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Chapter 1 - Human Resource Retention and Strategies

1.1 Introduction

Collins (2001) in his book “Good to Great” said “Great vision without great people is

irrelevant”. Human Resource is the soul of any organization. Body without soul is just a

skeleton. Human resource is the real strength of any organization and its business and

keeping them happy needs to be the primary objective.

Employee-Employer relationship is interdependent across industries. Employee works

for the company, so that company earns profit and in return, employer pays

remuneration. Relationship is mutually beneficial. This relationship flourishes when

employee stays with the company for longer period of time and employer take care of

employee in all aspects. The most critical challenge employers are facing is turnover of

employees. It is not just limited to high attrition rate but the more important problem is

to retain the performing employees. All the sectors are facing this challenge and

specifically IT sector is going through rough patch for retaining their key resources.

As Information Technology (IT) industry started growing very recently, young,

enthusiastic and dynamic talented candidates got attracted towards heavy pay

packages, benefits, companies are offering. The employment opportunities are very

much lucrative in nature. IT industry is growing globally and opportunities are available

not just locally but globally. Aspiring employees are attracted to foreign assignment and

remuneration in foreign currency. No employer can prevent him from seeking the new

opportunity.

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The first study on this topic was conducted about two decades ago by Roger E. Herman

who is regarded as the Father of Employee Retention. This study published in 1990 is

titled as “Keeping Good People: Strategies for Solving the Dilemma of the Decade”.

Herman (1990). The second one was by Gregory P Smith, who on the basis of his

extensive work has published in 2007 a book under the title “401 Proven Ways to Retain

Your Best Employees” Smith (2007). Both these works, together present a

comprehensive list of strategies to retain employees.

This study on Human Resource Retention Strategies was undertaken to evaluate the

retention strategies in practice in IT companies in Pune City.

1.2 Background of the problem

In a traditional approach, there were very few companies who are aware of human

resources retention strategies. Till the last generation, employees used to work for the

same company for 25-30 years and retire from the company. Employees used to stay

with the company even if there were various issues and concerns with the company,

environment, interpersonal relationships, and slow career and personal growth. One of

the reasons for not shifting the company was, there were fewer opportunities existing in

the market. In addition, loyalty and trust were the factors for not shifting the company.

In recent 10-15 years, scenario has changed. Indian IT industry is growing rapidly. Huge

foreign IT companies have come to India to do the business. Therefore there is need of

massive amount of human resources to carry out the outsourced work. In India,

technical and non-technical skilled labor is available to carry out the work. Many foreign

IT companies have outsourced the business to Indian IT companies. They are called as

offshore centers. Because of the outsourcing, foreign IT companies get specialized

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human resources to produce quality work in fewer amounts of time with low cost

advantage. There is no dearth of opportunities for the best in the business. As there are

lots of opportunities available in the market, frequency of changing the job is increasing.

Here retention of human resources comes into picture. To retain good people, company

needs to hire right people, at right time, at right place, with right competencies. A

retention strategy starts with recruitment of the candidate.

Indian IT industry has seen ups and downs in the business as similar to the other non-IT

companies. There are various factors like, change in foreign business environment,

Indian foreign policies, export import polices, natural and man-made calamities etc. that

also affects Indian IT business and in turn human resources. We can see and measure

the attrition rate in boom and recession period. While studying human resource

retention strategies in Indian IT companies, there are various factors that needs to

considered, like attrition rate of men and woman candidates, candidates with different

cultures, different educational background, resources working on different

technologies, resources working at various levels in the company, retirement age etc.

The Retention of Employees has proved to be the most challenging function of HR

Managers today. One finds them striving extremely hard in order to retain the best

talent within the organization. But the big question remains, “Is it enough?”

What is needed is a 360 degree approach to people management which would include

not only hiring, but also training and development, self learning and career growth of

employees. The organizations will have brilliant people and the key is to manage such

brilliant people. Innovation of HR retention strategies is the key today.

Natu & Misal (2013) in the research paper “Influential Triplets of Employee Retention”

argues that, one of the growing yet toughest industries for human resource to manage

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is the Information Technology (IT). The IT industry has one of the highest turnover rates

compared to other industries. Retention starts with hiring the right person for the

employment. Human resource recruiters should look for applicants with the

characteristics such as self-motivated, high tolerance for stress, positive attitude, good

listening skills, good communication skills, ability to work as an individual and in a group

and good problem solving skills. Retention reduces turnover costs, improves customer

service, raise productivity and increases employee morale and profits. There is no one

tool that can help retention; therefore common techniques those can be used together

includes good benefits, role of manager, compensation, career growth, reward and

recognition, ongoing training, job rotation, ongoing performance appraisals etc. It is also

evident that rewards and recognition help motivate IT employees.

1.3 Research problem

Retaining employees in the IT Companies is a crucial task for HR. Employee retention is

critical for any business. Average attrition rate of Information Technology (IT) sector is

15% - 20%. This attrition rate is significant and hampers overall success of the

organization. Employees are backbone of any organization and success is dependent on

the employee’s valuable contribution. Researcher has chosen this topic to study the

existing retention strategies in IT companies and the factors based on which employee

decides to stay with the company or quit.

1.4 Purpose of the research

This research addresses following issues:

1. Study human resource retention strategies in practice in selected IT companies in

Pune City

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2. What are the common strategies employed by the IT companies?

3. What are the specific strategies employed by the IT companies?

4. Discuss impact of attrition

5. Discuss retention factors impacting employee retention

6. What are the perceptions and role of HR executives / managers and employer?

1.5 Objectives of the research

To study the impact of retention strategies (Career Growth, Role of Manager,

Compensation and Health of Organization) on Employee Retention.

To study whether, Customer Satisfaction, Quality of Work, Image of Company have a

positive impact on Employee Retention.

To study perception of respondents towards following retention related attributes.

a. Revenue and Sales of the company

b. Success of the company

1.6 Hypotheses of the research

H1: Retention strategies Career Growth, Role of Manager, Compensation and Health of

Organization have a positive impact on Employee Retention.

H2: Customer Satisfaction, Quality of Work and Image of Company have a positive

impact on Employee Retention.

H3: Respondents have positive perception towards following retention related

attributes

a. Revenue and Sales of the company

b. Success of the company

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1.7 Utility of the research

Study on employee retention would be beneficial to the IT companies in Pune and other

regions as well. Companies might want to look at the factors that really bother

employees and factors employees might consider for quitting the company. Based on

the results, companies may want to have some plan in place or make required changes

in existing plan and implement it in an effective manner. Researcher has designed a

framework that will help increase in retention of employees, of which companies can

take advantage.

1.8 Assumptions

The research topic was selected to contribute to the study of human resource retention

strategies in IT companies. A cover letter in electronic form as well as hard copy

accompanied the survey and explained that each participant’s responses would remain

confidential and individual responses would not be revealed. An assumption in this

study was that, the employee’s opinion and answers would be honest and accurate.

Another assumption was that, the employees and HR executives / managers would not

be fearful of providing their opinions in the survey. The study included an assumption

that, the sample participants would be representative of the larger population of IT

employees. Furthermore, it was assumed that each employee understand that

participation in the study was voluntary. Finally, it was assumed that there are internal

as well as external factors affecting employee retention in IT companies.

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Note: Researcher have used synonyms for ‘Human resource’ such as ’employee’,

‘talent’, ‘labor’, ‘manpower’, ‘people’. These words are used interchangeably in the

thesis. Words ‘salary’ and ‘compensation’ are used interchangeably. Similarly, words

‘organization’, ‘company’ and ‘corporate’ are used interchangeably in this thesis.

1.9 Definitions

Various definitions of Human Resource, Human Resource Department and Human

Resource Retention are available in literatures that are quoted below.

Wikipedia article on “Human resources” states that, Human resource is the set of

individuals who make up the workforce of an organization, business sector, or economy.

"Human capital" is sometimes used synonymously with human resources, although

human capital typically refers to a more narrow view (i.e., the knowledge the individuals

embody and can contribute to an organization). Likewise, other terms sometimes used

include "manpower", "talent", "labour", or simply "people".

Oxford University Press defines Human Resource as “The personnel of a business or

organization, regarded as a significant asset in terms of skills and abilities.”

Entrepreneur Media defines Human Resource Department as “The department or

support systems responsible for personnel sourcing and hiring, applicant tracking, skills

development and tracking, benefits administration and compliance with associated

government regulations.”

Wikipedia article on “Employee retention” states that “Employee retention refers to

the ability of an organization to retain its employees. Employee retention can be

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represented by a simple statistic (for example, a retention rate of 80% usually indicates

that an organization kept 80% of its employees in a given period). However, many

consider employee retention as relating to the efforts by which employers attempt to

retain employees in their workforce. In this sense, retention becomes the strategies

rather than the outcome.”

Business Dictionary defines Human Resource Retention as “An effort by a business to

maintain a working environment which supports current staff in remaining with the

company. Many employee retention policies are aimed at addressing the various needs

of employees to enhance their job satisfaction and reduce the substantial costs involved

in hiring and training new staff.”

Singh, Sharma & Mahendru (2010) in their research paper “A Study of Employee

Retention in ITeS Industry: A Case of North India” quoted Employee Retention as

following:

a. Employee Retention involves taking measures to encourage employees to remain in

the organization for the maximum period of time.

b. Employee retention is a systematic effort by employers to create & foster an

environment that encourages current employees to remain employed by having

policies &practices in place that address their diverse needs.

c. Retention is the process for members or volunteers remain active with the

organization. Retention is not a particularly formal process. Instead it focuses on

maintaining a welcome environment, member morale, and organizational process.

(Source: Duke University-Student Affairs-Multicultural centre)

Thus, Employee Retention is a systematic and organized effort by the management of

an organization to retain the skilled and competent manpower acquired thereof.

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1.10 History and Evolution of Human Resource and Human Resource

Management

Sinha (2011) in an article “The History of Human Resource Management (HRM)” quoted

definition of HRM by (Mathis, Jackson 2007) as "The design of formal systems in an

organization to ensure the effective and efficient use of human talent to accomplish the

organizational goals."

The author further discusses that; another way to define would be that HRM is

concerned with the policies, practices and systems that influence employees’ workplace

behavior, attitudes and performance. HRM is a process (or a grouping of processes) of

managing human talents/skills to achieve the organization’s objectives. The core aim of

all management, to increase predictability and achieve better control of events is

central to HRM.

