Executive Summary

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.
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

Introduction

Employee turnover is one of the largest though widely unknown costs an

organization faces. While companies routinely keep track of various costs
such as supplies and payroll, few take into consideration how much employee
turnover will cost them: Ernst & Young estimates it costs approximately
$120,000 to replace 10 professionals. According to research done by Sibson
& Company, to recoup the cost of losing just one employee a fast food
restaurant must sell 7,613 combo meals at $2.50 each. Employee turnover
costs companies 30 to 50% of the annual salary of entry-level employees,
150% of middle-level employees, and up to 400% for upper level, specialized
employees. 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.

Resume Writing Tips

Employee Retention

Retention involves five major things:

Ø Compensation
Ø Environment
Ø Growth
Ø Relationship
Ø Support

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. Economic benefits: It
includes paid holidays, leave travel concession, etc.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.

Employers And Their Key Drivers To Attract And Retain Talent

Employers Key Drives To Attract And Retain Talent

Procter and Gamble India

Early responsibilities in career
Flexible and transparent organizational culture
Global opportunities through a variety of exposure and diverse experiences
Performance Recognition

American Express (India)

Strong global brand
Value-based environment
Pioneer in many people practices

NTPC
Learning and growth opportunities
Competitive rewards
Opportunity to grow, learn and implement
Strong social security and employee welfare performance- oriented culture

Johnson & Johnson

Strong values of trust, caring fairness, and respect within the organization
Freedom to operate at work
Early responsibility in career
Training and learning opportunities
Visible, transparent and accessible leaders
Competitive rewards
Innovative HR programs and practices

Glaxo Smith Kline Consumer Healthcare

Performance-driven Rewards
Its belief in “Growing our own timber”
Comprehensive development and learning programs
Flat organization, where performance could lead to very quick progression
Challenging work context
Competitive rewards
Exhaustive induction and orientation program

Tata Steel
Organization philosophy and culture
Job stability
Freedom to work and innovate

Colgate Palmolive India

Company brand
Open , transparent, and caring organization
Management according to the managing with respect to guiding principles
Training ad development programs
Structured career planning process
Global career opportunities

Wipro
Company’s brand as an employer
Early opportunities for growth
High degree of autonomy
Value compatibility
Innovative people program

Indian Oil Corporation

Company brand image
Work ethics
Learning and growth opportunities
Challenging work assignments
Growing organization

TCS
The group brand equity
Strong corporate governance and citizenship
Commitment to learning and development
Best in people practices
Challenging assignments
Opportunity to work with fortune 500 clients

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
Ø Appreciation for the work done
Ø Ample opportunities to grow
Ø A friendly and cooperative environment
Ø 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 technologies
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.
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 can not 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:

Communications 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.

Importance of Relationship in Employee Retention Program

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 ands 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
Relationship among collegues.

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.

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, conseling services, etc

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:

Ø By providing feedback
Ø By giving recognition and rewards
Ø By counseling them
Ø By providing emotional support

RESEARCH METHODOLOGY

Research Design

The research design indicates the type of research methodology under taken
to collect the information for the study.

The researcher used both descriptive and analytical type of research design
for his research study. The main objective of using descriptive research is to
describe the state of affairs as it exits at present. It mainly involves surveys
and fact finding enquiries of different kinds. The researcher used descriptive
research to discover the characteristics of customers. Descriptive research
also includes demography characteristic of consumer who use the product.

The researcher also used analytical research design to analyze the existing
facts from the data collected from the customer.

Area of study
The area of study is confined to employees of GEMINI COMMUNICATION LTD,
Chennai.

Research instrument
The Structured questionnaire is used as the research instrument for the
study.

Questionnaire Design
The questionnaire framed for the research study is a structured questionnaire
in which all the questions are predetermined before conducting the survey.
The form of question is of both closed and open type.

The scales used to evaluate questions are:

Dichotomous scale (Yes or No)
Likert 5 point scale (Highly satisfied, satisfied, Neither
Satisfied nor dissatisfied, Dissatisfied, Highly
dissatisfied)
Category scale (Multiple items)
Ranking type (R1, R2, R3…)

The questionnaire for the research was framed in a clear manner such that it
enables the respondents to understand and answer the question easily. The
questionnaire was designed in such a way that the questions are short and
simple and is arranged in a logical manner.

