rather than going through a prolonged posting process and screening

    a deluge of rsums, some companies poach employees directly from

    their competitors and offer to double salaries or buy out contracts on

    the spot to scale up quickly. Poaching is generally a bad idea, as it

    drives up salaries and discourages employee loyalty.

    An employee referral program can serve as an alternative and

    effective recruiting strategy. Satisfied employees can be a company's

    best sales tool and add a personal touch that a print or radio campaign

    _______________________________________________________________________

    _

    23

  • 7/27/2019 21430807 Attrition attrition

    24/56

    lacks. A Voice & Data survey of the top 15 Indian outsourcing

    companies with 1,000-plus employees found that referrals constituted

    23% of new hires. For some companies, the number was even higher,

    at 40%. The study also observed that recruits hired through employee

    referral programs are "stickier"; that is, they stay with companies

    longer than non-referrals.

    Just Ask: Are Your Employees Satisfied?

    Retention is inextricably linked to employee satisfaction, so it pays to

    periodically survey employees hopefully before their exit interviews

    about job satisfaction issues, and act on the data gathered. The aim

    is to determine why some employees depart and some remain with the

    company, and to define the traits of productive, successful employees.

    Many companies examine the reasons employees leave, which don't

    reveal as much as the reasons they stay.

    An important aspect of implementing a retention program understands

    that it should not be one-size-fits-all. If incentives are meant to keep

    employees happy, then they truly have to be designed with the

    employee in mind. Too often, employers and employees disagree onwhat constitutes a good incentive. For example, a company might

    reward a father with three young children a monetary bonus as thanks

    for working overtime for five months straight. To the father, however,

    _______________________________________________________________________

    _

    24

  • 7/27/2019 21430807 Attrition attrition

    25/56

    days off might have been more attractive, since they would have

    allowed him to spend time with his family.

    Knowing your employees and personalizing rewards makes a

    difference. The global workforce has different, individualized needs,

    and organizations should tailor incentives for their employees if they

    want to retain them. If your company doesn't bother, don't be

    surprised if workers head for the door as soon as year-end bonuses are

    handed out or stock options vest.

    Spend More Time Recruiting

    With huge projects ramping up within exceedingly short windows, it

    can be hard to convince management to allot more time to the

    recruiting process. However, it's difficult to retain good employees if

    the company doesn't have a process to hire the right people in the first

    place. Simple measures, such as incorporating skills tests that relate

    directly to the job in question, can help companies to determine

    whether the applicant is indeed an expert programmer or merely an

    intermediate programmer. Having employees interview candidates

    also may increase the chances of success, as these employees canbetter identify potential personality clashes that HR personnel may not

    spot.

    _______________________________________________________________________

    _

    25

  • 7/27/2019 21430807 Attrition attrition

    26/56

    Costs of Turnover

    The impact of employee turnover on company performance is often

    understated by organizations. This describes how the cost of turnover

    is can be calculated using some basic organizational parameters. The

    purpose of this document is to provide talent cost of turnover

    calculator with insight into how costs are calculated and the reasons

    why certain costs were include or excluded form the calculator. The

    calculator should only be used as a guide in understanding the impact

    of turnover on a company. If the desire is to understand the true cost

    of turnover then it is suggested that a greater degree of analytical

    work is undertaken.

    The key areas used in the calculation of turnover are:

    Administration and sourcing costs

    _______________________________________________________________________

    _

    26

  • 7/27/2019 21430807 Attrition attrition

    27/56

    These include the administration of the termination and recruitment

    functions together with the costs associated with interviewing, testing

    and attracting applicants.

    New Hire costs

    Once a person has been employed an organization generally spends

    significant resources in the induction and administration of bringing

    them into the organization.

    Lost productivity

    The hidden costs associated with lost productivity of employees prior

    to leaving the organization and new less skilled employees are one the

    largest components of the total cost associated with turnover.

    Dysfunctional and avoidable turnover

    Determining the level of dysfunctional and avoidable attrition provides

    a perspective on the scope of control that a company has to manage

    their turnover costs. Determining the cost of turnover is the first step

    in the process of developing a management plan. To deal with an

    attrition issue effectively the reasons for turnover and an

    understanding of the demographics of turnover need to be understood.

    _______________________________________________________________________

    _

    27

  • 7/27/2019 21430807 Attrition attrition

    28/56

    Undoubtedly, the financial costs of turnover have attracted the

    attention of academics and practitioners alike. Besides the more

    familiar costs associated with the administration of terminated

    employees the economic costs such as productivity losses need to be

    included in any calculation. In particular, departure of employees -

    especially experienced or talented ones - may threaten overall firm

    productivity or client retention. Furthermore, personnel losses may

    endanger the firms future opportunities in the marketplace or the

    morale of their remaining work force. Human resource accounting

    experts Cascio, Hom and Griffeth define exit expenses as having two

    main components - direct and indirect costs.