The term HRM is not that old actually. The term HRM evolved in USA out of the earlier

Personnel Management or PM in the early 1960s. Merriam-Webster dictionary claims

that the first recorded use of the term Human Resource is from 1961. By the mid 1980s,

the term HRM or Human Resource Management started appearing and it quickly

replaced Personnel Management or Personnel Administration.

Most of the functions typically covered by HRM today have a much longer history than

is widely believed. Though not using modern terms, ancient texts have many recorded

instances of current HRM functions.

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The ancient Code of Hammurabi from Babylon in 1750 BC sets minimum wages,

obligations for expert craftsmen to transfer their skills to apprentices, quality

standards for builders, and healthcare obligations for owners of slaves.

Roman philosopher Pliny the Elder in the first century AD, warned about the health

hazards of employees handling zinc and sulphur. He prescribed the use of protective

masks made from animal bladder.

In 1556, the German scientist Georgious Agricola in his De Re Metallica describes

occupational hazards of employees and suggests methods for improving

occupational health.

In 1700 Bernardo Ramazzini, known as the "father of industrial medicine," published

in Italy the first comprehensive book on industrial medicine, De Morbis Artificum

Diatriba (The Diseases of Workmen).

In 1850 Abraham Lincoln viewed all American workers as potential entrepreneurs.

The modern usage dates from after WWII, when Personnel Management

practitioners in the USA wanted to differentiate PM from other managerial

functions.

According to Wikipedia article on “Human resource management”, Human resource

management (HRM, or simply HR) is a function in organizations designed to maximize

employee performance in service of their employer’s strategic objectives. HR is primarily

concerned with how people are managed within organizations, focusing on policies and

systems. HR departments and units in organizations are typically responsible for a

number of activities, including employee recruitment, training and development,

performance appraisal, and rewarding (e.g., managing pay and benefit systems). HR is

also concerned with industrial relations, that is, the balancing of organizational practices

with regulations arising from collective bargaining and governmental laws.

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HR is a product of the human relations movement of the early 20th century, when

researchers began documenting ways of creating business value through the strategic

management of the workforce. The function was initially dominated by transactional

work, such as payroll and benefits administration, but due to globalization, company

consolidation, technological advancement, and further research, HR now focuses on

strategic initiatives like mergers and acquisitions, talent management, succession

planning, industrial and labor relations, and diversity and inclusion.

Antecedent theoretical developments

HR spawned in the early 20th century and was influenced by Frederick Taylor (1856-

1915). Taylor explored what he termed "scientific management" (later referred to by

others as "Taylorism"), striving to improve economic efficiency in manufacturing jobs.

He eventually keyed in on one of the principal inputs into the manufacturing process—

labor—sparking inquiry into workforce productivity.

The human relations movement grew from the research of Elton Mayo and others,

whose Hawthorne studies (1924-1932) serendipitously documented how stimuli

unrelated to financial compensation and working conditions, yielded more productive

workers. Contemporaneous work by Abraham Maslow, Kurt Lewin, Max Weber (1864-

1920), Frederick Herzberg, and David McClelland (1917-1998) formed the basis for

studies in industrial and organizational psychology, organizational behavior and

organizational theory, giving room for an applied discipline.

Birth and evolution of the discipline

By the time enough theoretical evidence existed to make a business case for strategic

workforce management, changes in the business landscape (à la Andrew Carnegie, John

Rockefeller) and in public policy (a là Sidney and Beatrice Webb, Franklin D. Roosevelt

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and the New Deal) had transformed the employer-employee relationship, and the

discipline was formalized as "industrial and labor relations". In 1913, one of the oldest

known professional HR associations—the Chartered Institute of Personnel and

Development was founded in England as the Welfare Workers' Association, then

changed its name a decade later to the Institute of Industrial Welfare Workers, and

again the next decade to Institute of Labour Management before settling upon its

current name. Likewise in the United States, the world's first institution of higher

education dedicated to workplace studies—the School of Industrial and Labor Relations

was formed at Cornell University in 1945.

During the latter half of the 20th century, union membership declined significantly,

while workforce management continued to expand its influence within organizations.

"Industrial and labor relations" began being used to refer specifically to issues

concerning collective representation, and many companies began referring to the

profession as "personnel administration". In 1948, what would later become the largest

professional HR association—the Society for Human Resource Management (SHRM)—

was founded as the American Society for Personnel Administration (ASPA).

Nearing the 21st century advances in transportation and communications greatly

facilitated workforce mobility and collaboration. Corporations began viewing employees

as assets rather than as cogs in a machine. "Human resources management",

consequently, became the dominant term for the function—the ASPA even changing its

name to SHRM in 1998. "Human capital management" is sometimes used synonymously

with HR, although human capital typically refers to a more narrow view of human

resources; i.e., the knowledge the individuals embody and can contribute to an

organization. Likewise, other terms sometimes used to describe the field include

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"organizational management", "manpower management", "talent management",

"personnel management", and simply "people management".

Business Function

Dave Ulrich lists the functions of HR as: aligning HR and business strategy, re-

engineering organization processes, listening and responding to employees, and

managing transformation and change.

At the macro-level, HR is in charge of overseeing organizational leadership and culture.

HR also ensures compliance with employment and labor laws, which differ by

geography, and often oversees health, safety, and security. In circumstances where

employees desire and are legally authorized to hold a collective bargaining agreement,

HR will typically also serve as the company's primary liaison with the employee's

representatives (usually a labor union). The discipline may also engage in mobility

management, especially pertaining to expatriates; and it is frequently involved in the

merger and acquisition process. HR is generally viewed as a support function to the

business, helping to minimize costs and reduce risk.

1.11 Strategy! What it that?

As per Wikipedia Strategy (from Greek στρατηγία stratēgia, "art of troop leader; office

of general, command, generalship") is a high level plan to achieve one or more goals

under conditions of uncertainty. Strategy is important because the resources available

to achieve these goals are usually limited.

Strategy generally involves setting goals, determining actions to achieve the goals, and

mobilizing resources to execute the actions. A strategy describes how the ends (goals)

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will be achieved by the means (resources). The senior leadership of an organization is

generally tasked with determining strategy. Strategy can be intended or can emerge as a

pattern of activity as the organization adapts to its environment or competes. It involves

activities such as strategic planning and strategic thinking.

Henry Mintzberg from McGill University defined strategy as "a pattern in a stream of

decisions" to contrast with a view of strategy as planning, while Max McKeown (2011)

argues that "strategy is about shaping the future" and is the human attempt to get to

"desirable ends with available means". Dr. Vladimir Kvint defines strategy as "a system

of finding, formulating, and developing a doctrine that will ensure long-term success if

followed faithfully."

Strategy typically involves two major processes: formulation and implementation.

Formulation involves analyzing the environment or situation, making the diagnosis, and

developing the guiding policy. It includes such activities as strategic planning and

strategic thinking. Implementation refers to the action plans taken to achieve the goals

established by the guiding policy. Bruce Henderson wrote in 1981 that "Strategy

depends upon the ability to foresee future consequences of present initiatives”.

Berg (2011) in an article “Three Reasons Strategy is Important” discusses reasons why

strategy is Important. Strategy is fundamental to the success and sustainability of any

organization for the following reasons:

a. Understanding your company and industry

Strategy allows organizations to develop a clearer understanding of their own

organization and what’s required for them to succeed. It helps organizations understand

their core capabilities, identify and address weaknesses and mitigate risks. It can help

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organizations to design themselves, so that they focus on the right things that are the

most likely to deliver the best performance, productivity and profit both now and in the

future.

b. Growing in a changing world

Understanding what is taking place within the external environment is important to

prepare a strategy that will ensure long-term profit and growth. Understanding changes

that are taking place in your industry or with your market place is essential.

If you don’t adapt you die. Even successful businesses need to realize that what made

them successful today is not what will make them successful tomorrow. With the rate of

change becoming faster every year, it’s increasingly important that we understand what

trends are going to impact on our business and our industry, and how we’re going to

respond to them.

Whether political, social or technological, we need to know, what changes are going to

affect our businesses. And we need to know how our organization can respond to them.

It enables us to find opportunities for growth and sustained profitability and it can help

us identify and respond to changes that could make us extinct.

In the same way that the motor vehicle put many horsewhip makers out of business, it’s

important that you understand what can affect you and your business both short term

and long term.

c. Creating a vision and direction for the whole organization

All organizations and their staff need to understand their purpose, their destination and

the course they’re taking to get there. A company without a strategy is akin to sending

your staff into the desert and leaving them to follow mirages in search of water.

Without a destination and focus in mind your staff will wander aimlessly from one

activity to the other never knowing what to focus on or how to prioritize.

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Providing an organization with a common purpose, goals and a set of actions to reach

the goal ensures that everyone is working for the same outcome (your organizations

success) and resources are being allocated to the same goals and objectives. Simply it

streamlines your business and ensures every dollar and minute you spend on the

business is in the direction of your sustained success.

While strategy can be difficult for many organizations to commence, its benefits are far-

reaching and many. From creating new business opportunities, to streamlining the

operations and engaging staff, a well-formulated strategy will enable increased growth,

productivity and profit both now and into the future.

1.12 What’s so special about Pune City?

Pune is the cultural capital of Maharashtra. The city is now also known for

Manufacturing, Automobile, Government & Private sector Research Institutes,

Information Technology as well as Educational, Management and Training institutes that

attract migrants, students and professionals not only from India but also from foreign

countries.

Author Anuj Chopra (2005) in his article “IT is destination Pune” argues that Pune city is

a strong contender for the position of the `Silicon Valley of India'. Pune has been at the

centre of IT activity for the past few years. Yet, despite the huge difference in export

figures, several IT companies are evincing greater interest in Pune, a Tier II city, over all

Tier I cities like Bangalore, Hyderabad, Chennai or Delhi. It's slowly becoming the hub of

huge IT-ITES (Information Technology-IT Enabled Services), BPO (Business Process

Outsourcing) investments. The city has seen a precipitous growth. The city is competing

strongly with other IT strongholds to be the IT capital of the country, to be the next

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outsourcing hub of India. It's a strong contender for (against Bangalore) the position of

"Silicon Valley of India". These are just a few examples of the burgeoning IT

development in Pune.