Pilot study

It is appropriate to conduct pilot survey to check the reliability of the

questionnaire. So pilot study was conducted on 5 respondents which is a 10%
of the sample.
Sampling design

A Sample design is a definite plan for obtaining a sample from a given

population. It is the procedure used by the researcher in selecting items for
the sample.

Sample size
Sample size=125 samples, variance and confidence methods are used for
determining sample size.

Sampling Technique:

The researcher adopted simple random sampling for the study.

DATA COLLECTION METHOD

Primary data

Primary data is the new or fresh data collected from the respondents through
structured scheduled questionnaire.

Secondary data

The secondary data are collected through the structured questionnaire,

literature review and also from the past records maintained by the company.

STATISTICAL TOOLS AND TECHNIQUES

PERCENTAGE ANALYSIS:

Percentage = (No. of respondents/ total no. of respondents)*100

WEIGHTED AVERAGE METHOD:

Formula:
Mean score = total score/no of respondents.
Where total score = no of respondents*weighted average

CHI – SQUARE TEST:

1. Null Hypothesis (Ho): There is no difference in attributes

2. Alternate Hypothesis(H1): There is a difference in attributes
3. Level of significance α = 0.05
4. Degrees of freedom = (r-1)(c-1)
5. Expected frequency:
E = R.T × C.T
G.T
6. Calculation of :
∑ = ∑ (O-E)²
E
7. The tabulated value of at given level of significance with (r-1)(c-1)
Degrees of freedom

ONE RUN TEST

Null hypothesis (H0):

There is a no significant relationship between the variables

Alternate hypothesis (H1):

There is significant relationship between the variables

µr = 2 n1 n2 + 1
n1 + n2

2 n1 n2- n1- n1
σr = 2 n1n2
(n1+ n2)2 (n1+ n2-1 )

Lower limit = µr + (2.58) σ

Upper limit = µr + (2.58) σ

KENDALL’S COEFFICIENT OF CONCORDANCE:

Null hypothesis (H0): There is a difference in attributes

Alternate hypothesis (H1): There is no difference in attributes

∑ Rj = (Rj-Rj)2
S= Rj = ∑ Rj

LIMITATIONS OF THE STUDY

1. The findings of the study are subjected to bias and prejudice of the
respondents.
2. Area of the study is confined to the employees in Chennai only.
3. Time factor can be considered as a main limitation.
4. The findings of the study are solely based on the information provided by
the respondents.
5. The accuracy of findings is limited by the accuracy of statistical tools used
for analysis.
6. Findings of the research may change due to area, demography, age
condition of economy etc.

Analysis and Interpretation of data

PERCENTAGE ANAYLSIS

AWARENESS OF HR POLICIES

Chi-Square Test

To find whether there exists a significant relationship between Work Culture

of the Company and interpersonal relationship between employees.

H0: There is a no significant relationship between Work Culture of the

Company and
interpersonal relationship between employees.

H1: There is a significant relationship between Work Culture of the Company

and interpersonal relationship between employees.

Calculated value is more than table value therefore accept H0

Result:
There is a significant relationship between overall satisfaction and aspects of
job.
KENDALL’S COEFFICIENT OF CONCORDANCE

Null hypothesis (H0): There is a no significant difference in the rank assigned

by respondents towards the attributes that gives them satisfaction in the
company.

Alternate hypothesis (H1): There is a significant difference in the rank

assigned by respondents towards the attributes that gives them satisfaction
in the company.
Ranking Based on Satisfaction

K=20
Salary
Superior Role
Team Coordination
Work responsibilities
Rules and Policies
Physical work environment
Training

Calculated value : S= 5815.714

Table value : 1158

Calculated value is more than table value therefore reject H0

Result:

There is a significant difference in the rank assigned by respondents towards

the attributes that gives them satisfaction in the company.

ONE RUN TEST

Null hypothesis (H0):

The samples are not taken randomly.
Alternate hypothesis (H1):
The samples are taken randomly.
Table:2.5.1
EMPLOYEE’S SATISFACTION REGARDING MONETARY BENEFITS PROVIDED BY
THE COMPANY.

