1.INTRODUCTION

Human Resource Management (HRM) is the function within an organization that

focuses on the recruitment of, management of, and providing direction for the people

who work in an organization.

The HRM department members provide the knowledge, necessary tools, training,

administrative services, coaching, legal and management advice, and talent

management oversight that the rest of the organization needs for successful operation.

HRM functions are also performed by line managers who are directly responsible for

the engagement, contribution, and productivity of their reporting staff members. In a

fully integrated talent management system, the managers play a significant role in and

take ownership responsibility for the recruitment process. They are also responsible for

the ongoing development of and retention of superior employees.

Organizations also perform HRM functions and tasks by outsourcing various

components to outside suppliers and vendors. The tasks that are most frequently

outsourced are those that take HR time and energy away from the HR activities that

provide the most strategic value to the company.

This outsourcing most frequently involves payroll functions, but vendors and external

consultants can help an organization with HRM in many ways. Specifically, many HR

departments outsource background checking, benefits administration, training such as

sexual harassment training, temporary staffing, and the production of employee

handbooks, policy manuals, and affirmative action plans.

HRM is the organizational function that deals with or provides leadership and advice

for dealing with all issues related to the people in an organization. HRM, as such, deals

with compensation, hiring, performance management, organization development,

safety, wellness, benefits, employee motivation, communication, administration, and

training. 

HRM is also a strategic and comprehensive approach to managing people and the

workplace culture and environment. Effective HRM enables employees to contribute

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effectively and productively to the overall company direction and the accomplishment

of the organization's goals and objectives.

HRM is moving away from traditional personnel, administration, and transactional

roles, which are increasingly outsourced. The HRM function is now expected to add

value to the strategic utilization of employees and to ensure that employee programs

recommended and implemented impact the business in positive measurable ways.

Gone are the days when HR staff received direction from the executive team as to their

priorities and needs. HR is now expected to sit at the executive table and recommend

processes, approaches, and business solutions that improve the ability of the

organization's people to effectively contribute.

The new role of HRM involves strategic direction and HRM metrics and

measurements to demonstrate their value. Employees who work in HRM must

demonstrate their value by keeping their employer and company safe from lawsuits and

the resulting workplace chaos. They must perform a balancing act to serve all of an

organization's stakeholders: customers, executives, owners, managers, employees, and

stockholders.

It is difficult to underestimate the importance of an effective, modern HRM

function within an organization. An employee who retired from HRM twenty years ago

would not recognize the competence and capability of the best HRM organizations

today. You can choose to move your HRM function out of the dark days and into the

light. Organizations that do - are best served.  

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2.OBJECTIVES OF THE STUDY

1. To study the common reasons of employee voluntarily leaving from the

organization.

2. To suggest the strategies and steps for reducing turnover and improving retention.

3. To study efforts made by organization to retain employee.

SCOPE OF STUDY

The scope of the study is to extend the knowledge of employee retention strategies.

3.RESEARCH METHODOLOGY

Information collected from various websites and books.

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4.INTRODUCTION OF EMPLOYEE RETENTION

Employee Retention involves taking measures to encourage employees to remain in the

organization for the maximum period of time. Corporate is facing a lot of problems in

employee retention these days. Hiring knowledgeable people for the job is essential for an

employer. But retention is even more important than hiring. There is no dearth of

opportunities for a talented person. There are many organizations which are looking for such

employees. If a person is not satisfied by the job he’s doing, he may switch over to some

other more suitable job. In today’s environment it becomes very important for organizations

to retain their employees.

The top organizations are on the top because they value their employees and they know how

to keep them glued to the organization. Employees stay and leave organizations for some

reasons.

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

organization for the maximum period of time or until the completion of the project.

Employee retention is beneficial for the organization as well as the employee.

Employees today are different. They are not the ones who don’t have good opportunities in

hand. As soon as they feel dissatisfied with the current employer or the job, they switch over

to the next job. It is the responsibility of the employer to retain their best employees. If they

don’t, they would be left with no good employees. A good employer should know how to

attract and retain its employees.

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5.IMPORTANCE OF EMPLOYEE RETENTIONNow that so much is being done by organizations to retain its employees, why is retention so

important? Is it just to reduce the turnover costs? Well, the answer is a definite no. It’s not

only the cost incurred by a company that emphasizes the need of retaining employees but also

the need to retain talented employees from getting poached.

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

1. The Cost of Turnover: The cost of employee turnover adds hundreds of thousands of

money to a company's expenses. While it is difficult to fully calculate the cost of

turnover (including hiring costs, training costs and productivity loss), industry experts

often quote 25% of the average employee salary as a conservative estimate.

2. Loss of Company Knowledge: When an employee leaves, he takes with him

valuable knowledge about the company, customers, current projects and past history

(sometimes to competitors). Often much time and money has been spent on the

employee in expectation of a future return. When the employee leaves, the investment

is not realized.

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

company in part because of the people. Relationships are developed that encourage

continued sponsorship of the business. When an employee leaves, the relationships

that employee built for the company are severed, which could lead to potential

customer loss.

4. Turnover leads to more turnovers: When an employee terminates, the effect is felt

throughout the organization. Co-workers are often required to pick up the slack. The

unspoken negativity often intensifies for the remaining staff.

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

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

organization.

