CHANAKYA NATIONAL LAW UNIVERSITY, NYAYA NAGAR,

MITHAPUR, PATNA-800001

“EMPLOYEE RETENTION THROUGH EMPLOYEE MOTIVATION”

FINAL DRAFT SUBMITTED IN THE PARTIAL FUILFILMENT OF THE COURSE

TITLED-

FUNDAMENTALS OF MANAGEMENT

SUBMITTED TO: SUBMITTED BY:

MR. MANOJ MISHRA NAME: AAYUSH KUMAR

FACULTY OF FUNDAMENTALS OF COURSE: BBA LL.B (HONS.)

MANAGEMENT
SEMESTER: 1ST

ROLL NO. : 2201

DECLARATION BY THE CANDIDATE

I, AAYUSH KUMAR, student of Chanakya National Law University, hereby declare that
the work reported in the BBA LL.B (Hons.) Project Report titled “EMPLOYEE
RETENTION THROUGH EMPLOYEE MOTIVATION” submitted at Chanakya
National Law University is an authentic record of my work carried out under the supervision
of Mr Manoj Mishra. I have not submitted this work elsewhere for any other degree or
diploma. I am fully responsible for the contents of my Project Report.

(SIGNATURE OF CANDIDATE)

NAME OF CANDIDATE: AAYUSH KUMAR

ROLL NO: 2201

COURSE: B.B.A LL.B ( Hons.)

SEMESTER : 1st

CHANAKYA NATIONAL LAW UNIVERSITY, PATNA

ACKNOWLEDGEMENT

I would like to thank my faculty Mr. Manoj Mishra whose guidance helped me a lot with
structuring my project.

I owe the present accomplishment of my project to my friends, who helped me immensely

with materials throughout the project and without whom I couldn’t have completed it in the
present way.

I would also like to extend my gratitude to my parents and all those unseen hands that helped
me out at every stage of my project.

THANK YOU,

NAME: Aayush Kumar

COURSE: BBA. LL.B. (Hons.)

ROLL NO: 2201

SEMESTER – 1ST
 Index

1. Employee Retention
2. Objectives of Employee Retention
3. The Benefits of Employee Retention
4. Importance of Employee Retention
5. Motivation
6. Types of Motivation
7. Theories of Motivation
8. Employee Retention - Role of Motivation
9. Bibliography

Employee Retention

Employee retention refers to policies and practices companies use to prevent valuable
employees from leaving their jobs. How to retain valuable employees is one of the biggest
problems that plague companies in the competitive marketplace. Not too long ago, companies
accepted the "revolving door policy" as part of doing business and were quick to fill a vacant
job with another eager candidate. Nowadays, businesses often find that they spend
considerable time, effort, and money to train an employee only to have them develop into a
valuable commodity and leave the company for greener pastures. In order to create a
successful company, employers should consider as many options as possible when it comes
to retaining employees, while at the same time securing their trust and loyalty so they have
less of a desire to leave in the future.

Employee Retention is defined as an organization’s ability to retain its employees. It can also
be called as a process, in which the resources are motivated and encouraged to stay in an
organization for a longer period of time for the sustainability of the organization.

The ultimate aim of Employee Retention is to make both the stakeholders, i.e., employees
and employer happier. It facilitates loyal employees sticking to the company for a longer
duration, which in turn will benefit both the stakeholders.
Employee retention is not just a matter that can be dealt with records and reports. It purely
depends upon how the employers understand the various concerns of the employees and how
they help them resolve their problem, when they are in need.

Every organization spends time and invests money in grooming new employees and make
them corporate-ready. The organization will be in complete loss, if such employees quit after
they are fully trained.

Objectives of Employee Retention

It is very important for an organization to attract, hire, and retain the right resources. Most of
the organizations are very effective, when it comes to attracting and hiring new talents, but
they fail in retaining the same talents.

There can be many reasons for an employee to leave an organization. It is very essential for
an organization to know the reasons, which can help the organization in making the job
attractive and encourage the employees to stay with the organization.

The first and foremost requirement is to measure the key factors which influence the retention
rates, such as salary expectations, employee engagement, working environment and
boss/managers. Once these measurements are identified, the initiatives are to be planned and
to be implemented for improvement of the retention rate.

The HR department has to provide the line managers with the right tools to retain talented
employees. The retain policy should be designed with flexible schemes that can be changed
according to the prevailing conditions. It is the manager who can influence the employee, but
the Human Resources department has to provide the managers with the required tools and
channels to influence the employees effectively.

