INDUSTRIAL PROFILE

Introduction to the Insurance Industry

INTRODUCTION The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalisation) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related Acts. With such a large population and the untapped market area of this population Insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 per cent to the countrys GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation Malhotra Committee was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was Participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform. Since then the insurance industry has gone through many sea changes .The competition LIC started facing from these companies were threatening to the existence of LIC .since the liberalization of the industry the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today. The use of new distribution

techniques and the IT tools has increased the scope of the industry in the longer run.

HISTORY OF INSURANCE SECTOR

The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important milestones in the life insurance business in India are given in the table 1. Table 1: milestones in the life insurance business in India Year 1912 1928 Milestones in the life insurance business in India The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non1938 1956 life insurance businesses Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 245 Indian and foreign insurers and provident societies taken over by the central government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.

The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestones in the general insurance business in India are given in the table 2.

LIFE INSURANCE CORPORATION OF INDIA (LIC)

Life Insurance Corporation of India (LIC) was formed in September, 1956 by an Act of Parliament, viz., Life Insurance Corporation Act, 1956, with capital contribution from the Government of India. The then Finance Minister, Shri C.D. Deshmukh, while piloting the bill, outlined the objectives of LIC thus: to conduct the business with the utmost economy, in a spirit of trusteeship; to charge premium no higher than warranted by strict actuarial considerations; to invest the funds for obtaining maximum yield for the policy holders consistent with safety of the capital; to render prompt and efficient service to policy holders, thereby making insurance widely popular. Since nationalisation, LIC has built up a vast network of 2,048 branches, 100 divisions and 7 zonal offices spread over the country. The Life Insurance Corporation of India also transacts business abroad and has offices in Fiji, Mauritius and United Kingdom. LIC is associated with joint ventures abroad in the field of insurance, namely, Ken-India Assurance Company Limited, Nairobi; United Oriental Assurance Company Limited, Kuala Lumpur and Life Insurance Corporation (International) E.C. Bahrain. The Corporation has registered a joint venture company in 26th December, 2000 in Kathmandu, Nepal by the name of Life Insurance Corporation (Nepal) Limited in collaboration with Vishal Group Limited, a local industrial Group. An off-shore company L.I.C. (Mauritius) Offshore Limited has also been set up in 2001 to tap the African insurance market.

Some Areas of Future Growth

Life Insurance The traditional life insurance business for the LIC has been a little more than a savings policy. Term life (where the insurance company pays a predetermined amount if the policyholder dies within a given time but it pays nothing if the policyholder does not die) has accounted for less than 2% of the insurance

premium of the LIC (Mitra and Nayak, 2001). For the new life insurance companies, term life policies would be the main line of business. Health Insurance Health insurance expenditure in India is roughly 6% of GDP, much higher than most other countries with the same level of economic development. Of that, 4.7% is private and the rest is public. What is even more striking is that 4.5% are out of pocket expenditure (Berman, 1996). There has been an almost total failure of the public health care system in India. This creates an opportunity for the new insurance companies. Thus, private insurance companies will be able to sell health insurance to a vast number of families who would like to have health care cover but do not have it. Pension The pension system in India is in its infancy. There are generally three forms of plans: provident funds, gratuities and pension funds. Most of the pension schemes are confined to government employees (and some large companies). The vast majority of workers are in the informal sector. As a result, most workers do not have any retirement benefits to fall back on after retirement. Total assets of all the pension plans in India amount to less than USD 40 billion. Therefore, there is a huge scope for the development of pension funds in India. The finance minister of India has repeatedly asserted that a Latin American style reform of the privatized pension system in India would be welcome (Roy, 1997). Given all the pros and cons, it is not clear whether such a wholesale privatization would really benefit India or not (Sinha, 2000). MARKET SHARE OF INDIAN INSURANCE INDUSTRY The introduction of private players in the industry has added value to the industry. The initiatives taken by the private players are very competitive and have given immense competition to the on time monopoly of the market LIC. Since the advent of the private players in the market the industry has seen new

and innovative steps taken by the players in this sector. The new players have improved the service quality of the insurance. As a result LIC down the years have seen the declining phase in its career. The market share was distributed among the private players. Though LIC still holds the 75% of the insurance sector but the upcoming natures of these private players are enough to give more competition to LIC in the near future. LIC market share has decreased from 95% (2002-03) to 81 %( 2004-05).The following companies has the rest of the market share of the insurance industry. Table 3 shows the mane of the player in the market.