Pune is home to all the major IT companies; Infosys, Wipro, Zensar Technologies,

Cognizant, KPIT, Kanbay, Tata Technologies, Tata Consultancy Services (TCS) to name a

few. There are in all 109+ companies registered with the Software Technology Park of

India (STPI), Pune. From multinationals to Indian majors, BPO units are expanding in

Pune. Many of these companies are venturing out of their nerve centers in Bangalore

and Hyderabad, to make Pune the hub of their expansion plans. The software industry's

expansion plans have triggered a real estate boom in the city.

But why Pune, you might ask. Well, the city offers advantages of both, a small and big

city. Smaller distances ensure that logistics can be managed easily. Commuting times

are shorter. Pune is also close to Mumbai, the financial capital of the country. The

express highway has ensured reduced travelling time between the two cities. The

clearance of an international airport in Pune means it'll soon be directly connected with

the world.

Pune being "The Oxford of the East" has no dearth of a talent pool either. The city

churns out 80,000 engineering graduates each year. There are specialized education

institutes here and a large base of scientists working on research and development.

While Chennai, Bangalore and Hyderabad suffer from the accent factor, the BPO

industry has Pune to look to, for a large English speaking public.

Pune has undergone a metamorphosis from a city of ancient houses from the Peshwa

era to a city of suave IT parks and stellar business achievements. It boasts of a high

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standard of living and yet the cost of living here is nearly 40 per cent lower than a city

like Mumbai. There's a new cosmopolitan culture here, a mall and multiplex culture, a

lifestyle to celebrate.

Pune has the highest PC (Personal Computer) penetration among households, even

more than Bangalore. The telecom infrastructure is fast improving.

The city has an Intelsat Standard C-Band earth station, which provides connectivity to

any point of the globe. The Software Technology Park of India, Pune, has tie-ups with 18

international carriers to provide connectivity anywhere in the world.

Pune still poses stiff competition to all other Tier I cities. According to NASSCOM, Pune is

numero uno (number one) in terms of growth percentage. It has witnessed a near 40

per cent growth this year, when the industry average is just about 30 per cent to 35 per

cent. Pune's story of technological achievements is a beacon for several other small Tier

II and Tier III cities in the country. It's an inspiration for them to expand and grow and to

spearhead another technological revolution in the country.

Now, after IT, ITES and the BPO revolution, Knowledge Process Outsourcing (KPO) is

being touted as the next big thing to hit India. With its immense talent pool, Pune is also

poised to be the next KPO hub of India.

The Indian Express (2014) article “Pune only behind Bangalore in software exports in

India” mentions that The Pune-Mumbai Knowledge Corridor has shown impressive

growth with the IT and ITES industry firmly entrenched in the two cities. Maharashtra

has reached the number two spot in IT exports in the country and Pune region is the

leading source of IT exports. The total software exports out of Maharashtra amount to

Rs 51,760 crore, second only to Karnataka (Rs 80,000 crore).

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Among cities, Pune ranks second in the country in software exports after Bangalore. In

the financial year 2012-13, Pune’s software exports were at Rs 29,589.25 crore. Pune is

followed by Mumbai, which reported exports of Rs 21,811.13 crore.

While Karnataka leads the ranking in IT exports, Maharashtra is second followed by

Tamil Nadu and then the NCR, followed by Andhra Pradesh and West Bengal (Kolkata),

according to Dr Omkar Rai, director general, Software Technology Parks of India (STPI).

While Pune and Mumbai continue to have the lion’s share in IT exports, other centers

too are coming up on the IT export map. Prominent among them is Nagpur, which has

seen exports of Rs 215.85 crore, Nashik is at Rs 112.36 crore, Kolhapur at Rs 46.80 crore

and Aurangabad at Rs 5.56 crore. This takes total exports out of Maharashtra to Rs

51,76,000 crore.

STPI has recently shifted its western India headquarters from Mumbai to Pune. The

good news for the IT industry, especially IT product companies, is that STPI is looking to

reposition itself as a more serious player in the start-up ecosystem. Dr Rai said STPI will

play the role of incubator, assist in getting risk capital, help in marketing and filing of

IPRs.

He said STPI will be offering product companies a differential tariff structure so they will

pay less lease rent than service companies to incentivize them. STPI is also in the

process of revising its regulations to ease the entry and exit for start-ups and simplify

procedures under the new national policies on IT and electronics. These revisions are

being prepared by the government in consultation with the industry and will aid the

start-ups registering under STPI, Rai said in a media interaction at the IT Industry 2014

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meet organized by the Software Exporters Association of Pune (SEAP) and NASSCOM in

Pune on Wednesday.

SEAP vice-president Prashant Pansare said, “Pune has been one of the fastest growing

cities in Asia, and in India it’s the second largest growing IT destination after Bangalore.

SEAP is playing a pivotal role to build an effective eco-system of software exporters,

MSMEs (Micro-Small-Medium Enterprises), start-ups, innovators and allied segments to

position Pune as the preferred IT destination.”

1.13 Scenario of IT industry

The Times of India (2011) article “Attrition highest in IT sector” claims that Information

Technology industry in India is witnessing the attrition among talented and valued

employees. Making retention of critical human resources is a key challenge. According

to a study conducted by MyHiringClub.com, the IT and ITES sectors saw the highest

attrition rate of 23 per cent in the first quarter of 2010-11. If this is the scenario and if

the attrition rate is high, it is not affordable to Indian IT industry. It varies from sector to

sector and depends on the global market conditions. However, here we are only

focusing on attrition and retention of Human Resources working in Information

technology (IT) industry in Pune City in India.

Persistent Systems Limited (2013) annual report 2012-2013 mentions that, India is one

of the outsourcing hubs in the world. After Bangalore, Pune is one of the most popular

IT hubs in India. According to NASSCOM (National Association of Software and Services

Companies) Pune registered IT Company Persistent Systems Ltd., due to the consistent

efforts taken by the company, the attrition rate for the year 2012-2013 was reduced to

14.36% as against 18.35% for the previous financial year 2011-12.

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Jayan (2010) in his article, published in ‘The Indian Express’ put forth study conducted

by TeamLease Services Pvt. Ltd. They found that 55 per cent employees in Pune changed

jobs for a better salary, and 20-25 per cent for better career opportunities. About 5 per

cent changed jobs because they were a "misfit" in their present jobs and an equal

percentage looked for a new job to change location.

To define the scope of study, researcher has selected NASSCOM Pune registered IT

companies. Find the list of NASSCOM Pune registered IT companies in Appendix - 1.

There were approximately 40+ NASSCOM Pune registered IT companies, when

researcher started working on it. Today there are many more companies added in the

list.

1.14 Human Resource Retention

Managementstudyguide.com published an article “Need and Importance of Employee

Retention” discusses about the reasons of why retaining a valuable employee is

essential for an organization. Employee Retention refers to the techniques employed by

the management to help the employees stay with the organization for a longer period of

time. Employee retention strategies go a long way in motivating the employees, so that

they stick to the organization for the maximum time and contribute effectively. Sincere

efforts must be taken to ensure growth and learning for the employees in their current

assignments and for them to enjoy their work.

Employee retention has become a major concern for IT companies in the current

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

for better prospects. Lucrative salary, comfortable timings, better ambience, growth

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prospects are some of the factors which prompt an employee to look for a change.

Whenever a talented employee expresses his willingness to move on, it is the

responsibility of the management and the human resource team to intervene

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

Natu & Misal (2013) in the research paper “Influential Triplets of Employee Retention”

argues that Employee retention of the best and most desirable employees is a key

challenge in organizations today. In this constantly evolving contemporary economy,

companies need to anticipate technological, managerial innovations and employee skills

to compete with other companies. Acquiring and retaining such skilled employees play

an important role in this process, because employees’ knowledge and skills are central

to companies’ ability to be competitive. Employee’s motivation plays a vital role in this

context. To motivate employees, role of a manager, compensation and career growth

are imperative factors to be considered. This study focuses on organizational and

personal factors that influence employee retention. A special interest is taken in

employee motivation, because it is seen as a retention supporting activity. Employee

retention takes effort, energy, and resources and the results are worth it.

Selecting the right resources, retaining most ambitious resources and helping them

develop their career in the organization makes retention possible and succeed the

organization.

Retaining a positive and motivated staff is crucial to an organization's success. High

employee attrition increases expenses and also has a negative effect on employee’s

morale. Implementing an employee retention program is an effective way of ensuring

key resources remains employed while maintaining job performance and productivity.

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Basic and foremost need to run any business is to have human resources with domain

knowledge and right skills. If organization is successful in retaining such employees half

the battle is won. Retaining critical employees also ensures the customer satisfaction.

Researcher also observed that many times customer wants to work with /deal with

specific employee. If that employee leaves the company, it affects customer satisfaction

and it may impact on business.

According to pilot study conducted by researcher, there are three predominant factors

affecting retention of critical resources, ‘Career Growth’, ‘Compensation’ and ‘Role of

Manager’. Off course, there are many more factors such as lack of overseas opportunity,

location of the organization and work life balance influence employee retention. These

factors will be discussed in detail in later part.

Wikipedia article on “Employee retention” state that, A distinction should be drawn

between low performing employees and top performers, and efforts to retain

employees should be targeted at valuable, contributing employees. Employee turnover

is a symptom of a deeper issue that has not been resolved. These deeper issues may

include low employee morale, absence of a clear career path, lack of recognition, poor

employee-manager relationships or many other issues. A lack of satisfaction and

commitment to the organization can also cause an employee to withdraw and begin

looking for other opportunities.

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

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

organizational knowledge. By implementing lessons learned from key organizational

behavior concepts employers can improve retention rates and decrease the associated

costs of high turnover.

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Content.timesjobs.com (2014) article “Indian workforce reports lowest employer

loyalty in Asia” quoted Brad Adams, Head of HR Research in Asia, CEB (Corporate

Executive Board) on findings based on their report ‘Employee Engagement Insights of

India’.

The connection between engagement and corporate performance is quite compelling.

When employees are effectively engaged in alignment with corporate strategy

extraordinary performance advantages are achieved.

Engaged organizations enjoy:

a. Higher return on assets

b. Better profitability

c. Double the shareholder value

Especially in India’s dynamic and extremely competitive markets and increasingly

interconnected work environment, engagement is the key to an organization’s ability to

not only work collaboratively but also to adapt to market changes.

