Mse-617 Final Project Report - Team 2-2

Analyzing and Managing Employee Turnover in IT and other Technical
Industries

A Study Report by:

MSE-617-SEM QUALITY MANAGEMENT
TEAM-2
Summer 2014
Prof: Shereazad Jimmy Gandhi
Department of Manufacturing Systems Engineering and Management
California State University, Northridge

Team

Jerod Mccully
Avinash Reddy Tummalapalli
Eman Alkhatani
Srikanth Reddy Burri
Anirudh Sangapu
Varshini Lingam

MSE-617 Final Project Report

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TABLE OF CONTENTS

Table of Contents
1 Introduction .................................................................................................................... 3
2 What Is Turnover, Exactly? ...................................................................................... 3
3 How do we calculate Turnover rate? ..................................................................... 3
4 Classifying Employee Turnover ............................................................................. 3
5 Why Voluntary Turnover Matters? ........................................................................ 5
5.1 TURNOVER IS COSTLY: ......................................................................................................................... 5
5.2 TURNOVER AFFECTS ORGANIZATIONAL PERFORMANCE .................................................. 6
5.3 UNFULFILLED DAILY FUNCTIONS .................................................................................................. 6
6 Process flow diagram-Before ................................................................................... 7
7 Cause and effect diagram .......................................................................................... 7
8 Role of a Survey in Problem Identification ......................................................... 8
9 Goal of our survey ....................................................................................................... 8
10 Contents of the survey ................................................................................................ 8
11 Response to each question in the survey .............................................................. 9
12 Pareto charts ................................................................................................................ 16
13 Analyzing results ....................................................................................................... 18
14 Recommendations ..................................................................................................... 19
15 Process flow diagram-After ................................................................................... 20
16 Quality function description .................................................................................. 20
Lessons Learned .............................................................................................................. 22
Appendix-Survey ............................................................................................................. 23
References ........................................................................................................................ 26


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1 Introduction

One of the biggest challenges that the IT industry is facing these days is
employee turnover. Employee Turnover has been a never-ending problem
for every organization due to either lack of appreciation or lack of proper job
sculpting. It not only affects the morale of other employees but also impacts
financial position of the organization. It is very important for HR managers
to understand the factors that prompt employees to quit an organization.

Is our organization meeting the needs of our employees?
Are the employees happy to be a part of our organization?
Is our organization emphasizing on creating a better workplace?

This report will try to answer these questions by acquiring the voice of the
customer. This report is composed of a detailed study on the reasons that
prompts an employee to quit the organization and how to eliminate those
reasons.
2 What Is Turnover, Exactly?
Employee turnover refers to the number or percentage of workers who leave
an organization and are replaced by new employees in a given time period.
3 How do we calculate Turnover rate?
Basic turnover calculations are relatively simple. If your company employs
100 employees and 15 employees are fired or quit, your turnover is 15
percent.
4 Classifying Employee Turnover
Employees leave organizations for all sorts of reasons. Some find a different
job, some go back to school, and some follow a spouse who has been
transferred out of town. Others retire, get angry about something and quit on
impulse, or never intended to keep working after earning a certain amount of
money. Still others get fired or laid off, or they come into money (a lottery
win, an inheritance) and decide they no longer need a job.

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All of these examples represent turnover, but they dont all have the same
organizational implications. To distinguish their implications, we need to
define types of turnover.
Above figure shows the classification of employee turnover. The first
important distinction in turnover is between voluntary and involuntary. The
employee initiates voluntary turnover; For example, a worker quits to take
another job. Involuntary turnover is initiated by the organization; For
instance, a company dismisses an employee due to poor performance or an
organizational restructuring.
Another important distinction is between functional and dysfunctional
voluntary turnover. Dysfunctional turnover is harmful to the organization
and can take numerous forms, including the exit of high performers and
employees with hard-to-replace skills. It includes departures of women or
minority group members that can erode the diversity of your companys
workforce, and turnover rates that lead to high replacement costs. By
contrast, functional turnover does not hurt an organization. Examples of this
type of turnover include the exit of poor performers or employees whose
talents are easy to replace.
This report focuses on voluntary turnover. To manage voluntary turnover

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in your organization, you need an in-depth understanding of why employees
leave or stay with organizations in general, as well as strategies for
managing turnover among valued workers in your company.
5 Why Voluntary Turnover Matters?