    A company incurs both direct and indirect costs that result in losses in

    production dollars and overall production volume, as well as increased

    administrative costs. Direct Costs are actual dollars spent each time anemployer has to attract, select, and induct a replacement for an

    employee who leaves the organization. Indirect costs are those

    expenditures attributable to turnovers affects on production - that is

    costs for incomplete or disrupted work, loss of quality, etc.

    The cost of turnover can be calculated by measuring the time taken to

    administer each activity plus the direct costs such as advertising costs.

    The turnover costs calculated using the calculator represent dollars

    spent. The potential loss of revenue if these dollars were invested

    elsewhere or through lost productivity is not calculated. Therefore, the

    _______________________________________________________________________

    _

    28

  • 7/27/2019 21430807 Attrition attrition

    29/56

    figures are an indication of the minimum costs that the organization is

    subjected to when an individual leaves the company.

    Administration & Sourcing costs

    The most visible cost of turnover is incurred by organizations in the

    area of recruitment administration and sourcing. The time associated

    with processing terminated employees and recruits places a burden on

    organizations where staff turnover is excessively high. The assumption

    is that this is largely an administrative task conducted by people at

    80% of the average company salary. In addition the direct costs to a

    company for recruitment agency and advertising costs are highlytransparent.

    1. Process Administration:

    Resignation Administration -

    _______________________________________________________________________

    _

    29

  • 7/27/2019 21430807 Attrition attrition

    30/56

    The time taken to administer a resignation will include activities

    such as: conducting exit interviews & processing of administrative

    tasks. The time taken to perform these activities is ideally measured

    as a result of analyzing the processes involved.

    2. Recruitment Administration -

    A large amount of time is often spent in administering the

    recruitment process. Writing the job ad, posting it onto job boards,

    organizing agencies and reference checking all require the use of

    organizational resources, whether internal staff or outsourced. The

    hours spent involved in these activities does need to be factored

    into the cost of turnover.

    3. Sourcing Costs:

    The cost of sourcing a successful applicant from an agency may be

    one of the largest single direct costs associated with recruitment.

    4. Advertising costs -

    The cost associated with posting job ads to job boards or traditional

    media such as newspapers can be significant. The average cost per

    vacancies is used within the calculation.

    5. Interview Costs:

    Interview -

    A core component of recruitment administration is the cost

    associated with interviewing applicants. Interviews make use

    internal resources. The more interviews held and the greater the

    _______________________________________________________________________

    _

    30

  • 7/27/2019 21430807 Attrition attrition

    31/56

    number of candidates interviewed the larger the costs associated

    with these activities.

    Testing -

    Companies are making greater use of psychometric and aptitude

    testing in their recruitment processes. These tests can be costly to

    administer and as such need to be factored into the overall attrition

    costs.

    Travel -

    Companies may pay the costs associated with bringing an applicant

    to the interview location. Although this may not be done for every

    candidate an average is used in the I4 calculator.

    Cost of New Hire

    The two costs measured in this area are the administrative tasks

    associated with inducting a new hire into the organization and theassociated induction training. When measuring the cost of attrition

    sometimes the total cost of training that an individual has received

    whilst in the employment of an organization is included. However, as

    all learning undertaken by employees will be used back on the job an

    _______________________________________________________________________

    _

    31

  • 7/27/2019 21430807 Attrition attrition

    32/56

    add value to the business it is inappropriate to count it as a cost of

    attrition. Also, where particular jobs have high training, often there is a

    corresponding lower rate of pay which acknowledges the investment

    that the organization is making in the individual, eg. Youth wages. One

    aspect of training directly associated with turnover, however, is the

    induction of new staff to the organization. High staff turnover will

    necessitate greater levels of resources being made available to induct

    new employees. It is the opportunity costs of these resources that

    must also be calculated.

    1. Induction Administration

    The process of induction into an organization can involve a substantial

    amount of time. The activities included here would include the

    processing of new hires into organization systems (HR) and

    introductions to fellow employees.

    _______________________________________________________________________

    _

    32

  • 7/27/2019 21430807 Attrition attrition

    33/56

    Induction Fixed Costs -

    The fixed costs associated with inductions include the cost of materials

    such as induction kits and staff manuals.

    Induction Training -

    Any initial training received by an employee on joining the company.

    This includes the costs of the materials, presenters and the opportunity

    costs associated with the new employee taking time off work to

    participate.