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

hiring a new employee and then training him/her and this goes to the loss of the

company directly which many a times goes unnoticed. And even after this you cannot

assure us of the same efficiency from the new employee.

WHAT MAKES EMPLOYEE LEAVES?

Employees do not leave an organization without any significant reason. There are certain

circumstances that lead to their leaving the organization. The most common reasons can be:

Job is not what the employee expected to be: Sometimes the job responsibilities don’t come

out to be same as expected by the candidates. Unexpected job responsibilities lead to job

dissatisfaction.

1. Job and person mismatch: A candidate may be fit to do a certain type of job which

matches his personality. If he is given a job which mismatches his personality, then he

won’t be able to perform it well and will try to find out reasons to leave the job.

2. No growth opportunities: No or less learning and growth opportunities in the current

job will make candidate’s job and career stagnant.

3. Lack of appreciation: If the work is not appreciated by the supervisor, the employee

feels de-motivated and loses interest in job.

4. Lack of trust and support in co-workers, seniors and management: Trust is the

most important factor that is required for an individual to stay in the job. Non-

supportive co-workers, seniors and management can make office environment

unfriendly and difficult to work in.

5. Stress from overwork and work life imbalance: Job stress can lead to work life

imbalance which ultimately many times lead to employee leaving the organization.

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

attract employees towards themselves.

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7. New job offer: An attractive job offer which an employee thinks is good for him with

respect to job responsibility, compensation, growth and learning etc. can lead an

employee to leave the organization.

EMPLOYEE RETENTION STRATEGIESThe basic practices which should be kept in mind in the employee retention strategies are:

1. Hire the right people in the first place.

2. Empower the employees: Give the employees the authority to get things done.

3. Make employees realize that they are the most valuable asset of the organization.

4. Have faith in them, trust them and respect them.

5. Provide them information and knowledge.

6. Keep providing them feedback on their performance.

7. Recognize and appreciate their achievements.

8. Keep their morale high.

9. Create an environment where the employees want to work and have fun.

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

<Low> <Medium > <High>

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RETENTION DETERMINANTS

It has been recognized by both employers and employees that some common areas affect

employee retention. If certain organizational components are being provided, than other

factors may affect retention. Surveys of employees consistently show that better

compensation package and better career opportunity are the two most important determinates

of retention. Finally, job design and fair and supportive employee relationship with others

inside the organization contribute to retention. Following are the components that affect

employee retention: -

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Organizational Components1. Values and Culture.2. Strategies & Opportunities.3. Well managed & results-oriented.4. Job continuity & security.

Career opportunities1. Training

Continuity.2. Development &

Rewards1. Competitive pay & benefits.2. Performance reward

differentiation.3. Recognition.4. Special benefit & perks.

Job design & work1. Job responsibility &

autonomy.2. Work flexibility.3. Working conditions.4. Work/Life balancing.

Employee Relationship1. Fair/nondiscriminatory

treatment.2. Supervisory/management

support.

These were the determinants of retention. An affective leadership assumed by the top

management would be a very important feature that keeps the work force intact and loyal. In

fact, the approach to the task of formulation of strategies for employee retention should be

comprehensive and the honest intention of the employer to implement every stipulation in the

package of appointment should be evident. However, there would, in each employing

corporate, be a section of so-called ‘good employees’, whom it would be unwise to loose.

Special strategies and special kind of efforts are required in the task of retaining them.

Probably it would be the hardest task for the employer to retain them as persons and rivals

would be making relentless bids to woo this section of employees. To counter these

onslaughts from peers, special efforts are called for.

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6.MANAGER’S ROLE IN RETENTION

When asked about why employees leave, low salary comes out to be a common excuse.

However, research has shown that people join companies, but leave because of what their

managers’ do or don’t do. It is seen that managers who respect and value employees’

competency, pay attention to their aspirations, assure challenging work, value the quality of

work life and provided chances for learning have loyal and engaged employees. Therefore,

managers and team leaders play an active and vital role in employee retention by creating a

motivating team culture and improving the relationships with team members. This can be

done in a following way:

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

environments are likely to keep their team members together for a longer period of

time. Motivation does not necessarily have to come through fun events such as

parties, celebrations, team outings etc. They can also come through serious events e.g.

arranging a talk by the VP of Quality on career opportunities in the field of quality.

Employees who look forward to these events and are likely to remain more engaged.

2. Standing up for the Team: Team leaders are closest to their team members. While

they need to ensure smooth functioning of their teams by implementing management

decisions, they also need to educate their managers about the realities on the ground.

When agents see the team leader standing up for them, they will have one more

reason to stay in the team.

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

However, not everyone knows how. Therefore, one of the key responsibilities will be

providing coaching that is intended to improve the performance of employees.

Managers often tend to escape this role by just coaching their employees. However,

coaching is followed by monitoring performance and providing feedback on the same.

4. Delegation: Many team leaders and managers feel that they are the only people who

can do a particular task or job. Therefore, they do not delegate their jobs as much as

they should. Delegation is a great way to develop competencies.

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

them engaged with the company. However, just giving the extra responsibility does

not help. The manager must spend good time teaching the employees of how to

manage responsibilities given to them so that they don’t feel over burdened.

6. Focus on future career: Employees are always concerned about their future career.

A manager should focus on showing employees his career ladder. If an employee sees

that his current job offers a path towards their future career aspirations, then they are

likely to stay longer in the company. Therefore, managers should play the role of

career counselors as well.