Employee turn over is harmful for any organization mainly due to three
reasons:
1. It is costly
2. It affects business performance
3. It may become increasingly difficult to manage
5.1 TURNOVER IS COSTLY:

Employee departures cost a company time, money, and other resources.
Every time an employee leaves and is replaced, there are costs associated
with the process of losing the first employee and hiring and training the new
one. Organizations have to spend a lot of money to replace the departed
employee. These costs include:
a) Hiring Costs: This includes recruitment costs, advertising costs, travel
costs for employees to visit the company, travel cost for your staff to
go to a recruiting fair, cost for background checks and relocation costs
for the new employee, joining bonuses etc.
b) On-boarding costs: cost to on-board the employee.
c) Training costs: Cost for getting the new employee trained to the level
of the employee who has left the organization.
d) Opportunity costs: Opportunity costs are the costs of opportunities
you couldn't take advantage of - the cost of business lost because you
didn't have the people resources to do all the work while you were
shorthanded.
e) Morale costs: cost of reduced morale from other workers having to
cover the workload of the employee left from the time the employee
starts slowing down because they know they are leaving until the time

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the replacement is hired, trained, and up to speed.
5.2 TURNOVER AFFECTS ORGANIZATIONAL
PERFORMANCE

Long-term employees generally have higher productivity and efficiency on
the job than newer employees, due to their length of experience with the
firm. Loyal employees also improve operational processes and train
incoming employees. When an experienced employee leaves the
organization and is replaced by a new employee, productivity can drop
dramatically. In organizations with high turnover, constant change in
employee ranks means average years of experience and background of
employees are low. This means employees are generally less familiar with
work tasks they complete and working effectively with customers. Staff
turnover can have a negative effect on an organization. It can lead to a loss
of productivity, profitability, corporate knowledge, and skills and
competencies.
5.3 UNFULFILLED DAILY FUNCTIONS

Many of the negative effects of turnover relate to performance quality, but
the "Encyclopedia of Business" points out companies with higher turnover
may struggle to complete all necessary or important daily functions. For
instance, if it takes 10 workers to a complete a given work task or function
in a day, and only seven workers are currently employed in that area, the
company has to figure out how to deal with the unfulfilled daily work
requirement. Owing to the above-discussed negative effects of Voluntary
employee turnover on an organization, it is important for our organization to
retain its high skilled professionals. Before we come up with an employee
retention plan we need to know what encourages our employees to stay in
the organization and what is encouraging them to leave our organization.


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6 Process flow diagram-Before

7 Cause and effect diagram
The team has brainstormed about several reasons that might be the cause for
the high turnover rates in our organization and we have used an Ishikawa, or
fish bone diagram to organize the thoughts. In the above figure the items
highlighted in red will be assessed more in detail using the survey to know
their impact on the high turnover rates.
Employee
is Hired
Orientation
Project
specific
training
On-
boarded

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8 Role of a Survey in Problem Identification

One of the main reasons for high turnover rates is lack of morale in the
employees. Finding the causes for this lack of enthusiasm and giving them
opportunities to go above and beyond their normal limits will increase their
job satisfaction.
Surveys, or questionnaires, may be used to assess overall employee
satisfaction and morale. Attitude surveys can be administered to find out
what employees think about their workplace.
Surveys can gather information on multiple employment variables including
pay, benefits, working conditions, professional development, and
communication throughout the organization, foodservice, and opportunities
to voice ideas, supervision, and relationships with managers.
Surveys can gather information about what is meaningful to employees,
what they need to support their work.
Surveys can also gather data that, once analyzed, are used to establish
benchmarks to which future behaviors and feedback can be compared.
9 Goal of our survey
Our organization with employees in a range of call center, maintenance,
professional, and management roles wanted to understand why its highly
engaged workforce was turning over. Not only did the organization want to
understand the problem, it was poised to take immediate action on the
problem by coming up with an employee retention plan.
In order to know the root cause for the employee dissatisfaction within the
organization we have encouraged our employees to participate in a survey
that we have designed to understand the cause of employee dissatisfaction.
10 Contents of the survey

The survey consists of 8 multiple-choice questions. Each question collects
significant data that helps in achieving our goal towards problem
identification. In order to obtain reliable and useful data we have asked the
respondents to answer all the questions without skipping any questions
before submitting their response.

