Case Study

 ' A Case Study on ‘Attrition and Retention Strategies’ at KRDS Social and Mobile Marketing’

                                                             L.Kavitha and S.Princy, III BBA

Introduction

Attrition simply means “A reduction in the number of employees through retirement, resignation or death.”Attrition can be conceptualised in many forms; the two prominent forms of attrition for the constraints of this endeavour are attrition due to employees leaving and employee retiring from an organisation

Attrition has always been a sensitive issue with IT firms. Despite offering the highest salaries across all business segments, the industry has been plagued with attrition across the board, particularly in the past few years. This ever-growing wage inflation and attrition rates have put financial pressures on firms.

Hiring young IT majors from colleges are now also turning towards youth from the interior regions of the country to get more loyal employees coming from rural parts.

Review the Literature

Attrition Scenario in India

India’s $118 billion information technology industry may witness an increase in the pace of hiring, wages and even employee attrition this fiscal as firms grow faster, according to a report released by lobby group Nasscom. With improvement in the global economic environment and gradual rise in technology spending, the $118 billion Indian IT industry is expected to increase its net hiring by about 6% over last year, adding about 170,000-180,000 employees in 2014-15. Freshers still form the bulk of hiring at 70% while hiring experienced professionals comprise the remaining 30% but with an improvement in the start-up environment, hiring of experienced professionals is expected to see a 10% jump this year, said R. Chandrasekhar, president of Nasscom. He added that the bench strength, the number of freshers recruited by companies, but not allotted jobs, would fall by two percentage points from the current 20%. However, attrition too is likely to rise as demand improves—100 to 200 basis points (bps) over last year. One bps in one hundredth of a percentage point. Hence, firms feel the need to spend more to retain employees, and wages are expected to rise between 8% and 11% in fiscal 2015 compared with 6-10% last year. Attrition, on average had declined to 14% in fiscal 2012-13 from 19% in 2011-2012

Drivers of Attrition

It is not easy to find out, who contributes and who has the control on the attrition of employees. Various studies/survey conducted indicates that everyone is contributing to the prevailing attrition. Attrition does not happen for one or two reasons. The way the industry is projected and speed at which the companies are expanding has a major part in attrition. If you look within, the specific reasons for attrition are varied in nature and it is interesting to know why the people change jobs so quickly. Even today, the main reason for changing jobs is for higher salary and better benefits. But in call centers the reasons are many and it is also true that for odd reasons people change jobs. At the same time the attrition cannot be attributed to employees alone. Organisations must develop its own sensing device to know whether it is the internal or external factor that is causing the attrition.

Organizational matters:

The employees always assess the management values, work culture, work practices and credibility of the organization. The Indian companies do have difficulties in getting the businesses and retain it for a long time. There are always ups and downs in the business. When there is no focus and in the absence of business plans, non-availability of the campaigns makes people to quickly move out of the organization. Moving from one job to another for higher salary, better positions and better benefits are the most important driver for attrition. The salary offered from MNC companies & IT firms in Bangalore, Delhi, Pune and Mumbai have gone up very high and it is highly impossible for Indian companies to meet the expectation of the employees. The employees expect salary revision once in 4-6 months and if not, they move to other organizations. The employees move out if there are strained relations with the superiors or with the subordinates or any slightest discontent.

Other factors.

Working environment is the most important cause of attrition. Employees expect very professional approach and working environment of international standard. They expect very friendly and learning environment. Employees look for freedom, good treatment from the superiors, good encouragement, friendly approach from one and all, and motivation. If they won’t get such environment they will leave the job. Pouching the demand for trained and competent manpower is very high. Poaching has become very common. The big companies target employees of small companies. The employees with 4-6 months experience have very good confidence and dare to walk out and get a better job in a week's time. Most of the organizations have employee referral schemes and this makes people to spread message and refer the known candidates from the previous companies and earn too.

Cost of Attrition

Employee attrition is a costly dilemma for all organizations. In today's taxing business climate, managing company's competent and skilled human capital is vital for success. The extent of the impact of attrition on an organisation cannot be fully understood if there is no attempt to quantify the costs. The more complex approaches to costing turnover give a more accurate and higher estimate of the costs. When a competent employee is to be replaced an organization incurs a variety of costs including those related to recruiting, selection, training and suboptimal performance while learning the job. Companies usually turn to increasing the compensation for employees to retain them. This however is no longer helpful in solving the problem as the skilled work force has many opportunities which masses of them give predilection to. Employee attrition costs 12 to 18 months' salary for each leaving manager or professional.

According to the HR the major turnover costs are:

• Administration of the resignation (including exit interviews)

• Recruitment costs (including advertising)

• Selection costs

• Costs of cover (temporary employees or overtime) during the vacancy period• administration of recruitment and selection process

• Induction training for new employees.

Some Positive Aspects of Attrition

• If all employees stay in the same organization for a very long time, most of them will be at the top of their pay scale which will result in excessive manpower costs.

• When certain employees leave, whose continuation of service would have negatively impacted productivity and profitability of the company, the company is benefited.