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7.RETENTION MYTHS

The process of retention is not as easy at it seems. There are so many tactics and strategies

used in retention of employees by the organizations. The basic purpose of these strategies

should be to increase employee satisfaction, boost employee morale hence achieve retention.

But some times these strategies are not used properly or even worse, wrong strategies are

used. Because of which these strategies fail to achieve the desired results. There are many

myths related to the employee retention process. These myths exist because the strategies

being used are either wrong or are being used from a long time. These myths prevent the

employer from successfully implementing the retention strategies. Let us have a look on

some of these myths:

1. Employees leave an organization for more pay: Money may be the motivating

factor for some but for many people it is not the most important factor. Money matters

more to the low-income-employees for whom it’s a survival issue. Money can make

an employee stay in an organization but not for long. The factors more important than

money are job satisfaction, job responsibilities, and individual’s skill development.

The employers should understand this and work out some other ways to make

employees feel satisfied. When employees leave, management tries to retain them by

offering more money. But instead they should try to figure out the main reason behind

it. Issues that are mainly the cause of dissatisfaction are organization’s policies and

procedures, working conditions, relationship with the supervisor and salary, etc. For

such employees, achievement, growth, respect, recognition, is the main concern.

2. Incentives can increase productivity: Incentives can surely increase productivity but

not for long term. Cash incentives, volume work targets and speed awards are old

management beliefs. They can generate work speedily and in volumes but can’t boost

employee commitment. Rather speed can hamper the quality of work produced. What

really glues employees to their work and organization is quality work, meaningful

responsibilities, recognition, respect, growth opportunities and friendly supervisors.

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3. Employees run away from responsibilities: It is a myth that employees run from

responsibilities. In-fact employees feel more responsible if they are given extra

responsibilities apart from their regular job. Employees look for variety, greater

control on the processes and authority to take decisions in their present job. They

want opportunities to learn and grow. Management can assign extra responsibilities to

their employees and appreciate them on the completion of these tasks. This will

induce a sense of pride in the employee and will improve the relationship between the

management and the employee.

4. Loyalty is a thing of the past: Employees can be loyal but what they need is an

employer for whom they can be loyal. There is no reason for the employee to hop jobs

if he’s satisfied with the employer.

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

organizations: The things actually required improving employee satisfaction like

respect, career growth and development, appreciation, etc. can’t be bought. They are

free of cost. An employer or management that reacts well to the employee’s ideas and

suggestions is enough for the employees to be retained.

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8.RETENTION SUCCESS MANTRAS

1) Transparent Work CultureIn today’s fast paced business environments where employees are constantly striving to

achieve business goals under time restrictions; open minded and transparent work culture

plays a vital role in employee retention.

Companies invest very many hours and monies in training and educating employees. These

companies are severely affected when employees check out, especially in the middle of some

big company project or venture. Although employees most often prefer to stay with the same

company and use their time and experience for personal growth and development, they leave

mainly because of work related stress and dissatisfactions.

More and more companies have now realized the importance of a healthy work culture and

have a gamut of people management good practices for employees to have that ideal fresh

work-life. Closed doors work culture can serve as a deterrent to communication and trust

within employees which are potential causes for work-related apathy and frenzy.

A transparent work environment can serve as one of the primary triggers to facilitate

accountability, trust, communication, responsibility, pride and so on. It is believed that in a

transparent work culture employees rigorously communicate with their peers and exchange

ideas and thoughts before they are finally matured in to full-blown concepts. It induces

responsibility among employees and accountability towards other peers, which gradually

builds up trust and pride. More importantly, transparency in work environment discourages

work-politics which often hinders company goals as employees start to advance their

personal objectives at the expense of development of the company as a single entity.

Employees comprise the most vital assets of the company. In a work place where employees

are not able to use their full potential and not heard and valued, they are likely to leave

because of stress and frustration. In a transparent environment while employees get a sense of

achievement and belongingness from a healthy work environment, the company is benefited

with a stronger, reliable work-force harboring bright new ideas for its growth.

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2) Quality of WorkThe success of any organization depends on how it attracts recruits, motivates, and retains its

workforce. Organizations need to be more flexible so that they develop their talented

workforce and gain their commitment. Thus, organizations are required to retain employees

by addressing their work life issues.

The elements that are relevant to an individual’s quality of work life include the task, the

physical work environment, social environment within the organization, administrative

system and relationship between life on and off the job.

The basic objectives of a QWL program are improved working conditions for the employee

and increase organizational effectiveness.

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

1. Occupational health care: The safe work environment provides the basis for the

person to enjoy working. The work should not pose a health hazard for the person.

The employer and employee, aware of their risks and rights, could achieve a lot in

their mutually beneficial dialogue.

2. Suitable working time: Organizations are offering flexible work options to their

employees wherein employees enjoy flexi-timings for dedicating their efforts at work.

3. Appropriate salary: The appropriate as well as attractive salary has always been an

important factor in retaining employees. Providing employees salary at par with the

other counterparts of above that what competitors are paying motivates them to stick

with the company for long.

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

problem solving that are of mutual benefit to employees or employers, based on labor

management cooperation. People also conceive of QWL as a set of methods, such as

autonomous work groups, job enrichment, and high-involvement aimed at boosting the

satisfaction and productivity of workers. It requires employee commitment to the

organization and an environment in which this commitment can flourish.

