LITERATURE REVIEW

The turnover of key employees can have a disproportionate impact on the business and the people

organizations wish to retain are probably the ones most likely to leave.

Reed (2001) claims that:

Every worker is five minutes away from handing in his or her notice, and 150 working

hours away from walking out of the door to a better offer. There is no such thing as a ‘job

for life’ and today’s workers have few qualms about leaving employers for greener

pastures… The average permanent job in the UK lasts six years.

Concerted action is required to retain talented people, but there are limits to what any

Organization can do. It is also necessary to encourage the greatest contribution from

existing talent and to value them accordingly.

Here is a list of broad factors that impact retention

● company image,

● recruitment, selection and deployment,

● leadership – ‘employees join companies and leave managers’;

● learning opportunities,

● performance recognition and rewards

Effective employee retention is the systematic effort by the employers to create and foster an

environment that encourages current employees to remain employed by having policies and practices

in place that address their diverse needs. A strong retention strategy eventually becomes a powerful

recruitment tool.
The Job Confidence Index Q1 2017, conducted by the recruitment firm Michael Page India, has found

that compensation is only the third factor that keeps an employee happy and results in satisfaction.

The top two reasons happen to learning new skills and work-life balance.

The top motivations for employees to look for a new job were recorded as: 48% of the respondents in

India wanted to learn new skills (down from 52%); 39% aspired for better work-life balance (up from

35%) and 34% chose salary (down from 35%). Although the top three reasons are the same as last

year, their order has changed as work-life balance has quipped compensation.

Another study in retention of employees suggests that employee retention starts at the job description,

recruitment, selection and orientation stages. The author argues that the four elements mentioned

above form the foundation for any retention strategy that a company may adopt (Dibble, 1999).

WHY EMPLOYEES LEAVE?

Organizations in India must give serious thought to what drives employee commitment. Firms need to

focus on employees with mission-critical skills, as well as high-potentials and those holding crucial

roles. According to the study ‘Preparing for Take-Off’, conducted in association with the Centre for

Economics and Business Research, Employee turnover in India is predicted to rise to 26.9% in 2013

with an employee base of 30 million compared with 26% in 2010 on an employee base of 28 million.

Worldwide, attrition is predicted at 21.2% in 2013 on an employee base of 716 million compared with

20.3% in 2010 on an employee base of 644 million. The number of workers expected to take flight

will reach 161.7 million in 2014 - a 12.9% increase compared with 2012 - as growth builds and

employment opportunities increase. Comparatively, turnover was minimal between 2010 and 2012. In

the next five years, 49 million employees will leave their employers globally (India Times, 2013).
FACTORS AFFECTING EMPLOYEE RETENTION

EMPLOYEE PERSONAL VALUE MATCH WITH JOB

The concept of employee value match with job means jobs matching with employees in term of skill,

knowledge, qualifications, ability and others characteristics of employees which match and suitable

for the job .To gain competitive advantage organizations have to innovate and mangers have to search

for employees with useful knowledge who are motivated to use it for the benefit of the organization.

Employee selection process should also consider improving congruent between employee values and

corporate culture.

COMPENSATION

The literature considered that compensation one of the largest factors for the retention of employees.

Compensation plays significant role in attracting and retaining good employees specially those

employees whose gives outstanding performance or unique skill which is indispensable to the

organization because company invest more amounts on their training and orientation. It is not

necessary that money which satisfies the employee is not sufficient to retain the employee. A fair

wage is the foundation element in fostering a long term relationship between the company and

employees. Organizations often offer high pay packages i.e. stock options, special pay, retention pay,

gain share pay, performance base pay and bonus etc. for attraction and retention of talented employees

of the market.

REWARDS

The literature meaning of word “reward” as it is something the offer by the organization to the

workers in response of their performance and contributions which are expected by the workers .The

amount of pay, benefits, or equivalents employee received in return for service which employee
render to organization. A reward can be intrinsic or extrinsic, it can be in form of cash i.e. bounces etc

or reward can be in form of recognition / certificate such as commendation certificate or worker of the

month etc. In business environment rewards are offered in several forms e.g. recognition, cash

bonuses, awards, free trips and free merchandise etc. Recognition is important for workers and they

want to listen that their work are recognized and they are appreciated.