    Relocation Expenses -

    Similar to travel these cost are incurred by companies in an effort to

    source the best talent for alternate locations. An average cost needs to

    be captured as part of the calculation process.

    Productivity Losses

    The most detrimental aspect of staff turnover is lost productivity.

    Evidence has found that leavers often miss work or are tardy before

    they depart. Deery and Iverson argue that according to progression-of-

    _______________________________________________________________________

    _

    33

  • 7/27/2019 21430807 Attrition attrition

    34/56

    withdrawal models the productivity of leavers may deteriorate before

    they depart.

    Turnover is commonly viewed as belonging to a family of withdrawal

    behaviors that physically distance employees from unpleasant work

    settings. Serving a common psychology function, withdrawal actions

    reduce the time spent in an adverse environment and thus reduce job

    dissatisfaction.

    Studies have shown that employees leaving a company will have a

    greater level of absenteeism prior to leaving. Excessive sick leave is

    not only costly, but is also an early warning signal that an individual

    may be considering resigning from the organization. Not only does

    staff take more sick leave but Hom and Griffeth state that their overall

    productivity decreases as well. Furthermore, resignations may disrupt

    other employees work if their work depends on the leavers or they

    must assume the leavers duties.

    The second effect of loss of productivity occurs when new hires join theorganization. They will not have the networks, understanding of

    organizational processes or product/service knowledge to be effective.

    Studies have shown that a new hire will generally take between 3- 8

    months to become effective in their new role. The longer period is

    associated with more senior roles.

    Excluded costs

    _______________________________________________________________________

    _

    34

  • 7/27/2019 21430807 Attrition attrition

    35/56

    Not all the costs associated with turnover have been included in the i4

    attrition calculator. Costs that cannot be accurately measured or

    assumed have been excluded. These costs, although hidden, may be

    the most critical in terms of organizational impact. Examples of hidden

    costs are included below to highlight the organizational impact of

    attrition.

    Employee Demoralization

    Turnover may erode the morale and stability of those who remain

    employed. Their morale suffers because they lose friends and may

    interpret motives for quitting as social criticisms about the job. A belief

    that a leaver has a better job elsewhere may change employees

    perceptions of their jobs. As a result stayers may denigrate their

    present position in the light of superior alternatives and begin

    contemplating other employment. This phenomenon may lead to a

    cycle of attrition whereby employees leaving a company prompt other

    to do the same.

    Impaired Quality of Service

    Turnover also hinders the delivery of service and retention of

    customers. Attrition among service personnel impairs customer service

    because understaffed branches delay or withhold service. Unlike

    experienced leavers, new employees may also provide less competent

    or less personalized service because they do not know the clients and

    cant meet customer expectations through lack of knowledge andexperience.

    _______________________________________________________________________

    _

    35

  • 7/27/2019 21430807 Attrition attrition

    36/56

    If satisfied employees make customers feel well treated, disgruntled

    employees may provide careless service before they leave. Turnover

    also interrupts the transmission of service values and norms, which are

    the essential underpinnings of high quality service, to successive

    generations of employees. Customers' perceptions, attitudes and

    intentions seem to be affected by what employees experience, both in

    their specific role of service employees and their more general role of

    organizational employees. It has been found that there is a high

    correlation between employee turnover and customer turnover.

    Therefore, the cost of decreased customer satisfaction and loyalty

    should be taken into account when considering staff turnover.

    Turnover reason & cost impact

    Just as attrition can lower productivity, incur financial costs, and

    undermine stayers' morale, turnover can have the opposite

    ramifications under certain circumstances or for certain firms. That is

    that the exit of marginal performers may improve overall firm

    productivity, while new replacements for leavers can infuse

    companies with new ideas and technology. Though turnover is

    obviously costly, personnel shrinkage - especially among

    administrative staff - can nonetheless reduce overhead costs. Further

    resignations may create more job and empowerment opportunities for

    employees who remain in firms.

    _______________________________________________________________________

    _

    36

  • 7/27/2019 21430807 Attrition attrition

    37/56

    Functional and Dysfunctional Turnover

    Departing from conventional beliefs, some academics point out that

    turnover can prevent stagnation and complacency, facilitate change

    and innovation, and displace poor performers. Turnover is not

    inherently negative. Although it creates personnel costs, the

    organizational consequences of turnover are dependent on who leaves

    and who stays. The departure of good performers is construed as

    dysfunctional turnover - representing a loss to the organization - for

    their replacements are likely to be of lower caliber. The departure of

    poor performers is viewed as functional turnover - because they are

    apt to be replaced by better performers. Research into whether high

    performers or low performers leave tends to have found mixed results.

