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Research Report Attrition Rate Affecting Air India

Submitted To Lecturer Mr.Chua Chong Hock Submitted By K.S.PremGopal Student Id: 12615526

Letter of transmittal
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12th December 2011 Mr.Rohit Nandan , (Chairman & Managing Director) Air India Air India Building, 1st Floor, Nariman Point, Mumbai 400 021 Respected Sir,
I have enclosed a report with this Letter about the attrition rate of employee affecting your Company. The main objective of this report is to why attrition rate is more in your company comparing to other airlines and gives some recommendations to avoid employee attrition and some steps to sustain in the business in upcoming years. This report which will help your top level management to see in to why problems are caused and how it can be avoided in upcoming years .The solutions which are given in this report will be more helpful for you to avoid attrition rate . Here by I think this report will be helpful to your company to have an healthy business in the upcoming , if any queries on this report you can contact me at 90966961 email id prem.gopal6@gmail.com, will be waiting for your feedback and thanks for giving a great opportunity and will really look forward to work with you one again . Thank you Yours Sincerely, K.S.Premgopal (Consultant)
Enclosure: Final Report

Executive Summary:
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In India attrition rate is been more and major issue in many organization that to mainly in aviation industry. In India Air India Company has faced by many issues and problems in this year 2011. One of the major problem was employment strike which was held in the month of May, Due to delay of salary and salary hike is not been offered for any one no promotions in their work level , fringe benefits not offered and paid well. Air India is a public sector company owned by government in India. The major cause and problems faced by the company is fuel price hike. Due to the fuel price hike the company cannot even fly their flights as scheduled its been cancelled due some reason like flights not been fully occupied by the customers. Due to this customers in India not preferring air India for their travel. Attrition rate in aviation industry is more nowadays because other airline companies pay more for their employees and give fringe benefits to them by paying their telephone bills, leaving expenditures and providing cars for their travel. These benefits are not given by air India to their employees, to retain the employees company should work accordingly. In India the economy rate is high nowadays so employees in the company need more salary to overcome all expenditures, So employees jump from one organization to other because they get more salary they even go out of India to work to overcome their basic needs so the employment attrition rate is more India. The Report tells mainly about why attrition rate is more in air India and how it can be avoided or solved. Recommendations and advices given to overcome the major problems like fuel price hike, retaining the customers and give more fringe benefits to retain their employees. This research report also tells about the attrition rate in India and tells why employees switch companies and what companies should do to avoid the attrition rate in upcoming years.

Table of Contents
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Introduction..............05 Company Background.....06 Issues and problem..07 Fuel Price Hike .07 Competitors Increases.07 Re-hiring Problem 07 Company Name /Brand decreases08 More Loans taken in RBI.08 Critical analysis. 09 What makes an employee Leave an organization? .09-10 Recommendations/ Implementation Plan:11 Recommendations: How employee attrition rate can be avoided/solved...11 Definition of employee Retention11 Importance of employee retention..12 Steps to Increase employee retention...12 Implementation Plan: Phase 1...13 Phase 2...14 Phase 3...14 Conclusion 15 References.16

Introduction:

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Attrition rate is been a major issue for all organizations all over the world but in India the percentage of employees attrition rate is high when compare to other country in all sectors . The attrition rate in India of different sectors is given below.

In the above bar diagram shows that the aviation industry is in the third place in India. In an organization employees are the major back bone of each and every organization , so it is a necessity a company should look that every employees is satisfied with is work and salary, if it is not been seen then the employees switch over to other company where they get more salary and benefits . The company should try to retention their employees by serving them the best salary and benefits. In this report I have given some recommendations for the retention of employees for long term which does not affect the companies and some recommendations to carry out the fuel price hike.

Company Background:

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Air India company was started on July 1932 as TATA airlines by JRD.TATA. 1946 29th July it was changed has public sector company in the name of Air India .Air India corporate office is in Mumbai and almost covers 44 destinations and its been the Indias national airline .Air India international was born in the year 1960 and flew its first fight to new york via London from India . On the year 2007 Indian airlines and air India joined to together and named has air India. Now it has air India express under their venture. In starting stage of air India the company was in a great heights but after 2005 the competition became very heavy like there were many private domestic airlines with low cost. So air India faces many problems in their organization has its been a public sector company owned by government. Many top level management is been changed now at last its Mr.Rohit Nandan current Chairman & Managing Director was appointed on august 2011 .