In an organization, the core driver of retention policies are the strategies behind them. The
team of line managers and the leaders are the owners of the documentation and the HR
department has to measure the progress, successes and failures of the strategies applied. The
ownership of the strategies falls on the team of line managers and the leaders, who need to
protect the work interests of the employees and retain them.

Finally, the retention program has to be measured. The HR department has to measure the
performance of the retention plan. They should measure the difference in the turnover, the
development of the attrition and the satisfaction of employees in the program.

Employee Retention Strategies

Most organizations apply the following strategies to retain their employees −

 Create open communication between employees and management.

 Conduct "stay" interviews.

 Provide some small perks.

 Offer financial rewards.

 Make sure employees know what you expect of them.

 Use healthy competition and incentives to help keep workers motivated and make
them feel rewarded.

 Foster employee development.

 Promote from within, whenever possible.

Employee retention also refers to the various policies and practices applied within an
organization for employees to stick to their jobs and fulfill their responsibilities over a longer
period of time.

The Benefits of Employee Retention

Every company should understand that people are their best commodity. Without qualified
people who are good at what they do, any company would be in serious trouble. In the long
run, the retention of existing employees saves companies money. As Beverly Kaye and
Sharon Jordan-Evans stated in Training and Development: "Studies have found that the cost
of replacing lost talent is 70 to 200 percent of that employee's annual salary. There are
advertising and recruiting expenses, orientation and training of the new employee, decreased
productivity until the new employee is up to speed, and loss of customers who were loyal to
the departing employee. Finding, recruiting, and training the best employees represents a
major investment. Once a company has captured talented people, the return-on-investment
requires closing the back door to prevent them from walking out."

When an employee leaves a company for a direct competitor, there is always a chance that
they will take important business strategies and secrets with them to be exploited by the
competition. This is yet another reason why the retention of employees is so crucial to some
businesses. While this practice seems a bit unscrupulous, it still happens quite frequently.

One way for a company to prevent employees from giving valuable information to
competitors is to make it a policy to enforce strict noncompete and confidentiality agreements
amongst its employees. The existence of such agreements could in fact deter a competitor
from hiring a valuable employ because they might not want to risk possible legal
entanglements with the other company. Of course, all this could possibly lead to animosity
with the employee who could feel that his or her options are being limited. Many employees
don't always remember signing such a document, so a copy of it should always be kept on file
for the employee to refer to. This area could prove to be a highly sensitive one between
employer and employee, so extreme caution is suggested in all instances.

Importance of Employee Retention

 Hiring is not an easy process: The HR Professional shortlists few individuals from a

large pool of talent, conducts preliminary interviews and eventually forwards it to the
respective line managers who further grill them to judge whether they are fit for the
organization or not. Recruiting the right candidate is a time consuming process.

 An organization invests time and money in grooming an individual and make

him ready to work and understand the corporate culture: A new joinee is
 completely raw and the management really has to work hard to train him for his
overall development. It is a complete wastage of time and money when an individual
leaves an organization all of a sudden. The HR has to start the recruitment process all
over again for the same vacancy; a mere duplication of work. Finding a right
employee for an organization is a tedious job and all efforts simply go waste when the
employee leaves.

 When an individual resigns from his present organization, it is more likely that
he would join the competitors: In such cases, employees tend to take all the
strategies, policies from the current organization to the new one. Individuals take all
the important data, information and statistics to their new organization and in some
cases even leak the secrets of the previous organization. To avoid such cases, it is
essential that the new joinee is made to sign a document which stops him from
passing on any information even if he leaves the organization. Strict policy should be
made which prevents the employees to join the competitors. This is an effective way
to retain the employees.

 The employees working for a longer period of time are more familiar with the
company’s policies, guidelines and thus they adjust better: They perform better
than individuals who change jobs frequently. Employees who spend a considerable
time in an organization know the organization in and out and thus are in a position to
contribute effectively.

 Every individual needs time to adjust with others: One needs time to know his
team members well, be friendly with them and eventually trust them. Organizations
are always benefited when the employees are compatible with each other and discuss
things among themselves to come out with something beneficial for all. When a new
individual replaces an existing employee, adjustment problems crop up. Individuals
find it really difficult to establish a comfort level with the other person. After striking
a rapport with an existing employee, it is a challenge for the employees to adjust with
someone new and most importantly trust him. It is a human tendency to compare a
new joinee with the previous employees and always find faults in him.