Prioritizing the right strategies that fit your strategy is the key. Even if there are right

engagement drivers, many organizations still fail to drive sustainable engagement

because they expect too much of managers in delivering them. Successful and

sustainable approaches use a mix of manager, organization, and employee-powered

ways to engage the workforce and ultimately fuel the organization’s competitive

strategy.

There has been quite a bit of uncertainty in India over the past few years. For example,

currency issues last year, growth concerns, and most recently political uncertainty.

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That’s natural for a rapidly evolving economy like India, especially when the global

economic picture isn’t exactly stable and during such a big election year.

At the firm level, that manifests as job insecurity, organizational and management

changes, and role clarity issues. Employees in India have experienced more change

within their organizations over the past year, and continue to expect future change,

both of which wreak havoc on the employee effort levels they bring to their jobs.

The same is true for intent to stay. When employees experience and anticipate change,

it increases uncertainty in their career path with their current employers and they start

thinking about and – in India especially – looking for new and better options. In a

market like India, there is not nearly the scarcity of opportunities for talented

individuals to find alternative work. This presents a real challenge for business in India.

The first key is to invest in strategies that improve engagement across the workforce,

not just within their direct teams. Many companies invest in engagement initiatives that

provide an immediate boost to engagement levels, but which fail to sustain employee

engagement over time.

The best engagement strategies focus on seven core engagement drivers that sustain

engagement over time: Role Clarity, Career Management, Performance Management,

Networking, Non-cash Rewards, the Work Environment, and Values.

1.15 Impact of attrition

When an employee leaves the company, he takes away the skills acquired and

knowledge gained while working in the company. This knowledge was provided to the

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employee at time and cost to the company. To retain talent and key employees in an

increasingly competitive environment, employers need to do more, than just increase

pay package and extra benefits. Following are the top few parameters discussed, those

impact the overall performance, business and success of the company.

Loss of productivity

In IT Companies, every project has start date and end date. Project deadlines needs to

be met and are generally committed to the customer. Whenever the performing

employee leaves the company, there is a loss of productivity in the work. Project cannot

afford such loss and it results into diminishing quality of work. It also affects the team

spirit and disturbs the team environment. If the employee is critical and project

schedule is tight, then that affects deadline of the project. It was observed that once

employee puts the paper, he takes less interest in the work, he stops supporting

colleagues and that affects the overall productivity.

Low morale and confidence

If key employee in the team leaves the company, it disturbs the team environment.

Negative thoughts capture the minds of team members. Rumors and lot of fluctuations

starts getting circulated, whether the company is doing well or not, customer is satisfied

or not, is there any dispute with the manager, so on and so forth. Such gossips put the

moral down of team members and lower their confidence and it affects productivity.

Manager and HR have to handle such situations very delicately and keep them

motivated in this polluted environment.

Customer dissatisfaction

Approach of IT companies is now customer centric. Business is focused and delivers

according to customer needs. It is observed that many employees directly interact with

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customers and customers are comfortable working with those employees. Many times

business is given based on the relationship with the company or the specific person’s

ability to deliver and personal relationships. Key resources such as Business Unit head,

Customer Relationship Manager, Customer Account Manager or even a support person

who is directly interacting with end user, leaves the company that affects customer

impression and relation and negatively impacts customer satisfaction.

Replacing qualified employees

It takes lot of efforts and energy to replace the key employee. HR first needs to

understand the exact requirements of the project and level of employee. If such

resources are available in the market then filtering process is carried out. If there is a

dearth of resources for that particular technology then it’s challenging to get one.

Once the new resource is on boarded, company needs to look for the retention criteria

for the resource. New resource undergoes the formal and/or informal training process

to ramp up the skills and come up to the speed and start delivering.

Training the resource involves the huge cost and time. Trainer / consultant needs to be

arranged and it could be a costly affair. Cost and time investment is huge in this process

of replacement. It is always beneficial to invest cost and time to retain employees than

just keep them replacing.

Cost of overtime or temporary help

Once team member leaves the company, other team members have to work overtime

to complete the deliverables, if until that time new resource is not recruited or newly

recruited resource is not yet ready for deliverables. It leads to the stress, physical and

mental health problems. For the time being, temporary resource needs to be arranged.

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But it may not guarantee the good performance of the resource. Quality of deliverable

gets affected and incurs cost for overtime and temporary help. Vendor management for

contract hiring is the separate task to be looked at, which again involves efforts, time

and cost.

Recruiting and Interviewing costs

Recruitment is the flip side of Retention. If organizations can retain good employees, the

benefits are multi-fold. If organizations cannot retain employees, recruitment cost will

increase proportionately as well as productivity gets impacted.

Every company has budget allocated for recruitment and its associated processes like,

interviewing, selection, on boarding etc. However, cost of recruitment and selection is

much higher than retaining existing employees in the company. It is a compounded loss.

For any company, a lost employee is lost money. Recruitment costs for new employees,

in particular for specialized professions, are a major concern for HR.

In recruitment and selection process there are various direct and indirect costs involved.

Direct costs involved such as placement fees, advertisement cost, interview cost, cost of

background check, pay raise asked by new candidate, higher rate paid for contractual

candidate, training cost, joining bonus, relocation expenses etc. Indirect costs involved

such as consulting fees, contractor fees, portal fees, lost revenue, project slippage, ramp

up time, customer dissatisfaction etc.

Time spent in orientation and ramp up

Manager of the team, team members and HR needs to spend time and efforts to ensure

new candidate has completed its induction process. There will be some learning curve

for the candidate to get up to the speed and start delivering in the project. All the

required stakeholders have to support him in the phase of learning project

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environment, team and business environment and related processes. This again involves

cost, efforts and time for related stakeholders. Apart from daily transactional and

planning activities project manager needs to ensure new team member becomes

productive and efficient as soon as possible to avoid project loss.

If all types of costs are considered such as Termination cost, Hiring cost, Orientation and

Training cost, Indirect cost etc., many studies show that cost of replacing an employee

can range from tens of thousands of dollars to more than three times the employee's

annual salary.

1.16 Human Resource Retention Strategies

Effective retention strategies in turn will lead to employee commitment and

productivity. It is implied that company should walk the talk. Policies and procedures

should be implemented in the right manner and should be implemented effectively and

equally at all levels. Creative strategies that go beyond compensation and benefits can

be employed effectively to attract and retain employees.

Careeronestop.org published an article “Retention Strategies” talks about the factors

employees look for to be retained in an organization and strategies to engage

employees to increase retention.

To be retained, the best employees want:

Career development opportunities

To work in the chosen field

360 degree feedback system effectively implemented

To Know, how they are contributing to the success of the company

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Are they getting recognized for good work

Flexible work schedules for work life balance

Open work culture

Compensation strategy and salary structure which will lead to win-win situation

Benefits tailored to individual needs

Article also talks about employee engagement. Engaging your employees that is, making

sure that they are committed and productive in their work can benefit you as much as it

benefits employees.

If you hire the right employees, chances are good they’ll be engaged, committed to your

business and happy in their work. But to ensure ongoing engagement, you as an

employer must play a major role, particularly when it comes to communication.

Consider these five strategies:

Be clear on what your business stands for. Your company’s mission and vision and

brand must be front and center in everything you do.

Communicate well and often. Your employees need to know on a continuous basis

how both they and your company are doing.

Understand generational differences. To get the best out of all your employees,

know what motivates different generations.

Find out what your employees need. Ask your employees on a regular basis how

they’re doing, and be ready to follow up on their input.

Empower all employees to do their best. Provide the leadership, resources, and

training your employees need to realize their potential.

Understanding what engages employees can help during all phases of the employment

cycle from recruitment to training to performance assessment and beyond. It’s also

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much easier to retain employees who are engaged and committed to your company’s

success.

Retention starts at the time of recruitment

Retention of an employee starts at the time of recruitment. Retention depends upon

how the employee is treated at the time of interview process and/or joining process. If

an employee is treated well, Halo effect gets created and employee starts thinking on

positive lines about the company, environment and work. Even if there are few hick-ups

about anything mentioned above in future, employee chooses to ignore it because of

positive image of the company. Needless to say, discussion on other factors but not

limited to work expectation, career growth, compensation, benefits etc. needs to be

fruitful. It should be a win-win situation for both the sides.

Employee retention begins when prospective candidate gets first call/email for an

interview. Yes, it is important to make a good first impression, but also important to

keep the same throughout. As a company you are trying to influence an employee to

join the company and selling that position. At the same time prospective candidate also

tries to portray and sell his capabilities. It is a bit of balancing act to hire retainable

employees. You take considerable efforts and spend so much time and money to

identify, interview, and hire good employees for your company; so retaining them

should also be a top priority. Company can adapt and implement inexpensive practices

to retain good employee.

Even if you are not selecting the candidate, you can convey the same to candidate

respectfully. How you are communicating the same is also important. HR is not just an

individual; he represents the company he works for. Many times it is observed that

company do not send reply to candidate and that may depict wrong impression about

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the company. There needs to be some process in place to communicate the result to

candidates. This is how the word is spread about the culture and how human resources

are treated in the company. It is HR’s responsibility to maintain good image of the

company. Image of the company plays vital role in attracting and retaining right talent.

1.17 Study and evaluation of existing retention strategies

Companies strive for retaining employees by having retention strategies. Companies

think that they have best retention strategies in place, but still they have substantial

manpower turnover rate. Some have 15% or more, some have 20% or more. Companies

understands that loosing good employees cause lot of issues and affect internal as well

as external environment. Companies claim that they take lot of efforts to retain their

key employees by offering various benefits, perks, incentives, bonuses etc. These types

of motivators are termed as extrinsic motivators and all the employees may not always

be satisfied with this. For key employees companies offer overseas opportunities,

flexible working hours, work from home facility etc. but these policies are only for

employees who are working at and above certain level.

Companies conduct exit interview for every employee who is leaving the organization.

Concerns and reasons are noted down for taking the decision of quitting the company.

Companies also claim that they take actions on the points collected through exit

interviews wherever possible. Based on the responses, retention strategies are devised

or modified. Researcher has discussed specific as well as common strategies

implemented by IT companies.