Providing quality at work not only reduces attrition but also helps in reduced absenteeism and

improved job satisfaction. Not only does QWL contribute to a company's ability to recruit

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quality people, but also it enhances a company's competitiveness. Common beliefs support

the contention that QWL will positively nurture amore flexible, loyal, and motivated

workforce, which are essential in determining the company's competitiveness.

3) Supporting EmployeesOrganizations these days want to protect their biggest and most valuable asset and they want

to do this in a way that best suits their organizational culture. Retaining employees is a

difficult task. Providing support to the employees acts as a mantra for retraining them.

Employers can also support their employees by creating an environment of trust and

inculcating the organizational values into employees.

The management can support employees directly or indirectly. Directly, they provide support

in terms of personal crises, managing stress and personal development. Management can

support employees, indirectly, in a number of ways as follows:

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

terms of productivity. Managing the turnover, hence, becomes an important task. A

proactive approach can be adopted to reduce attrition. Strategies should be framed in

advance and implemented when the times arrives. Turnover costs should also be taken

into consideration while framing these strategies.

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

benefit it offers or the compensation packages it gives away to its employees? Or is it

measured in terms of how they value their employees or in terms of customer

satisfaction? Becoming an employer of choice involves following a road map which

tells where to go as a brand.

3. Engage the new recruits: The newly hired employees are said to be least engaged in

the organization. Keeping them engaged is an important task. The fresh talent should

be utilized to maximum before they start feeling bored in the organization.

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

terms of employee satisfaction but by employee engagement. Employees are said to

be engaged when they show a positive attitude toward the organization and express a

commitment to remain with the organization. Employee satisfaction also comes with

high engagement levels. So, organizations should aim to maximize the engagement

among employees.

5. Coaching and mentoring: Employees whose work performance suffers due to poor

interpersonal relationships or because of lack of interpersonal skills should be

provided proper coaching by their superiors. Planed coaching sessions help an

individual to work through issues, maximize his potential and return to peak

performance.

4) FeedbackFeedback acts as a channel of communication between the employee and his manager. The

amount of information employees receive about how well or how poorly they have performed

is what we call feedback. It is a dialog between a manager and an employee which acts as a

way of sharing information about the performance. It suggests where the employee

performance is effective and where performance has to improve.

Managers can provide either positive feedback or negative feedback to employees. This

feedback helps the employee assess his performance and identify the improvement areas.

Positive feedback communicates managerial satisfaction. Positive recognition for good

performance boosts up morale of employees and results in performance improvement to a

higher productivity level. It is believed that positive feedback is the only type of feedback

that generates performance above the minimum acceptable level.

Negative feedback obviously communicates manager’s dissatisfaction. However,

negative feedback sometimes make employee to put more efforts to improve his

performance. But such times are very rare. Moreover this improvement is short term.

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Some managers do not provide any kind of feedback to their employees. Due to no

feedback, employees may assume that they are performing productively or they may feel that

the manager is satisfied with their performance. Studies reveal the performance tends be same

or even decreases if no feedback is provided.

Thus, feedback is necessary because:

1. It builds trust and enhances communication between manager and employee.

2. It gives managers and employees a way to identify and discuss skills and strengths.

3. Positive feedback leads to employee retention and motivation.

4. It helps in identifying performance areas that need improvement and specific ways to

improve them.

5. It acts as an opportunity to enhance performance by identifying resources for skill

development.

6. It is an opportunity for managers and employees to assess and identify career and

advancement opportunities.

7. It helps employees to understand the effectiveness of their performance and

contributes to their overall knowledge about the work

Managers have tendency to ignore good performances of their employees.

Providing no feedback may de-motivate employees and may lead to employee absenteeism.

Input from manager’s side is necessary as it help employees to improve their performance

and increase productivity.

5) Communication between Employee and EmployerCommunication is the solution to almost everything in this world. Same applies to employee

retention also. Straight-from-the-shoulder communication is what the employees need from

their employers. Employees look for organizations where communication and process are

transparent. Nothing is hidden and shared with the employees. Communication is also the

way to win the employees trust in the organization. Employees trust the employers who are

friendly and open to them. This trust leads to employee loyalty and finally retention.

Employers also feel that the immediate supervisors are the most authenticated and trusted

source of information for them. So the organizations should hire managers who are active

communicators.

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Communication mediums

1. Open door policy: Organizations should support open door policies so that the

employees feel comfortable and are able to express their doubts and feeling to their

employers.

2. Frequent meetings and Social gatherings

3. Emails, Newsletters, Intranet and many more.

So there should be effective communication across the organization & this communication

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

retention.

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9.EMPLOYEES TURNOVER

Employee’s turnover has always been a sensitive issue for all organizations. Calculating

employee turnover rate is not that simple as it seems to be. No common formula can be used

by all the organizations. A formula had to be devised keeping in view the nature of the

business and different job functions. Moreover, calculating attrition rate is not only about

devising a mathematical formula. It also has to take into account the root of the problem by

going back to the hiring stage.

Employees Turnover rate or Attrition rate means:

In terms of numbers:Total number of resigns per month (whether voluntary or forced) divided by (Total Number

of employees at the beginning or the month plus total number of new joiners minus total

number of resignations) multiplied by 100.