Retention Management

Abstract: Background: retention management is a highly topical subject and

an important dilemma many organizations might face in the future, if not
facing it already. We believe that the leader plays a key role in employee
retention and retention management. The concept of retention management
can both have a narrow, and a broader significance. Both parts of its
significance are generally included in this thesis. The background of the
thesis present a few articles that discuss issues that makes it important for
the organization, and the leaders, to work hard with retention management.
The research is based on the leaders in the Finnish case company Tradeka.
Following key questions are intended to be answered: What are the
consequences between leaders actions and employees retention? Which is
the leader’s role when it comes to retaining employees? Purpose statement:
The purpose of the thesis is to investigate and analyze how company leaders
today can retain their key employees. How can the provision of key human
resources develop a long-term relationship that makes top employees stay in
the company? The study aims to establish the procedure leaders apply to
retain employees. The purpose is to compare the qualitative study, made at
the case company, with findings from the thesis theoretical framework.
Research method: The study is a qualitative, as well as a theoretical study
where empirical findings and theories has been compared. The intention of
investigating and using the Finnish company Tradeka Limited as a case
company, is to make the information from the theories more valid, and also
the interest in how retention management works in practice. Eleven
qualitative interviews were conducted at Tradeka?s financial department,
both with supervisors and employees to get a broader view at the
phenomenon retention management. Result: Leaders and their skill in
creating a culture of retention, has becoming a key in why people stay and
what usually drives them away from a company. The leader has become the
main factor in what motivates people’s decision to stay or leave. For
organizations to keep its key employees their number one priority should be
to look at their management, because people leave managers and not
companies. Characteristics in a leader that are of importance, as the leader
plays a key role in retention management is: trust builder, esteem builder,
communicator, talent developer and coach, and talent finder. The leader’s
relation to the employees plays a central role in retaining employees,
because employees need to feel involvement, and that their presence count.
When retention is a core value, good things happen for customers,
employees, and the company.

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 and respect them
5. Provide them information and knowledge.
6. Keep providing them feedback on their performance.
7. Recognize and appreciate their achievements.
8. 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 mess•ages 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
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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.

Retention Success Mantra

Transparent Work Culture

In today’s fast paced business environments where employees are constantly

striving to achieve business goals under time restrictions; open minded and
transparent work culture plays a vital role in employee retention.Companies
invest very many hours and monies in training and educating employees.
These companies are severely affected when employees check out,
especially in the middle of some big company project or venture. Although
employees most often prefer to stay with the same company and use their
time and experience for personal growth
and development, they leave mainly because of work related stress and
dissatisfactions.More and more companies have now realized the importance
of a healthy work culture and have a gamut of people management good
practices for employees to have that ideal fresh work-life. Closed doors work
culture can serve as a deterrent to communication and trust within
employees which are potential causes for work- Related apathy and frenzy.

A transparent work environment can serve as one of the primary triggers to

facilitate accountability, trust, communication, responsibility, pride and so on.
It is believed that in a transparent work culture employees rigorously
communicate with their peers and exchange ideas and thoughts before they
are finally matured in to full-blown concepts. It induces responsibility among
employees and accountability towards other peers, which gradually builds up
trust and pride. More importantly, transparency in work environment
discourages work-politics which often hinders company goals as employees
start to advance their personal objectives at the expense of development of
The company as a single entity.
.

Quality Of Work

The success of any organization depends on how it attracts, recruits,

motivates, and retains its workforce. Organizations need to be more flexible
so that they develop their talented workforce and gain their commitment.
Thus, organizations are required to retain employees by addressing their
work life issues. The elements that are relevant to an individual’s quality of
work life include the task, the physical work environment, social environment
within the organization, administrative system and relationship between life
on and off the job.

The basic objectives of a QWL program are improved working conditions for
the Employee and increase organizational effectiveness. Providing quality
work life involves taking care of the following aspects:Occupational health
care: The safe work environment provides the basis for the person to enjoy
working. The work should not pose a health hazard for the person. The
employer and employee, aware of their risks and rights, could achieve a lot in
Their mutually beneficial dialogue.

