JANKIDEVI BAJAJ INSTITUTE OF MANAGEMENT

STUDIES
S.N.D.T WOMENS UNIVERSITY, MUMBAI

A RESEARCH STUDY
ON
EMPLOYEE ENGAGEMENT & RETENTION LEVEL

SUBMITTED BYMANALI AGRAWAL (02)

In the partial fulfillment of award of
Master of Personnel Management & Industrial Relations
(MPMIR)
2007-2009
UNDER THE GUIDANCE OF
1

SELECTION OF STUDY AREA AND SAMPLE SIZE

40 samples of employees and 9 samples of HR managers were collected from 10
companiesnamely:
1. EDS, Bangalore
2. Infosys, Bangalore
3. TCS, Mumbai
4. Delloite, Mumbai
5. Eureka Forbes, Mumbai
6. IDBI, Mumbai
7. CSC, Indore
8 . H S B C G l o b a l Tec h n o l o g i e s , P u n e
9. Amdocs, Pune
10. Impetus, Indore
11.Blue Sky, Mumbai
12. Sahara, Mumbai8

These companies were chosen as subject of study.

SIGNIFICANCE OF THE STUDY

People often lie in exit interviews about why they are leaving. Managers should, of
course,know in advance who is leaving and why. A comprehensive list like this is of
little valueunless used as a guide to gather information as to how to engage the
employees so that toretain the talents in the organization.
LIMITATIONS OF THE STUDY
Age Limitation- I had access to the young employees thats why the study is mainly
on theyoungsters.Family issues- The reason being I did not want to go into personal
details and stick only to job and organisational related issues.
CHAPTER-II
INTRODUCTION
S u c c e s s t o d a y r e q u i r e s a g o o d b i t m o r e t h a n g o o d a t t e n d a n c e . Yet , m u l t i p l e
s t u d i e s i n different countries and across industries show that employees who are passionate
about their j o b s a n d t h e o r g a n i z a t i o n s i n w h i c h t h e y w o r k a r e i n t h e
m i n o r i t y. S o m e o f t h e S u r v e y conducted by few organization revealed that
approximately 19% of the employees are highly engaged The Corporate Executive Board,
looking at levels of engagement across 50,000employees around the world, placed
only 11 percent in what they dubbed true believer category.1 Towers Perrins recent
Talent Report is slightly more optimistic, finding just
17 p e r c e n t o f t h e 3 5 , 0 0 0 e m p l o y e e s s u r v e y e d t o b e h i g h l y e n g a g e d .
4 0 t o 7 0 p e r c e n t o f emplo yees can be classified as neutral, middle of
t h e r o a d , o r a g n o s t i c . Wor s e y e t , a n alarming 10 to 20 percent of employees are
actively disengagedjust putting in their timeor, worse yet, undermining or
badmouthing their organizations and bosses. The economic impact of low engagement
can be staggering.The global survey shows that 34 per cent of the employees in India are fully
engaged and 13 per cent disengaged. As many as 29 per cent are almost engaged.What makes
these numbers especially discouraging is that, supposedly, we have evolvedfrom the
dark ages of personnel management. On one hand, for the past two decades
wehave been trying to realize the benefits of empowerment, teamwork, recognition,
peopledevelopment, performance management, and new leadership styles. Evidently, there is a
bigd i f f e r e n c e b e t w e e n p u t t i n g i n p l a c e i n i t i a t i v e s t h a t h a v e t h e o v e r a l l g o a
l o f i n c r e a s i n g employee engagement and truly seeing the payoffs. And, on the other hand,
one might easilyattribute low engagement to persistent downsizing, which leads to an erosion of
loyalty andcommitment.

2.1 Definition of Employee Engagement

Employee engagement can be defined as an employee putting forth extra discretionary effort,as
well as the likelihood of the employee being loyal and remaining with the
organizationover the long haul. Research shows that engaged employees: perform
better, put in extraefforts to help get the job done, show a strong level of commitment to the
organization,
anda r e m o r e m o t i v a t e d a n d o p t i m i s t i c a b o u t t h e i r w o r k g o a l s . E m p l
oyers with engagedemployees tend to experience low employee tur
n o v e r a n d m o r e i m p r e s s i v e b u s i n e s s outcomes.Employee engagement is more
than just the current HR 'buzzword'; it is
essential
. In order for organizations to meet and surpass organizational objectives, employees must be
engaged.Research has proven that wholly engaged employees exhibit,

Higher self-motivation.