If calculating in monetary terms, it includes the following:

Costs Due to a Person Leaving

1. Calculate the cost of the person(s) who fills in while the position is vacant. Calculate

the cost of lost productivity at a minimum of 50% of the person’s compensation and

benefits cost for each week the position is vacant, even if there are people performing

the work. Calculate the lost productivity at 100% if the position is completely vacant

for any period of time.

2. Calculate the cost of conducting the exit interview to include the time of the person

conducting the interview, the time of the person leaving, the administrative costs of

stopping payroll, benefit deductions, benefit enrollments.

3. Calculate the cost of the manager who has to understand what work remains, and how

to cover that work until a replacement is found.

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

leaving.

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

will pick up the work, whose work will suffer, what departmental deadlines will not

be met or delivered late.

6. Calculate the cost of lost knowledge, skills and contacts that the person who is leaving

is taking with them out of your door. Use a formula 50& of the person’s annual salary

for one year of service, increasing each year of service by 10%.

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

vacant.

Recruitment costs1. The cost of advertisements; agency costs; employee costs; Internet posting costs.

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

and implement a sourcing strategy, review candidates backgrounds, prepare for

interviews, conduct interviews, prepare candidate assessments, conduct reference

checks, make the employment offer and notify unsuccessful candidates. This can

range from a minimum of 30 hours to over 100 hours per position.

3. Calculate the cost of the various candidate pre-employment tests to help assess

candidates’ skills, abilities, aptitude, attitude, values and behaviors.

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Training costs

1. Calculate the cost of orientation in terms of the new persons’ salary and the cost of the

person who conducts the orientation. Also include the cost of orientation materials.

2. Calculate the cost of departmental training as the actual development and delivery

cost plus the cost of the salary of the new employee. Note that the cost will be

significantly higher for some positions such as sales representatives and call center

agents who require 4-6 weeks or more of classroom training.

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

4. Calculate the cost of various training materials needed including company or product

manuals, computer or other technology equipment used in the delivery of training.

Lost productivity costs

As the new employee is learning the new job, the company policies and practices, etc. they

are not fully productive. Use the following guidelines to calculate the cost of this lost

productivity:

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

25% productivity level for the first 2-4 weeks. The cost therefore is 75% of the new

employees’ full salary during that time period.

2. During weeks 5-12, the employee is contributing at a 50% productivity level. The cost

is therefore 50% of full salary during that time period.

3. During weeks 13-20, the employee is contributing at a 75% productivity level. The

cost is therefore 25% of full salary during that time period.

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

indoctrination period.

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New Hire Costs

1. Calculate the cost of bring the new person on board including the cost to put the

person on the payroll, establish computer and security passwords and identification

cards, telephone hookups, cost of establishing email accounts, or leasing other

equipment such as cell phones, automobiles.

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

in the new employee’s work.

Lost Sales Costs

1. Calculate the revenue per employee by dividing total company revenue by the average

number of employees in a given year. Whether an employee contributes directly or

indirectly to the generation of revenue, their purpose is to provide some defines set of

responsibilities that are necessary to the generation of revenue. Calculate the lost

revenue by multiplying the number of weeks the position is vacant by the average

weekly revenue per employee.

The cost of employee’s turnover or attrition is:

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

80%)The ‘rule of thumb’ appears to be very inaccurate indeed and, while it depends upon the

category of staff, it is probably better to estimate around 80% of salary as a truer rule of

thumb- and this will be on the conservative side.

What kind of strategies would be effective in producing the desired results of maximum

‘Employee Retention’ and minimum ‘Employee Turnover’? The answer is obvious. It

should be the aim of each employee to keep his work force fully satisfied with no room for

disgruntlement.

Retention of employees has become a primary concern in many organizations foe several

reasons. As a practical matter, with lower turnover, every individual who is retained means

one less person to have to recruit, selects, and trains. Also, the continuity employees who

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know their job, co-workers, organizational services and products and firm’s customers

enhance organizational and individual performance. One survey of supervisor and workers

found that losing high performance made it more difficult for organizations to reach their

business goals. Additional continuity of employees provides better “Employee image” for

attracting and retaining other individuals.

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10.WAYS TO REDUCE EMPLOYEE TURNOVER

Following are some of the ideas to reduce employee turnover:

1. Hire the best candidate.

2. Welcome new employees. Customize your induction program for new employees

according to the requirements. Same induction program can not be applied to all the

candidates. Make them feel welcomed.

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

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

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

family commitments. Respect them.

6. Provide career counseling and development.

7. Discuss your future plans regarding the candidate with the candidate. Let them know

that the management is interested in retaining them and cares for them.

8. Take proper feedback from employees regarding their grievances.

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

part of employee retention.

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11.FACTS ABOUT EMPLOYEE TURNOVER

It is difficult to accept when organizations say they have zero attrition rates. Companies may

have healthier turnover rates, however, there is no such thing as zero attrition. There are other

such facts about turnover, about which most of us are not aware. Some of such facts have

been highlighted below:

1. Turnover always happens: Companies who believe in zero attrition rates only fool

themselves. This happens because employees keep on moving due to reasons like

marriage or further education. Nothing can stop these employees from moving on. So,

rather than achieving zero attrition companies should focus on identifying whom they

want to keep so that they have healthy attrition rate.

