BENEFITS OF ATTRITION

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. The term healthy attrition or
good attrition signifies the importance of less productive employees voluntarily leaving the
organization. This means if the ones who have left fall in the category of low performers, the
attrition in considered being healthy.
Attrition rates are considered to be beneficial in some ways:
1. 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.
2. When certain employees leave, whose continuation of service would have negatively
impacted productivity and profitability of the company, the company is benefited.
3. New employees bring new ideas, approaches, abilities & attitudes which can keep the
organization from becoming stagnant.
4. There are also some people in the organization who have a negative and demoralizing
influence on the work culture and team spirit. This, in the long-term, is detrimental to
organizational health.
5. 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:

It removes bottleneck in the progress of the company

It creates space for the entry of new talents

It assists in evolving high performance teams

6. There are people who are not able to balance their performance as per expectations, lack
potential for future or need disciplinary action. Furthermore, as the rewards are limited,
business pressures do not allow the management to over-reward the performers, but when
undesirable employees leave the company, the good employees can be given the share
that they deserve.
Some companies believe attrition in any form is bad for an organization for it means that a wrong
choice was made at the beginning while recruiting. Even good attrition indicates loss as
recruitment is a time consuming and costly affair. The only positive point is that the realization
has initiated action that will lead to cutting loss.

RETENTION SUCCESS MANTRAS

1) Transparent Work Culture
In todays 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.
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.

2) 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 individuals 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:
1. 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.
2. Suitable working time: Organizations are offering flexible work options to their
employees wherein employees enjoy flexi-timings for dedicating their efforts at work.
3. 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.

3) 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:
1. 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.
2. 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.
3. 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.
4. Optimize employee engagement: An organizations 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.
5. 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.

4) 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 managers 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:
1. It builds trust and enhances communication between manager and employee.
2. It gives managers and employees a way to identify and discuss skills and strengths.
3. Positive feedback leads to employee retention and motivation.
4. It helps in identifying performance areas that need improvement and specific ways to
improve them.
5. It acts as an opportunity to enhance performance by identifying resources for skill
development.
6. It is an opportunity for managers and employees to assess and identify career and
advancement opportunities.

7. 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 de-motivate employees and may lead to employee absenteeism. Input from
managers side is necessary as it help employees to improve their performance and increase
productivity.

5) Communication between Employee and Employer

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. 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
1. 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.
2. Frequent meetings and Social gatherings
3. Emails, Newsletters, Intranet and many more.
So there should be effective communication across the organization & this communication
should be two-way. Communication alone can lead to unimaginable heights of employee
retention.

EMPLOYEES TURNOVER
Employees turnover has always been a sensitive issue for all organizations. Calculating
employee turnover rate is not that simple as it seems to be. No common formula can be used by

all the organizations. A formula had to be devised keeping in view the nature of the business and
different job functions. Moreover, calculating attrition rate is not only about devising a
mathematical formula. It also has to take into account the root of the problem by going back to
the hiring stage.

Employees Turnover rate or Attrition rate means:

In terms of numbers:
Total number of resigns per month (whether voluntary or forced) divided by (Total Number of
employees at the beginning or the month plus total number of new joiners minus total number of
resignations) multiplied by 100.

If calculating in monetary terms, it includes the following:

Costs Due to a Person Leaving
1. Calculate the cost of the person(s) who fills in while the position is vacant. Calculate the
cost of lost productivity at a minimum of 50% of the persons compensation and benefits
cost for each week the position is vacant, even if there are people performing the work.
Calculate the lost productivity at 100% if the position is completely vacant for any period
of time.
2. Calculate the cost of conducting the exit interview to include the time of the person
conducting the interview, the time of the person leaving, the administrative costs of
stopping payroll, benefit deductions, benefit enrollments.
3. Calculate the cost of the manager who has to understand what work remains, and how to
cover that work until a replacement is found.
4. Calculate the cost of training your company has invested in this employee who is leaving.

5. Calculate the impact of departmental productivity because the person is leaving. Who
will pick up the work, whose work will suffer, what departmental deadlines will not be
met or delivered late.
6. Calculate the cost of lost knowledge, skills and contacts that the person who is leaving is
taking with them out of your door. Use a formula 50& of the persons annual salary for
one year of service, increasing each year of service by 10%.
7. Subtract the cost of the person who is leaving for the amount of time the position is
vacant.

