L.Kavitha and Princy,III BBA
Chevalier T Thomas Elizabeth College for Women
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 on Wednesday. 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 21st
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 a 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
- Employees 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”.