2. Some Turnover is Desirable: Zero attrition is not desirable mainly because of two

reasons. Firstly, if all employees continue to stay in the same organization, most of

them will be at the top of their pay scale which will result in excessive manpower

costs. Secondly, new employees bring new ideas, approaches, abilities & attitudes

which can keep the organization from becoming stagnant.

3. Turnover includes costs: Turnover always includes some costs. Consider the costs of

replacing the key employee who falls in to the category of high performers. This

includes the costs of recruitment advertisement, referral bonuses, selection testing,

training costs, etc. Moreover, turnover results in loss of time & efforts, low

productivity, loss of morale, loss of knowledge and so on.

4. High salary doesn’t work: Most managers assume that a high salary package is

enough to keep employees loyal to their organization. Employees may face other

problems like low job satisfaction, low engagement levels, no recognition, poor

working conditions, less support from superiors and so on. Salaries are not always the

solution to attrition. Managers should try to identify the roots of the problem and then

find a feasible solution.

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5. The manager can reduce attrition: Managers should take primary responsibility for

retaining their employees. Much of the employee’s perception of job satisfaction

stems from the relationship they share with their immediate supervisor. Managers

should try to support their subordinates and give proper feedback on performance. HR

managers should work in collaboration to make the key employees last in their

organization.

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

coaching, developing, motivating, mentoring & listening to people. There should be

universal acceptance of the goal of reducing turnover along with top management

commitment and dedication.

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12.GOOGLE’S EMPLOYEE RETENTION STRATEGIES

Google, through its branding, PR and recruiting efforts, has made itself so well-known and

attractive to professionals from every industry and university that they have essentially

changed the game of recruiting forever.

The world’s first recruiting culture

Google has accomplished something that no other corporation has ever accomplished. In less

than a handful of years, they have developed what can only be categorised as a recruiting

machine. What they have done better than anyone else is to develop the world’s first

recruiting culture. What that means is that recruiting and the need for it permeates the entire

organisation, from the key leaders on down to the entry-level employees.

As a result of this culture, not only does Google fund recruiting to the point where the

function is in a league by itself, but they have also gone to the extraordinary step of changing

the way employees work in order to attract and retain the very best.

Working with 20 per cent time

Many organisations have changed their pay or benefits in order to attract better workers, but

none has changed every professional job in the company so that the work itself is the primary

attraction and retention tool. Rather than letting work, jobs and job descriptions be put

together by the “out of touch” people in corporate compensation, Google’s founders Larry

Page and Sergey Brin, HR director Stacy Sullivan and the leadership team at Google have

literally crafted every professional job and workplace element so that all employees are

working on interesting projects, learning continuously, constantly challenged to do more and

feeling that they are adding value.

The key element of changing the work so that the work itself becomes a critical attraction

and retention force and driver of innovation and motivation is what Google calls ‘20 per cent

work’. There is no concrete definition of what 20 per cent work means, but generally for

professional jobs it means that the employee works the equivalent of one day a week on their

own, researching individually selected projects that the company funds and supports. Both

the Google Groups and Google News products are reported to have started as a result of

personal 20 per cent time projects. In addition to being a phenomenal attraction tool, it also

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keeps their attrition rate at, as one HR executive put it “almost nil”, but its greatest value is

that it drives innovation and creativity throughout the organisation.

The world’s largest recruiting budget

Google recruiting is the best-funded recruiting function in any major product-driven

corporation. Arnnon Geshuri, the head of recruiting, and Sullivan, have done what can only

be classified as an unbelievable job in convincing senior management to fund the recruiting

effort beyond that of any corporation in history.

My own calculations indicate that, at times, Google recruitment has a ratio of one recruiter

for every 14 employees (14:1). That ratio surpasses the previous record of 65:1, held by

Cisco during the first war for talent in the late ‘90s. If on the surface this ratio doesn’t

impress you, might I suggest that you compare it to the typically much larger ratio of

employees to all HR professionals, which is about 100:1.

The benefits are breathtaking

Google offers spectacular benefits even though they are not designed just for recruiting

purposes. Instead, these benefits are also designed to encourage collaboration, to break down

barriers between functions and to stimulate individual creativity and innovation.

These benefits do attract some of the “wrong people”, that is, talented individuals who are

seeking benefits rather than an opportunity to do their best work, which creates a screening

challenge.

The take away for other firms is that, even if you do match Google’s “non-work” benefits (as

firms like SAS have almost done), you are not automatically going to attract the very best and

the most innovative.

Recruiting structure

Google has plans to nearly double its workforce, growing from approximately 5,000 to

10,000 employees in the near future. The recruitment structure they have designed to enable

such growth is, like most successful recruiting organisations, primarily a centralised

operations model.

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The basic reason why firms use a centralised recruiting function is to ensure that most of the

recruiting is done by recruitment professionals, as opposed to generalists, who for the most

part don’t have the skills or the attitude to be great recruiters. Centralisation also makes it

easier to share top applicants between business units, a key activity which seldom occurs

when decentralised generalists execute recruiting.

A key tenet of any successful recruiting function is that the function has the capability to

handle in-house the most important and visible positions, that is, executive search. At

Google, recruiting is responsible for filling both executive leadership and top-level technical

positions.

Because Google believes wholeheartedly in sourcing the best talent that is ferociously sought

after by competitors, every element of the recruiting function is abundantly staffed with

highly focused professionals.

