INDEX 1. Introduction. 2. What is Employee Retention? 3. Importance of Employee Retention. 4. What makes employee leave? 5. Retention Myths. 6. Benefits of Attrition. 7. Employee Retention strategies. * Low Level * Medium Level * High Level. 8. Manager’s Role in Retention. 9. Bibliography Introduction Employee Retention involves taking measures to encourage employees to remain in the organization for the maximum period of time. Corporate is facing a lot of problems in employee retention these days. Hiring knowledgeable people for the job is essential for an employer. But retention is even more important than hiring.
There is no dearth of opportunities for a talented person. There are many organizations which are looking for such employees. If a person is not satisfied by the job he’s doing, he may switch over to some other more suitable job. In today’s environment it becomes very important for organizations to retain their employees. The top organizations are on the top because they value their employees and they know how to keep them glued to the organization. Employees stay and leave organizations for some reasons. The reason may be personal or professional. These reasons should be understood by the employer and should be taken care of.
The organizations are becoming aware of these reasons and adopting many strategies for employee retention. What is Employee Retention? Employee retention is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until the completion of the project. Employee retention is beneficial for the organization as well as the employee. Employees today are different. They are not the ones who don’t have good opportunities in hand. As soon as they feel dissatisfied with the current employer or the job, they switch over to the next job.
It is the responsibility of the employer to retain their best employees. If they don’t, they would be left with no good employees. A good employer should know how to attract and retain its employees. Retention involves five major things: 1. Compensation 2. Growth 3. Relationship 4. Environment 5. Support 1. Compensation Compensation constitutes the largest part of the employee retention process. The employees always have high expectations regarding their compensation packages. Compensation packages vary from industry to industry. So an attractive compensation package plays a critical role in retaining the employees.
Compensation includes salary and wages, bonuses, benefits, prerequisites, stock options, bonuses, vacations, etc. While setting up the packages, the following components should be kept in mind: Salary and monthly wage: It is the biggest component of the compensation package. It is also the most common factor of comparison among employees. It includes * Basic wage * House rent allowance * Dearness allowance * City compensatory allowance Salary and wages represent the level of skill and experience an individual has. Time to time increase in the salaries and wages of employees should be done.
And this increase should be based on the employee’s performance and his contribution to the organization. Bonus: Bonuses are usually given to the employees at the end of the year or on a festival. Long-term incentives: Long term incentives include stock options or stock grants. These incentives help retain employees in the organization’s startup stage. Health insurance: Health insurance is a great benefit to the employees. It saves employees money as well as gives them a peace of mind that they have somebody to take care of them in bad times. It also shows the employee that the organization cares about the employee and its family.
After retirement: It includes payments that an Employee gets after he retires like EPF (Employee Provident Fund) etc. Miscellaneous compensation: It may include employee assistance programs (like psychological counseling, legal assistance etc), discounts on company products, use of a company cars, etc. 2. Growth and Career Growth and development are the integral part of every individual’s career. If an employee can not foresee his path of career development in his current organization, there are chances that he’ll leave the organization as soon as he gets an opportunity.
The important factors in employee growth that an employee looks for himself are: Work profile: The work profile on which the employee is working should be in sync with his capabilities. The profile should not be too low or too high. Personal growth and dreams: Employees responsibilities in the organization should help him achieve his personal goals also. Organizations cannot keep aside the individual goals of employees and foster organizations goals. Employees’ priority is to work for themselves and later on comes the organization. If he’s not satisfied with his growth, he’ll not be able to contribute in organization growth.
Training and development: Employees should be trained and given chance to improve and enhance their skills. Many employers fear that if the employees are well rained, they’ll leave the organization for better jobs. Organization should not limit the resources on which organization’s success depends. These trainings can be given to improve many skills like: * Communication Skills * Technical skills * In-house processes and procedures improvement related skills * C or customer satisfaction related skills * Special project related skills
Need for such trainings can be recognized from individual performance reviews, individual meetings, employee satisfaction surveys and by being in constant touch with the employees. 3. Relationship Sometimes the relationship with the management and the peers becomes the reason for an employee to leave the organization. The management is sometimes not able to provide an employee a supportive work culture and environment in terms of personal or professional relationships. There are times when an employee starts feeling bitterness towards the management or peers. This bitterness could be due to many reasons.
