Importance of Employee Retention, and Employee Retention Techniques

Preface

Professional study is incomplete without having practical exposures in life. Theory provides the fundamental stone for the guidance of practice, but practice examines the element of truth lying in the theory. Therefore, a stand co-ordination between theory and practice is very essential to give a synergistic strength and let help the esteemed MBA program move towards perfection. The comprehensive knowledge of the theoretical aspects and the practical exposures has given me a lot of strength to complete my project.

I avail this stance in a very satisfactory manner and think it will be very beneficial for me in building my future. This project is in a part and I have given my best to arrange and report the findings in a good, lucid and systematic way.

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Executive Summary

Employee retention Techniques 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.

Most employees feel that they are worth more than they are actually paid. There is a natural disparity between what people think they should be paid and what organizations spend in compensation. When the difference becomes too great and another opportunity occurs, turnover can result. Pay is defined as the wages, salary, or compensation given to an employee in exchange for services the employee performs for the organization. Pay is more than 'dollars and cents;' it also acknowledges the worth and value of the human contribution. What people are paid has been shown to have a clear, reliable impact on turnover in numerous studies.

Employees comprise the most vital assets of the company. In a work place where employees are not able to use their full potential and not heard and valued, they are likely to leave because of stress and frustration. In a transparent environment while employees get a sense of achievement and belongingness from a healthy work environment, the company is benefited with a stronger, reliable work-force harboring bright new ideas for its growth Blog Online and Earn Money.

Introduction Of The Study

Employee Retention

Employee retention means to retain the employee in the company. One of the biggest challenges companies are facing is the attraction and retention of top performers. The World Future Society predicted that the greatest test of durability for companies in the next five years would be the ability to get and keep good people. In some industries, such as the TPA industry, there is a phenomenon of merry-go-round employees where employees jump ship within the industry, and companies are recycling employees.

Retaining key personnel is critical to long term success of an organization. A retention strategy has become essential if the organization is to be productive over time. It can become an important part of hiring strategy by attracting the best candidates who know of your track record for caring for employees. In fact, some companies do not have to recruit because they receive so many qualified unsolicited submissions due to their history of excellence in employee retention. When one company loses key personnel to other companies, it is expensive to find and train replacements. It’s harder then ever to find good people. Usually, the loss could have been prevented and, at the same time, created a policy that actually helps to attract the best and the brightest candidates. Retention has become an essential business strategy for companies that wish to remain productive into the future.

The following project reflects information gathered from recently conducted exit interviews that were conducted in Hero Motocorp Ltd. When we look at some employees going out of our organization, we may consider that the act may be a voluntary decision that forces them to take a step from the organization. But when we consider this as an organizational failure to retain the best talents with us, we may seek to answer the question: does all the outgoing choices of the employee subject to his personal choice or some other force motivating him to do so?

To a layman, an exit interview may be a term that refers to ascertaining from an outgoing employee what prompted him to leave the organization. Or we can view this term as a process where collection of data in a systematic way, its aggregation for the organization as a whole, analyzing the data for identifying trends or patterns, if any in the employment turnover and using the findings to draft and implement strategies to arrest further turnovers and attrition in the prevailing organization. When information is collected from the employee leaving the organization in an atmosphere in which he/she feels comfortable in sharing and reliving their understanding of the events or factors that led to their resignation.

In the best of the worlds, employees love their job like their co-workers work hard for their employers, get paid well for their work have ample chances for advancement, and flexible schedules so they could attend to personal or family needs when necessary. And never leave.

But then there’s the real world, and in the real world, employees, do leave, either because they want more money, hate the working conditions, hate their co-workers, want a change or because their spouse gets a dream job in another state so what does all that turnover cost? And what employees are likely to have higher retention turnover? Who is likely to stay the longest?

It’s, however, no easy task for an HR manager to bridge the ever-increasing demand and supply gap of professionals. HR manager is not only required to fulfill their responsibilities but also find the right kind of people who can keep pace with the unique work patterns in this industry. Adding to this is the issue of maintaining consistency in performance and keeping the motivation levels high despite the monotonous work. The toughest concern for an HR manager is however the high attrition rate.

Conceptualization Of The Frame Work

Theoretical Technique

Employee retention is most critical issue facing corporate leaders as a result of the shortage of skilled labor, economic growth and employee turnover.

• Lower turnover
• Increase employee – and customer – satisfaction
• Increase quality and productivity
• Increase profits · Decrease cost

Costs Due To An Employee Leaving

When an employee leaves the job, the company has to bear some costs. The cost of the person who fills the post while the post is vacant. The cost of the lost productivity at a minimum of 50% of the person’s compensation and benefits cost for each week the position is vacant, even if there are people performing the work.