 It has been observed that individuals sticking to an organization for a longer

span are more loyal towards the management and the organization: They enjoy
all kinds of benefits from the organization and as a result are more attached to it. They
 hardly badmouth their organization and always think in favour of the management.
For them the organization comes first and all other things later.

 It is essential for the organization to retain the valuable employees showing

potential: Every organization needs hardworking and talented employees who can
really come out with something creative and different. No organization can survive if
all the top performers quit. It is essential for the organization to retain those
employees who really work hard and are indispensable for the system.

Motivation

The word motivation is derived from Latin word ‘movere’ which means ‘to move’.
Motivation is something – a desire, a want, need or drive − that moves or spurs an individual
to act in a particular way to achieve a goal or objective. Motivation can be defined as a
concept used to describe the factors within an individual which arouse, maintain and channel
behavior towards a goal.

The factors that stimulate the behavior and actions of the people are as follows −

 Success and advancement in Life

 Desire for Money

 Desire to be empowered

 Work Satisfaction

 Recognition in the Society etc.

Employee motivation is defined as the commitment, the energy levels, and the creativity that
the employees bring to their job. Even though employees’ motivation doesn’t directly
influence organization’s growth, it is like a necessary pre-condition because lack of
motivation among the employees can have a detrimental effect on their performance.

Motivational Myths
Mcnamara discusses three motivational myths.

1. One person can motivate another- You only have to estabilish an environment that will
cultivate and bring forth the personal motivational factors of each individual.

2. Money and fear are good motivators-Mcnamara says money can only help people from
being less motivated & fear acts for short term.

3. I know what motivates me, so I know what motivates my employees- Everyone is

different. Managers need to identify and understand what motivates each employee to reach
the common organizational goals.

Types of Motivation

Intrinsic and Extrinsic Motivation:-

Intrinsic Motivation:-When people are internally motivated to do something because it

either brings them pleasure, they think it is important, or they feel that what they are learning
is morally significant.

Extrinsic Motivation:-When people is compelled to do something or act a certain way

because of factors external to them.(Money or good grades).

Telic and Paratelic Motivational Modes:-

In the telic state, a person is motivated primarily by a particular goal or objective-such as

earning payment for work.

In paratelic mode, a person is motivated primarily by the activity itself (intrinsic).

Direct & Indirect Motivation:-

In direct motivation, the action satisfies the need. Eg. Job satisfaction & social
environment.

In indirect motivation the action satisfies an intermediate goal, which can in turn lead to the
satisfaction of a need. Eg. Money.

Negative and Positive Motivation:-

Negative motivation involves undertaking tasks because there will be undesirable outcomes,
eg. falling a subject, if tasks are not completed.

Positive motivation is a response which includes enjoyment and optimism about the tasks
that you are involved in.

Theories of Motivation

Theories are ways that we try to explain and understand complex and abstract issues and
ideas. Motivation is fairly difficult area and there are a number of theories which have
developed to try to explain why people behave in the ways that they do and try to predict or
guess what people actually will do, based on these theories.

Maslow’s Theory

Human beings have wants and desires which influence their behavior; only unsatisfied needs
can influence behavior, satisfied needs cannot. Needs are arranged in order of importance,
from the basic to the complex. The person advances to the next level of needs only after the
lower level need is at least minimally satisfied. The needs, listed from basic (lowest, earliest)
to most complex (highest, latest) are:-

 Physiological
 Safety and Security
 Social Self esteem
 Self actualization

Herzberg’s two factor Theory

Herzberg two factor theory, concludes that certain factors in the workplace result in job
satisfaction, while others do not, but if absent lead to dissatisfaction. He distinguished
between:-

Motivators (eg challenging work, recognition, responsibility) which give positive

satisfaction.

Hygiene factors (eg status, job security, salary and fringe benefits which do not motivate if
present, but if absent will result in demotivation.

Alderfer’s ERG Theory

It leads to (existence, relatedness, and growth). Physiological and safety, the lower order
needs, are placed in the existence, love and self esteem needs in the relatedness. The growth
contained the self actualization and self esteem needs.

Cognitive Dissonance

This occurs when an individual experiences some degrees of mental discomfort resulting
from an incompatibility between two cognition .

Self Determination Theory

It focuses on the importance of intrinsic motivation in driving human behavior. It require

active encouragement from the environment.