Confidence to express new ideas.

Higher productivity.

Higher levels of customer approval and service quality.

Reliability.

Organizational loyalty; less employee turnover.

Lower absenteeism.
Need of Employee Engagement
The general principles of employee engagement have been around for decades.
During the past five years, though, there has been a surge in the popularity of employee
engagement.There are four primary drivers.1.
People have become the primary source of competitive advantage.
The BrookingsInstitute (2003) examined the primary source of market value in
todays organizations andhow it has changed over time. In 1982, 62 percent of an
organizations market value camefrom tangible assets and 38 percent from intangible assets.
Tangible assets include things likemachinery, products, facilities, etc. Intangible assets, on the
other hand, include factors suchas brand, intellectual property, and, most important, the quality of
the workforce. By 2002, 20years later, the source of value had almost totally flipped. Almost 80

percent of market valuetoday comes from the intangible with a scant 20 percent coming from
tangible assets. As weall have heard before, products can easily be copied, a technological edge
can prove fleeting,and more facilities can be built, but the quality of an organizations
talent, its passion andcommitment, is nearly impossible to replicate. Engagement is the fuel
that drives the value of intangible assets..
Retention and the war for talent.
The landmark 1998 McKinsey study,
The War for Talent,
was among the first to talk about the potential for workforce shortages due to
theaging population. The studys authors called upon organizations to take more seriously
their efforts to attract and retain talent, to assure that they would be able to survive
and thrive inthe future. In the late 1990s and early 2000s, the slump in the global
economy quickly took the spotlight off of the anticipated talent shortage. And some predict
that a portion of todaysaging workers will delay their retirements out of necessity,
attenuating the expected talentshortage. Since 2003 the picture is once again changing,
albeit not as quickly as expected. For e x a m p l e , t h e S o c i e t y f o r H u m a n R e s o u r c e s
M a n a g e m e n t r e p o r t e d t h a t 4 8 p e r c e n t o f t h e employees it polled are actively
seeking new jobs. Additionally, the workforce is getting older, with many of the baby
boomers hitting 60 in 2006 and ready to retire. Over and abovethe workforce cost of
increased retirements, companies are beginning to take heed of the enormous financial
costs of turnover and increasingly viewing employee engagement as animperative for keeping
their key employees and attracting new onesas the war for talentheats up once again.3.
Popular appeal.
Remember the reengineering wave? Even those who used it as more than just a guise for massive
layoffs found it painful. Six Sigma implementations are invaluable to business performance, but
most companies are finding them too complex to implement
well.E n g a g e m e n t i s a d i f f e r e n t m a t t e r a l t o g e t h e r. W h i l e i t s t i l l t a k e s p a t i e n
c e t o i m p l e m e n t , engagement gets to the hard stuff by focusing on the softer
stuff. As one manager said:Its about appealing to the head and the heart.
Engagement is about creating passion, itsabout focusing on what people do well,
and its about development and recognition. Some have called employee engagement a
form of positive psychology which, on the whole, is aneasy pill for organizations and their
employees to swallow.4.
Overwhelming impact.
T h e h u m a n r e s o u r c e s f u n c t i o n h a s b e e n u n d e r p r e s s u r e f o r decades to prove
that it makes a difference. While CEOs may espouse the importance of their workforces in
their annual reports, when times get tough, HR is among the first to get
the b u d g e t a x e . W h y ? A l a c k o f c o n v i n c i n g e v i d e n c e o n t h e v a l u e o
f H R i n i t i a t i v e s . H R professionals are scrambling, according to a recent
Conference Board report, to prove
thatt h e i r a c t i v i t i e s a n d i n v e s t m e n t s a r e b o t h e f f i c i e n t a n d p o s i t i v e l y i n f l u e
n t i a l t o b u s i n e s s strategy.The positive relationship
between engagement and performance (documented inhundreds of studies, with the
evidence mounting every day) provides a way for HR to prove

its contribution. Its a fact: The higher the level of engagement, the higher the performance of the
business. The research is not inconclusive, not limited to one country or industry, and
notcontained to a few hundred peopleits overwhelming.

How to Make Employees Engage

Growth and development

- An exciting position, with plenty of opportunity
for g r o w t h , l e a r n i n g , a n d a d v a n c e m e n t f o r e m p l o y e e s i s a l w a y s h e l p f u l i n r
e t a i n i n g employees.

Support and recognition

- Giving those rewards and recognition.