COMPANY PROFILE

Introduction to SMC Insurance Broker Pvt. Ltd.

Insurance Broking SMC believes that a transaction is for a moment, but a relationship is forever. Hence it gives all transactions equal importance and strives to offer its esteemed clientele an unmatched service. SMC provides insurance broking services through our subsidiary SMC insurance brokers private ltd. as a direct broker for both life and general insurance. We are licensed as a Direct Insurance Broker with Insurance Regulatory and Development Authority (IRDA) for providing a wide array of insurance services under professional guidance by experienced and experts of the field. We are authorized to offer all types of insurance products, insurance consultancy besides risk assessment and policy servicing for all life and general insurance companies in India. Buyers of insurance products have multiple informed choices in terms of Products offered in the market. A premium rate, Risk coverage, services both pre and post insurance of the policies including claim services through our experts and experiences in our forte.

Insurance solutions for both life and general Insurance Honesty, Transparency , Fairness and Customer care upheld in every Product customization to meet clients requirements Ability to quote quickly and efficiently Personalized solution and attention offered to each client Insurance product products of all the insurance provides under one Ability to settle Claims Quickly

transaction

umbrella

SMC understand the needs of their clients and meet their requirements on a preagreed basis within well defined time frames and quality assurance.

Insurance Product (LIFE) Individual Products

Terms Insurance Key Man Insurance Unit Linked Investment Plans(ULIP) Endowment Plans Pension Plans Child Plans

Group Products

Terms Insurance Gratuity Plans Super Annuation plans EDLI (Employees Deposit Linked Insurance) Leave Encashment Policies

Insurance Product (GENERAL)

Motor Insurance Mediclaim (individual, group, overseas) Personal Cover Safeguard against fire hazard (office/shop/factory/godown/ house) Household Insurance (furniture, jewellery, electronics etc.) Protection against burglary & house breaking Office Umbrella Marine Insurance ( inland & overseas) Professional Indemnity Baggage Insurance Aviation hulk & loss of license

WHAT IS ATTRITION?

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WHAT IS ATTRITION?

Definition
Attrition measures the amount of recurring revenue lost during a particular time frame, expressed on a monthly/annualized basis. Attrition can be measured in many differentways. The nomenclature used to describe the measurement tool and methodology can vary widely. Gross attrition is the absolute of customer losses without the inclusion of any offset or reduction activity such as price increases, acquisition RMR or other add backs to the customer base. Net attrition is the result of offsetting like customer gains from the gross attrition losses. Within both residential and commercial markets, there are various types of companies that utilize different marketing strategies, which ultimately tend to yield different built in averages of attrition by channel. In the residential market there are the traditional security installation companies versus high-volume companies. The relationship between performance and job satisfaction has been debated since the Hawthorne studies were conducted (Landy. 1989). The Hawthorne studies are credited with launching the human relations human relations npl relationes fpl humans school of management which has often been associated with the slogan. "A happy worker is a productive worker." Human relations theorists traditionally have viewed job satisfaction as being an antecedent . Something that goes before. In the construction of laws, agreements, and the like, reference is always to be made to the last antecedent; ad proximal antecedents fiat relation. to productively.

