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How To Reduce Attrition Without Increasing The Cost Management Essay

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by Improving Emotional Intelligence of People. Employee attrition is a high cost factor
in most industries. Studies show that most important reason for attrition is immediate
manager's behaviour and action which makes the employee stay or quit. Attrition can be
reduced by increasing the EI of the managers. EI consist of Personal and Social
Competences. By EI training, organizations can create a great work environment to
reduce attrition. EI training is implemented by Analysis, Pattern Identification,
Comparison, EI Study and Audit. This study contributes to providing an insight to ways
of reducing cost of attrition using soft skills with an emphasis on EI
Key words: Emotional Intelligence, Attrition, cost factor, EI training

Introduction
Researchers of 21st century from the fields of psychology, education and business are
converging on the concept of Emotional Intelligence , which is deemed as a sure
pathway for success in personal and organisational life. "IQ gets you hired, but EQ gets
you promoted" was the slogan mentioned in TIME magazine cover story on The EQ
factor.(TIME,1995).Emotionally intelligent people can perceive, understand and
regulate the emotions of others, thus making Emotional intelligence a significant factor
in the success of inter personal interaction in work context. Increasingly we will see
employers actively seeking people with high emotional intelligence

Emotional Intelligence
Emotional Intelligence or EI is "a form of social intelligence that involves the ability to
monitor ones own and others feelings and emotions, to discriminate among them, and
to use this information to guide one's thinking and action. (Salovey & Mayer, 1990)."

Emotional Intelligence is not being soft- It means being intelligent about emotions.
Daniel Golemen shares his insight on the power of emotional intelligence in his article
in HBR " EI is twice as important as technical skills an IQ." Developing &
using EI skills offers a set of core abilities that impact many business issues important to
individual & organizational success
In other words, how the immediate manager treats the people reporting to him/her,
how the manager takes the success and failures, how he motivates the team, leads the
team, etc form part of the Emotional Intelligence. A manger who has very high
emotional intelligence will be able to perceive himself well in the organization and lead
his team with a sense of purpose and direction.
EI consist of two major competence areas - Personal and Social Competences. The
following grid will help the understand the EI framework better.

EI Framework
Personal Competence
Social Competence
SELF - AWARENESS
Emotional awareness
Accurate self-assessment
Self-confidence

SOCIAL AWARENESS
Empathy
Service orientation
Developing others
Leveraging diversity

Political awareness

SELF - REGULATION
Self-control
Trustworthiness
Conscientiousness
Adaptability
Innovativeness

SOCIAL SKILLS
Influence
Communication
Leadership
Change catalyst
Conflict management
Building bonds
Collaboration and cooperation
Team capabilities

SELF - MOTIVATION
Achievement drive
Commitment
Initiative

Optimism

1.2 Significance of Emotional intelligence at work


place
Advanced emotional intelligence can be beneficial in many areas of life. However, the
application of its usefulness has been most frequently documented in the professional
workplace. Cherniss (2000) outlines four main reasons why the workplace would be a
logical setting for evaluating and improving emotional intelligence competencies:
1. Emotional intelligence competencies are critical for success in most jobs.
2. Many adults enter the workforce without the competencies necessary to succeed or
excel at their job.
3. Employers already have the established means and motivation for providing
emotional intelligence training.
4. Most adults spend the majority of their waking hours at work.
The cost-effectiveness of emotional intelligence in the workplace has been an area of
interest. Several studies have reported the economic value of hiring staff ,based on
emotional intelligence. Some of the research findings pertaining to this topic are
discussed in this article
Cherniss and Goleman (1998) estimated that by not following training guidelines
established to increase emotional intelligence in the workplace, industry in the United
States is losing between $5.6 and $16.8 billion a year. They found that the impact of
training employees in emotional and social competencies with programs which followed
their guidelines was higher than for other programs, and by not implementing these
programs companies were receiving less of an impact and consequently losing money.
The foremost contributor to the area of emotional intelligence and leadership is Daniel
Goleman, who has written several books on implementing emotional intelligence in an
organization, including Working with Emotional Intelligence (1998) and The
Emotionally Intelligence Workplace (2001). Goleman posits that leaders high in
emotional intelligence are key to organizational success; leaders must have the capacity

to sense employees' feelings about their work environments, to intervene when


problems arise, to manage their own emotions in order to gain the trust of the
employees, and to understand the political and social conventions within an
organization (Goleman, 2001). In addition, a leader has the capacity to impact
organizational performance by setting a particular work climate. Goleman outlines six
distinct leadership styles and how they affect the climate of the organization