In many instances, employeeretentionstarts just as soon as an employee is hired. If acompany

sees an unusual amount of potential in a new hire, management could makethem feel
appreciated right off the bat. In a way, this practice can be considered a combination
of recruitment and retention tools.

Employee Participation in decision making is also a ver y effective engage

m e n t activity in the organization.

Aligning effort with strategy

E n g a g e m e n t b e g i n s w i t h e m p l o y e e s c l e a r understanding of what they
should be doing on the job. Each employee needs a solid job description and a clear set of
performance expectations.

Empowerment
E m p o w e r m e n t i s a f e e l i n g o f j o b o w n e r s h i p a n d c o m m i t m e n t brought about
through the ability to make decisions, be responsible, be measured byresults, and be recognized
as a thoughtful, contributing human being rather than a pair of hands doing what others say.

Teamwork and Collaboration I n t h e c o n t e x t o f e n g a g e m e n t , t e a m w o r k a n d collaboration require good

relationships both within the work group and across work groups. Many organizations have
strong teams with members who work well with each other.
The Benefits of Employee Engagement
The power of employee engagement is that it is closely connected to business results.
Whenemployees work in an environment in which they can focus their attention on their work
andh a v e a d r i v e t o d o t h e i r b e s t , o r g a n i z a t i o n s e x p e r i e n c e h i g h e r l e v e l s o f
productivity and
13

profitability.
Engaged employees look for better ways to do their work, spend less time onwasted
activities, and make effective use of resources. In the end, companies deliver
better p r o d u c t s o r s e r v i c e s a n d h a v e m o r e r e s o u r c e s l e f t t o i n v e s t i n f u r t h e
r i m p r o v e m e n t s . Although it is an important consideration, high financial compensation is
not the only driver of increased employee
retention.
As addressed previously, employees decide to stay
witho r g a n i z a t i o n s f o r o t h e r r e a s o n s , s u c h a s g r o w t h a n d d e v e l o p m e n t o p p o
r t u n i t i e s , s t r o n g leadership, and meaningful work. Turnover costs organizations millions of
dollars each year,and engagement has a proven relationship to employee retention. No
one likes going into as t o r e w h e r e t h e s a l e s c l e r k s
a r e s u l l e n , a b s e n t , o r u n c o o p e r a t i v e . I t s e a s y t o s e e w h y customers notice
engaged employees and are more satisfied and willing to purchase again. For
example,Tom Labadie, director of training and development at CompUSA
states,Wheny o u w a l k i n t o a s t o r e w i t h h i g h e n g a g e m e n t s c o r e s , y o u c
a n s e n s e t h e p o s i t i v e t o n e . Employees whistle and smile, they approach
customers, and the store gives off that elusive approachable feeling that customers
appreciate. Organizations with engaged employees havemore
satisfied customers,
but its not just because employees have better interactions withcustomers. Engaged
employees are more likely to improve other critical factors
affectingc u s t o m e r s a t i s f a c t i o n , s u c h a s r e s p o n s i v e n e s s , p r o d u c t q u a l
i t y , t h o u g h t l e a d e r s h i p , innovation, etc. Finally, higher engagement translates into
higher and
faster revenue growth.
Engaged employees are more innovative and place more emphasis on meeting
customer needs. The what can I do better or differently attitude of engaged
employees versus theits not in my job description attitude of the unengaged
simply leads to better financial performance.
ASSESSING ENGAGEMENT
Over the past eight years, The Gallup Organisation has been conducting exhaustive studies
of employee engagement to try and answer these fundamental questions. One of a
handful of engagement evangelists, Gallup has promoted the value of measuring employee
engagementthrough a series of books, seminars and programmes; it has also taken the lead in
identifyingand managing the factors that impact engagement levels.14

In order to rate the engagement of a workforce, first Gallup assesses employees to

determinewhether they are engaged, not engaged or actively disengaged.Engaged employees
are the stars in a company. Passionate about what they do, they feel astrong