Contemporary research however has failed to support a consistent statistically significant causal linkage In mechanical engineering, a system of solid, usually metallic, links (bars) connected to two or more other links by pin joints (hinges),

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sliding joints, or ball-and-socket joints to form a closed chain or a series of closed chains. between job satisfaction and worker productivity. After performing a meta-analysis of 74 studies and 213 correlations, laffaldano and Muchinsky (1985) concluded that the link between performance and satisfaction was an "illusory correlation Illusory correlation is the phenomenon of seeing the relationship one expects in a set of data even when no such relationship exists. When people form false associations between membership in a statistical minority group and rare (typically negative) behaviors, this would be a ..... Click the link for more information." Illusory Correlation had previously been defined by Chapman and Chapman (1969) as a perceived relation between two variables that we logically or intuitively think should interrelate , To place in or come into mutual relationship. in, but in fact do not (1985, p. 270). Locke (1976) reversed the theoretical relationship between satisfaction and productivity. He did not deny that there was a relationship between the two constructs, however. He proposed that a worker s good performance causes job satisfaction and not vice versa. On the contrary; on opposite sides.

Researchers have tried too hard to find a global relationship between satisfaction and performance. Because there are so many differences between employee groups in work settings and occupational requirements, a global relationship between productivity and job satisfaction may not be discoverable. In fact, the attempt to force a universal interpretation upon data obtained from an occupational environment can lead the researcher to wrong conclusions (Johnston, et al., 1990; Churchill, Ford and Walker 1974). The insurance industry seems an especially fertile field in which to perform productivity/ satisfaction research. Schwartz (1991) states that agent retention is "the bane BANE. This word was formerly used to signify a malefactor. Bract. 1. 2, t. 8, c. 1. of life insurers. "According to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions.

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3. the Life Insurance Marketing Research Association (LIMRA Life Insurance and Market Research Association (now LIMRA International, Inc.) ), in 1989, the four-year retention rate for insurance agents was 19 percent (1991a) This low retention rate may indicate two conditions (1) the failure rate for agents is high, and (2) successful agents frequently become dissatisfied and seek: employment from another insurance company.

Failure to retain agents can be an expensive proposition. An unpublished report distributed by Learning International (1989) estimated that turnover among salespeople . Persons who are employed to sell merchandise in a store or in a designated territory .in 1988 cost companies approximately $40,000 per salesperson. McNeilly and R. E. Goldsmith (1991) states: "Sales managers irecteur commercial sales manager sale n want to retain their best salespeople through positive strategies that do not at the same time retain the poorer performer" (p. 220). One way sales managers might combat the high attrition rate Noun 1. attrition rate the rate of shrinkage in size or number rate of attrition

rate - a magnitude or frequency relative to a time unit; "they traveled at a rate of 55 miles per hour"; "the rate of change was faster than expected" is to keep insurance salespeople satisfied. However, before emphasizing salesperson satisfaction, sales managers might want to ask the following questions (1) What is the relationship between satisfaction and performance; and (2) What is the relationship, between satisfaction and tenure? This paper will attempt to address those two questions.

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As for the commercial market, there is the traditional outright sale versus the leased system. On average, there are industry ranges for net attrition. The following is a breakdown of the ranges that TRG has encountered during its work with a significant cross section of the industry involved in the residential and commercial markets: Average Net Attrition Ranges Market Type Low High Residential Traditional Installation Co. 2.5% 7.5% High-Volume Co. 8.0% 15.0% Commercial Traditional Outright Sales 2.0% 6.0% Leased Systems 3.7% 8.7% Before determining the appropriate method of measuring attrition, we need to know what is in and out of each companys calculations. The measuring of customer losses on a gross basis seeks to identify customer losses regardless of what actions caused the loss and what actions were taken to mitigate or reduce those losses. Gross attrition is the purest of the measurement tools, as it doesnt allow for any qualitative decisions or processes to obfuscate the loss. Net attrition seeks to measure the qualitative impact of managements effort to control and minimize customer losses. There is a fine philosophical/cost assessment line between including like customer re-signs as an offset to gross attrition versus as part of the cost to create a new customer. TRG has found that for various reasons, such as the related economics and automation system support to the gathering of data, the newly signed up customer in a like location is often best counted as a new customer. This new customer and its related cost to create, in excess of a 6 multiple of RMR (normal costs to program & transfer a system), should be included in the new sale category versus as an offset to gross attrition. The old customer 4 who moved and whose system was re-installed at a loss may not be used as an offset from gross to net attrition. The like customer who was tracked in your marketplace and re-signed without an additional investment should be allowed to reduce gross attrition. Similarly, a customer who cancels and was originally included in the gross attrition but subsequently comes back to the company should be used to reduce that gross attrition upon return. The tracking of offsets to gross attrition (or deciding what is in or out) should be dictated by the following factors:

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 Net investment to maintain the same customer (person or location). Time frame between the loss and the re-sign (maximum six months). Ease of data gathering as to the evolution of a re-signed customer. Specific loss/re-sign causes bad debt cancellation made good should be considered a re-sign. Specific departmental responsibility for tracking and effectuating resigns and related compensation costs. Regardless of the companys policies or definitions, consistency in the calculation method and in the definition of what makes up gross and net attrition is critical. The attrition measurement is most important as to what it tells you about a companys overall performance versus any specific months results.

If employees are to be products, their shelf-lives are getting shorter

In the best of worlds, employees would love their jobs, like their coworkers, work hard for their employers, get paid well for their work, have ample chances for advancement, and flexible schedules so they could attend to personal or family needs when necessary. And never leave. But then there's the real world. And in the real world, employees, do leave, either because they want more money, hate the working conditions, hate their coworkers, want a change, or because their spouse gets a dream job in another state. So, what does all that turnover cost? And what employees are likely to have the highest turnover? Who is likely to stay the longest?

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Attrition is beginning to significantly affect offshore ROI. Just as businesses faced a scarcity of talented IT resources during the dotcom era, organizations in offshore countries such as India are experiencing similar pains. Skilled employees are hopping from job to job and taking with them the customer knowledge and technical expertise that any company needs. Their salaries are increasing, along with their perks, benefits, and bonuses.

Defining the attrition problem

Global outsourcing and the astounding amount of foreign direct investment pouring into China, Russia, and India have created tremendous opportunities and competition for talented IT professionals in those countries. The downside of this increased competition is a rising rate of attrition, particularly in India. Fiscal thirdquarter 2005 (ended December 2004) results filed by Infosys, Wipro, Satyam, and TCS listed attrition rates between 7.6% and 17.7%. Vendors that we have interviewed place the numbers much higher, at 25%60%, while an April 2005 BusinessWeek article estimated an attrition rate of 60%, with some India service providers experiencing up to 80% turnover. To put these attrition numbers into perspective, if a company has 100 programmers and an attrition rate of 25%, then 25 of its IT staff will leave each year. Think about the time and money it took to find, interview, hire, train, and coach those 25 people. Now think about losing them and starting the hiring and training processes anew. How do the hiring and training processes break down in terms of total costs in India? The typical time for advertising, interviewing, screening, negotiating, and hiring a new employee is about two weeks. Companies usually allot one week for programmers to become familiar with the new business, two more weeks for technical training, and one last week for customer training. Now imagine a 25% attrition rate and replacing 25 of these programmers each year. Based on a 16

yearly salary of $15,000 for the human resource person and $25,000 for the programmer, it would cost an additional $63,000 annually in acquisition and employee training costs. After considering these figures, it quickly becomes apparent why companies are investing in strategies to prevent attrition.

High Attrition Rate: A Big Challenge

Defining attrition: "A reduction in the number of employees through retirement, resignation or death" Defining Attrition rate: "the rate of shrinkage in size or number" Introduction: In the best of worlds, employees would love their jobs, like their coworkers, work hard for their employers, get paid well for their work, have ample chances for advancement, and flexible schedules so they could attend to personal or family needs when necessary. And never leave. But then there's the real world. And in the real world, employees, do leave, either because they want more money, hate the working conditions, hate their coworkers, want a change, or because their spouse gets a dream job in another state. So, what does all that turnover cost? And what employees are likely to have the highest turnover? Who is likely to stay the longest? Background of article The IT enabled services (BPO) industry is being looked upon as the next big employment generator (Nasscom predicts 1.1 million job requirement by the year 2008). It is however no easy task for an HR manager in this sector to bridge the ever increasing demand and supply gap of professionals. Unlike his software