Suitable working time: Organizations are offering flexible work options to

their employees wherein employees enjoy flexi-timings for dedicating their
efforts at work. Appropriate salary: The appropriate as well as attractive
salary has always been an important factor in retaining employees. Providing
employees salary at par with the other counterparts of above that what
competitors are paying motivates them to stick With the company for long.
QWL consists of opportunities for active involvement in group working
arrangements or problem solving that are of mutual benefit to employees or
employers, based on labor management cooperation. People also conceive of
QWL as a set of methods, such as autonomous work groups, job enrichment,
and high-involvement aimed at boosting the satisfaction and productivity of
workers. It requires employee commitment to the organization and an
environment in which this commitment can flourish. Providing quality at work
not only reduces attrition but also helps in reduced absenteeism and
improved job satisfaction. Not only does QWL contribute to a company's
ability to recruit quality people, but also it enhances a company's
competitiveness. Common beliefs support the contention that QWL will
positively nurture amore flexible, loyal, and motivated workforce, which are
essential in determining the company's competitiveness.

Supporting Employees

Organizations these days want to protect their biggest and most valuable
asset and they want to do this in a way that best suits their organizational
culture. Retaining employees is a difficult task. Providing support to the
employees acts as a mantra for retraining them. Employers can also support
their employees by creating an environment of trust and inculcating the
organizational values into employees.

The management can support employees directly or indirectly. Directly, they

provide support in terms of personal crises, managing stress and personal
development. Management can support employees, indirectly, in a number of
ways as follows:

Manage employee turnover: Employee turnover affects the whole

organization in terms of productivity. Managing the turnover, hence, becomes
an important task. A proactive approach can be adopted to reduce attrition.
Strategies should be framed in advance and implemented when the times
arrives. Turnover costs should also be taken into consideration while framing
these strategies.

Become employer of choice: What makes a company an employer of choice?

Is the benefit it offers or the compensation packages it gives away to its
employees? Or is it measured in terms of how they value their employees or
in terms of customer satisfaction? Becoming an employer of choice involves
following a road map which tells where to go as a brand.

Engage the new recruits: The newly hired employees are said to be least
engaged in the organization. Keeping them engaged is an important task.
The fresh talent should be utilized to maximum before they start feeling
bored in the organization.

Optimize employee engagement: An organization’s productivity is measured

not in terms of employee satisfaction but by employee engagement.
Employees are said to be engaged when they show a positive attitude toward
the organization and express a commitment to remain with the organization.
Employee satisfaction also comes with high engagement levels. So,
organizations should aim to maximize the engagement among employees.

Coaching and mentoring: Employees whose work performance suffers due to

poor interpersonal relationships or because of lack of interpersonal skills
should be provided proper coaching by their superiors. Planed coaching
sessions help an individual to work through issues, maximize his potential
and return to peak performance.

Feedback

Feedback acts as a channel of communication between the employee and his

manager. The amount of information employees receive about how well or
how poorly they have performed is what we call feedback. It is a dialog
between a manager and an employee which acts as a way of sharing
information about the performance. It suggests where the employee
performance is effective and where performance has to improve.Managers
can provide either positive feedback or negative feedback to employees. This
feedback helps the employee assess his performance and identify the
improvement areas.Positive feedback communicates managerial satisfaction.
Positive recognition for good performance boosts up morale of employees
and results in performance improvement to a higher productivity level. It is
believed that positive feedback is the only type of feedback that generates
performance above the minimum acceptable level. Negative feedback
obviously communicates manager’s dissatisfaction. However, negative
feedback sometimes make employee to put more efforts to improve his
performance. But such times are very rare. Moreover this improvement is
short term. Some managers do not provide any kind of feedback to their
employees. Due to no feedback, employees may assume that they are
performing productively or they may feel that the manager is satisfied with
their performance. Studies reveal the performance tends be same or even
decreases if no feedback is provided.Thus, feedback is necessary because:

It builds trust and enhances communication between manager and

employee.
It gives managers and employees a way to identify and discuss skills and
strengths.
Positive feedback leads to employee retention and Retention.
It helps in identifying performance areas that need improvement and specific
ways to improve them. It acts as an opportunity to enhance performance by
identifying resources for skill development. It is an opportunity for managers
and employees to assess and identify career and advancement opportunities.
It helps employees to understand the effectiveness of their performance and
contributes to their overall knowledge about the work Managers have
tendency to ignore good performances of their employees. Providing no
feedback may demotivate employees and may lead to employee
absenteeism. Input from manager’s side is necessary as it help employees to
improve their performance and increase productivity.

Communication Between Employee and Employer

Communication is a process in which a message is conveyed to the receiver

by the sender. The message may be or may not be in a common format or
language that both the sender and receiver understand. So there is a need to
encode and decode the message in the process. Encoding and decoding also
helps in the security of the message. The process of communication is
incomplete without the feedback. Communication is the solution to almost
everything in this world. Same applies to employee retention also.