Leadership Style and Impact on Organizational


Climate (Goleman, 2001)
LEADERSHIP STYLE
Coercive
Authoritative
Affiliative
Democratic
Pacesetting
Coach
When Appropriate
In a crisis, to kick-start turnaround, or with problem employees
When change requires a new vision, when clear direction needed
To heal rifts in a team or to motivate during stressful times
To build consensus or to get valuable input from employees
To get quick results from a highly motivated and competent team
To help an employee improve performance or develop long-term strengths
Objective

Immediate compliance
Mobilize others to follow a vision
Create harmony
Build commitment through participation
Perform tasks to a high standard
Build strengths for the future
Impact on Climate
Strongly negative
Most strongly positive
Highly positive
Highly positive
Highly negative
Highly positive
EI
Competencies
Drive to achieve; initiative; emotional self control
Self-confidence; empathy; change catalyst

Empathy; building bonds; conflict management


Collaboration; team leadership; communication

Conscientious-ness; drive to achieve; initiative


Developing others; empathy; emotional self-awareness
Now, from this table how the different components of EQ could be utilized for different
managerial style can be clearly seen. All the five leadership styles mentioned here are
suitable for different organisations , depending on the management philosophy and the
organisational climate. So by identifying the leadership style practiced in each firm,
along with enhancing the EI competency corresponding to that will help in a major way
to improve leadership skill and there by improved retention.

1.3 Teaching Emotional Intelligence:


Training programs aimed at improving emotional intelligence can occur in several
different areas of training and development within an organization, including
management training, communication and empathy training, conflict resolution and
stress management training, as well as self-management training and training provided
to unemployed workers (Cherniss, 2000). However, it is important to realize that
traditional training curriculum and delivery are not generally successful in developing
emotional intelligence competencies. Traditional programs generally adopt a "one size
fits all" approach that ignores individual complexities while focusing on cognitive
learning (Dearborn, 2002).
Organisations can assist employees in developing emotional competencies by providing
appropriate training. The Consortium for Research on Emotional Intelligence in
Organizations, which consists of researchers and practitioners from business schools,
the federal government, consulting firms and corporations, has developed guidelines for
best practices in teaching emotional intelligence competencies. Organisations can
definitely utilize these services and improve the emotional intelligence of employees and
there by retain the talents.
Some of the comprehensive strategies for retention include the following:
Hiring and screening employees based on EQ competencies
Build an emotionally skilled leadership by training.

Improve the organisational climate by fostering healthy interpersonal relationship


among employees
Encourage people to build a network of support .
Motivate the employees to take up EQ training by showing the pay off on the job
Competency models and succession plan based on EQ competencies
Create readiness for change.
Envision desired outcomes by bench marking
Continuously promote EQ environment

3.The study
The basic study involves facts drawn from secondary literature survey. Even before
research in the area of E.I. had begun, the Ohio State Leadership Studies reported that
leaders who were able to establish mutual trust, respect, and certain warmth and
rapport with members of their group were more effective (Fleishman and Harris, 1962)
Research work undertaken at national and international level are quoted here.Research
work published by Daniel J. Svyanket and M.Afzlur Rahim, University of Akron in The
international Journal of organisational analysis(2002, Vol -10 No 4 Pg 299-301 , shows
a clear indication of positive relationship between EQ and employees behaviour in the
organisation. It was found that team performance, cohesiveness, empathy etc are
positively correlated to EQ level of employees.
An article was presented by Ioannis Tsaousis, University of Aegena, Greece and Ioannis
Nikolaou, Athens university of Economics and business, Greece in " International
Journal of organisational Analysis, ",2002, Vol .10, No 4, Pg 327-342 , titled, "Emotional
intelligence at work place; Exploring its effect on occupational stress and organisational
commitment" , talks about the research conducted by them by administering EQ
questionnaire and an organisational stress screening tool. The results showed a positive
relation between EQ and organisational commitment