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industry counterpart, the BPO HR manager is not only required to fulfill this responsibility, but also find the right kind of people who can keep pace with the unique work patterns in this industry. Adding to this is the issue of maintaining consistency in performance and keeping the motivation levels high, despite the monotonous work. The toughest concern for an HR manager is however the high attrition rate. In India, the average attrition rate in the BPO sector is approximately 30-35 percent. It is true that this is far less than the prevalent attrition rate in the US market (around 70 percent), but the challenge continues to be greater considering the recent growth of the industry in the country. The US BPO sector is estimated to be somewhere around three decades old. Keeping low attrition levels is a major challenge as the demand outstrips the supply of good agents by a big margin. Further, the salary growth plan for each employee is not well defined. All this only encourages poaching by other companies who can offer a higher salary. The much hyped "work for fun" tag normally associated with the industry has in fact backfired, as many individuals (mostly fresh graduates), take it as a pas-time job. Once they join the sector and understand its requirements, they are taken aback by the long working hours and later monotony of the job starts setting in. This is the reason for the high attrition rate as many individuals are not able to take the pressures of work. The toughness of the job and timings is not adequately conveyed. Besides the induction and project training, not much investment has been done to evolve a "continuous training program" for the agents. Motivational training is still to evolve in this industry. But, in all this, it is the HR manager who is expected to straighten things out and help individuals adjust to the real world. I believe that the new entrant needs to be made aware of the realistic situation from day-one itself, with

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the training session conducted in the nights, so that they get accustomed to things right at the beginning. The high percentage of females in the workforce (constituting 30-35 percent of the total), adds to the high attrition rate. Most women leave their job either after marriage or because of social pressures caused by irregular working hours in the industry. All this translates into huge losses for the company, which invests a lot of money in training them. If a person leaves after the training it costs the company about Rs 60,000. For a 300-seater call centre facing the normal 30 percent attrition, this translates into Rs 60 lac per annum. Many experts are of believe that all these challenges can turn out to be a real dampener in the growth of this industry. This only raises the responsibility of "finding the right candidate" and building a "conducive work environment", which will be beneficial for the organization. The need is for those individuals who can make a career out of this. All this has induced the companies to take necessary steps, both internally and externally. Internally most HR managers are busy putting in efforts on the development of their employees, building innovative retention and motivational schemes (which was more money oriented so far) and making the environment livelier. Outside, the focus is on creating awareness through seminars and going to campuses for recruitment. Major Worries for the Industry Reckless Start-ups- a vast majority of the 310 start-ups are headed for a deadend (according to Nasscom). Their capacity utilization is less than one of the three shifts. Many of these companies that converted their empty basements and warehouses into BPO units or firms with $10 million-20 million VC funds that ran out of cash without creating anything more than white elephants. They have driven down prices to grab business, but have failed to deliver. They were always

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clueless about people, processes or technologies- the three key elements of the BPO business. Poor Infrastructure- the industry has more to worry about than just reckless startups. Primary among those is infrastructure. While telecom networks are state of the art, getting a connection still takes up to three months. Unreliable power supply is forcing units to create their own back-ups. Roads are bad and airports are in dire need of repairs and upgrades.

FACTORS AFFECTING ATTRITION

INDIVIDUAL 1. Ambitions/Career aspirations 2. Parental/Family mobility 3. Personality factors

ORGANIZATIONAL Role Related 1. No challenge 2. No learning 3. Style of boss 4. Role clarity 5. Role stress 6. Lack of independence

OTHER Peer pressure Environment

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FACTORS AFFECTING ATTRITION

High Attrition-Another major problem is the high attrition and growth aspirations of the workforce. At least 60,000 of the 171,000 workforce change jobs every year. About 80% of them look for better leaders. Team leaders want to upgrade to supervisors, quality professionals or operations heads. The HR problem threatens to soon become grave. Good agents are becoming hard to find and with tardy infrastructure, big moves to the much talked about smaller towns will take longer. This means costs will rise making it difficult for small VC-funded companies to survive. Attrition rates US Australia Europe India Global Average * Source-Times News New York Staff attrition (or turnover) and absenteeism represent significant costs to most organizations. It is odd, therefore, that many organizations neither measure such costs nor have targets or plans to reduce them. Many organizations appear to accept them as part of the cost of doing business - a sign of increasing job 42% 29% 24% 18% 24%