    A meta-analysis conducted by McEvoy and Cascio found that generally

    it is the poor performers that will leave their place of work. There are

    two possible explanations for this: firstly, terminated staff has on

    average a lower tenure than current staff and so have not had the time

    or opportunity to develop the skills necessary to perform well; or the

    current performance management systems which exist are

    encouraging high performers to stay and poor performers to quit.

    _______________________________________________________________________

    _

    37

  • 7/27/2019 21430807 Attrition attrition

    38/56

    Avoidable and Unavoidable

    Further differentiation should occur between organizationally avoidable

    turnover and organizationally unavoidable turnover. For example,

    organizations cannot control (that is, it is unavoidable) turnover caused

    by an employees death, or by an employees quitting to follow a

    relocating spouse. It is important to identify carefully those exits that

    are avoidable and those that are unavoidable. After all, leavers whose

    departures are unavoidable resemble stayers more than they resemble

    the leavers whose departure is avoidable; they do not resign because

    they are unhappy with their jobs or the organization.

    Despite the appeal, determining whether exits are avoidable or

    unavoidable may prove difficult because employees may falsify reports

    of their reasons for leaving, they may not wish to burn their bridges

    behind them.

    The cost of attrition is only calculated on the level of avoidable

    turnover. There is no benefit in including the cost of unavoidable

    turnover since a company has no control over these events and can

    therefore not put in place action plans to minimize the negative

    consequences of staff turnover.

    _______________________________________________________________________

    _

    38

  • 7/27/2019 21430807 Attrition attrition

    39/56

    Software firms R&D centers in India facing double-

    digit attrition rates

    Research and development centers at Yahoo Inc., Microsoft

    Corp., Adobe Systems Inc. and other multinational software product

    firms are facing a slowdown in growth and product development work

    in India as they battle double-digit attrition rates with key personnel

    quitting to join start-ups or launch their own ventures.

    Headhunters specializing in talent for large software product firms in

    India, executives at emerging start-ups and entrepreneurs said

    attrition rates are set to touch 20-25% annually, making it difficult for

    such product makers to hire and retain top talent.

    They are losing people to start-ups. And why is that happening? In the

    MNC captives, peoples careers are stagnating and many people are

    saying, Look Ive built this product, Ive gone through five product

    cycles. Why not go through a product cycle at a smaller company

    because I can get better value out of that?, said Sharad Sharma,

    chairman of the Nasscom Product Forum and entrepreneur-in-

    residence at Canaan Partners, a US-based venture capital firm focused

    on technology start-ups.

    Take, for example, 30-year-old software architect Mohammad Aamir,who recently quit his job at Adobe to join an enterprise mobility start-

    up Bitzer Mobile Inc. After six years of working on a single product at

    Adobe, Aamir felt he had reached a saturation point and needed to

    work on newer products.

    _______________________________________________________________________

    _

    39

  • 7/27/2019 21430807 Attrition attrition

    40/56

    In a big company like Adobe or Microsoft when you work on a product,

    you end up working in big teams, where you often tend to get sidelined

    and your presence is not noticed. You dont have the level of exposure

    or responsibility that you get at a start-up, said Aamir. At my new

    workplace, Im involved not only in technical management, but also

    people management and business development. Im at the top level of

    the picture.

    Also, the entrepreneurial environment is becoming increasingly

    conducive to start-ups in India, with more angel investors and venture

    capitalists willing to throw their weight behind innovative ventures.

    Even though average attrition rates for the countrys R&D industry

    have not increased, the levels havent dropped either, experts said.

    Indias R&D industry accounts for 200,000-300,000 engineers working

    in more than 700 multinational firms, according to technology advisory

    firm Zinnov Management Consulting Pvt. Ltd.

    With the number of offshoring jobs coming into the country not that

    high right now, attrition should have ideally slowed down. But that has

    not happened, said Anshuman Das, co-founder and chief operating

    officer of CareerNet Consulting, a company that recruits engineers forproduct development centers at MNCs. Thanks to so much

    entrepreneurship happening out here, attrition rates are still kind of

    similar, which is 15-25% range, that I still see happening.

    Another reason for the stagnation in growth is that India doesnt figure

    high on the value chain, with many of the MNCs centres in India

    contributing only 2-3% to their overall global revenue. Also, many

    MNCs have reached the maximum level on the amount of R&D work

    they can send to India, which is 30-40% of their overall R&D activity,

    said Sharma.

    Will it be 60% tomorrow or 80% tomorrow? Its very, very unlikely.