To ensure that the company has the capability to recruit talent at the capacity needed, the

recruiting model has been broken up into very distinct roles, each requiring specialised

expertise. These activities, carried out in a highly choreographed manner by teams tied to

divisions and business units, include: recruiting research analysts; candidate developers

(sourcers); process coordinators; candidate screeners; specialised recruiters for college;

specialised recruiters for technical and leadership executive search; specialised international

recruiters to be located in Asia and Europe; recruiting program managers; and recruiting

project managers.

Such specialisation enables the function to be managed in a way similar to a supply chain.

Some outside consultants have argued that such a large number of recruiters and specialised

positions is an indication of inefficiency. Like many things in business, obtaining a specific

level of efficiency requires that one makes tradeoffs between output quality and input cost,

and at this point in time Google values the quality over the cost. The willingness to fund this

recruiting model is a clear indication that talent more than any other input is the most critical

at Google, a notion many pay lip service to but few actually execute.

Standard recruiting tools

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Google has successfully implemented many of the standard best practice tools found at other

companies:

Employee referral: Google’s referral program is without any industry leading features, but

the company’s strong brand coupled with its highly enthusiastic workforce makes up for

weaknesses in the program.

College recruitment: Google hires a large number of PhDs on the premise that they enjoy

exploring areas that no one else has explored. To accomplish this, they have developed a

network of direct relationships with over 350 professors at major schools. In addition, Google

has an outstanding internship program that has a very high conversion rate to permanent

hires.

Professional networking: Google also effectively uses networking groups like Linkedin and

other live professional events to recruit top performers.

Recruiter training: Google is one of only a handful of companies that requires most newly

hired recruiters to go through extensive recruiter training prior to starting.

“Wow” recruiting tools

Google employs a variety of impressive recruiting tools that certainly “wowed” me while

researching this case study.

AdWords as a recruiting tool: Google’s first “wow” approach is its use of its own Google

search tool to find “passive” candidates. Because Google is recognised as the master of

search, it’s not surprising that they utilise their own search tool to find top candidates without

active resumes. In addition, they attract top performers by placing their own job ads that

appear when certain keywords are typed into a search.

Contests as recruiting tools: A second “wow”aspect of Google recruiting is its use of a

contest to identify and attract top software engineers. The Google Code Jam, as they call it, is

a global online software writing contest that can attract over 7,500 people each year. The top

25 finalists are invited to the Mountain View campus to compete for US$50,000 in prizes as

well as a chance to work at Google. The contest is powered by TopCoder, a vendor that helps

manage the contest and score the winners.

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Brain teasers as recruiting tools: The third “wow” aspect of Google’s recruiting is its

creative use of roadside billboards and math tests placed in magazines to garner the attention

of math and programming wizards. Google has placed brainteaser billboards in the Silicon

Valley and by Harvard Square. The math puzzles on these billboards challenge mathematics-

oriented people and get them thinking. Although they do not specifically mention Google, the

billboard puzzle does eventually lead interested participants to the Google site.

Friends of Google: The final “wow” recruiting tool is the “friends of Google” system. This

tool creates an electronic email network of people that are interested in Google and its

products but not necessarily interested in working for the company. By signing up these

individuals and then periodically sending them emails about the firm’s products and events,

Google can build a relationship with thousands of people that like the firm.

Weaknesses in the Google approach

Google’s primary strength in recruiting comes from the fact that they “change the work” and

that they have, and continue to make, an outstanding business case to fund the recruiting

organisation at an unparalleled level. But it’s equally important to point out that Google

recruiting is not without weaknesses. Some of the current and potential issues facing Google

recruiting are outlined below.

Given the relative youth of the company, none of these weaknesses even reach the level of

being considered a threat, but in a company whose slogan is “great isn’t good enough”, it’s

critical that HR and recruitment management spend some time and resources in the following

areas:

Employment branding: Although Google is clearly well-known as a great employer, it is

clear that much of that recognition has come as a result of programs and ideas that originated

outside of HR. It is critical that HR and recruitment devote resources to developing a formal

employment brand strategy and execution plan.

Metrics: At a technology company driven by mathematics and staffed largely with

mathematicians, it’s almost unbelievable how both the HR and the recruiting function have

dragged their feet on developing metrics. In particular, Google’s inability to track the on-the-

job performance of new hires is inexcusable.

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Recruiting strategy: Although Google recruiting obviously does great things, those things

seem to occur at random and in spite of the fact that there is no formal, well-

communicated recruitment strategy. Whether you talk to recruiters or hiring managers at

Google, no one seems to be able to clearly articulate the strategy and how it differentiates

Google from its talent competitors.

Speed: Almost everyone that has been a candidate at Google comments on how slow the

screening, recruiting, and interview process is. The fact that some stock option grants and all

new professional hires must be approved by senior management (an activity limited to one

day a week) is industry leading in a way that hurts the recruiting effort.

Contingent labour: The number of temps and contractors in the recruiting function at

Google is high. The unwillingness to give permanent jobs immediately to recruiters may

reduce Google’s ability to get seasoned recruiters, who have mortgages and car payments like

the rest of and require a certain level of stability.

Emphasis on youth: Google’s emphasis on youth culture might hurt its ability to attract

more senior and experienced personnel. I have heard concerns related to their emphasis on

youth from more than one employee, and at least one former worker has accused them of age

discrimination.