• New employees bring new ideas, approaches, abilities & attitudes which can keep the organization from becoming stagnant.

• Desirable attrition also includes termination of employees with whom the organization does not want to continue a relationship. It benefits the organization in the following ways:

o   It removes bottleneck in the progress of the company

o   It creates space for the entry of new talents

o   It assists in evolving high performance terms

• Acquisition of new knowledge

• Reduced conflict situations from controversial employees who leave

Status of the topic

                  In this 21^st century, Attrition was the major problem faced by many sectors and it is becoming most common issue in day to day life activities of every concern. Because of this issue, IT companies were facing drastic changes in their working process. So considering all these problems, we have taken the presentation on Attrition.

Methodology

A Case study approach is used for the study the topic Attrition and Retention Strategy.

Sources for Data Collection:

·                     Primary data was collected is through Interview method. HR of KRDS company was interviewed to study how they handled attrition and applied retention strategy.

·                     Secondary data was collected from print books, journals, websites, e-journals and magazines.

Case Study of KRDS

Retaining best talent is always a challenge. Some turnover is expected, but when there is a high percentage of people in a key demographic leaving a company, you have to find the reason. Asking those who have left is an excellent resource to find the answer.

KRDS was losing 30% of its employees in last year. They turned to Human Resource department to find out the answer in order to reduce this high percentage. The result?  Now turnover is only 4%. How did they do it?

Company Profile

KRDS is a leading Social and Mobile Agency in Europe and Asia.

Founded in 2008 in Paris, KRDS became a member of Facebook’s Preferred Marketing Developer program (previously known as the Preferred Developer Consultant program) as soon as the PMD became available in Europe in early 2010. Since then KRDS has grown from 10 to 120 employees and has opened 7 new offices throughout Europe and Asia.

Since its creation, KRDS has registered a triple-digit annual growth and in 2011 AXA PE, the leading European private equity firm, took an equity stake in the company. 

Challenges:

• KRDS realized it was losing more than a third of its workers, a third of the national organization’s 120 -employee workforce.
• The job of Developers is demanding. Employees work in short duration to complete a project and it demands huge talent. Survey results validated that the company was not providing female workers with opportunities for advancement.
• Employees did not perceive the company had much interest in their well-being.

Solution:

·         By conducting exit interviews with former employees who had recently left the company and conducting employee satisfaction surveys, human resource department identify the root causes of the turnover and put the facts and data in front of the senior management team.

• Based on the survey results we created a diversity committee consisting of members of management as well as employees at all levels from different areas of the company.

·         Mediclaim for self and family (part of CTC) – All member of family who are depandant are covered in this mediclaim

·         Flexi timing – work hours are reduced and flexi timing was introduced

·         Employee Referral Scheme – Bonus of 10000 was given to employee referral and it decreased attrition

·         Wedding Gift - Rs.5000/-

·         Birth of Baby Gift - Rs.3000/-

·         Three Year Service Award - Rs.25000/-

·         Five Year Service Award - Trip to France

·         Leave were increased :Ten Declared Holidays per year,Twelve Privilege Leave per year , Twelve General Leave per year

·         Open House Meeting – meeting were arranged once in three month to get inputs of employees  regarding work culture etc

·         Official Outing once a year to promote team binding and build relationship between employees

·         Family day once a year was held to promote binding between employees and their families with the company

·         Tuition Reimbursement of 25000rs was given to promote their knowledge where they can pursue any course realted to their career

·         Late Stay Dinner Reimbursement

·         Over Night Stay – Conveyance reimbursement

·         Week End Lunch Reimbursement

·         Team Lunch

·         Personal Loans – case by case basis

·         Leave Encashment

·         Telephone Reimbursement - (Telephone Reimbursement - (for all employees)

·         Petrol Reimbursement -  (for Managers / Mid Managers)

·         Refreshments / Play Station

·         Well Planned Induction Program

·         Paternity (Adoption) Leave -  5 days

·         Christmas Period: Accept 60% of people on leave during that period.               

Results:

• Employee attrition rate dropped from more than 30 percent  to 5 percent.
• The company has increased the number of employees as, a result of its recruitment marketing, which now focuses on work/life balance and community involvement.

Findings

• Employee’s satisfaction is most important factor to avoid attrition.
• Every individual has to be recognonised individually for their hardwork.
• The capacities of the employees should be assessed through potential appraisal for performing new roles and responsibilities.

·         Opportunity and comprehensive framework should be provided for full expression of employees' talents and manifest potentialities.

·         Skills of the organizations should be developed internally and externally as well as horizontally and vertically.

Conclusion:

In the current scenario where every organisation wants to be at its competitive best, high attrition rate can really act as a threat to success. Attrition is a very serious challenge especially to rapidly growing organizations. Before it explodes, the organizations should seriously workout strategies to reduce the turnover so that the organizations should not suffer. Organisations planning for the future should be giving close attention to why attrition is occurring in the present. Attrition is not bad always if it happens in a controlled manner. Some attrition is always desirable and necessary for organizational growth and development. The only concern is how organizations differentiate “good attrition” from “bad attrition”.