Recruitment costs
1. The cost of advertisements; agency costs; employee costs; Internet posting costs.
2. The cost of internal recruiters time to understand the position requirements, develop and
implement a sourcing strategy, review candidates backgrounds, prepare for interviews,
conduct interviews, prepare candidate assessments, conduct reference checks, make the
employment offer and notify unsuccessful candidates. This can range from a minimum of
30 hours to over 100 hours per position.
3. Calculate the cost of the various candidate pre-employment tests to help assess
candidates skills, abilities, aptitude, attitude, values and behaviors.

Training costs
1. Calculate the cost of orientation in terms of the new persons salary and the cost of the
person who conducts the orientation. Also include the cost of orientation materials.

2. Calculate the cost of departmental training as the actual development and delivery cost
plus the cost of the salary of the new employee. Note that the cost will be significantly
higher for some positions such as sales representatives and call center agents who require
4-6 weeks or more of classroom training.
3. Calculate the cost of the person(s) who conduct the training.
4. Calculate the cost of various training materials needed including company or product
manuals, computer or other technology equipment used in the delivery of training.

Lost productivity costs

As the new employee is learning the new job, the company policies and practices, etc. they are
not fully productive. Use the following guidelines to calculate the cost of this lost productivity:
1. Upon completion of whatever training is provided, the employee is contributing at a 25%
productivity level for the first 2-4 weeks. The cost therefore is 75% of the new
employees full salary during that time period.
2. During weeks 5-12, the employee is contributing at a 50% productivity level. The cost is
therefore 50% of full salary during that time period.
3. During weeks 13-20, the employee is contributing at a 75% productivity level. The cost is
therefore 25% of full salary during that time period.
4. Calculate the cost of mistakes the new employee makes during this elongated
indoctrination period.

New Hire Costs

1. Calculate the cost of bring the new person on board including the cost to put the person
on the payroll, establish computer and security passwords and identification cards,

telephone hookups, cost of establishing email accounts, or leasing other equipment such
as cell phones, automobiles.
2. Calculate the cost of a managers time spent developing trust and building confidence in
the new employees work.

Lost Sales Costs

1. Calculate the revenue per employee by dividing total company revenue by the average
number of employees in a given year. Whether an employee contributes directly or
indirectly to the generation of revenue, their purpose is to provide some defines set of
responsibilities that are necessary to the generation of revenue. Calculate the lost revenue
by multiplying the number of weeks the position is vacant by the average weekly revenue
per employee.

The cost of employees turnover or attrition is:

(Total staff * employees turnover rate/attrition rate %) * (annual salary *
80%)
The rule of thumb appears to be very inaccurate indeed and, while it depends upon the category
of staff, it is probably better to estimate around 80% of salary as a truer rule of thumb- and this
will be on the conservative side.
What kind of strategies would be effective in producing the desired results of maximum
Employee Retention and minimum Employee Turnover? The answer is obvious. It should
be the aim of each employee to keep his work force fully satisfied with no room for
disgruntlement.
Retention of employees has become a primary concern in many organizations foe several
reasons. As a practical matter, with lower turnover, every individual who is retained means one
less person to have to recruit, selects, and trains. Also, the continuity employees who know their
job, co-workers, organizational services and products and firms customers enhance
organizational and individual performance. One survey of supervisor and workers found that

losing high performance made it more difficult for organizations to reach their business goals.
Additional continuity of employees provides better Employee image for attracting and
retaining other individuals.

WAYS TO REDUCE EMPLOYEE TURNOVER

Following are some of the ideas to reduce employee turnover:
1. Hire the best candidate.
2. Welcome new employees. Customize your induction program for new employees
according to the requirements. Same induction program can not be applied to all the
candidates. Make them feel welcomed.
3. Produce quality managers who can really manage employees well.
4. Provide employees with work schedules that are flexible enough to suit their needs.
5. Dont be too demanding. You re hiring human beings who have their own life and family
commitments. Respect them.
6. Provide career counseling and development.
7. Discuss your future plans regarding the candidate with the candidate. Let them know that
the management is interested in retaining them and cares for them.
8. Take proper feedback from employees regarding their grievances.
9. Remember your former employees. They can be helpful to you in future. It is also a part
of employee retention.