1.17.1 Specific retention strategies employed by companies

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The Economic Times (2012) article “Companies like TCS, Wipro bet on employee-

friendly policies to retain talent” claims that, Companies today are adopting more

family-friendly and flexible HR policies that help in increase profitability and become

instrumental in retaining talent, say industry experts. Some of these are very innovative

retention strategies. Some of the unique HR policies that are being adopted by

companies include leave pooling, adoption leave, free child care placement services,

flexible timing, among scores of other such initiative, the experts said.

E Balaji, director and president of HR firm Ma Foi Randstad said, "Organizations are

trying to be innovative in crafting their retention strategies. In addition to traditional

perks and benefits like bonuses and financial incentives, they want to offer compelling

employee value proposition. Companies are offering attractive perks like holiday travels,

and even sabbaticals and higher studies subsidy more widely.

Balaji said, "IT companies are beginning to link retention with generation characteristics.

If, for instance, employee average age is under 30, flexi-work arrangements, job

advancements, travel abroad and jobs for spouses when relevant are also being added."

Few specific examples of retention strategies employed by companies are quoted

below.

Maternity leave for adoption of a child – Tata Consultancy Services (TCS)

TCS offers 3 months paid maternity/ paternity leave for employees for biological and

adopted children. In addition to regular 3-month maternity leave for women, they offer

an equal period of paid adoption leave for employees, irrespective of gender. The

adoption leave policy was initially put in place for women in early 2005 and later

extended to male employees as well after we saw a need for it.''

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Ma Foi Randstad MD and CEO E Balaji said that, all these policies help in retaining

people. Because there is talent shortage and good people are available only at premium.

Hence companies have to find out innovative methods to retain and attract talent. He

added that "it is a method by which you can increase the motivation of employees,

which in turn boosts the productivity of the firm as happier employees are more

productive."

‘Wings Within’ program where existing employees get a chance to change the job

role – Wipro

Careers.wipro.com published what different things they do to attract and retain

employees. At Wipro they provide the best opportunity to build a flying career with

'Wings Within', a transparent job posting system. It is a tool that gives flexibility to apply

for the job of your choice and map your career. All open positions are visible to

employees encouraging the eligible to look for a job change within Wipro. It has led to a

higher retention rate.

In many companies this facility is also called as Internal Job Posting (IJP) or Lateral

Hiring. People working on this are tiled differently in different companies. They are

known as People Managers, Resource Managers and Staffing Partners.

It is very important to retain key employees who have gained so much knowledge while

working in the organization. Employees have career aspirations and would like to have

hands on in various departments. If these aspirations are not handled well then they are

likely to shift the job as per their desire and capability. Company cannot afford to lose

such employees and they place these employees in other functions, departments as

their skills, knowledge and capability and retain the talent.

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‘PathFinder’ program - Infosys

Infosys.com on their page “Infosys Careers - Jobs for Fresher's and Graduates” claim

that they have a program for building expertise and capability. PathFinder NEXT is an

Internal Internship Program for building expertise and peak performance. It is a program

that provides a platform for new joinees to choose work opportunities across various

career streams and units. This helps in job enrichment, vertical or lateral exposure,

hands-on learning and development depending on their career focus and plan. With

over 2,600 applicants, 500 internships and over 100,000 hits since its launch in 2012, the

demand for PathFinder NEXT is rapidly increasing on a daily basis.

‘Break ke Baad’ program for woman employees – Persistent Systems

Athavale (2013) in his article “Employers go flexi to retain new moms” claim that, it was

observed that many women employees leave company and take the maternity break.

After the break if they decide to start the work again it is difficult for them because of

many reasons such as they may not be able to work full time as they have to maintain

balance between work and personal life and spend quality time with kid. In this case,

women employee can work part time, first half or second half of the day. Another

problem is that they are out of touch with the latest technological changes, new trends

and challenges. It’s challenging to cope up with new things. Because of that they have

lost their confidence to do the work. Here, someone has to understand this problem

and give them the chance to prove them again and bring them back in the main stream.

For years, employers rued the loss of talented woman workforce to motherhood, but

have only in the recent past started making changes to make jobs mother-friendly.

Chitra Buzruk, senior general manager of people management at Persistent Systems,

says the company offers flexible working hours to those who seek it and although the

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policy is applicable to men and women alike, women tend to use it more often - mostly

to cater to the needs of their child.

Many women find it difficult to resume work after a break. Persistent offer such women

roles where critical project responsibilities are not very high, typically in one of the

support functions. Such temporary transition helps women get back to work and keep

their jobs, while gradually moving back to their regular roles. The company has also

created a Yahoo group "Break ke baad" which helps connect women who are available

for part time or work-from-home jobs.

Patni Academy for Competency Enhancement (PACE) - iGate - Patni

Wikinvest.com (2009) quoted that, ‘Engagement initiatives’ introduced during the year

2008 resulted in a sharp dip in our net attrition rate. The Patni Academy for Competency

Enhancement (PACE) and Learning & Development delivered technical, functional &

behavioral training of close to 86,000 person days in 2008. Totally, 150 employees have

completed their Master’s degree through Patni—BITS collaborative program in Software

Engineering.

Global Resources in Technology (GRiT) was launched as a corporate initiative with the

primary intent of building the technology competency of the Company, to make us

industry leaders. Over 4000 technical professionals were brought under GRiT.

Businesswire.com (2010) claims that, Patni has received the award for “Innovative

Retention Strategies” at the World HRD Congress 2010. Patni has a holistic approach

toward employee engagement through initiatives such as “Patni Academy for

Competency Enhancement” for training, “Lifestyle Assessment Survey” and “Patni

Confidante Program” for employee connects, “Winner’s Circle” for rewards and

recognition, and “Patni Leadership Academy” for employee growth and development.

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Telecommuting - Cisco Systems

Cisco's The Network (2009) Cisco’s Technology News Site claims that Cisco study finds

telecommuting significantly increases employee productivity, work-life flexibility and job

satisfaction. Cisco Systems is always been an employer of choice. Cisco allows

employees to telecommute while at work. It means company allows its employees not

to come at workplace and work from anywhere. It has social, economic and

environmental impacts associated with telecommuting at Cisco. Employees experienced

a significant increase in work-life flexibility, productivity and overall satisfaction as a

result of their ability to work remotely.

Like Cisco, as the modern workforce continues to evolve and globalize, more companies

are evaluating a telecommuting strategy to save costs and lower carbon emissions as

well as to retain top talent.

Cisco employees extensively use technology to work remotely. They use mediums such

as Cisco Virtual Office (CVO), Cisco Tele-Presence, Cisco Office Extend and Cisco WebEx.

Cisco is achieving new levels of efficiency and effectiveness by enabling people to work

together no matter where they are located. By this company could save millions of

dollars annually. Cisco anticipates that employees and employers will continue to see a

rise in the benefits associated with telecommuting.

Benefits of Telecommuting:

Higher productivity when working remote and Improved timeliness of the work

Overall work quality improved when telecommuting

An improved quality of life through telecommuting

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Telecommuting can also lead to a higher employee retention rate, as telecommuting

is important to their overall satisfaction

1.17.2 Overall retention strategies adapted by IT companies

IT companies employ various common retention strategies that are easy to implement.

Many of the strategies are simple and straightforward in nature. Researcher have

interviewed HR managers and executives and penned down the retention strategies

often used by their companies. These commonly used strategies are discussed below.

CEO / Senior Management Meet

The Chief Operating Officer (CEO) of the company has the most influence over the

entire organization and its culture. It can certainly make things happen. The decision

makers can also influence and motivate people in the organization.

Interacting with employees can be one of the motivational factors to retain key

employees. Employees also feel that top management is listening to their concerns and

addressing the queries. Employees ask questions regarding the future plans and road

map of the organization or the department in which they are working. They discuss and

understand the challenges of either side.

In many companies these type meetings are called as “All Hands” meeting or “Open

Forum” meeting. Names might differ but the purpose of it is the same, to interact with

employees, provide the insights what’s happening in the company and how it will affect

them and keep them motivated.

Knowledge Sharing Sessions

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"Knowledge is power". Rightly said! But it will make sense when it is shared with others.

In IT Company or in any other company, work is so much dependent on teamwork and

collective knowledge. It could be the case that only a handful of people have it, but to

expand it sharing the same with others is the key. One may think that the knowledge I

have may not be useful to others or may not need it. However, others may think that

few people have the knowledge and they are not sharing it. This confusion /

miscommunication may lead to loss of productivity.

Many times people say that they cannot spare time for such sessions. But it is not true.

Spending some time, may be 30 to 60 minutes once in 15 days is definitely possible. It is

continuous learning process and one can spend this small amount of time to learn new

things while continue to working on daily activities.

For this, company needs to create learning culture and motivate employees to conduct

knowledge sharing session and others to attend it. Employees can use it in some or the

other way in their day to day activities. Knowledge sharing sessions can be conducted

team wise according to their requirements. Teams can involve members to participate

in it. Reward and recognition system can be implemented to motivate people. Some of

the best knowledge sharing cultures is where everybody (even new team members)

believes that their knowledge is respected, valued and used to take decisions.

Commitment to knowledge sharing must be demonstrated throughout the organization.

It is very important what the leaders of the organization say and do. It is shown by

commitment in the organizations' processes, reward systems, development programs.

Knowledge sharing is intrinsic motivation for some of the employees and having reward

and recognition system is the extrinsic motivation for some. Ultimately it affects

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employee retention as they feel motivated; see career advancement in the current

organization.

Higher Study / Educational Programs

Economictimes.com (2008) in an article “IT firms taking employees back to campus”

discusses that, IT companies are taking their employees back to campus. Many

employees in the organization have aspirations for higher study. They work with the

organization for generally between 2 to 4 years and quit the job for higher studies. They

take admission to premium institutes / universities in India or abroad.

When employee leaves the company, they take away the knowledge they have earned

in these years and company loses valuable resources. To deal with this situation IT

companies have started collaborating with premium institutes and universities. Some IT

companies choose to play the role of facilitator and some provide monetary support to

do higher studies. Middle and large scale IT organizations are providing this facility to

employees who have served 3 to 5 years or more.

IT companies like IBM, Cognizant, Xansa, ITC Infotech have joined hands with premium

institutes such as BITS Pilani, XLRI, SP Jain Institute of Management & Research, Amity

University and I2IT and ICFAI.