Employee benefits at Google

A partial list of Google's "I-bet-you-don't-have-that-where-you-work" benefits include:

Flexible hours for nearly every professional employee

Casual dress everyday (and this goes well beyond business casual)

Employees can bring their dogs to work, everyday

Onsite physician and dental care

Health benefits that begin as soon as an employee reports for work

Free massage and yoga

Shoreline running trails

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Stock options everywhere

Free drinks and snacks everywhere (espresso, smoothies, Red Bull, health drinks, kombucha

tea, you name it)

Free meals, including breakfast, lunch and dinner (some have described this as a feast with

multiple locations and world-class chefs, including one that cooked for the Grateful Dead)

Three weeks' vacation during the first year

Free recreation everywhere, including video games, foosball, volleyball and pool tables

Valet parking for employees

Onsite car wash and detailing

Maternity and parental leave (plus new moms and dads are able to expense up to US$500 for

take-out meals during the first four weeks that they are home with their new baby)

Employee referral bonus program

Near site childcare centre

Backup childcare for parents when their regularly scheduled child care falls through

Free shuttle service to several San Francisco and East and SouthBay locations (San Francisco

is 45 miles away from the main campus)

Fuel efficiency vehicle incentive program (US$5,000 assistance if you buy a hybrid)

Onsite dry cleaning, plus a coin-free laundry room

A Friday TGIF all-employee gathering where the founders frequently speak

A 401k investment program

A "no tracking of sick days" policy

An onsite gym to work off all of the snacks

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Here are a few strategies to help in the quest of recruiting and retaining the best and brightest

stars.

Get it right the first time

Hire the right person for the right job. Use tools to aid in identifying these candidates, the

ones who possess the suitable characteristics desired for the job. "Identifying accurate job

characteristics may seem like a daunting task, but it is actually quite straight-forward when

you have the right tools at your disposal," explained Bud Haney, Founder of Profiles

International. It is crucial that when looking at a person's eligibility for a job, that you are

looking at them as an opportunity for future success, not just as a function of human

resources.

Understand that money is not everything

Money - as important as it is in our daily lives, is just one component of employment value.

Businesses must ensure that they offer a great workplace, life balance, career development,

quality leadership and work flexibility.  These additional benefits add to the employment

value and can range from a great financial package to employee appreciation and recognition

programs. Remember, they do not have to be expensive, see our recent post on How to

motivate without money

Create a caring work environment

Wages and salaries are the main reason why people come to work and do their jobs, but it is

not enough to motivate high productivity and innovation. A genuine, warm and caring

workplace has a high impact on staff and the quality of their work. The philosophy here is

simple: Give and you will get back tenfold. How employees and applicants are treated shows

a clear indication of the organizations passion for the business that they are in.

Promote from within

Give your people an opportunity to advance from within. This perpetuates company culture

and creates drive to further careers. "Knowing your employees' strengths, weaknesses and

what makes them productive gives employers a distinct advantage in retaining and

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developing their workers," says Dario Priolo, Chief Marketing Officer of Profiles

International. Treat your people with dignity and respect, nurture those who want to move

ahead and create an environment in which they can excel.

Build your reputation

Organize and plan effective strategies. A successful brand and image in the workplace is key

to attracting and retaining good workers. Everyone wants to believe in and feel a part of

something. Employees are no different, they gravitate towards those organizations with

sterling reputations.

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13.OBSRVATION & SUGGESTION

The suggestions for the findings from the study are follows

Most of the employees agree that the performance appraisal activities are helpful to

retain employees, so the company should try to improve performance appraisal

system, so that they can retain employees and improve their performance.

The trust and support is lacking in the co-workers so the organization should try to

focus on it.

In the organization climate collaboration is lacking so the organization has to make

efforts in this direction so that employees can work collaboratively.

Organization can reduce employee turnover by providing flexible work schedules.

The organization must consider about providing more growth opportunities for

employees.

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CONCLUSION

As employees are the bases for company so retention of employees is a major focus for HR

department. The management should identify the important factors that affect retention and

should take necessary measures to improve these. Also, the management should take

appropriate measure to identify the reasons of employee voluntarily leave.

It is only the employees that implement and give tangibility to the corporate’s mission.

In other words if it is the highest rung in the corporate hierarchy that has ideas, it is the

employees’ rung that has the chisel to bring the vision to life. In the best of worlds,

employees would love their jobs. Like their co-workers, work hard for their employers, get

paid well for their work, have ample chances of 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 co-workers, want a

change, or because their spouse gets a dream job in another state. Unlike inanimate products

and systems that subject themselves to fine tuning without any reaction, employees would not

subject themselves to any measure taken without reaction and analysis. Hence managing

human resources, particularly retaining them, is an art that calls for special skills and

strategies.

Employee survey and exit interviews can be used for assessing the reasons of employee

voluntarily leave. HR interventions such as improving selection process, effective orientation

and training, better employee relation, better career development programs and planning etc

should be used to improve employee retention.

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BIBLIOGRAPHYName of author: Aswathappa

Name of book: Human Resource Management Text and Cases

Name of Publisher: Tata Mc Graw-Hill Education

Year of edition: 2010

WEBLIOGRAPHY

http://humanresources.about.com/od/glossaryh/f/hr_management.htm

http://www.hcamag.com/hr-resources/hr-strategy/a-look-inside-the-google-

talent-machine-112999.aspx

www.google.com

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