FACTS ABOUT EMPLOYEE TURNOVER

It is difficult to accept when organizations say they have zero attrition rates. Companies may
have healthier turnover rates, however, there is no such thing as zero attrition. There are other
such facts about turnover, about which most of us are not aware. Some of such facts have been
highlighted below:
1. Turnover always happens: Companies who believe in zero attrition rates only fool
themselves. This happens because employees keep on moving due to reasons like
marriage or further education. Nothing can stop these employees from moving on. So,
rather than achieving zero attrition companies should focus on identifying whom they
want to keep so that they have healthy attrition rate.
2. Some Turnover is Desirable: Zero attrition is not desirable mainly because of two
reasons. Firstly, if all employees continue to stay in the same organization, most of them
will be at the top of their pay scale which will result in excessive manpower costs.
Secondly, new employees bring new ideas, approaches, abilities & attitudes which can
keep the organization from becoming stagnant.
3. Turnover includes costs: Turnover always includes some costs. Consider the costs of
replacing the key employee who falls in to the category of high performers. This includes
the costs of recruitment advertisement, referral bonuses, selection testing, training costs,
etc. Moreover, turnover results in loss of time & efforts, low productivity, loss of morale,
loss of knowledge and so on.
4. High salary doesnt work: Most managers assume that a high salary package is enough
to keep employees loyal to their organization. Employees may face other problems like
low job satisfaction, low engagement levels, no recognition, poor working conditions,
less support from superiors and so on. Salaries are not always the solution to attrition.
Managers should try to identify the roots of the problem and then find a feasible solution.

5. The manager can reduce attrition: Managers should take primary responsibility for
retaining their employees. Much of the employees perception of job satisfaction stems
from the relationship they share with their immediate supervisor. Managers should try to
support their subordinates and give proper feedback on performance. HR managers
should work in collaboration to make the key employees last in their organization.
6. Reducing Turnover takes Commitment: Reducing turnover takes an investment in
coaching, developing, motivating, mentoring & listening to people. There should be
universal acceptance of the goal of reducing turnover along with top management
commitment and dedication.

OBJECTIVES OF
THE STUDY

OBJECTIVES OF THE STUDY

1. To study the common reasons of employee voluntarily leaving from the organization.
2. To suggest the strategies and steps for reducing turnover and improving retention.
3. To study efforts made by organization to retain employee.
4. To study various career development programs offered by the organization.

5. To study the impact of induction & training programs on retention of employees.

6. To determine the organizational climate.

REVIEW

OF
LITREATURE

REVIEW OF LITERATURE
Most researchers (Bluedorn, 1982; Kalliath and Beck,2001; Kramer et al., 1995; Peters et al.,
1981; Saks,1996) have attempted to answer the question of what determines people's intention to
quit by investigating possible antecedents of employees intentions to quit. To date, there has
been little consistency in findings, which is partly due to the diversity of employed included by
theresearchers and the lack of consistency in their findings. Therefore, there are several reasons
why people quit from one organisation to another or why people leave organisation. The
experience of job related stress(job stress), the range factors that lead to job related
stress(stressors), lack of commitment in the

organisation; and job dissatisfaction make

employees to quit Firth et al.(2004). This clearly indicates that these are individual decisions

which make one to quit. They are other factors like personal agency refers to concepts such as a
sense of powerlessness, locus of control and personal control.
Locus control refers to the extent to which people believe that the external factors such as chance
and powerful others are in control of the events which influence their lives Firth et al. (2004).
Manu et al. (2004) argue that employees quit from organization due economic reasons.Using
economic model they showed that people quit from organization due to economic reasons and
these can be used to predict the labour turnover in the market. Good local labour market
conditions improve organizational stability Schervish (1983). Large organizations can provide
employees with better chances for advancement and higher wages and hence ensure
organizational attachment (Idson and Feaster 1990). Trevor (2001) argues that local
unemployment rates interact with job satisfaction to predict turnover in the market. Role
stressors also lead to employees turnover. Role ambiguity refers to the difference between what
people expect of us on the job and what we feel we should do. This causes uncertainty about
what our role should be. It can be a result of misunderstanding what is expected, how to meet the
expectations, or the employee thinking the job should be different Kahn et al. Muchinsky, 1990.
Insufficient information on how to perform the job adequately, unclear expectations of peers and
supervisors, ambiguity of performance evaluation methods, extensive job pressures, and lack of
consensus on job functions or duties may cause employees to feel less involved and less satisfied
with their jobs and careers, less committed to their organizations, and eventually display a
propensity to leave the organisation (Tor et al., 1997). If roles of employees are not clearly
spelled out by management/ supervisors, this would accelerate the degree of employees quitting
their jobs due to lack of role clarity.
Organisational instability has been shown to have a high degree of high turnover. Indications are
that employees are more likely to stay when there is a predictable work environment and vice
versa (Zuber, 2001). In organizations where there was a high level of inefficiency there was also
a high level of staff turnover (Alexander et al.,1994). Therefore, in situations where
organizations are not stable employees tend to quit and look for stable organisations because
with stable organisations they
would be able to predict their career advancement.The imposition of a quantitative approach to
managing the employees led to disenchantment of staff and hence it leads to labour turnover.
Therefore management should not use quantitative approach in managing its employees.