    They logically cant offshore more than 40% of their R&D... Theyre

    _______________________________________________________________________

    _

    40

  • 7/27/2019 21430807 Attrition attrition

    41/56

    building a product that the company is selling to the market, so it is

    core to the market and, therefore, theres a limit to how much they can

    offshore and that limit is being reached, Sharma said. Also, with

    some of these technology changes that have taken place, cloud-like

    changes, the team sizes of products have shrunk.

    Incidentally, Sharma, who quit Yahoo in 2009 after two years as its

    research head in India to join Canaan, helped form a separate forum

    for product companies last month called the Indian Software Product

    Industry Round Table, or iSpirt.

    According to industry executives, even if a products team becomes

    smaller, the co-ordination costs remain the same.

    Google and Adobe did not respond to requests for comment. Yahoo

    India R&D did not comment on the attrition figures, but its vice

    president and CEO Shouvick Mukherjee said in an email, We have

    seen a reverse trend in recent years where a lot of folks working for us

    in the US have been coming back to India to work at our Bangalore

    centre... Even people who left Yahoo to join start-ups have chosen toreturn for a second innings...

    Microsoft did not provide a break-up of attrition levels for the last two

    years but said in an email response that the average attrition rate at

    their India R&D center was 7% for the last five years.

    Flipkart Online Services, the countrys largest online retailer, has been

    one of the beneficiaries of the exodus from multinational tech firms.

    Experienced technologists from MNCs are attracted to us because it

    gives them the chance to own and build solutions and do it on a large

    scaleand we have seen senior talent from established product

    companies joining us in large numbers over the last couple of years,

    Flipkart chief people officer Aparna Ballakur said in an email response.

    _______________________________________________________________________

    _

    41

  • 7/27/2019 21430807 Attrition attrition

    42/56

    Some experts say multinational firms are learning to do more work

    with fewer people.

    Most of these GICs (global in-house or R&D centres) are trying to add

    more value to the job, with the headcount not growing as much as the

    revenue growth is. Theyre doing more work with less people,

    said K.S. Viswanathan, vice president of industry initiatives at industry

    lobby National Association of Software and Services Companies, or

    Nasscom.

    Also, India has not lived up to the hype of being a hub for innovation

    something that was widely projected after the dotcom boom in the

    mid-2000s.

    Most of these MNCs are not launching their new and upcoming

    products in India. So, as a result of that, a lot of new products are not

    happening in India and its mostly the sunset products which are

    happening in India, and hence the kind of work you end up doing is not

    something that you feel does justice to your competency, said Das.

    A Zinnov study issued last week seems to support that theory. The

    study, conducted among 100 multinationals with an R&D presence in

    India, revealed that only 26% have global roles based in the countrydespite over 40% of the headcount being located here.

    _______________________________________________________________________

    _

    42

  • 7/27/2019 21430807 Attrition attrition

    43/56

    Attrition in India to top world charts in 2013; one in

    four employees to change jobs

    One in four employees in the organised sector in India is set to switch

    jobs, the highest attrition rate globally, according to a Hay Group

    study. The series of fresh investments planned across sectors could

    raise demand for talent even as economic conditions remain tepid,

    raising concerns on employee engagement and retention.

    We are in the eye of an employee turnover storm. Organisations in

    India must give serious thought to what drives employee

    commitment," says Mohinish Sinha, leadership and talent practice

    leader, Hay Group India. Firms need to focus on employees with

    mission-critical skills, as well as high-potentials and those holding

    crucial roles, he adds.

    Employee turnover is predicted to rise to 26.9% in 2013 with an

    employee base of Rs 3 crore compared with 26% in 2010 on an

    employee base of Rs 2.8 crore, according to the study, 'Preparing for

    Take-Off', conducted in association with the Centre for Economics andBusiness Research. It covered 700 million employees in 19 countries.

    Worldwide, attrition is predicted at 21.2% in 2013 on an employee

    base of Rs 71.6 crore compared with 20.3% in 2010 on an employee

    base of Rs 64.4 crore. The number of workers expected to take flight

    _______________________________________________________________________

    _

    43

  • 7/27/2019 21430807 Attrition attrition

    44/56

    will reach Rs 161.7 million in 2014 - a 12.9% increase compared with

    2012 - as growth builds and employment opportunities increase,

    according to the study. Comparatively, turnover was minimal between

    2010 and 2012. In the next five years, 49 million employees will leave

    their employers globally.

    The figure is indicative, and helps to understand the employee

    mindset. It could help companies figure out why their employees are

    thinking in such a direction," says Sinha.

    In India, sectors like infrastructure and banking - where new players

    are entering the field - will continue to suck in talent. In infrastructure,

    nearly $1 trillion of investment has been planned in the years to 2018.