Once employee completes the course, he gets career advancement and company also

ensures that they stay with the company at least for 2 to 3 years. This helps to curb

attrition of key employees who wish to study further and do not want to leave current

organization. Such initiatives are for mutual benefit and thus help in human resource

retention.

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Medical Insurance and Health Checkup

It is a common practice that medium and large scale organizations are providing medical

insurance benefit to all its employees. Coverage amount and persons covered in the

family varies as per companies’ policy. Company provides coverage ranging from 1 lakh

to 6 lakh Rupees. Some companies cover only employee for medical benefits and some

covers immediate family of parents, wife and children.

This insurance scheme provides adequate insurance coverage of employees for

expenses related to hospitalization due to illness, disease or injury or pregnancy. If the

company cannot afford to cover immediate family members, they provide the option to

cut the extra premium amount from employee’s salary and cover family members.

Employees also take advantage of health checkup facility provided in selected hospitals.

Company apportions certain amount for health checkup of employee and a copy of

report is directly sent to company. As per doctors suggestions employee can take

corrective and preventive measures to avoid any health problems. Employees in IT

companies work in stressful situations. Such medical benefits are very much useful and

helpful for employees to stay fit, healthy mentally and physically.

Employee Assistance Programs

Wikipedia article on “Employee assistance programs” talks about Employee Assistance

Programs (EAPs) that are employee benefit programs offered by many employers. EAPs

are intended to help employees deal with personal problems that might adversely

impact their job performance, health, and well-being. EAPs generally include short-term

counseling and referral services for employees and their household members. Manager,

HR may also refer employees to such program based upon circumstances or some

issues. Various assistant programs are arranged like external counseling service so that

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employees or members of their immediate family can get counseling on various

matters.

Employees and their household members may use EAPs to help manage issues in their

personal lives. EAP counselors typically provide assessment, support, and referrals to

additional resources such as counselors for a limited number of program-paid

counseling sessions. The issues for which EAPs provide support vary, but examples

include occupational stress, emotional distress, major life events, including births,

accidents and deaths, health care concerns, financial or non-work-related legal

concerns, family/personal relationship issues, work relationship issues etc.

Employee Assistance Cell (EAC) is the separate cell companies have, to listen and to

address various issues / concerns of employees. Few employees do have personal issues

to deal with and that affects the work they are doing and ultimately it impacts quality of

work, deliverables and work environment. This cell interacts with such employees and

makes an effort to resolve issues. By this employees do feel connected and associated

with the organization. They feel that company is listening and address their concerns

and look at it positively.

Ultimately it boils down to stress and leads to frustration. These issues does impact

quality of work and affect work environment and productivity. Some organizations have

different names to this program such as Employee Assistance Cell (EAC), Employee

Assistance Unit (EAU) etc. However, the functioning is same. Many employees do avail

this facility and get benefited. If these issues are handled sensitively by companies then

employees feels mentally supported and they stay back with the organization for longer

period of time.

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Corporate Social Responsibility (CSR) Initiatives

Natu (2013) in the research paper “Corporate Social Responsibility – Myriad prospects

for sustainable development” discussed about the link between CSR and retention of

employees. Employees are very much socially aware of happenings around them. Social

media plays an important role in this. There are two dimensions to CSR activities.

Government has made it compulsory for organizations to avail various facilities and

second is employees are also willingly participating in such activities. For the benefit and

development of community at large, companies are taking a lead in CSR activities in the

areas such as Health, Education, Environment etc.

HR can build CSR framework and can have policy to encourage employees to participate

in various CSR activities for sustainable development. HR can implement CSR by making

sure that employees are aware of green, environmental issues. They can enforce the use

of brown paper bags, recycling of bottles, cans and papers in the office, practice of

charitable actions and initiatives, the reduction of power and fuel and encourage the

practice of working from home.

The HR department can also advance the cause of Corporate Social Responsibility by

rewarding and recognizing the contribution and achievements of its employees and

celebrating their success. The HR of the company has to focus on community relations,

training and development, and creating a global CSR platform. Employees feel

connected and associated with the society and also help companies to achieve their

objectives.

Long Service Award

Bhattacharya (2012) in her article “Companies dangle carrots to retain staff” talks about

awards companies are offering for Long service, incentives to reward employees who

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have completed a certain number of years of service. These perks encourage employees

to stick to their employers for a longer timeframe. They encourage employees to serve

the organization for some time more. This is a traditional way of recognizing employee’s

contribution. However, many companies still follow this practice.

Aricent Group, a technology services company, gives a certificate in addition to Rs.

35,000 in cash to employees who have completed 10 years. Employees of computer

software firm Adobe can avail an additional leave of 30 days when they complete five

years with the company. The policy has been a huge hit among Adobe’s employees.

These awards acknowledge the contributions made by the employees to the

organization.

Employees feel that their service and loyalty is being valued by the employer and he is

motivated to perform better and stay with the company.

Training and Development Programs

Training and Development programs are crucial when it comes to continuous

development of existing employees. IT companies recruit employees from various

institutes and colleges as a part of campus recruitment program. At the time of joining,

the department in which candidate will be working is not decided. Company provides

trainings to candidates on various technologies, platforms, assess them and accordingly

place the candidates to respective departments.

Learning and Development is the separate department for organizing and conducting

various types of trainings to help employees do their jobs better. Training programs are

also valuable in career advancement. Employees opt for various technical or soft skills

training programs of their interest. Respective managers give permission to team

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members whichever training is applicable for the advancement. Internal as well as

external trainers are arranged for training programs to maintain the quality of programs.

Employees do have aspirations to grow in the company and continuous learning is one

of the solutions for it. In some companies this functions is also called as learning and

development department or cell. This cell arranges various technological, soft skills,

managerial development programs, workshops for various types of certifications.

Employees take advantage of such programs and enroll themselves for suitable and

needed program. Leveraging such programs they prepare themselves for the next level

of growth.

Companies perceive this as an employee engagement activity. Many employees have an

urge of learning and it acts as intrinsic motivating factor. With his upliftment of

employees, company also gets benefited from it. They expect improvement in efficiency

and effectiveness in the work deliverables. They monitor and measure increase in

productivity after the completion of training and development programs. Companies

look at this as one of the retention strategies and ensure that employees do not leave

within 1 to 2 years of timeframe after completion of programs.

Reward and Recognition

IT companies declare quarterly, bi-annual or annual awards for best performance of

employees in various departments, especially, if employee has received customer

appreciation. Companies recognize employees by giving awards such as ‘Above and

Beyond’, ‘Performer of the year’, ‘Initiator’, ‘Innovator’, ‘Impressive mentor’ etc.

Purpose of these awards is different and is given after stringent evaluations and strong

recommendations.

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Rewards are given and people, teams are recognized, if specific goals are achieved,

reaching particular milestone, company wins any bid; flagship product is deployed for

esteemed customer etc. Rewards are given in different forms such as incentives, cash

award, gift vouchers, memento etc. This is perceived as extrinsic motivating factors for

employees. Those who do get the award get motivated to do their jobs better and strive

for the same next time. Employees also see awards as value addition in curriculum vitae.

Reward and recognition is a culture. Appreciating employees motivate people to do

better job and innovate in day to day activities. Sometimes recognizing, praising people

verbally before audience or sending appreciation email also be enough to energize. It

creates positive work environment and boost employee’s moral. Having such positive

culture, companies are able to improve employee retention, resulting in decreased

turnover and recruiting costs and increased productivity.

Other benefits

Companies provide perks and other benefits to employees working above certain grade

or level. Facilities such as petrol allowance, paying part of loan interest (home and car),

sponsored holidays etc. are also provided. Employees also take advantage of referral

bonus scheme. If candidate is referred, employee gets small token (cash incentive) for

referring good resource to the company.

To summarize, retaining a positive and motivated staff is vital to an organization's

success. High employee turnover increases expenses and also has a negative effect on

company morale. Implementing an employee retention program is an effective way of

making sure key workers remain employed while maintaining job performance and

productivity. Employee turnover costs businesses time and money, and disrupts the

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flow of a functioning workforce. While some turnover is inevitable, putting employee

retention strategies in place can help ease an employer's pain.

1.18 What is happening in other sectors?

The September 2012 reports, Deloitte’s Talent 2020 series, highlighted overall key

findings across a broad range of sectors and provides salient insights into the talent

issues in various sectors. Following discussion is in the context of global scenario.

Other sectors such as Insurance, Oil and Gas, Health Care, Automotive, Life sciences etc.

are also experiencing heat of human resource attrition. Below, few sectors are discussed

in brief.

Insurance sector

As per report Talent 2020: Surveying the talent paradox from the employee

perspective The view from the Insurance sector (2012) by Deloitte, A strong majority

33% of survey respondents who have been seeking new employment do not believe

their job makes good use of their skills and abilities. Respondents reported significantly

less career movement as compared to other sectors. Only 15% employees have

assumed a new role in their organization and only 8% have received a promotion in the

past year. Out of 75% respondents who have received raise in the past year only 43%

are satisfied with it.

Findings indicate that there are growing issues related to retention and respondents

rated their companies’ HR/talent efforts poorly. 60% of surveyed Insurance employees

with less than two years of experience intend to leave within the next year. If these

conditions are not addressed, a likely consequence is increased attrition. It is a call for

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action for Insurance companies to examine the quality of their HR/Talent programs,

assess their compensation structures, provide employees with meaningful work, and

offer desirable corporate programs such as sustainability and work-life balance

programs to attract critical talent and retain their top performers.

Oil and Gas sector

As per report Talent 2020: Surveying the talent paradox from the employee

perspective The view from the Oil & Gas sector (2012) by Deloitte, A strong majority

35% of survey respondents who have been seeking new employment do not believe

their job makes good use of their skills and abilities. The sector falls short on retaining

top performers. 46% of respondents feel that attrition has increased in last year.

Three clear takeaways for Oil & Gas corporate leaders to address emerging turnover and

to retain top talent:

Focus on using, engaging, and developing employee skills

Emphasize and reward authentic leadership

Don’t underestimate the returns on communication

Health Care sector

As per report Talent 2020: Surveying the talent paradox from the employee

perspective The view from the Health Care sector (2012) by Deloitte, 33% of

respondents are actively looking for a job during the past year.

Health Care organizations are offering higher salaries because it is becoming increasingly

more difficult to find candidates with the right skills and education as Baby Boomers

retire. Given that rewards are so important to Health Care employees, these attraction

and retention efforts are likely seeing positive returns.