When high performers are insufficiently rewarded, they quit. If jobs provide adequate financial
incentives the more likely employees remain with organisation and vice versa. There are also
other factors which make employees to quit from organisations and these are poor hiring
practices, managerial style, lack of recognition, lack of competitive compensation system in the
organisation and toxic workplace environment Abassi et al. (2000).
Employee engagement, the organizations capacity to engage, retain, and optimize the value of
its employees hinges on how well jobs are designed, how employees' time is used, and the
commitment and support that is shown to employees by the management would motivate
employees to stay in organizations..Knowledge accessibility, the extent of the organisations
collaborativeness and its capacity for making knowledge and ideas widely available to
employees, would make employees to stay in the organisation. Sharing of information should be
made at all levels of management. This accessibility of information would lead to strong
performance from the employees and creating strong corporate culture Meaghan et al. (2002).
Therefore; information accessibility would make employees feel 052 Afr. J. Bus. Manage.that
they are appreciated for their effort and chances of leaving the organisation are minimal.
Workforce optimization, the organisations success in optimizing the performance of the
employees by establishing essential processes for getting work done, providing good working
conditions, establishing accountability and making good hiring choices would retain employees
in their organisation. The importance of gaining better
understanding of the factors related to recruitment, motivation and retention of employees is
further underscored by rising personnel costs and high rates of employee turnover (Badawy,
1988; Basta and Johnson, 1989; Garden,1989; Parden, 1981; Sherman, 1986). With increased
competitiveness on globalizations, managers in many organizations are experiencing greater
pressure from top management to improve recruitment, selection, training, and retention of good
employees and in the long run would encourage employees to stay in organisations. Job
involvement describes an individuals ego involvement with work and indicates the extent to
which an individual identifies psychologically with his/her job (Kanungo,1982). Involvement in
terms of internalizing values about the goodness or the importance of work made employees not
to quit their jobs and these involvements are related to task characteristics. Workers who have a
greater variety of tasks tend stay in the job. Task characteristics have been found to be potential
determinants of turnover among employees (Couger, 1988; Couger and Kawasaki, 1980; Garden,

1989; Goldstein and Rockart, 1984). These include the five core job characteristics identified by
Hackman and Oldham (1975, 1980): skill variety, which refers to the opportunity to utilize a
variety of valued skills and talents on the job; task identity, or the extent to which a job requires
completion of a whole and identifiable piece of work - that is, doing a job from beginning to end,
with visible results; task significance, which reflects the extent to which the job has a substantial
impact on the lives or work of other people, whether within or outside the organisation; job
autonomy, or the extent to which the job provides freedom, independence, and discretion in
scheduling work and determining procedures that the job provides; and job feedback, which
refers to the extent to which the job provides information about the effectiveness of ones
performance (Tor et al., 1997). Involvement would influence job satisfaction and increase
organizational commitment of the employees. Employees who are more involved in their jobs
are more satisfied with their jobs and more committed to their organization (Blau and Boal,
1989; Brooke and Price, 1989; Brooke et al., 1988; Kanungo, 1982). Job involvement has also
been found to be negatively related to turnover intentions (Blat and Boal, 1989). Job satisfaction,
career satisfaction, and organisational commitment reflect a positive attitude towards the
organization, thus having a direct influence on employee turnover intentions. Job satisfaction, job
involvement and organisational commitment are considered to be related but distinguishable
attitudes (Brooke and Price, 1989). Satisfaction represents an affective response to specific
aspects of the job or career
and denotes the pleasurable or positive emotional state resulting from an appraisal of ones job or
career (Locke, 1976; Porter et al., 1974; Williams and Hazer, 1986).Organisational commitment
is an affective response to the whole organisation and the degree of attachment or loyalty
employees feel towards the organisation. Job involvement represents the extent to which
employees are absorbed in or preoccupied with their jobs and the extent to which an individual
identifies with his/her job (Brooke et al., 1988).The degree of commitment and loyalty can be
achieved if management they enrich the
jobs, empower and compensate employees properly.Empowerment of employees could help to
enhance the continuity of employees in organisations. Empowered employees where managers
supervise more people than in a traditional hierarchy and delegate more decisions to their
subordinates (Malone, 1997). Managers act like coaches and help employees solve problems.
Employees, he concludes, have increased responsibility. Superiors empowering subordinates by

delegating responsibilities to them leads to subordinates who are more satisfied with their leaders
and consider them to be fair and in turn to perform up to the superiors expectations (Keller and
Dansereau, 1995). All these makes employees to be committed to the organization and chances
of quitting are minimal.

RESEARCH
METHODOLOGY