    With half of this expected from private financing, there will be huge

    _______________________________________________________________________

    _

    44

  • 7/27/2019 21430807 Attrition attrition

    45/56

    demand for labour in India's finance, insurance, real estate and

    construction sectors - totalling 14% of employment in the organised

    sector - and raising turnover in these activities, as Sinha points out.

    Besides, there is a huge demand for ready talent, he says.

    But not everyone thinks it is a function of external growth conditions.

    "The best insurance against attrition is not to hope for lack of

    opportunities outside but to build strong internal conditions which act

    like a glue to employees," says Divakar Kaza, president, HR, Lupin

    Pharma.

    The study seems to support this. Nearly 55% of Indian employees

    expressed concerns about the fairness of their compensation and the

    extent to which benefits meet their needs (48%). One in every three

    employees expressed concern over a lack confidence in being able to

    achieve their career objectives with their current employers (37%); as

    a result, they are concerned about opportunities for learning and

    development (39%) and supervisory coaching for their development

    (36%).

    An analysis of Hay Group's employee opinion database, covering 5.5 m

    employees worldwide, threw up the most consistent predictors ofemployee engagement and commitment: confidence in leadership; an

    opportunity for career development; autonomy; supportive work

    environment; and appropA significant number of Indian employees

    have expressed concern over their firms' ability to provide the five

    retention factors - especially when it comes to the opportunity for

    career development, says Hay Group's Sinha. "Organisations need to

    give serious thought to how they stack up against these factors now -

    before the job markets begin to improve. Those who don't are likely to

    find employees exiting in increasing numbers as more opportunities

    become available," he says.

    _______________________________________________________________________

    _

    45

  • 7/27/2019 21430807 Attrition attrition

    46/56

    However, not everyone is buying the study's findings. "I am surprised

    to know we will see this kind of employee turnover in India because the

    GDP has declined to 5% and employees have till now stuck to their

    companies due to job security issues and the lack of new opportunities.

    The turnover might be voluntary," says Adil Malia, group president, HR,

    Essar Group.

    Worldwide, average employee turnover rates over the next five years

    are predicted to rise to 23.4% and the number of global departures in

    2018 is expected to be at 192 million. Turnover rates are forecast to be

    higher where market prospects are better - so employees in emerging

    markets will continue to have opportunities and be among the first to

    take flight.

    riate compensation.

    Attrition rate falls down to 15-20% in IT-BPO sector:

    ASSOCHAM

    The apex industry body, the Associated Chambers of Commerce and

    Industry of India (ASSOCHAM), has reported that the attrition rate in IT-

    BPO sector had fallen drastically. According to the body, the level ofattrition has come down to 15-20% in the last six months for the year

    2012 when compared to the 55-60% attrition rate in same period

    during the year 2011.

    As per the recent survey carried out by the apex body, the level of

    attrition rate has been falling by 45-50% from period of January to June

    mainly due to the downturn in the global economy. According to the

    report, slow growth of the economy coupled with weakening rupee

    against dollar has made the employees in the BPO sector to adopt a

    wait and watch policy before moving out from the current job position.

    Nevertheless, this policy adopted by the employees proved to be a

    _______________________________________________________________________

    _

    46

  • 7/27/2019 21430807 Attrition attrition

    47/56

    boon for the IT/ITES as the sector has been grappling due to talent

    shortage in the middle and senior level management.

    The industry body as part of their survey interacted with consultants,

    HR professionals, psychologists and managerial officials of various

    companies from six leading centers of IT-BPO sector in India. Many of

    the respondents gave economic slump as the reason for the slowing

    down of hiring activities and increasing retention rate at all levels of

    management in BPO companies. They further said that the slowdown

    has been also forcing the other companies to consider only a mere

    hike in the annual appraisal season which doesnt have much incentive

    to employees looking to jump from current jobs.

    Most often, attrition in the IT-BPO sector happens mainly in quest of

    High pay packages

    Better career opportunities and growth prospect

    Better management relationship and Avoid performance pressure.

    But, according to the survey, decline in attrition rate will prove to be

    fruitful for the companies which are struggling as expenses incurred on

    recruiting new staff and training them on the skills sets has fallen

    considerably.

    According to ASSOCHAM, the fall in attrition rate is beneficial as

    frequent change in the job can be fatal for the growth of the BPOsector in India. The report claims that high attrition rate affects both

    the companies that pay high pay packages and for the individuals

    receiving those high pay since high pays do not raise the level of skills

    and talents of the individuals.