This decreases employee’s interest and he becomes de-motivated. It leads to less satisfaction and eventually attrition. A supportive work culture helps grow employee professionally and boosts employee satisfaction. To enhance good professional relationships at work, the management should keep the following points in mind: Respect for the individual: Respect for the individual is the must in the organization. Relationship with the immediate manager: A manger plays the role of a mentor and a coach. He designs and plans work for each employee. It is his duty to involve the employee in the processes of the organization.
So an organization should hire managers who can make and maintain good relations with their subordinates. Relationship with colleagues: Promote team work, not only among teams but in different departments as well. This will induce competition as well as improve the relationships among colleagues. Recruit whole heartedly: An employee should be recruited if there is a proper place and duties for him to perform. Otherwise he’ll feel useless and will be dissatisfied. Employees should know what the organization expects from them and what their expectation from the organization is.
Deliver what is promised. Promote an employee based culture: The employee should know that the organization is there to support him at the time of need. Show them that the organization cares and he’ll show the same for the organization. An employee based culture may include decision making authority, availability of resources, open door policy, etc. Individual development: Taking proper care of employees includes acknowledgement to the employee’s dreams and personal goals. Create opportunities for their career growth by providing mentorship programs, certifications, educational courses, etc.
Induce loyalty: Organizations should be loyal as well as they should promote loyalty in the employees too. Try to make the current employees stay instead of recruiting new ones. 4. Organization Environment It is not about managing retention. It is about managing people. If an organization manages people well, employee retention will take care of itself. Organizations should focus on managing the work environment to make better use of the available human assets. People want to work for an organization which provides * Appreciation for the work done * Ample opportunities to grow * A friendly and cooperative environment A feeling that the organization is second home to the employee Organization environment includes: * Culture * Values * Company Reputation * Quality of people in the organization * Employee development and career growth * Risk Taking * Leading Technology * Trust Types of environment the employee needs in an organization: * Learning environment: It includes continuous learning and improvement of the individual, certifications and provision for higher studies, etc * Support environment: Organization can provide support in the form of work-life balance. Work life balance includes: * Flexible hours * Telecommuting Dependent care * Alternate work schedules * Vacations * Wellness * Work environment: It includes efficient managers, supportive co-workers, challenging work, involvement in decision-making, clarity of work and responsibilities, and recognition. Lack or absence of such environment pushes employees to look for new opportunities. The environment should be such that the employee feels connected to the organization in every respect. 5. Support: Lack of support from management can sometimes serve as a reason for employee retention. Supervisor should support his subordinates in a way so that each one of them is a success.
Management should try to focus on its employees and support them not only in their difficult times at work but also through the times of personal crisis. Management can support employees by providing them recognition and appreciation. Employers can also provide valuable feedback to employees and make them feel valued to the organization. The feedback from supervisor helps the employee to feel more responsible, confident and empowered. Top management can also support its employees in their personal crisis by providing personal loans during emergencies, childcare services, employee assistance programs, counseling services, et al.
Employers can also support their employees by creating an environment of trust and inculcating the organizational values into employees. Thus employers can support their employees in a number of ways as follows: * By providing feedback * By giving recognition and rewards * By counseling them * By providing emotional support Importance of Employee Retention Now that so much is being done by organizations to retain its employees, why is retention so important? Is it just to reduce the turnover costs? Well, the answer is a definite no.
It’s not only the cost incurred by a company that emphasizes the need of retaining employees but also the need to retain talented employees from getting poached. The process of employee retention will benefit an organization in the following ways: 1. The Cost of Turnover: The cost of employee turnover adds hundreds of thousands of money to a company’s expenses. While it is difficult to fully calculate the cost of turnover (including hiring costs, training costs and productivity loss), industry experts often quote 25% of the average employee salary as a conservative estimate. . Loss of Company Knowledge: When an employee leaves, he takes with him valuable knowledge about the company, customers, current projects and past history (sometimes to competitors). Often much time and money has been spent on the employee in expectation of a future return. When the employee leaves, the investment is not realized. 3. Interruption of Customer Service: Customers and clients do business with a company in part because of the people. Relationships are developed that encourage continued sponsorship of the business.