Mr.Rohit Nanadan (Current Chairman and Manager)

As many airline organization coming in to market air India tires to give the best to the employees and customer to retain the business and its brand image.
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Issues and problems: Fuel Price Hike Competitors Increases Re-hiring Problem Company Name /Brand decreases More Loans taken in RBI

Fuel Price Hike:

Fuel Price hike is the major issues running out in India. Due to fuel price hike the company couldnt flew the flights as per the schedule because if the flight is not full the company some time cancel the flights. Due to this the company losses its reputation in the market, due to fuel price hike the company somehow adjust and gets the money by increasing the ticket rate, by doing this people will think to travel in the airlines and go for the budget airline company which gives a very low rate. By doing this the company can only can sustain only market but they cant develop are satisfy the employees.

Competitors Increase:
Competitors are more in airline industry now in India. Budget airlines are more comparing to other airline company. In India before there were very few airline companies but after 2005 there are lot of company came in airline industry so people have a great choice in choosing their airline while traveling which gives the cheap rate and good standards. So this is a major problem nowadays for air India to with stand like before. So the company should keep their employees by providing their needs properly because employees have many companies to change and get good salary.

Re-hiring Problem:
The Employees gets out of the company because they dont have a job satisfaction and they are not paid for they do, so they switch to other company where they get more benefits and salary. But the company should rehire an another employee which is will lead the company to
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invest more money which leads to 100 to 150% more, for e.g. if an employee leaves the company with salary of 40,000 Rs Per annum when the company replace him the cost will be like 60,000Rs for the new employee. This is a major lose for a company. So the company should plan accordingly to with stand the old employee.

Company Name / Brand Decreases:

When an employee leaves a company and goes for a company the company name and the reputation becomes down. There was strict by the air India employees in May 2011 because of late salary and no benefits. This brings down the company reputation down between the people; the company should look over keenly to avoid such strike by the employees, due to this the flights were cancelled and customers who booked the tickets were facing many problems, because the air India did announce anything to the customers about the flight cancellations. This will make the customers to look over another airline company when they fly next time; this is will be a great loss for the company. So company should look the employees to avoid such loss.

More Loans taken in RBI:

Air India company has taken a large amount of loan from Reserve bank of India which they could not repay it , this loans were taken to for buying new flights and for fuel . RBI gave a notice that they wont give loan from upcoming years because the company didnt repay the old loan amount till date. Then government of India on Nov 25 2011 helped out in extension of loan tenures in RBI. This is a good thing done by the government to help out the air India in crisis. This can be repaid only if the employees have the good salary and benefits. Or else the employees will leave the company and get in to other companies where they get good pay and benefits.

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Critical Analysis:
As there is more attrition rate in India when compare to other countries. The attrition rates are in many different levels in an organization.

Due to attrition in a company they have training development cost, Administration cost, Recruitment cost, these makes an company in to loss ,waste of money and time instead of these the company can retain their employees by making salary hike are by giving fringe benefits. So companies should have employee Retention that means they should retain their employees and make them remain in their company for maximum period. Employee retention is important in an organization and beneficial for employees.
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What makes organization? an employee leave a

Employees doesnt leave a company suddenly are without any reason. There are some reasons and circumstances that make an employee to leave the company. Here are some most common reasons why employee things to leave an organization or company. Job dissatisfaction: In an organization the job given to the employees does not come has what they expect. Due to unexpected job and responsibility it leads an employee for job dissatisfaction. Mismatch job: In an organization sometimes the employee will not get a job for his education are personality because he may be fit for some other job but the organization sometimes gives him a job which does not match his education and personality where he will not be able perform well and thinks to leave the with some reason. Growth: When an employee have less growth and learning in his company after many years he plans to get in to another company where they get more learning, good position, growth. Lack of support, appreciation: When employee does not have a support with his co- workers and senior employees he will not have good office environment and it will be very difficult for him to work.. So he will try to leave the job and get in to another company. No Fringe Benefits for employees: Definition of fringe benefits is when an employee gets a various benefits and compensation at a work place for e.g. like paid vacation time, sick leave, Paying hand phone bill , claiming medical bill , time-share condominiums and discounted and free membership in health clubs. If these fringe benefits are not given the employee may leave the company and get in to a company where he gets good fringe benefits.

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Work Life imbalance: When job stress comes to an employee it leads to work life imbalance and will make the employee to leave the company. Good Job offer from another company: When an employee gets a job offer with good salary, benefits, growth and learning he will surely switch over to another company without any further delay.