    _______________________________________________________________________

    _

    47

  • 7/27/2019 21430807 Attrition attrition

    48/56

    Further the report also discusses that the attrition rate is maximum

    among the entry level employees due to their aspiration for hefty pay

    packages, whereas the rate is minimum i.e less than 5% for the

    employees having work experience for more than10 years. The rate of

    attrition is 7-10% among the employees having experience between 5-

    10 years.

    However, according to the report, the companies are planning for

    salary hikes and promotions to keep a check on the attrition rate and

    to further lower the current rate.

    OBJECTIVE OF THE RESEARCH :Primary Objective:

    A Study on attrition in IT industry

    Secondary Objective:

    To know the major reasons for employees to leave their jobs.

    To evaluate how an employee is valued as a part of this office.

    To study whether the promoting respect and fair treatment among

    all staff is a high priority of this office.

    To find whether the communication between staff and management

    is effective.

    To study whether the workload in this office is distributed equitably.

    _______________________________________________________________________

    _

    48

  • 7/27/2019 21430807 Attrition attrition

    49/56

    To evaluate whether the employee know exactly what is expected

    of him/her as an employee.

    RESEARCH METHODOLOGY

    Research methodology is a science of studying how research is done

    scientifically. Methodology helps to understand not only the products

    of scientific inquiry but the process itself. Aims to describe and analyse

    methods, throw light on their limitations and resources, clarify their

    presuppositions and consequences.

    Research Design:

    This research is of descriptive. In descriptive research, we have

    sufficient data on the concept and research material. Because many

    research have been done on the same concept. Therefore, nothing new

    is in this concept while I am going to study. I have used questionnaire

    method for collecting data.

    Sources of data:

    The data used in this research involves both primary and secondary.

    Primary data:

    Primary data are directly collected from the original sources. The

    primary data is collected in the form of responses from the employees

    using survey method.

    Secondary data:

    Secondary data is the data that has already been collected by

    someone else for a different purpose of yours.

    Sampling Techniques:

    Sample Unit:

    The sampling unit is IT industry, MumbaiSample size:

    My sample size is 20.

    Tools used for data collection:

    Questionnaire:

    _______________________________________________________________________

    _

    49

  • 7/27/2019 21430807 Attrition attrition

    50/56

    A questionnaire is sent to the person concerned with request to

    answer the question and return the questionnaire. A questionnaire

    consists of a number of question printed or typed in a definite order on

    a form. The respondents have to answer the question on their own. I

    have used like scale which consists of 10 question and respondents

    have to answer for the questions asked.

    Tools used for Analysis:

    Statistical tool:

    Percentage Analysis:

    Percentage analysis is the method to represent raw streams of data as

    a percentage for better understanding of data collected.

    Chi-square Test:

    The measure of chi-square enables us to find out the degree of

    discrepancy between observed frequencies and theoretical frequencies

    is due to error of sampling or due to chance.

    ANALYSIS:

    Survey research was conducted for the collection of data from a

    representative sample of Mumbai employees in IT industry.

    The data collected have been analysed.

    The age-wise classification of the respondents is depicted in the table.

    Age wise Percentage No. of respondentsBelow 22 [45%] 922 24 [20%] 425 27 [15%] 328 30 [10%] 2

    Above 30 [10%] 2

    Interference:

    _______________________________________________________________________

    _

    50

  • 7/27/2019 21430807 Attrition attrition

    51/56

    From the above table, it is interfered that 45% of the respondents are

    of age below 22, 10 % of the respondents are of age group 28 30 and

    above 30.

    The table showing whether the office has policies that are supportive

    to its staff.

    Opinion Percentage No. of respondentsStrongly agree [15%] 3Agree [20%] 4Neutral [30%] 6

    Disagree [10%] 2Strongly disagree [25%] 5

    TESTING OF HYPOTHESIS

    The hypothesis assumed in the study has been tested with help of chi-

    square test.

    The formula used is X2 = (O-E)2/E

    Age of

    the

    responde

    nt

    The office has policies that are supportive to its

    staff

    Strongl

    y Agree

    Agree Neither

    Agree Nor

    Disagree

    Strongly

    Disagree

    Disagree

    Below 22 1 2 3 - 3

    22 24 1 - 2 - 1

    25 27 1 1 1 - -

    28 30 - - - 1 1

    _______________________________________________________________________

    _

    51

  • 7/27/2019 21430807 Attrition attrition

    52/56

    Above 30 1 - - 1 -

    The expected frequencies can be calculated using the formula.

    Expected frequency = ( Row Total x Column Total) / Grand Total.