Straight-from-the-shoulder communication is what the employees need from

their employers. Employees look for organizations where communication and
process are transparent. Nothing is hidden and shared with the employees.
There are 3 categories of employees:

A: Who will leave their current employer in 3 years of their employment

B: Who have a probability of leaving their current employer in next 3 years
C: Who will stay with their current employer in the next 3 years
Category A: These are the employees who lack communication with their
employers.Category C: These are the employees who have proper, well
structured communication with their employers.Communication is also the
way to win the employees trust in the organization. Employees trust the
employers who are friendly and open to them. This trust leads to employee
loyalty and finally retention. Employers also feel that the immediate
supervisors are the most authenticated and trusted source of information for
them. So the organizations should hire managers who are active
communicators.Communication mediums
Open door policy: Organizations should support open door policies so that the
employees feel comfortable and are able to express their doubts and feeling
to their employers.
Frequent meetings and Social gatherings
Emails, Newsletters, Intranet and many more

So there should be effective communication across the organization and this

communication should be two-way. Communication alone can lead to
unimaginable heights of employee retention.

Importance Of Employee Retention

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.
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.

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.

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.
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.

Managing Employee Retention

The task of managing employees can be understood as a three stage

process:
1. Identify cost of employee turnover.
2.Understand why employee leave.
3.Implement retention strategies

The organizations should start with identifying the employee turnover rates
within a particular time period and benchmark it with the competitor
organizations. This will help in assessing the whether the employee retention
rates

are healthy in the company. Secondly, the cost of employee turnover can be
calculated. According to a survey, on an average, attrition costs companies
18 months’ salary for each manager or professional who leaves, and 6
months’ pay for each hourly employee who leaves. This amounts to major
organizational and financial stress, considering that one out of every three
employees plans to leave his or her job in the next two years.
Understand why employees leave :

Why employees leave often puzzles top management. Exit interviews are an
ideal way of recording and analyzing the factors that have led employees to
leave the organization. They allow an organization to understand the reasons
for leaving and underlying issues. However employees never provide
appropriate response to the asked questions. So an impartial person should
be appointed with whom the employees feel comfortable in expressing their
opinions.

Implement retention strategy :

Once the causes of attrition are found, a strategy is to be implemented so as

to reduce employee turnover. The most effective strategy is to adopt a
holistic approach to dealing with attrition. An effective retention strategy will
seek to ensure:
Attraction and recruitment strategies enable selection of the ‘right’ candidate
for each role/organization
New employees’ initial experiences of the organization are positive
Appropriate development opportunities are available to employees, and that
they are kept aware of their likely career path with the organization
The organization’s reward strategy reflects the employee drivers

How To Increase Employee Retention

Companies have now realized the importance of retaining their quality

workforce. Retaining quality performers contributes to productivity of the
organization and increases morale among employees/ Four basic factors that
play an important role in increasing employee retention include salary and
remuneration, providing recognition, benefits and opportunities for individual
growth. But are they really positively contributing to the retention rates of a
company? Basic salary, these days, hardly reduces turnover. Today,
employees look beyond the money factor.

Retention Bonus

Higher attrition rates within a particular industry have forced companies to

use some innovative strategies to retain employees. Retention Bonus is one
of the important tools that are being used to retain employees. Retention
bonus is an incentive paid to an employee to retain them through a critical
business cycle. Retention bonuses are becoming more common in the
corporate world because companies are going through more transitions like
mergers and acquisitions. They need to give key people an attractive
incentive to stay on through these transitions to ensure productivity.