connection to their company and perform at high levels every day while looking
for ways to improve themselves and the company as a whole. Not engaged employees,
according to Gallup, are the company zombies who show up everyd a y a n d p u t i n j u s t
e n o u g h e f f o r t t o m e e t t h e b a s i c r e q u i r e m e n t s o f t h e i r j o b s . Wi t h o u t passion
or innovation, these employees neither commit to the companys direction, nor
dothey work against it.Actively disengaged employees are those who present a big problem for
businesses.
Negative b y n a t u r e , t h e s e p e o p l e a r e u n h a p p y i n t h e i r w o r k a n d t h e y
c o m p o u n d t h e i r l a c k o f productivity by sharing this unhappiness with those around
them. They are the proverbial badapples who revel in their discontent while undermining
the accomplishments of others; as ar e s u l t , n o t
only do they achieve little themselves, they also prevent others from bein
g productive too.
2.2 HISTORICAL BACKGROUND OF EMPLOYEE ENGAGEMENT
Over the past decade, the way in which people are managed and developed at work has cometo
be recognized as one of the primary factors in achieving improvement in
organizational performance. This is reflected by popular idioms such as people are
our most importantassets.Back in the good old days of corporate world, things were
pretty simple. Companies put people on career tracks straight out of college; they gave
employees a job for life and waved
Engagement is all about creating a culture where people do not feel misused,
overused,underused or abused.A t a v e r y b a s i c l e v e l , e m p l o y e e e n g a g e m e n t
d r a w s f r o m t h e t e n e t s o f t h e H i e r a r c h y o f Needs as conceptualized by
Maslow, the highest stage of which is self-actualization; the pinnacle of an
individuals fulfillment of talent and potential. This theory of higher order needs
was largely overlooked in the heydays of scientific assembly line manufacturing.
2.3 EMPLOYEE ENGAGEMENT IN INDIA
The recent WorkAsia research study by Watson Wyatt Worldwide indicates that India has
thehighest percentage of highly engaged workers at 78% in Asia as compared to
Japan, whichhas the lowest employee engagement level at 39%.Head to head with China,
the engagement level of the Indian worker is 20% more than
hisC h i n e s e c o u n t e r p a r t . T h e s e a r e a l l e n c o u r a g i n g s i g n s - b u t t h e c
h a l l e n g e s a n d t h e opportunities ahead are manifold. The imminent US
slowdown, shrinking of talent
pools l o w d o w n i n h i r i n g , l a r g e r e m p l o y e e e x p e c t a t i o n s a r e a l l
c h a l l e n g e s f o r i n t e r n a l communicators to cope with. The Gallup Organization
describes employee engagement as the"the involvement with and enthusiasm for work".The
challenges faced by organizations in India are around attrition, communication,
career d e v e l o p m e n t a n d e n g a g e m e n t w h i l e t r y i n g t o k e e p p a c e w i t h t
h e e x p l o s i v e g r o w t h . Outsourcing outfits have the highest attrition rates losing staff at a
rate of between 100% and2 0 0 % a y e a r. I t i s w i d e l y b e l i e v e d t h a t o r g a n i z a t i o n s
s p e n d a n a v e r a g e o f 3 6 % o f t h e i r revenues on their employees but do not have a
tangible way to measure its impact.A M e r c e r s t u d y W h a t s Wor k i n g a s e r i e s
of national research on worker

insights,highlights factors that make a difference to employee engagement

. T h e s u r v e y s 1 2 5 questions elicit views in the areas defined by Mercers Human
Capital Strategy Model andcover training and development, work environment,
leadership, performance management, work/life balance, communication, compensation,
benefits, and engagement.The India study throws up some fascinating directions for HR
and internal communication professionals. Employee engagement is no more just
about the employees intent to
leave.T h e e m p l o y e e s c o m m i t m e n t t o t h e o r g a n i z a t i o n a n d m o t i v a t i o
n t o c o n t r i b u t e t o t h e organizations success plays a significant role. The top
three drivers in India are trust insenior management, how the organization is
perceived for customer service and fair pay.Surprisingly, from an Indian context, the least
valued factors in the continuum were benefits,compensation and performance management.In
India, having a long-term career is considered positive and stable. Frequent job
changesare viewed negatively and therefore the high scores around the commitment count are
in linewith the mindset.Internal communication and HR professionals need to take
note of the employees need for giving feedback and to observe action taken from
this. Employees seem to be getting verylittle information on the organizations
vision and future plans, a cause of concern. Other a r e a s f o r a c t i o n i n c l u d e t h e
o r g a n i z a t i o n s r e p u t a t i o n i n t h e m a r k e t c o n g r u e n t t o o t h e r research in this
space which believes that organizations which are socially responsible are considered
better places to work. In the talent management bracket, managers fare poorly for their
involvement, understanding and support as well as for merit based appraisals.18