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11 Response to each question in the survey

1) QUESTION: Your current work experience relative to IT
industry?


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2) QUESTION: What is your current role in your
company?


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3) QUESTION: With how many companies have you been
associated with before joining your current employer?


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4) QUESTION: If you were able to, what would you want to
change about your job?


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5) QUESTION: What factor makes it less likely that you
would choose a career or long- term employment with
your current employer?


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6) QUESTION: One reason that encourages you to make a
long-term career with your current employer?


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7) QUESTION: How would you rate your Job satisfaction
with your current employer?


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12 Pareto charts

Pareto analysis is a creative way of looking at causes of problems
because it helps stimulate thinking and organize thoughts. We have
developed Pareto charts from the information collected in the survey to get a
better analysis of the problem.

0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
0
5
10
15
20
25
30
first job 1 company 2 companies 3 companies more than 4
Companies Associated
Numbers Cumilative %
0%
20%
40%
60%
80%
100%
120%
0
5
10
15
20
25
30
35
40
1-5 years Less than 1 year 6-10 years More than 10
years
Experience
Responses cumilative %

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0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
0
2
4
6
8
10
12
14
16
18
20
Increased
opurtunities
Better pay More training
sessions
Work schedule
Employee Expectations
Numbers Cumilative%
16
11
8
6
5 5
31.37%
52.94%
68.63%
80.39%
90.20%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
0
2
4
6
8
10
12
14
16
18
consultant Analyst associate entry level
employee
senior
consultant
senior
associate
Role of the employee
Numbers Cumilative %

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13 Analyzing results

a. The survey had 50 respondents, 19.61% with less than 1 year overall
IT experience, 66.67% with 1-5 years experience and 11.76% with 6-
10 years experience and 1.96% of more than 10 years experience.
b. 52.94% of the respondents, this is their first job. 25.49%, this is their
second job and 11.76% and 5.88% are associated with 3 and more
than 4 organizations before the current employer respectively.3.92%
employees have been associated with more than 4 organizations
before joining the current employer.
c. 11.76% of the respondents are highly satisfied with their current
employer, 64.71% were just satisfied, 21.57% are dissatisfied and
1.96% are highly dissatisfied
d. The respondents gave an overall rating of 2.14 (out of 5) to our
organization. Which is quite alarming
e. 40% of the employees with less than one year experience were
expecting more training sessions when asked about the one thing they
wanted to change the about their current employer and 30% wanted a
better pay. Newly hired employees want more training and better pay
benefits but however 60% of them stated that they would be happy to
continue with the current employer if the projects they are assigned to
is giving them scope to learn and improve and 30% of them are
satisfied if they are getting a better pay. Overall 80% expressed that
they are satisfied with their current employer.
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
0
5
10
15
20
25
Pay/Benefits
not fair
Fewer or no
learning
Lack of
recognition
Performance
evaluation
Work
stress/safety
Factors effecting employment
Numbers Cumilative%

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f. 65% of the respondents with 1-5 years experience are at Analyst and
consultant levels and 13% are at senior consultant and senior associate
levels, this shows that the organization is hiring employees at an
appropriate level and is promoting employees who are showing good
performance. However employees with 1-5 years experience have
expressed than they are expecting a better pay for the work they are
doing.
g. 70% of the Employees with more than 6 years experience are not
happy with the opportunities that the organization is providing.
Increased opportunities include On-site opportunities, to have their
voice in important decisions in the project, Opportunity to lead and
grow in the project team and opportunities that can fully utilize their
skills. However 85.71% of these high skilled and experienced
employees are satisfied with their current employee.
14 Recommendations