Recommendations/ Implementation Plan :

Recommendations: How employee attrition rate can be avoided/solved Definition of employee Retention Importance of employee retention Steps to Increase employee retention How employee attrition rate can be avoided/solved: To retain the employees the company should follow employee retention and give fringe Benefits in order to develop the company. This Employee Retention helps a company a lot to retain their employees and develop their company to a good standard. Definition Employee Retention: Employee retention means keeping an employee in an organization for a long period of time. Employee Retention is very beneficial for an organization. Employees nowadays have many jobs out in the market, so they easily switch to other organization where they get good salary and fringe benefits. Its a responsibility for each organization to have their best employers in their company for a long period. A good Organization should learn the employees pulse, how to attract and retain their employees. Retention has 5 important ways they are 1.Compensation i.e. means fringe benefits 2.Environment 3.Growth 4.Employee relationship 5.Support. If these are down with lot of efforts and resources the result will be good and worth for the organization.

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Importance of Employee Retention: Every organization should retain their employees because there not for cost cutting but also for 1. Loss of company information i.e. employee who moves out of the company knows the plus and minus of the company very well so employee retention is important. 2.Rehiring Problem i.e. if an employee leaves an organization again the company should search for an employee and have interviews, training and that employee should be up to the mark like pervious employee so time and money is waste . So employee retention is important. Steps to increase Employee Retention:

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Communication: Communication applies faithfulness between the employees. The communication leads an employee informed on major issues. The important thing is always, employee need to know the views of the management whether they are interested in employees input. Reward Schemes: Whenever an employee does any good job in an organization he can be rewarded with some gifts and money, to boost up his work and make recognition by awards for best employee of month. Learning and Development Opportunities: Each and every individual is been thinking and worried about their future and career. Each and every organization should help the employee in developing their skills to get the next level by free certification training and courses to enhance the employees knowledge. Benefits: The employees see that whether company comes out with some fringe benefits .The organization should see that every employee gets some benefits while he is working in the company. Because if the benefits are good and attracted by the employees they wont change are search for a job in other companies. So benefits are major part in employee retention. Implementation: The implementation plan given below is for next three years to retain your employees and develop your company and repay your loan amount as fast as possible and helps you to have employee retention. Phase 1: Pay the salary on time and introduce exclusive Fringe Benefits to the employees which satisfy employees. Fly flights to destination which have more customers and cut shot the flights to rare destinations. Dont buy new flights for next two years change the infra-structure in old flights. Introduce good offers to the customers and maintain a good customer relation when flights are cancelled.

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Phase 2: Pay high salary to the employees. Increase more sales of tickets and built customer relation when every customer books a ticket. Weekly seminar on sales of tickets with employees and discuss how to develop the sales of tickets.

Phase 3: Discussions with employee if he is not satisfied with his salary are work. Bonus and incentives based on employees best performer. Develop the company profit margin. If an employee leaves the company survey should be conducted to the employee before he/she leaves.

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Conclusion:
Airline industry in India is fastest growing industry but nowadays its been in loss due to fuel price hike and employment attrition. To retain in the business organization should see that the employee retain in their companies because at this point if employees gets off its been a major loss for the company so the organization should retain their employees. If the employees leaves an organization the company should search for another person and appoint him due to this money and time is been wasted. Customers satisfaction is main part in the aviation industry. So Air India should see that customers are satisfied while they travel in their flights and should be keep on track when is flights are cancelled they should see to that each and every customer knows it before they come to airport . To Avoid Attrition rate of employee in an organization, the management should have good rapport with the employees and satisfies their needs and should give fringe benefits to retain the employee for long term. Air India can develop their company by implementing and Follow the phase I, 2, and 3 to with stand in the current aviation industry .Air India should immediately implement the phase of the implementation plan to retain the employee and develop the organization and this point. If Air India follows the Given Recommendations it will be good for the organization to have healthy relationship with the employees to retain them in the company for long period. If Air India wants to retain their business and retain their customers they should satisfy the customer by changing the infra-structure of flights and inform them about the flights cancellation and giving some good discounts for frequent flyers. This helps the Air India for Long term run in the aviation Industry.

References:
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http://home.airindia.in/SBCMS/Webpages/JRD.aspx? MID=196# http://www.ndtv.com/article/india/180-crores-lost-air-indiastrike-crawls-towards-compromise-103474 http://www.ndtv.com/article/india/air-india-cancels-flightsahead-of-uk-strike-153805 http://www.cedarmesa.org/challenges-faced-by-indianairline-industry http://saraalgoe.hubpages.com/hub/rise-in-fuel-pricesairline-industry http://retention.naukrihub.com/ http://www.ehow.com/list_6197102_airline-employeeretention-strategies.html http://www.retentionconnection.com/view_articles_retention .php

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