Studies conducted by Jigisha .B. Dholakia & Geethika Kaushal, TAA Communication
Area, IIM, Ahmedbad ( working paperno. 2001-05-01, Pg 2-15), titled" Emotional
Intelligence at work place. A priliminary study of male executives in private and public
sector organisation" reveals a relationship between EQ and work place situations.
During the recent studies conducted at L'Oreal , it was found that when the sales people
were selected on the basis of emotional competence, the turn over was reduced by a
drastic 63% !! Likewise, when Metlife selected sales people on the basis of optimism,
which is one of the emotional intelligence competencies, they out sold other Metlife
people by 37% and showed reduced attrition.
The link between EQ and leadership was clear from the study at PepsiCo. In a pilot
project, executives selected for EQ competencies outperformed their colleagues,
delivering 10% increase in productivity,87% decrease in executive turn over (!) and over
$ 3.75m added economic value. At one of the Motorola's manufacturing facility used
HeartMath's stress and EQ program and realized that 93% of employees showed
increase in productivity.

It is very interesting to note that unlike IQ, which is almost decided at birth, EQ can be
improved by training and nurturing. A study conducted at Case Western University, a
competency building program increased the Emotional Intelligence skills by 40 % to 75
% among the respondents, and that effect lasted at least through the 5- 7 years of the
study.
The US Air Force spends millions on recruitment every year , but their professional
recruiters were only picking up an average of one recruit per month. A $ 10,000
investment in EQ testing helped them to profile top performers and in one year , they
saved $2.7 million. Following this success, The General Accounting Office requested
that the Secretary of Defense order all branches of armed force to adopt this procedure
in recruitment and selection.
Gallup's land mark research of over two million working Americans on" employee
Engagement"( a sense of emotional connection to the organisation) it was identified that
teams with higher engagement showed 50% less turn over and 38% above average
productivity.

A recent meta analysis of 69 independent studies explored the predictive validity of


emotional intelligence with diverse job performance outcomes (Van Rooy &
Viswesvaran, 2004). Results suggested diverse measures of EI correlated .23 with job
performance (k=19, N=4158) and .22 with general mental ability. These correlations
suggest that EI can be considered a moderate predictor of job performance
and success which has a direct impact on retention. A recent study by Career
Systems International in 2005. They surveyed over 7,500 employees in diverse
industries about retention factors-things available in organizations that engendered
commitment and a willingness to stay.The top five retention factors included: 1)
Exciting Work/Challenge (48.4%); 2) Career growth/learning (42.6%); 3)
Relationships/working with great people (41.8%); 4) Fair pay (31.8%); and 5)
Supportive management/great boss (25.1%).
Another research conducted by John Humphreys, Bill Brunsen and Dale Davis, College
of Business, Eastern New Mexico University, Portales, New Mexico, making use of
Pearson product moment correlation, shows significant correlation between EQ and
organisational commitment(0.303)
A study of the relationship between emotional intelligence and performance in UK call
centres by Malcolm Higgs published in the" Journal of Managerial Psychology" June
2004 Volume: 19 Issue: 4 Page: 442 - 454 shows a strong correlation between
Emotional intelligence and Individual performance, which corresponds to reduced
attrition

4 .Results
These findings appear to add support to the growing body of literature indicating the
constructs of EI and organisational commitment having a great significance.
What is highlighted above appears to be an accurate description of what is happening in
general in most of the organisations across the world. One of the most important and
significant findings from this study is the positive correlation between Organization
commitment and higher emotional intelligence.

5.Conclusion
From the research studies discussed above , we can arrive at the conclusion that we can
definitely reduce the cost of attrition by improving the emotional intelligence of
employees. The primary reasons for an employee to leave the job are relationship based.
So one of the key retention factor is the quality of relationship between employee and
his supervisor. As leadership guru Richard Leider says" People do not Leave companiesThey leave Leaders!!!". When analytical brilliance is coupled with emotional
intelligence, breakthrough achievements can be gained. When many research studies
converge to similar conclusion, we don't need a Mc Kinsey to tell us that, we need to
have Emotionally Intelligent employees to have a stable organisation!!

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