TRAINING AND CAREER DEVELOPMENT

Investment on employee Training and career development is considered important factor in employee

retention. Organization has the incentive to make investment in form of training & development only

on those workers, from whom organization expect to return and give output on its investment

Training enhances the skills of employees. When employees are hired to enhance the skill,

organization needs to start training program. Employees have perception to acquire new knowledge &

skills which they apply on the job and also share with other employees. Training provides specialized

technique and skills to employee and also helps to rectify deficiencies in employee performance,

while development provide the skills and abilities to employee which will need the organization in

future. Development of skill consists of improving interpersonal communication, technological

knowledge, problem solving and basic literacy etc. In today’s competitive environment feedback is

essential for organizations to give and receive from employees and the more knowledge the employee

learn the more he or she will perform and meet the global challenges of the market place.

CAREER ADVANCEMENT OPPORTUNITIES

Employees career advancement is a phenomenon which is formalized, organized and it is planned

effort to accomplish the balance between requirement of organization workforce and individual career

needs. The rapidly rising awareness makes it evidence that employees can give leading edge to the
organization in market place. It is challenge for today HR Managers to identify the organization

developmental strategies which enthuses the employee commitment to the organization vision and

values to motivate the employees and help the organization to gain and sustain the competitive

advantage .People always work for a reason and the cause should be provided by work, organization,

co-workers or from within. . Career development is mutual benefited process because it gives

imperative outcomes to employer and employees. To gain and maintain competitive advantage

organizations required talented & productive employees and these employees need career

development to enhance and cultivate their competencies

SUPERVISOR SUPPORT

The leadership style consider affective factor in employee retention. The relationship between

supervisor and worker play pivotal role in employee turnover intention. The organization “human

face” is supervisors. Leaders are the human face of the firm. An employee’s view regarding

organization is strongly concerned to their relationship with supervisor. If supervisor support, open

communication and have good relationship with employees, the employees turnover intention are

likely less and more engaged with organization. Leaders interact as a bond to perform application

between expectations and stated goals. Employees leave the leaders not jobs so leader support is also

essential in this regard. Employees who are valued and they feel esteemed will take active part in the

organization goals, show productive behaviour, workplace and increased job involvements, which

decrease absenteeism and turnover intention rates. The effective leadership style can be revealed by

formal and informal acknowledgment. In organization employees responds to admire, support and

encouragement, no matter the environment is profession or personal to ensure accurate performance

appraisal management leader must discusses the progress with employees outside the time of formal

evaluation process. They assist workers to find the right place in the firm, not only move in the

hierarchy next position. Well skilled and talented workers may easily find good job, position and

workplace elsewhere however the effective way for retention these talented employees is to enhance

friendly and close working environment and to promote leader support.

WORK ENVIRONMENT

A numbers of studies have conduct to explain the work environment with different aspects such as

job satisfaction and employee retention employee turnover, organizational commitment and job

involvement. Work environment is considered one of the most important factors in employee‟s

retention. Work environment is generally discussed as industrial perspective, focus on aspect i.e.

noise, toxic substances exposure and heavy lifts etc. The interesting part of work environment is;

work environment characteristics in services sector is differ from production sector, because services

sector directly deal with consumers / clients The interactions depends on the kind of job or / and kind

of business, it may be more or may be less. The interaction between employees and client / consumer

move from physical to Psychological dimension. Psychological work environment consist of work

load, decision, support, stressors, latitude and decision etc. It is much important to know and

recognize the emerging needs of employees and provide good work environment as required to keep

the employees committed with organization. Some researches confirm the fact that physical & work

environment play pivotal role in employee’s decision whether to leave the job or stay and consider as

a major factor in employee retention. Light has been identified is a casual factor of job performance,

sometime noise disturb the working environments and create a hitch in office which is harmful to

employees psychological & physical welfare, encouragement and at times productivity.