Retention bonuses have proven to be a useful tool in persuading employees

to stay.A retention bonus plan is not a panacea. According to a survey, non-
management employees generally receive about 10 percent of their annual
salaries in bonuses, while management and top-level supervisors earn an
additional 50 percent of their annual salaries. While bonuses based on salary
percentages are the generally used, some companies choose to pay a flat
figure. In some companies, bonuses range from 25 percent to 50 percent of
annual salary, depending on position, tenure and other factors. Employees
are chosen for retention bonuses based on their contributions to
management and the generation of revenue. Retention bonuses are
generally vary from position to position and are paid in one lump sum at the
time of termination. However, some companies pay in installments as on
when the business cycle completes. A retention period can run somewhere
between six months to three years. It can also run for a particular project. A
project has its own life span. As long as the project gets completed, the
employees who have worked hard on it are entitled to receive the retention
bonus. For example, the implementation of a system may take 18 months, so
a retention bonus will be offered after 20 months. Although retention bonuses
are becoming more common everywhere, some industries are more likely
than others to offer them. Retail/wholesale companies are the most
appropriate to implement stay-pay bonuses, followed by financial service
providers and manufacturing firms. Companies of all sizes use retention
bonus plans to keep knowledge employees retained in the company. To
retain its key senior employees post merger with EDS Corporation, Mphasis is
providing cash component based retention bonus plan for its employees. This
is mainly to retain good employees and provide them a cash incentive to
keep them motivated.

Hire Right Talent

employee retention starts with recruitment. Early departures arise from the
wrong recruitment process. Here are a few ways to ensure how to hire the
right talent for a particular job.

Hire appropriate• candidates. Hire candidates who are actually suitable for
the job. For this the employer should understand the job requirements
clearly. Don’t hire under qualified or clearly overqualified candidates.
Provide realistic job preview at the time of hiring: Mostly employees leave
an•
Organization because they are given the real picture of their job
responsibilities at the time of joining. Attrition rate can be reduced if a right
person is hired for a right job.Realistic preview of the job responsibilities can
be given to the employment seekers by various methods like discussions,
trial periods, internships etc.
Clearly discuss what• is expected from the employee: Before joining the
organization, tell the candidate what is expected from him. Setting wrong
expectations or hiding expectations will result in early leaving of employees.
• Discuss what the expectations of the employees are: Ask employees what
they expect from the organization. Be realistic. If their requirements can be
fulfilled only then promise them. Or tell them before hand that their
requirements can not be fulfilled. Don’t show them an unrealistic picture.
Culture fit: Try to judge individual’s capability to• adapt to the organization’s
culture. A drastic change in the culture may give a culture shock to the
candidate.
Referrals: According to• the research, referred candidates stay longer with
the organization. There is a fear of hampering the image and reputation of
the person who referred the candidate.

Manager 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. Retention 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.

How to Improve Employee Retention

People want to enjoy their work so make work fun and enjoyable.
Understand that employees need to balance life and work so offer flexible
starting times and core hours. Provide 360 feedback surveys and other
questionnaires to foster open communication. Consider allowing anonymous
surveys occasionally so employees will be more honest and candid with their
opinions. Provide opportunities within the company for career progression
and cross-training. Offer attractive, competitive benefits and 401(k)s.

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Organizations should target job applications for employees who have
characteristics that fit well with the organizational culture. Upon conducting
an interview, seek out traits, such as loyalty. Also, ask the potential employee
what motivates them on the job. Having more information about the potential
employee’s expectations can help retain them, should they get hired into the
company.

Rewards and Recognition

Employees want to be recognized for a job well done. Rewards and
recognition respond to this need by validating performance and motivating
employees toward continuous improvement. Rewarding and recognizing
people for performance not only affects the person being recognized, but
others in the organization as well.

Through a rewards program, the entire organization can experience the

commitment to excellence. When the reward system is credible, rewards are
meaningful; however, if the reward system is broken, the opposite effect will
occur. Employees may feel that their performance is unrecognized and not
valued, or that others in the organization are rewarded for the wrong
behaviors. Unrecognized and nonvalued performance can contribute to
turnover. Recognition for a job well done fills the employees' need to receive
positive, honest feedback for their efforts.
Need for Rewards and Recognition
Recognition should be part of the organization's culture because it
contributes to both employee satisfaction and retention. Organizations can
avoid employee turnover by rewarding top performers. Rewards are one of
the keys to avoiding turnover, especially if they are immediate, appropriate,
and personal. A Harvard University study concluded that organizations can
avoid the disruption caused by employee turnover by avoiding hiring
mistakes and selecting and retaining top performers.