McClelland’s achievement motivation theory

It envisages that a person has need for three things but people differ in degree in which the
various needs influences their behavior:

 Need for Achievement

 Need for power
 Need for affiliation

Goal Setting Theory

It states that individuals sometimes have a drive to reach a clearly defined end state.This end
state is a reward in itself. It is affected by three features: proximity, difficulty and specificity.
 Employee Retention - Role of Motivation

 Motivation works as a catalyst for the success of any individual. It is the responsibility of the
managers and the team leaders, who should constantly motivate their employees for
extracting the best out of them.

An employee, who has performed exceptionally good, must be appreciated immediately. The
top performers must be highlighted, awarded and rewarded and must be in limelight, which
make the employee for feel indispensable for the organization. Simple words like Good, Well
Done and Keep It Up, are actually the motivating factors for the employees. It is very
essential for making the employees loyal towards the organization for delivering their best.

Employee retention benefits both the employer and also the employee. Employee retention
involves a simple process that encourages and uplifts individuals or teams within an
organization to remain engaged with the Company in the long term.

What Motivates Employees to Stay?

An employee needs to feel motivated and have the zeal to work, this will help him and also
the organization. So what exactly can an employer do to retain good employees? Every
organization thinks that, remuneration is the primary way to motivate and retain the
employees with the organization, but the fact is that an employee needs an organization,
which understand their needs and necessities, health and other benefits along with their future
growth then comes the compensation.

An employee will stay, only if the organization boosts his/her morale. Surveys have shown
that the youngest employees, those aged between 18-24, cite a raise as key to their decision-
making to stay with a company. These young employees are matured enough to take
decisions about the responsibilities and their future plans. Hence, their general expectations
keep changes with time and the chances of staying in the organization for a longer time is
very difficult and keep change their jobs.

Now the question is ─ how do employers continue to sell the job to an employee when
increasing his/her pay is no longer an option? Surveys have revealed some of the top qualities
employees seek in their employers −

 Work that is meaningful

 Challenging work

 Training and development opportunities

 Management that assists and supports

 Does not dictate

 Explicit awareness of life beyond the office

 An array of core benefits and the power of choice

Retention of employees depends on four major motivating factors −

 Remuneration and Rewards

 Work Atmosphere

 Growth Opportunities

 Bonding and Timely Support

Remuneration and Rewards

Remuneration plays the biggest role in the process of motivating staff, which in turn, leads to
retention. It takes a clever hand to compose a compensation package. The best packages
include −

 Bonuses

 Allowances

 Basic Salary

 Retirement Benefits

 Incentives

 Employee Assistance Programs

Work Atmosphere

An organization should serve as a second home, as most of the employees spend a maximum
of their time at work here. It is not always about retaining an employee but about managing
one’s surroundings at work. It is about offering appropriate facilities and services to staff.

The following points play a major role in making the employee feel connected to a
corporation −

 Engaging employees in decision-making

 Friendly and lively culture

 Ethical values

 Personal and Professional Balance

 Health, safety and well-being

 Reliability and dependence

 Learning environment

 Credit and recognition

Growth Opportunities
Growth is an integral element of an individual’s career graph. If there is no scope of growth
within a Company, an employee seeks external opportunities. The essential aspects that an
individual looks to grow in are −

 Training for personal development

 Personal zeal to develop

 Profile of Job

Bonding and Timely Support

Providing a personal or professional supportive work culture is sometimes overlooked by

Management. This results in demotivation due to the decrease in interest in work in a
particular team or a Company as a whole. To craft a good, reliable, long-lasting bond
between the management and an employee, it is important to −

 Recruit an individual only if necessary

 Provide support at the time of need

 Respect the individual

 Acknowledge individual targets and create growth opportunities

 Recruit leaders who can promote team work and enhance relationships

Empowering employees, making them realize their importance and value to the organization,
appreciating their efforts and appraising them for their performances will induce self-
motivation and help reduce employee attrition. Therefore, it is very important to motivate
employees at the workplace in order to retain them.
 Bibliography

Books

1) The Trouble with HR: An Insider’s Guide to Finding and Keeping the Best Talent-
Johnny C. Taylor, Gary M. Stern.
2) The 7 Hidden Reasons Employees Leave- Leigh Branham.
3) Assimilating New Leaders: The Key to Executive Retention- Diane Downey, Tom
March, Adena Berkman

Websites

1) https://www.bartleby.com
2) www.whatishumanresource.com