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Survey results bring to light the important role the talent agenda plays as the Health

Care sector navigates imminent market challenges and seeks to retain high-performing

employees. While Health Care employees appear to be keeping their career options

open by seeking employment opportunities in other organizations, survey results reveal

that career advancement and rewards can be powerful retention tools. Health Care

organizations can take full advantage of the current upswing in morale by exploring

opportunities to reward employees either through financial incentives or in the form of

recognition, as these efforts do not go unnoticed.

Automotive sector

As per report Talent 2020: Surveying the talent paradox from the employee

perspective The view from the Automotive sector (2012) by Deloitte, After several

years of shedding employees, the Automotive sector is now in major talent acquisition

mode with strong momentum expected to continue in 2013 and beyond, due to a

combination of pent-up demand, increased consumer enthusiasm, readily available

credit, a wide range of new products, and the slow but steady recovery of the economy.

One noteworthy finding reveals that employees truly value meaningful work.

Respondents who reported that their company uses their skills effectively are more

likely to remain with their current employer.

Employees are significantly more dissatisfied with their organizations’ HR/Talent efforts.

Companies are struggling to make informed global decisions due to a lack of readily

available labor data. With this in mind, employers should consider investing in those

programs that support, engage, and help develop employees. The findings suggest a

need for employers to focus on retention strategies targeted at addressing the top areas

of employee dissatisfaction, compensation and benefits.

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Automotive employers have a window of opportunity to drive change and make talent a

differentiator going forward, but they should act now while the talent indicators are in

their favor. Defining a clear talent strategy that reflects both the organization and the

factors at play within the industry is a critical first step.

Life sciences sector

As per report Talent 2020: Surveying the talent paradox from the employee

perspective The view from the Life Sciences sector (2012) by Deloitte, The Life Sciences

landscape has shifted dramatically in recent years. After a strong period of growth and

market trends that have favored the sector, the Life Sciences industry is facing new

challenges. Life Sciences companies need increased focus on innovation, technological

advancement, globalization, and alliance/ acquisition to succeed. None of this can be

achieved without skilled, engaged talent and a plan.

Only 56% of surveyed employees in Life Sciences say they are satisfied at work. There is

high level of dissatisfaction regarding employee’s desire, meaningful and innovative

work that is aligned to their skills and interests, ineffective communication, long term

strategic vision within organizations and lack of trust in leadership due to high turnover

at the top level.

40% of respondents report that an employer’s commitment to supporting innovation is

very important to them. Due to increasing healthcare expenditures, Life Sciences

companies have had to shift their mindset away from being truly innovative to focusing

on reducing costs and bringing profitable products to market quickly to remain

competitive, as all companies are facing major patent cliffs.

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The Life Sciences sector as a whole faces a high level of uncertainty and increasing

federal regulation, which translates to specific talent implications that leaders need to

focus on. On a more positive note, Life Sciences companies will be poised to reap the

benefits of opportunities, like those that exist in emerging markets, if they are able to

manage their workforces and focus efforts on effective talent and retention programs.

Following combined table is the snapshot of sectors showing reasons for which

employees would like to leave the company.

Table 1.1 - Reasons to leave - Other sector employees

% of Respondents

Reasons to leave Insurance Healthcare Automotive Life

Sciences

Lack of career progress 28% 23% 20% 25%

Dissatisfaction with supervisor or

manager

25% 28% 16% 23%

Lack of challenge in the job 25% 17% 27% 30%

Lack of trust in leadership 25% 13% 11% 33%

Lack of job security 23% 20% 18% 25%

New opportunities in market 20% 21% 16% 10%

Lack of compensation increases 20% 18% 36% 18%

Lack of adequate bonus or other

financial incentives

15% 18% 18% 20%

Excessive workload 15% 23% 16% 25%

Inadequate or reduction in benefits 15% 17% 30% 15%

Lack of training and development

opportunities

13% 13% 9% 13%

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Declining perception of the company 13% 8% 5% 13%

Lack of flexible work arrangements 10% 11% 5% 10%

Pressure to relocate 5% 3% 20% 0%

Poor employee treatment during

downturn

3% 15% 9% 10%

Too much travel 3% 8% 5% 5%

Limitations due to new government

regulations

3% 3% 0% 0%

Lack of mentoring program 3% 1% 0% 3%

Deloitte Compensation Trend Survey 2013-2014 (2013) report has thrown light on the

attrition rate and key reasons for attrition and key human resource challenges faced by

organizations across sectors.

Figure 1.1 - Average attrition rate across sectors

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Above bar chart shows that attrition rate in IT organizations is 15% for year 2013-2014.

It shows that, it is really a concern for HR and companies doing business in IT sector.

This study and implementation of right retention strategies will certainly curb the

turnover rate in the organizations. With the support from top management, right

mindset of HR, positive attitude of employees, IT companies will achieve exemplary

results and be successful in retaining key human resources.

Key reasons for attrition

1. Better career opportunities

2. Better pay elsewhere

3. Pursue further studies

4. Better work life balance

5. Personal reasons

Key HR challenges

a. Hiring skilled talent

b. Retaining critical talent

c. Engaging and Motivating Employees

d. Developing Potential Leaders

e. Career management

These reasons and challenges are very much in line with IT sector. Other sectors are also

facing challenges in retaining good employees. There is definitely a scope for research

on attrition and retention strategies in other sectors.

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1.19 Factors impacting Human Resource Retention

Objectives of this research are to study retention factors such as Career Growth, Role of

Manager, Compensation, Health of Organization, Customer Satisfaction, Quality of

Work, Image of Company, Revenue and Sales of the company, Success of the company

have a positive impact on Employee Retention. Being worked in IT industry for so long,

researcher feels that these factors are important to study and evaluate. It is important

to understand employees and HR executive’s views on these factors and how they

respond to these factors. Are these factors really important to them and do they

consider these factors while making the decision to stay with the company or quit.

Below, Researcher has discussed these factors in detail.

Career Growth

Natu & Misal (2013) in the research paper “Influential Triplets of Employee Retention”

discussed about Career Growth as a prominent factor when it comes to retention.

Employee gives prime importance to this factor for staying in the organization for longer

period of time. If employee feels that he is getting the opportunity for career

advancement, he stays with the organization. Company also provides right environment

and support for career growth for all employees. Following are the factors, employee

look for, when he think of career growth in the same organization.

Foresee career advancement: Employees always look for career advancement in the

company. If company provides them the right opportunity for growth key employee

are retained.

Fair Job promotions: Employees should feel the confidence that job promotions are

fair and merely based on the work performance. If they get secondary treatment for

promotions, there is high probability of attrition.

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Training and development: Appropriate technological as well as soft skills training

needs to be conducted for employees. Management Development Programs can be

arranged for aspiring managers.

Internal Job Posting (IJP): Employee should be able to opt for internal job shift. Such

opportunities can lead to career advancement of employees and in turn help in

retention.

Quality of work

Employees in IT industry are well aware of project triangle: scope, schedule and cost.

Here, Quality of work is implied. It is the most important factor in successful project

delivery. Every organization has its well defined quality processes in place. Project team

members follow these procedures and processes for compliance. Organizations are

certified with quality certifications such as CMMI and ISO. These quality practices are

mandatory and asked by many customers. Following are the factors employee look for

when he think of quality of work in the same organization.

CMMI or ISO Certified Company: Whenever any prospective employees think of

joining any IT company, he looks for the quality certification. If any company is

certified, it ensures that, certain level of quality is maintained for the deliverables

and customer also expects the best quality product / service from such companies.

Company follows proprietary quality standards and processes: Many organizations

do not have such certifications however; they follow their proprietary quality

standards and processes and promise the quality results to the customer. Stringent

quality guidelines can also motivate prospective employees to join the company or

motivate existing employees to stay with the company.

Quality an intrinsic motivator: There are many small organizations with focused

entrepreneurs handling all the departments in the company. As they are focused

enough to grow their company, quality is the intrinsic motivator for all of them. They

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all know that this is the only way they can succeed and achieve customer

satisfaction; and if the company grows, prospective employees get automatically

attracted and would want to join the company.

Customer Satisfaction

In continuously changing business environment, keeping customers satisfied and

retaining them is essential to continued success of any organization. Often, it is

observed that, employees work face-to-face with the customers are in a position to

determine their levels of satisfaction, answering their queries, keeping them updated

about changes in company and preventing them from looking elsewhere for other

vendors to meet their needs.

If organizations have customer service policies and practices in place and can satisfy and

keep customers happy they can achieve twofold results. They can reach to satisfying

retention rate. Undeniably there is a satisfaction link between employee retention and

higher levels of customer satisfaction. Customers prefer dealing with the same

employees over and over again. Employee turnover destroys a customer's confidence in

the company. So, the key is to retain employees and in turn they will help you retain

your customers. Following are the factors, employee look for, when he think of

customer satisfaction in the same organization.

Customer Interaction: Employees that interact with customers have awareness to

respond to customer queries and meets customer goals and needs. Employees

directly working with customers seem to be satisfied and motivated. Such resources

deliver and put in more efforts. Satisfied employees feel empowered and have

positive attitude towards work and understand and serve customer demands

appropriately. In the process of interaction, employees build harmonious

relationship with customers.

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Customer Participation: Organizations are moving from traditional project

management methodologies to new agile methodologies. In agile methodology,

customer participation has prime importance. Project is delivered in chunks in

prioritized manner and customer can see actual product / service / result at regular

intervals. In this process, employees work closely with customers and assess each

others on a frequent basis.

Appreciation of good work: Delivering service quality is the responsibility of

employees. If project is delivered according to defined scope, time and budget,

customers are satisfied and appreciate employee’s work. If customers send

appreciation letter, email to senior management, employees get motivated and feel

that their work is valued by the customer.

Customer Satisfaction Index: Many companies measure customer satisfaction index

on a quarterly, bi-annually or yearly basis and accordingly take corrective action if

needed. Also, they do customer satisfaction survey to know where they stand and

improvements are needed.

Increased Sales

It was hypothesized that employees have positive perception towards increased

revenue and sales. Employee engagement and satisfaction is essential to boost sales

activities. Employee satisfaction has an impact on their customers and ultimately

company profits. Healthy, Wealthy and Happier employees are more productive and will

make more sales, treat customers better, and ultimately make more money for the

company.