FAMILY SUPPORT AND FLEX TIME WORK CULTURE

Research indicates that the existence of family support (such as alternative schedules, supervisor

support, co-worker support, flex time, work-family culture and family benefits etc) within the

organization helps a lot in the retention of talented employee. It also recognizes that organization

whose support their employee in integrating between family responsibilities and work reduce the

employee intention regarding leave the job. Places having flexible work arrangement is a very

important part of work family support that plays pivotal rule in the retention of employees. Thompson
and Prottas (2005) examined the relationship between employee turnover intention and organization

support such as supervisor support, flex time work family culture and co-worker support etc. and they

conclude that organization support reduced the employee turnover intention

INTRODUCTION

According to LBW Consulting (Leadership in Business, Worldwide) the cost of replacing an

employee ranges from 29% (non-management) to 46% (management) of the person’s annual salary.

Then there are the sunk costs such as, induction and training expenses, other administrative people

costs incurred on the person, expenses are also incurred when someone else does the person’s job in

the interim, leading to the domino effect on employee cost. Subsequently there is a new hiring cost

that on average would be 25% of the annual salary. There is also the probability that the new

employee’s salary would be higher. Companies are increasingly mapping employee retention and

hiring costs and eventually retention is emerging as a cost effective tool.

MOST COMMON ANSWERS WHEN ASKED ABOUT LEAVING A JOB?

Job is not what employee expected to be.

Lack of opportunities for personal and career development in the organization.

Lack of appreciation and recognition.

Stress from overwork and work life imbalance.

Financial consideration.

Inappropriate organizational culture and work environment.

Resistance to change.

For higher education.

Lack of cordial relations with peers and superiors.

Job and person mismatch.

Sexual harassment

WHY IS EMPLOYEE RETENTION IMPORTANT?

Manage Employee Turnover

Employers implement retention strategies to manage employee turnover and attract quality employees

into the organization. Retention programs focus on the relationship between management and their

workers. Competitive pay, benefits, employee recognition and employee assistance programs are all a

part of a company's attempt to maintain employee satisfaction. Human resources specialists utilize

feedback they receive from exit interviews and focus groups to improve employee relations and

reduce turnover.

Cost Effective

A company can significantly benefit from employee retention programs because of a direct effect on

an employer’s bottom line. High turnover can be very expensive. According to the Society for Human

Resources Management, “employee replacement costs can reach as high as 50 to 60 percent of an

employee’s annual salary.” Strategies geared towards retaining good workers helps offset employee

replacement costs and reduces the indirect costs such as decreased productivity and lost clients.

Maintain Performance and Productivity

Employee retention practices help support an organization’s productivity. Recruiting and training new

employees takes time. An unfilled position means work is not getting done. Even if a position is

filled, there is still a learning curve most employees must overcome before their work becomes

profitable. Taking the necessary steps to keep current workers satisfied with their roles will ensure

productivity is not interrupted.

Enhances Recruitment

Effective retention strategies often begin during the employee recruitment process. Employees are

more inclined to remain with a company that fulfils the promises made when their employment offer

was extended. Companies that provide a realistic view of their corporate environment, advancement

opportunities and job expectations to new hires can positively influence employee retention.
Increases Morale

Employees that enjoy what they do and the atmosphere in which they work are more likely to remain

employed with their company. Retention strategies are important because they help create a positive

work environment and strengthen an employee’s commitment to the organization. Strategies that

target employee engagement, such as team-builders and community involvement, increase company

morale and give employees a sense of pride in what they do.

LIMITATIONS
1. The research has a small sample size, I was unable to find more employees who were

free to provide me with their guidance.

2. The same language may have different interpretation for different people and hence may

influence their response. This may affect the accuracy of the findings.

3. Different people are entitled to have different opinions, findings in perceptual matters

may differ.

4. The study is based on the assumption that the respondents are true and honest in

expressing their views and have answered without any preconceived prejudices.