One of the keys to avoiding turnover is to make rewards count. Rewards are
to be immediate, appropriate, and personal. Organizations may want to
evaluate whether getting a bonus at the end of the year is more or less
rewarding than getting smaller, more frequent payouts. Additionally, a
personal note may mean more than a generic company award. Employees
should be asked for input on their most desirable form of recognition. Use
what employees say when it comes time to reward for performance (St.
Amour, 2000).
Designing a Rewards and and Recognition Solution

In designing a rewards and recognition program, the following guidelines

should be considered.
Rewards should be visible to all members of the organization.
Rewards should be based on well-defined, credible standards that have been
developed using observable achievements.
Rewards should have meaning and value for the recipient.
Rewards can be based on an event (achieving a designated goal) or based on
a time frame (performing well over a specific time period).
Rewards that are spontaneous (sometimes called on-the-spot awards) are
also highly motivating and should also use a set criteria and standard to
maintain credibility and meaning.
Rewards should be achievable and not out of reach by employees.

Nonmonetary rewards, if used, should be valued by the individual. For

example, an avid camper might be given a 10-day pass to a campsite, or, if
an individual enjoys physical activity, that employee might be given a spa
membership. The nonmonetary rewards are best received when they are
thoughtfully prepared and of highest quality. Professionalism in presenting
the reward is also interpreted as worthwhile recognition.

Rewards should be appropriate to the level of accomplishment received. A

cash award of $50 would be inappropriate for someone who just
recommended a process that saved the organization a million dollars.
Determining the amount of money given is a delicate matter of organizational
debate in which organizational history, financial parameters, and desired
results are all factors. Recognition for a job well done can be just as valued
and appreciated as monetary awards.

Formal recognition program can be used with success. First Data Resources,
a data processing services company that employees more than 6,000
individuals in Omaha, Nebraska, uses a formal recognition program (Adams,
Mahaffey, and Rick, 2002). Rewards are given on a monthly, quarterly, and
yearly basis, and range from Nebraska football tickets, gift certificates, pens,
plaques, mugs, and other items. One of the most popular awards at First Data
is called the "Fat Cat Award" that consists of: $500 gift check

Professional portrait of the employee

Appreciation letter from the CEO and senior management
E-mails, phone calls, and notes from peers
In addition to nonmonetary rewards, employees can be rewarded using
money in numerous ways. Cash is a welcome motivator and reward for
improving performance, whether at formal meetings or on the spot. Variable
bonuses linked to performance are another popular reward strategy. Profit
sharing and pay-for-skilis are monetary bonus plans that both motivate
individuals and improve goal achievement. Small acts of recognition are
valuable for employee daily Retention. Sometimes a personal note may mean
more than a generic company award. In one survey, employees cited the
following as meaningful rewards (Moss, 2000):
Employee of the month awards Years of service awards
Bonus pay (above and beyond overtime) for weekend work
Invitations for technicians to technical shows and other industry events
Meaningful and Retentional Rewards

What gives meaning to rewards and recognition? What makes them

effective? First, rewards and recognition should be based on a clear set of
standards, with performance verifiable or observable. The standards for the
reward should also be achievable. If the reward is based on an unachievable
result, such as a production goal that is beyond employees' power, then
those employees will not be motivated. Meaningful rewards and recognition
that are achievable have the greatest impact.

Case Studies

Employee Retention Best Practices in Keeping and Motivating Employees

By LisBeth Claus

Ask any CEO of an organization, “What keeps you awake at night?” and you
will get a response that relates to people management issues. a main
concern for any organization (whether small or large; private, public or
nonprofit) is its capacity to attract, engage,
and retain the right people. The problem of retention is compounded by the
predicted talent shortage resulting from the upcoming retirement of the baby
boomers, the scarcity of talent with relevant work skills for today’s jobs, the
changing values about work and the high cost of turnover. Research and
human resource practices provide us with a number of recommendations to
increase employee retention.

How Auditing Company X Works with Retaining Valuable Employees :