When an employee leaves, the relationships that employee built for the company are severed, which could lead to potential customer loss. 4. Turnover leads to more turnovers: When an employee terminates, the effect is felt throughout the organization. Co-workers are often required to pick up the slack. The unspoken negativity often intensifies for the remaining staff. 5. Goodwill of the company: The goodwill of a company is maintained when the attrition rates are low. Higher retention rates motivate potential employees to join the organization. 6.
Regaining efficiency: If an employee resigns, then good amount of time is lost in hiring a new employee and then training him/her and this goes to the loss of the company directly which many a times goes unnoticed. And even after this you cannot assure us of the same efficiency from the new employee. What Makes Employee Leave? Employees do not leave an organization without any significant reason. There are certain circumstances that lead to their leaving the organization. The most common reasons can be: * Job is not what the employee expected to be: Sometimes the job responsibilities don’t come out to be same as expected by the candidates.
Unexpected job responsibilities lead to job dissatisfaction. * Job and person mismatch: A candidate may be fit to do a certain type of job which matches his personality. If he is given a job which mismatches his personality, then he won’t be able to perform it well and will try to find out reasons to leave the job. * No growth opportunities: No or less learning and growth opportunities in the current job will make candidate’s job and career stagnant. * Lack of appreciation: If the work is not appreciated by the supervisor, the employee feels de-motivated and loses interest in job. Lack of trust and support in coworkers, seniors and management: Trust is the most important factor that is required for an individual to stay in the job. Non-supportive coworkers, seniors and management can make office environment unfriendly and difficult to work in. * Stress from overwork and work life imbalance: Job stress can lead to work life imbalance which ultimately many times lead to employee leaving the organization. * Compensation: Better compensation packages being offered by other companies may attract employees towards themselves. New job offer: An attractive job offer which an employee thinks is good for him with respect to job responsibility, compensation, growth and learning etc. can lead an employee to leave the organization. Retention Myths The process of retention is not as easy at it seems. There are so many tactics and strategies used in retention of employees by the organizations. The basic purpose of these strategies should be to increase employee satisfaction, boost employee morale hence achieve retention. But some times these strategies are not used properly or even worse, wrong strategies are used.
Because of which these strategies fail to achieve the desired results. There are many myths related to the employee retention process. These myths exist because the strategies being used are either wrong or are being used from a long time. These myths prevent the employer from successfully implementing the retention strategies. Some of these myths are: 1. Employees leave an organization for more pay: Money may be the motivating factor for some but for many people it is not the most important factor. Money matters more to the low-income-employees for whom it’s a survival issue.
Money can make an employee stay in an organization but not for long. The factors more important than money are job satisfaction, job responsibilities, and individual’s skill development. The employers should understand this and work out some other ways to make employees feel satisfied. When employees leave, management tries to retain them by offering more money. But instead they should try to figure out the main reason behind it. Issues that are mainly the cause of dissatisfaction are organization’s policies and procedures, working conditions, relationship with the supervisor and salary, etc.
For such employees, achievement, growth, respect, recognition, is the main concern. 2. Incentives can increase productivity: Incentives can surely increase productivity but not for long term. Cash incentives, volume work targets and speed awards are old management beliefs. They can generate work speedily and in volumes but can’t boost employee commitment. Rather speed can hamper the quality of work produced. What really glues employees to their work and organization is quality work, meaningful responsibilities, recognition, respect, growth opportunities and friendly supervisors. 3.
Employees run away from responsibilities: It is a myth that employees run from responsibilities. In-fact employees feel more responsible if they are given extra responsibilities apart from their regular job. Employees look for variety, greater control on the processes and authority to take decisions in their present job. They want opportunities to learn and grow. Management can assign extra responsibilities to their employees and appreciate them on the completion of these tasks. This will induce a sense of pride in the employee and will improve the relationship between the management and the employee. . Loyalty is a thing of the past: Employees can be loyal but what they need is an employer for whom they can be loyal. There is no reason for the employee to hop jobs if he’s satisfied with the employer. 5. Taking measures to increase employee satisfaction will be expensive for the organizations: The things actually required to improve employee satisfaction like respect, career growth and development, appreciation, etc. can’t be bought. They are free of cost. An employer or management that reacts well to the employee’s ideas and suggestions is enough for the employees to be retained.