After Analyzing the survey responses, the team has come up with the
below recommendations:

a. Pay scale has to be revised after comparing with what is offered by
the competitors in the market.
b. Training opportunities should be provided for the freshers and for
employees with less than one-year experience. Training and
knowledge transfer sessions should be an ongoing process.
c. Technical and project specific training should be made mandatory for
all the employees with less than one year IT experience.
d. Experienced employees should be provided with opportunities that
would elevate their skill set, which includes providing onsite offers,
opportunities to represent before the client, opportunity to be heard in
the decision making process. Such opportunities will increase the
visibility of the employees thus increasing their confidence and
morale levels.
e. Involving the junior employees in the new sub projects within the
current project rather than restricting them to the daily routine
activities. Assigning the junior level employees to new projects will
increase their skill set and will help them to perform at the level of
high skilled employees.

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f. Encouraging senior employees to proactively conduct learning and
training sessions to the juniors so that they can perform on par with
the seniors.
g. Encouraging the employees to update the shared drive with latest
documents.
h. Performance evaluation and recognition for good performers
i. Shifts should be flexible for the employees, allowing them to have a
work-life balance and work from home option should be made
available to employees when needed.

15 Process flow diagram-After

16 Quality function description

A Quality Function Description (QFD) helps diagram employee needs
(based on the voice of the customer) into engineering characteristics.
Weighting and levels of importance are assigned to help prioritize and

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organize functional requirements while simultaneously setting
development targets for the organization.


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Lessons Learned

We started off with deciding the topic for the project. Each member of
the team has come up with a topic and we choose this topic as
majority of us felt comfortable working on this issue.
We started off with a fishbone diagram to give a shape to our
thought process.
We designed a survey that we shared with our friends who are
working in IT and other technical industries.
We have spent a quality time to design this report. We have used
Pareto charts, Fish-bone diagrams, and Flow charts and QFD for
analyzing the data we have collected through the survey. This has
helped us in understanding the use quality tools in a better way.
It has been a great learning experience for the entire team to work
together. It has helped us to learn and to know each other. The entire
team has put genuine effort to see the project to completion.


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Appendix-Survey

This survey has been designed for a study on "High turnover rate in tech
industry"

One of the main reasons for high turnover rates is lack of morale in the
employees. Finding the causes for this lack of enthusiasm and giving them
opportunities to go above and beyond their normal limits will increase their
job satisfaction.

This survey will help us in creating a better working environment for you by
identifying your problems as an employee and stakeholder of the
organization and thus help you learn and grow in your jobs.

Thank you for participating in our survey. Your feedback is valued and is
very important in achieving our goals.

1) Your current work experience relative to IT industry?

a) Less than 1 Year
b) 1-5 Years
c) 6-10 Years
d) More than 10 years

2) What is your current role in your company

a) Analyst
b) Consultant
c) Associate
d) Senior Associate
e) Senior consultant
f) Entry level Employee

3) When did you join with your current employer?

Date:

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4) With how many companies have you been associated with
before joining your current employer?

a) 1
b) 2
c) 3
d) More than 4
e) This is my first Job

5) If you were able to, what would you want to change about
your job?

a) Better Pay
b) Work Schedule
c) More training
d) Increased opportunities

6) What factor makes it less likely that you would choose a
career or long- term employment with your current
employer?

a) Pay/Benefits not fair for work performed
b) Work stress/safety
c) Fewer or no learning opportunities
d) Lack of recognition

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e) Performance Evaluation

7) One reason which encourages you to make a long-term
career with your current employer?

a) Flexible shifts
b) Better pay
c) Option to work from home
d) Project is interesting and helps in increasing your learning
curve
8) How would you rate your Job satisfaction with your current
employer?

a) Highly Satisfied b) satisfied c) Dissatisfied d) Highly
Dissatisfied

Survey can be accessed using the below link:
https://www.surveymonkey.com/s/PT5G96R


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References

http://www.linkedin.com/today/post/article/20130816200159
-131079-employee-retention-now-a-big-issue-why-the-tide-
has-turned

http://www.citehr.com/182831-attrition-concept-working-
conditions.html

http://www.shrm.org/about/foundation/research/documents/r
etaining%20talent-%20final.pdf

http://management.about.com/od/money/a/The-High-Cost-
Of-High-Employee-Turnover.htm

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