In India, with a large number of global players entering the market, the talent pool has now
a plethora of choices and even these multinationals are finding it tough to retain
staff. TheCanadian HR Reporter writes that employees want to know where their
careers are headingand that is a critical component of the talent retention strategy
organizations need to focus on.Softer styles of leadership have a better impact in India
and China leaving organizations to develop or seek leaders who can fill this need.
Chapter-III3.1 THE LITERATURE REVIEW
Employee retention continues to remain a top priority at many organizations and
one thatcompanies increasingly view as a driver of business strategy. Business-critical
knowledge canwalk out the door when an employee leaves the company. While employee
retention figuresh a v e l o n g b e e n u s e d b y c o m p a n i e s a s a m e a s u r e o f t h e i r
p e r f o r m a n c e i n d e v e l o p i n g a n effective organization, this view of employee retention is
not only outdated, but these
figuresm a y n o t b e c o m p r e h e n s i v e e n o u g h t o t r u l y d e t e r m i n e t h e o r g a n i z a t i o
n's effectiveness.The concept of employee retention is more complex than
simply evaluating emplo yee
THANK YOU
QUESTIONNAIRE FOR HR MANAGERS
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1.Does your company have a clearly stated and published employment policy?
a ) Y e s b ) N o 2. Does your company communicate its corporate goals
to all employees?a ) Y e s b ) N o 71

3.Do you communicate what is expected out of the employee?

a)Yes b ) N o 4 . W h a t a r e t h e e n g a g e m e n t t o o l s w h i c h h a v e g a i n e d
p o p u l a r i t y a m o n g s t t h e e m p l o y e e s ? Please rate the options on a scale of 1 to 8, 1 being
the lowest.a ) S t r e s s M a n a g e m e n t b ) W o r k l i f e b a l a n c e c ) C a r e e r
d e v e l o p m e n t d)Employees Participation
in decision makinge ) C o u n s e l l i n g / F e e d b a c k f ) R e w a r d s a n d R e c o g n i t i o n
S c h e m e s g ) E m p l o y e e R e f e r r a l S c h e m e h ) R e t i r e m e n t P l a n s 5.Are
incentives linked to achievement of individual goals?
a ) Y e s b ) N o 6.What factors of the rewards scheme contribute
t h e m o s t i n e n g a g i n g t h e e m p l o y e e s ? Please rate the options on a scale of 1 to 7, 1
being the lowest.a ) C o m p e n s a t i o n a n d b e n e f i t p r o g r a m m e s b ) S t o c k o w n e r s h i p
a n d p r o f i t s h a r i n g c ) R e c o g n i t i o n p r o g r a m m e s d)Idea collection schemes
linked to rewards for idea generation e ) L o n g s e r v i c e a n d g o o d p e r f o r m a n c e
a w a r d s f ) C o m p e t i t i v e c o m p e n s a t i o n p a c k a g e s g)Material benefits like trips,
food and discount coupons, etc.72
7.What are the activities you conduct to build the team-spirit in the organisation?
a)Small team recreational activities, such as cricket, trips to the
cinema b)Social activities, such as family gatheringsc)Community outreach
activities such as volunteering and fund-raising d ) A n y o t h e r , p l e a s e
s p e c i f y 8.How often do you conduct training programs? 9.At what level of hierarchy
in the organization do you conduct these training programmes?a ) H i g h e r
l e v e l b ) M i d d l e l e v e l c ) L o w e r l e v e l 10.What is the objective of
training the employees?a)To enhance their current set of skills as per the organizations
requirement b ) To u n l e a s h t h e h i d d e n s k i l l s / t a l e n t c)To update them on the
technological advancementsd)To fill the gap of expected-actual performancee ) A l l

o f t h e a b o v e f ) A n y o t h e r , p l e a s e s p e c i f y 11.Is there a provision of

flexibility in terms of working hours? Please tick the appropriateoption.a ) F l e x t i m e b ) T e l e c o m m u t i n g 73
) J o b S h a r i n g d ) A n y o t h e r 12.Do you think the current retention strategies
are effective in reducing attrition rate?
a ) Y e s
b ) N o 13.What percent-decrease range have
y o u o b s e r v e d d u e t o t h e e f f o r t s i n r e t a i n i n g employees?a ) 1

5
%
b ) 5 1 0 % c ) 1 0 & a b o v e 14. In general, how do the
employees respond to such engagement policies?
a ) P o s i t i v e l y b ) N e g a t i v e l y c ) I n d i f f e r e n t 15. Have you come
up with any innovative idea for engaging & retaining employees?
Pleasemention. ___________________________________________________________ THANK
YOU7