Benefits Of Attrition Attrition is not bad always if it happens in a controlled manner. Some attrition is always desirable and necessary for organizational growth and development. The only concern is how organizations differentiate “good attrition” from “bad attrition”. The term “healthy attrition” or “good attrition” signifies the importance of less productive employees voluntarily leaving the organization. This means if the ones who have left fall in the category of low performers, the attrition in considered being healthy.
Attrition rates are considered to be beneficial in some ways: * If all employees stay in the same organization for a very long time, most of them will be at the top of their pay scale which will result in excessive manpower costs. * When certain employees leave, whose continuation of service would have negatively impacted productivity and profitability of the company, the company is benefited. * New employees bring new ideas, approaches, abilities & attitudes which can keep the organization from becoming stagnant. There are also some people in the organization who have a negative and demoralizing influence on the work culture and team spirit. This, in the long-term, is detrimental to organizational health. * Desirable attrition also includes termination of employees with whom the organization does not want to continue a relationship. It benefits the organization in the following ways: * It removes bottleneck in the progress of the company * It creates space for the entry of new talents * It assists in evolving high performance teams There are people who are not able to balance their performance as per expectations, lack potential for future or need disciplinary action. Furthermore, as the rewards are limited, business pressures do not allow the management to over-reward the performers, but when undesirable employees leave the company, the good employees can be given the share that they deserve. Some companies believe attrition in any form is bad for an organization for it means that a wrong choice was made at the beginning while recruiting. Even good attrition indicates loss as recruitment is a time consuming and costly affair.
The only positive point is that the realization has initiated action that will lead to cutting loss. Employee Retention Strategies The basic practices which should be kept in mind in the employee retention strategies are: 1. Hire the right people in the first place. 2. Empower the employees: Give the employees the authority to get things done. 3. Make employees realize that they are the most valuable asset of the organization. 4. Have faith in them, trust them and respect them. 5. Provide them information and knowledge. 6. Keep providing them feedback on their performance. 7. Recognize and appreciate their achievements. . Keep their morale high. 9. Create an environment where the employees want to work and have fun. These practices can be categorized in 3 levels: Low, medium and high level. Low Level Employee Retention Strategies ? Appreciating and recognizing a well done job ? Personalized well done and thank-you cards from supervisors ? Congratulations e-cards or cards sent to spouses/families ? Voicemails or messages from top management ? Periodic days off for good performance ? Rewards (gift, certificates, monetary and non monetary rewards) ? Recognizing professional as well as personal significant events. Wedding gifts * Anniversary gifts * New born baby gifts * Scholarships for employee’s children * Get well cards/flowers * Birthday cards, celebrations and gifts ? Providing benefits * Home insurance plans * Legal insurance * Travel insurance * Disability programs ? Providing perks: It includes coupons, discounts, rebates, etc * Discounts in cinema halls, museums, restaurants, etc. * Retail store discounts * Computer peripherals purchase discounts ? Providing workplace conveniences * On-site ATM * On-site facilities for which cost is paid by employees * laundry facility for bachelors * Shipping services Assistance with tax calculations and submission of forms * Financial planning assistance * Casual dress policies * Facilities for expectant mothers * Parking * Parenting guide * Lactation rooms * Flexi timings ? Fun at work * Celebrate birthdays, anniversaries, retirements, promotions, etc * Holiday parties and holiday gift certificates * Occasional parties like diwali, holi, dushera, etc * Organize get together for watching football, hockey, cricket matches * Organize picnics and trips for movies etc * Sports outings like cricket match etc * Indoor games ? Occasional stress relievers * “Casual dress” day “Green is the color” day * Handwriting analysis * Tatoo, mehandi, hair braiding stalls on weekends * Mini cricket in office * Ice cream Fridays * Holi-Day breakfast ? Employee support in tough time or personal crisis * Personal loans for emergencies * Childcare and eldercare services * Employee Assistance Programs ( Counseling sessions etc) * Emergency childcare services Medium Level Strategies for Employee Retention * Appreciating and recognizing a well done job * Special bonus for successfully completing firm-sponsored certifications * Benefit programs for family support * Child adoption benefits Flexible benefits * Dependents care assistance * Medical care reimbursement ? Providing conveniences at workplace ? Gymnasiums ? Athletic membership program ? Providing training and development and personal growth opportunities * Sabbatical programs * Professional skills development * Individualized career guidance High Level Strategies ? Promoting Work/Life Effectiveness ? Develop flexible schedules ? Part-time schedules ? Extended leaves of absence ? Develop Support Services ? On-site day care facility etc. ? Understand employee needs: This can be done through proper management style and culture ?