Caring about revenue and sales: Employees in IT companies are very much aware

about revenue and sales and have good business acumen. Employees have

knowledge about the market and business of the company. There is

interdependency between two factors revenue and sales of the company and

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employee retention. Employees put efforts to increase sales and earn more revenue

and profits. At the same time, he ensures sustainable growth of organization and in

turn his own stability.

Retention impacts revenue and sales and vice-versa: Sometimes, it is observed that

employee is associated with the customer for so long and business is dependent on

the relationship with the customer. By retaining these employees company is also

making sure continuous business and to increase in revenue and sales. Especially if

the organization is small or medium having few customers, human resource

retention has high impact on it. If organization is doing good and earning profits and

balance sheet looks promising, prospective employees get attracted to the

organization and existing people are motivated to stay for longer timeframe.

Image of the Company

Good image of the company has positive impact on retention. Effective measures can

boost corporate image among current and prospective employees, various other

stakeholders and within the business community.

Efforts to build image of the company: Retention of employees and customers

improve image of the company. Image of the company is not only analyzed by profit

it makes and success it achieves but by its vision, mission, values they believe in.

Ethical standards followed in the company matters the most to the employees and it

creates positive and fair image amongst current and prospective employees.

Company put efforts to build its image by ensuring employee and customer

satisfaction, branding activities, social initiatives, actively promoting company on

social media etc.

Contribution of social media: Social media has taken front seat when it comes to

branding or building positive image of the company. Publishing regular updates

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about business and company activities keep company in limelight and attract new

talent and customers.

Testimonials and Advertisement: Testimonial from satisfied customers also plays

important role in building positive image. Companies advertise their customer’s

logos and testimonials on websites, blogs, social media which help improve image.

Role of Manager

Natu & Misal (2013) in the research paper “Influential Triplets of Employee Retention”

discussed about Role of Manager in retaining employees. Managers and team leaders

can reduce the attrition levels considerably by creating a motivating team culture and

improving the relationship with team members. Managers and team leaders are single

point of contact for team members for any queries, issues, concerns they may have. If

managers could satisfactorily answer the queries and could maintain the personal touch

in that professional environment, team members feel emotionally connected and there

are more chances of staying with that team and with the organization for long time.

Good relations with employees: Maintaining professional and personal relationship

with team members keep them connected and motivated enough to carry out the

expected work.

Clear Communication: Clear communication regarding the expectation needs to be

set for work assigned. Manager needs to update team members what they are

supposed to deliver consistently. Regular company updates are to be given to all

team members.

Treat all team members equally: Every team member needs to be treated

respectfully and given equal importance. Member should feel that his/her opinion

does get counted while taking the critical decisions.

Provide leadership opportunities: Providing right leadership opportunities gives sense

of empowerment and help them in their career growth.

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Believe in 360 degree feedback: Manager should believe in 360 degree feedback and

take it positively and try to improve on those areas wherever possible. Manager

should not feel offended by the constructive feedback and it can be achieved

through anonymous survey.

Compensation

Natu & Misal (2013) in the research paper “Influential Triplets of Employee Retention”

discussed about Compensation impacting employee retention. Employees in their early

stage of career are more concerned about compensation and other benefits they are

getting.

Compensation is as per market: Nowadays employees are very much aware about

the compensation strategies and structure of competitive companies. Key

employees demand the right compensation that matches with the market.

Shifting the job for more compensation: In early stages of career, employees are

more vulnerable for switching the jobs for more salary. They do not care much about

the stability at that stage. Company needs to undertake internal employee

satisfaction survey on steady intervals to understand the employee mindset.

Matching the Compensation with job responsibilities: Employee will always feel that

the job responsibilities and compensation are inversely proportional and company

contemplates vice-versa. However, there should be right equilibrium between job

responsibility and compensation and it needs to be well discussed with employees.

Health of Organization

Organizational health is about how a company functions or operates effectively. It

includes building a strong leadership team, having clarity of vision, mission, values, and

goals among those leaders, percolating and communicating it to everyone within the

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organization. It consists of all aspects of human resources and cultural elements that

contribute to organizational function.

Psychological, Physiological and Social aspects:

Health of an organization can be measured in categories Psychological, Physiological

and Social. Organizations need to understand, what employees feels and expects at

these levels and caters to their issues and concerns. They can track Organizational

Health Index. These needs are to be monitored and measured and take preventive

and corrective action to rectify and improve overall health of the organization.

Organizational Health Index: There are various factors based on which health index

of an organization can be measured such as effective communication amongst the

stakeholders, enough freedom to carry out their work, positive and encouraging

work environment, how people get along with each other, how manager and HR

listens to employees on regular basis, supportive management, adequate safety and

security arrangements and so on.

Success of Organization

Employee retention strategies positively impacts success of the organization. Success

can be achieved in many ways but at the same time companies need to ask few

questions to themselves as, Are my employees satisfied and happy, how they are

contributing overall success, are all my stakeholders happy, do we care about social

responsibilities, are we taking steps to save energy and save environment or are we just

making dollars and calling ourselves as successful.

Companies need to look at all the facets when they measure success. Organizations

success depends on but not limited to:

a. History of collaboration or cooperation

b. Favorable political and social climate

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c. Members share a stake in both processes and outcomes

d. The organization permits decision making at many tiers

e. The organization has clear roles and policy guidelines

f. The organization is adapting agile methodologies

g. Effective implementation of human resource and customer retention strategies

To summarize, organizations can devise policies and practices to improve relations with

employees, work on new and relevant strategies and increase their motivation,

commitment and loyalty.

En.wikiquote.org (2004) Russian writer, philosopher and social activist ‘Leo Tolstoy’ said

that "Everyone thinks of changing the world, but no one thinks of changing himself". In

similar fashion many leaders who aspire to change the world struggle to build strong

and sustainable organizations. Every organization is unique. Yes! But still most

organizations face a similar set of challenges as they attempt to create organizations of

excellence.

1.20 Where companies can start?

Global Human Capital Trends 2014: Engaging the 21st-century workforce (2014) survey

report discusses that, leadership, retention, HR skills, and talent acquisition are the top

global trends in perceived urgency.

Building a work environment in which passion and purpose among employees can

flourish is a noble though tricky business. Several new practices and priorities are

emerging. What HR can do is to ask employees what matters to them, survey employees

regularly; not just annually about how they experienced the organization over the past

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year, but frequently and “in the moment” through pulse surveys and roundtable, find

out what makes them passionate about work and what parts of the environment are

irritating or too bureaucratic. Company’s top leaders and HR business partners can

collaborate and come with innovative strategies, policies and practices.

Remember: It is the work: Make sure the organization is feeding employees’ needs for

purpose and meaningful work. While there is a necessary focus on benefits,

compensation, and workplace flexibility, research suggests that these are table stakes. A

more important dimension for retention is the work itself.

Make development part of the job, not a perk: Opportunities for challenge and

development may be the most overlooked element of retention and engagement. Give

every employee—not only high performers or leadership candidates—opportunities to

build networks within the organization, along with skills and career development

opportunities. Chances may be that the organization already is, so be sure these

opportunities are couched so individuals see them as such and value them more.

Study retention continuously: Keep your finger on the pulse of the organization

regularly, not just annually or periodically. Use exit surveys and manager interviews to

understand what was missing. Provide open blogs and communication tools to help

people talk openly about what they need and what they particularly value.

Build a proactive retention model to identify potential problems before they occur.

Adopt talent analytics to uncover the hidden drivers of retention. Several of our clients

have now built statistically validated retention models that help predict why and when

an employee will leave. Design work environment solution sets around the findings to

drive greater performance, passion, and retention stickiness.

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Collaborate with other top leaders: The CEO’s executive committee should play a role

in developing and nurturing a compelling corporate mission, including determining how

to integrate social and community goals into the work and daily activities of the

company.

Challenge the performance management process: Is it timely enough? Does it provide

actionable feedback? Is the focus disproportionately on areas for development, giving

short shrift to strengths and contributions?

Understand and improve diversity and inclusion: People want to work in an

environment that respects them and customers are looking for companies that reflect

their diversity and perspectives as well.

Focus on your employment brand and talent experience: When competing for

customers, companies relentlessly focus on differentiating their products, services, and

customer experience. The same should be true for the talent experience and, in today’s

socially driven, transparent world, the line between the two is blurring. Challenge your

business and HR leaders to structure work, jobs, and development so they are

interwoven with what people do and the company’s employment brand.

In a nutshell, Companies already recognize that success depends on three things;

keeping good people, keeping them engaged and productive, and understanding that

these two aims are not one and the same. As Deloitte’s 2014 Human Capital Trends

survey points out, the challenge of retention and engagement ranks in the top echelon.

But framing the challenge according to the traditional binary view of retention vs.

attrition is proving inadequate. The secret is designing a suite of systems (work, culture,

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flexibility, and social and community purpose) that supports a talent experience that

makes it easy for individuals to continually reenlist for their tour of duty.

Already, today’s most successful employment brands align business and corporate

objectives with the professional, personal, and social goals of their employees. They

provide an environment where employees believe they are making a difference, not just

clocking their time. To reach new heights in retention and engagement, world-class

managers will focus on growing a talent brand that weaves together the critical

elements of work itself, the desire for personal growth and development, the power of

passion, and the intrinsic reward of serving society as part of a brand of which

employees can be proud.

1.21 Concluding remarks

Make the company an incredible place to work and you will never have to worry about

creating an employer brand. If your company is already in the list of ‘employer of choice’

then ensure your employer brand promise is adequately communicated to the entire

world. You need to constantly keep your people focused on the vision of the career path

in the organization. A growth plan is a great motivator for people. Without a clear

career vision people tend to get stuck in the routine and get frustrated and quit.

Empowering and appreciating people on a regular basis will help retaining key

employees. Genuine empathy, support and understanding are what everyone seeks

from their seniors. People bring their emotions and their worries along to work. If you

are kind enough to understand people, then you will not only earn their loyalty but also

the right to push them when they slack.

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Rewards and recognition for achievements at workplace act as morale booster, which in

turn increase their productivity and ensure retention. However, a more sustainable and

long lasting solution to this challenge is provided by a continuous monitoring and

feedback system. There are various common as well as specific retention strategies in

place however; they just need to be implemented efficiently and reviewed periodically.

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