Swedish Case study
University essay from Högskolan i Jönköping/IHH, EMM (Entrepreneurskap,
Marknadsföring, Management)
Author: Josip Bogic; Elina Armanto; Maja Cassel; [2008]
Abstract: Today, neither employees nor employers seem to take for granted
that a person will stay with the same firm until retirement. Yet, keeping
employees for longer periods is an imp-ortant challenge for firms. One
industry where retention is interesting is the auditing industry in Sweden, this
because certain requirements are needed to become an auditor. Firstly, the
employee needs to have a Swedish university degree, including specific
courses within au-diting/accounting. Furthermore, the person needs practical
experience for a specific period of time. Due to these statements the
challenge of retaining and motivating valuable em-ployees is crucial for the
auditing firms, which is why we have chosen to do a case study at Auditing
Company X to see how they work with employee retention. We have
compared the findings to our chosen theory, which consist of four categories:
the hiring process, in-ternal labor market and career, motivation and
performance, and finally culture and leader-ship. These four categories are
initially based on Leigh Branham?s book: ?Keeping the people who keep you
in business: 24 ways to hang on to your most valuable talent? (Bran-ham,
2001).In our conducted case study, at Auditing Company X, we have been
able to conclude that the firm’s retention practices are to a great extend in
line with the theoretical framework. There are some areas that need further
attention from the company, such as an individua-lized reward system and
communication between managers and employees. Even though there are
some parts to work on the most important aspects of retention, such as
having a holistic and long-term orientation, Auditing Company X seems to
have incorporated this into their practices successfully.
Retention: An explanatory study of Swedish employees in the financial sector
regarding leadership style, remuneration and elements towards job
satisfaction
University essay from Växjö universitet/Ekonomihögskolan
Author: Sanna Paulsson; Linda Lindgren; [2008]
Abstract: Introduction: Companies today are forced to function in a world full
of change and complexity, and it is more important than ever to have the
right employees in order to survive the surrounding competition. It is a fact
that a too high turnover rate affects companies in a negative way and
retention strategies should therefore be high on the agenda. When looking at
this problem area we found that there may be actions and tools that
companies could use to come to terms with this problem. Research told us
that leadership, remuneration and elements like participation, feedback,
autonomy, fairness, responsibility, development and work-atmosphere is
important for job satisfaction and retention. Object: The main objective is to
increase the understanding regarding employee’s retention in relation to
leadership style, remuneration and elements such as participation, feedback,
autonomy, fairness, responsibility, development and work-atmosphere in the
Swedish financial
Sector. Method: We wanted to investigate how employee of the Swedish
financial sector prefers to be retained, and how they consider and react to
the chosen areas. The survey has a quantitative approach with a web based
questionnaire and includes 129 respondents from banks, insurance and
finance companies. The theoretical framework includes leadership and
leadership style, financial as well as non-financial remuneration and research
done in later years regarding participation, feedback, autonomy, fairness,
responsibility, development and work-atmosphere connected to retention.
Conclusion: The result shows that regarding leadership the respondents
prefer leadership based on relations were they feel appreciation. Both
appreciations from the closest manager as well as the company management
influences employee job satisfaction in a positive way. More money was the
most common reason for wanting to change jobs, and when asking how the
remuneration system should be designed, base pay with additional bonus
and benefits were preferred. But also non financial factors such as
participation, feedback, autonomy, fairness, responsibility, development and
work-atmosphere must be taken in consideration to satisfy since they seem
to increase employees? Willingness to stay in the company.
What leaders can do to keep their key employees - Retention Management
University essay from Göteborgs universitet/Företagsekonomiska
institutionen
Author: Lisa Hedberg; Maria Helnius; [2007-09-03T08:22:31Z]
Abstract: Background: retention management is a highly topical subject and
an important dilemma many organizations might face in the future, if not
facing it already. We believe that the leader plays a key role in employee
retention and retention management. The concept of retention management
can both have a narrow, and a broader significance. Both parts of its
significance are generally included in this thesis. The background of the
thesis present a few articles that discuss issues that makes it important for
the organization, and the leaders, to work hard with retention management.
The research is based on the leaders in the Finnish case company Tradeka.
Following key questions are intended to be answered: What are the
consequences between leaders actions and employees retention? Which is
the leader’s role when it comes to retaining employees? Purpose statement:
The purpose of the thesis is to investigate and analyze how company leaders
today can retain their key employees. How can the provision of key human
resources develop a long-term relationship that makes top employees stay in
the company? The study aims to establish the procedure leaders apply to
retain employees. The purpose is to compare the qualitative study, made at
the case company, with findings from the thesis theoretical framework.
Research method: The study is a qualitative, as well as a theoretical study
where empirical findings and theories has been compared. The intention of
investigating and using the Finnish company Tradeka Limited as a case
company, is to make the information from the theories more valid, and also
the interest in how retention management works in practice. Eleven
qualitative interviews were conducted at Tradeka?s financial department,
both with supervisors and employees