Listen to the employee and show interest in ideas * Appreciate new ideas and reward risk-taking * Show support for individual initiative * Encourage creativity? Encouraging professional training and development and/or personal growth opportunities: It can be done through: * Mentoring programs * Performance feedback programs * Provide necessary tools to the employees to achieve their professional and personal goals * Getting the most out of employee interests and talents * Higher study opportunities for employees * Vocational counseling * Offer personalized career guidance to employees?
Provide an environment of trust: Communication is the most important and effective way to develop trust. * Suggestion committees can be created * Open door communication policy can be followed * Regular feedbacks on organization’s goals and activities should be taken from the employees by: * Management communications. * Intranet and internet can be used as they provide 24X7 access to the information. * Newsletters, notice boards, etc.? Hire the right people from the beginning: employee retention is not a process that begins at the end. The process of retention begins right from the start of the recruitment process. The new joinees should fit with the organization’s culture. The personality, leadership characteristics of the candidate should be in sync with the culture of the hiring organization. * Referral bonus should be given to the employees for successful hires. They are the best source of networking. * Proper training should be given to the managers on interview and management techniques. * An internship program can be followed to recruit the fresh graduates. | | | | Manager’s Role in Retention When asked about why employees leave, low salary comes out to be a common excuse.
However, research has shown that people join companies, but leave because of what their managers’ do or don’t do. It is seen that managers who respect and value employees’ competency, pay attention to their aspirations, assure challenging work, value the quality of work life and provided chances for learning have loyal and engaged employees. Therefore, managers and team leaders play an active and vital role in employee retention. Managers and team leaders can reduce the attrition levels considerably by creating a motivating team culture and improving the relationships with team members.
This can be done in a following way: * Creating a Motivating Environment: Team leaders who create motivating environments are likely to keep their team members together for a longer period of time. Motivation does not necessarily have to come through fun events such as parties, celebrations, team outings etc. They can also come through serious events e. g. arranging a talk by the VP of Quality on career opportunities in the field of quality. Employees who look forward to these events and are likely to remain more engaged. * Standing up for the Team: Team leaders are closest to their team members.
While they need to ensure smooth functioning of their teams by implementing management decisions, they also need to educate their managers about the realities on the ground. When agents see the team leader standing up for them, they will have one more reason to stay in the team. * Providing coaching: Everyone wants to be successful in his or her current job. However, not everyone knows how. Therefore, one of the key responsibilities will be providing coaching that is intended to improve the performance of employees. Managers often tend to escape this role by just coaching their employees.
However, coaching is followed by monitoring performance and providing feedback on the same. * Delegation: Many team leaders and managers feel that they are the only people who can do a particular task or job. Therefore, they do not delegate their jobs as much as they should. Delegation is a great way to develop competencies. * Extra Responsibility: Giving extra responsibility to employees is another way to get them engaged with the company. However, just giving the extra responsibility does not help. The manager must spend good time teaching the employees of how to manage responsibilities given to them so that they don’t feel over burdened. Focus on future career: Employees are always concerned about their future career. A manager should focus on showing employees his career ladder. If an employee sees that his current job offers a path towards their future career aspirations, then they are likely to stay longer in the company. Therefore, managers should play the role of career counselors as well. Bibliography 1. humanresources. about. com 2. highretention. com 3. retentionconnection. com 4. themanager. org/HR 5. ‘The Employee Retention Handbook’ by Stephen Taylor 6. ‘Hiring and Keeping the best people’ by Harvard Business School