    The expected frequencies are,

    Age of

    the

    responde

    nt

    The office has policies that are supportive to its

    staff

    Strongl

    y Agree

    Agree Neither

    Agree Nor

    Disagree

    Strongly

    Disagree

    Disagree

    Below 22 1.8 1.35 2.7 0.9 2.25

    22 24 0.8 0.6 1.2 0.4 125 27 0.6 0.45 0.9 0.3 0.75

    28 30 0.4 0.3 0.6 0.2 0.5

    Above 30 0.4 0.3 0.6 0.2 0.5

    _______________________________________________________________________

    _

    52

  • 7/27/2019 21430807 Attrition attrition

    53/56

    When applying X2,

    O E O-E (O-E)2 (O-E)2/E

    1 1.8 -0.8 0.64 0.35

    1 0.8 0.2 0.4 0.5

    1 0.6 0.4 0.16 0.26

    - 0.4 -0.4 0.16 0.4

    1 0.4 0.6 0.36 0.9

    2 1.35 0.65 0.42 0.31

    - 0.6 -0.6 0.36 0.6

    1 0.45 0.55 0.30 0.67

    - 0.3 -0.3 0.9 0.3

    - 0.3 -0.3 0.9 0.3

    3 2.7 0.3 0.9 0.33

    2 1.2 0.8 0.64 0.53

    1 0.9 0.1 0.1 0.1

    - 0.6 -0.6 0.36 0.6

    - 0.6 -0.6 0.36 0.6

    _______________________________________________________________________

    _

    53

  • 7/27/2019 21430807 Attrition attrition

    54/56

    - 0.9 -0.9 0.81 0.9

    - 0.4 -0.4 0.16 0.4

    - 0.3 -0.3 0.9 0.3

    1 0.2 0.8 0.64 0.321 0.2 0.8 0.64 0.32

    3 2.25 0.75 0.56 0.24

    1 1 0 0 0

    - 0.75 -0.75 0.56 0.74

    1 0.5 0.5 0.25 0.5

    - 0.5 -0.5 0.25 0.5

    Total 10.97

    Calculated Value = X2 = (O-E)2/E

    X2 = 10.97

    Degree of freedom

    = (r-1) (c-1)

    = (5-1) (5-1)

    = (4) (4)

    = 16

    Level of significant = 0.05

    Table value of 16 = 26.30.

    Conclusion:

    The table value of X2 for 16 d.f at 0.05% level of significance is 26.30.

    The calculated value of X2

    (10.97) is less than the table value. Thus H0is accepted. Thus, there is no relationship between the age of the

    respondents and the office has policies that are supportive to its staff.

    _______________________________________________________________________

    _

    54

  • 7/27/2019 21430807 Attrition attrition

    55/56

    FINDINGS:

    It is found that most of the respondents leave the job due to

    work stress and few respondents leave their job due to continue

    their Higher Education.

    It is observed that the respondents agree that the employee is

    valued as a part in his office and few of the respondents

    Disagree that the employee is valued as a part in his office.

    Most of the respondents agree that the employee are fairly

    treated and respected and few of the respondents Disagree that

    the employees are fairly treated and respected.

    It is found that most of the respondents Agree that the employee

    have a clear sense of future direction in this office and few of the

    respondents Strongly Disagree that the employee have a clear

    sense of future direction in this office.

    Most of the respondents Agree that the office has policies that

    are supportive to its staff and few of the respondents Disagreethat the office has policies that are supportive to its staff.

    It is observed that most of the respondents agree that the work

    load in this office is distributed equitably and only few of the

    respondents Disagree that the work load in this

    office is distributed equitably.

    Most of the respondents Agree that the employee exactly know

    what is expected from his/her as an employee and only few ofthe respondents Disagree that the employee exactly know what

    is expected from his/her as an employee.

    _______________________________________________________________________

    _

    55

  • 7/27/2019 21430807 Attrition attrition

    56/56

    SUGGESTIONS:

    Working conditions should be improved.

    Employee should be valued as a part in his office.

    The communication between the staff and the management

    should be effective.

    The office policies should be supportive to the employees.

    Workloads in the office should be distributed equally.

    There should be a regular staff meeting conducted by the

    management.

    Employees should be given constructive feedback about the

    work performed.

    CONCLUSION:

    To conclude, IT firms need to understand that now, the case is not

    about giving more salaries and preventing the employees from leaving.Employees need much more than what is obvious. A long-term

    relationship needs to be established with its employees.

    Moreover, employees in this sector need a lot of personal space and a

    well thought-out career growth plan. Also, HR practices are needed to

    be fine-tuned so as to get the right kind of employees. Some of the

    strategies suggested in this paper can be very easily implemented

    without any cost to the company.Some other strategies are not so easily implantable, but are very

    important for the growth of this sector, and are necessary for


Recommended