• The cost of conducting an exit interview to include the time of the person conducting the interview, of the person leaving, the administrative costs of the stopping payroll, benefit deduction, benefit enrollments.
• The cost of the manager who has to understand what work remains, and how to cover that work until a replacement is found.
• The cost of training your company has invested in this employee who is leaving.
• The cost of the person who is leaving for the amount of the time the position is vacant.
• If a person leaves after the training it cost the company about RS60000

Costs Due To An Employee Leaving

There is some type of costs that a company has to bear when an employee is leaving the job.

• Recruitment Cost
• Training Cost
• Lost Productivity Cost
• New Hire Cost

Recruitment Cost

• The cost of advertisements, agency costs, employee referral costs, Internet posting costs.
• The cost of the internal recruiter’s time to understand the position requirements, develop and implement a sourcing strategy, review candidates assessments, conduct reference checks, make the employment offer and notify unsuccessful candidates. This can range from a minimum of 30 hour to over 100 hours per position.
• The cost of various candidate pre-employment tests to help assess a candidate’s skills, abilities, attitude, values and behaviors.

Training Cost

• The cost of orientation in terms of the new person’s salary and the cost of the person to conduct the orientation. Also include the cost of orientation materials.
• The cost of the person who conduct the training.
• The cost of various training materials needed including company or product manuals, computer or other technology equipments used in the delivery of training

Lost Productivity Costs

As the new employee is learning the new job, the company policies and practices, etc. they are not fully productive. There are some guidelines :

• After training the employee is contributing at a 25% productivity level for the first 2-4 weeks. The cost therefore is 75% of the new employee’s full salary during that time period.
• During weeks 5 –12 the employee is contributing at a 50% productivity level. The cost is therefore 50% of the full salary during that time period.
• During weeks 13-20 the employee is contributing at a 75% productivity level. The cost is therefore 25% of full salary during that time period.
• The cost of mistakes the new employee makes during this elongate indoctrination period.

New Hire Cost

• Calculate the cost of bring the new person on board including the cost to put the person on the payroll establish the computer and security passwords and identification cards, telephone hookups, cost of establishing the e-mail accounts, or leasing other equipments such as cell phones, auto mobiles.
• The cost of a manager’s time spent developing trust and building confidence in the new employees work.

How To Retain The Employee

There are many ways to keep your prize employees happily on board. Here are some tips to help improve employee relations and ensure that your company keeps the best of best:

Employee Retention Tips

• Treat your employees like you treat your most valuable clients.

It is cheaper to keep your good employees than it is to hire and train new ones. Your top 20-25% should be courted as you would court and then service your top customers.

• Get your employees to 'fall in Love' with your organization. Communicate your vision in a compelling way. Show everyone the role they have to contribute to this vision. Create opportunities for people to connect with each other for support and to improve communication in work teams
• Strong retention strategies become strong recruiting advantages. Retention is much more effective when you put the right person into the right job. Know the job! Know the employee and their motivations

Half of the Fortune 500 companies are now using assessments to more fully understand each job and the soft skills that are required for top production within their specific company culture. These benchmarked skills are then compared against qualified applicants to help determine who will be successful in the position and fit well within their company's culture. These assessments are also used as a powerful professional development tool to enhance the training of continuous life-long learning (which is another powerful retention strategy.) Advanced Fibre Communication is beginning to use this assessment process in hiring.

Money is important but it is not the only reason people stay with an organization. If your compensation plan is in the top 20-30% of your industry, then money will often not be the reason why people leave. Know the trends in benefit packages. Do your best to offer the ones your employees need? Consider offering the best of the rest. Money is not the only reason people stay, but it play a significant role in job satisfaction. You must offer your employees a competitive salary and honor their service and tenure with raises, bonuses and other monetary rewards. Fair pay shows that you respect them.

• Employee committees to help develop retention strategies are a very effective strategy. Get their input! Ask, what do people like about working here? What would you like changed to make your company a better place to work?
• Some companies, such as Advance Fiber Communication (AFC), have recognized that the special engineers and technical experts that are the cornerstones of their business require special attention. Victoria Perrault, VP of Administrative Services for AFC, says that her company has identified the top 25% of their staff and caters to these special people by meeting their financial requirements and looking for the best package of benefits that these people will find most positive as incentives to stay. They even have employee committees that work as 'focus groups' to determine why people stay at AFC and what they might want to see changed to make AFC an even better place to work.
• Leadership must be deeply invested in retention. Management must be skillful communicating company policies in a way that creates 'buy-in' from their staff and be open to employee input. Help create “ownership” in your employees. The companies with the best retention percentages are the same companies that are actively committed to retention. They know that is costs less to keep good people than to continuously have to replace unsatisfied employees and managers.
• Recognition, in various forms, is a powerful retention strategy. It does not have to cost a lot. US Dept. of Labor - 46% of people leave their jobs because they feel unappreciated.