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mobility and decreasing staff loyalty perhaps, a matter to be regretted but just 'one of those things.' They add a sum in their budgets for 'temp staff' and 'recruitment' and forget about it. However, it seems to be one of the areas in which HR can make a difference and one that can be measured in quantifiable, financial terms against targets. An attrition rate in call (or contact) centers has become legendary. Indeed, the attrition rates in some Indian call centers now reach 80%. This is an extreme figure but the average attrition rates in Indian call centers are up around 30-40%. However, it is interesting to note that the attrition rates in India - and the costs associated - are so high that they can override the benefits of lower wage costs. While wages in call centers in Indian are less than one-eighth of those in Northern Europe, it has been reported that Hewlett-Packard have found the cost per 'ticket' (the cost of processing a query) has doubled "due to the inability of the staff to resolve customer queries efficiently because of language barriers and inexperience." It is said that this increased cost has made HPs move from Ireland to India "completely pointless," and that it can never recover the (substantial) costs of the move. It is further reported that GE Capital has moved a call centre back to Australia "after staff attrition rates of 70% wiped away any potential cost savings." The issue is not with the quality or education of the staff - and still less with the investment in technology. It is simply attrition - people do not stay long enough to be taught or to learn the job. The staff may be cheaper but if they cannot do the job, what's the point? Managing attrition is not just a 'nice thing to do' in Indian call centers. It is the route to their survival. Far from accepting attrition rates as part of the cost of doing business, it is surely something that all organizations should address, and equally surely it is an area

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in which HR can take a lead - measure attrition, seek its causes, set out solutions and target performance. Components to be taken into consideration, while calculating attrition rate

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In terms of numbers, attrition rate means: Total Number of Resigns per month (Whether voluntary or forced) divided by (Total Number of employees at the beginning of 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 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 person's 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. Calculate the cost of conducting an 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. Calculate the cost of the manager who has to understand what work remains, and how to cover that work until a replacement is found. Calculate the cost of training your company has invested in this employee who is leaving. Calculate the impact on 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. 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 of 50% of the person's annual salary for one year of service, increasing each year of service by 10%. Subtract the cost of the person who is leaving for the amount of time the position is vacant.

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Recruitment Costs The cost of advertisements; agency costs; employee referral costs; internet posting costs. The cost of the internal recruiter's 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. Calculate the cost of the various candidate pre-employment tests to help assess a candidates skills, abilities, aptitude, attitude, values and behaviors. Training Costs Calculate the cost of orientation in terms of the new person's salary and the cost of the person who conducts the orientation. Also include the cost of orientation materials. 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. Calculate the cost of the person(s) who conduct the training. 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: 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.

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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. 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. Calculate the cost of mistakes the new employee makes during this elongated indoctrination period. New Hire Costs 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. Calculate the cost of a manager's time spent developing trust and building confidence in the new employee's work. Lost Sales Costs 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 defined 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. Conclusion: It is clear that there are massive costs associated with attrition or turnover and, while some of these are not visible to the management reporting or budget system, they are none the less real. 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 does this mean? Well it means that if a company has 100 people doing a certain job paid 25,000 and that turnover or attrition is running at 10%, the cost of attrition is: (Total staff x attrition rate %) x (annual salary x 80%)

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100 staff at 10% attrition means 10 people leave and are replaced each year. A replacement cost of 80% of a salary of 25,000 means the cost of each replacement is 20,000. The cost of turnover is therefore 10 x 20,000 or 200,000 a year. The on cost to the overall salary bill is 8%. (Saving 8% of salary costs would make the average HR manager a hero.) ALTERNATIVES TO MEASURE ATTRITION TRG has encountered various methods of computing attrition during our years of experience in the industry. The following table offers two different scenarios for our sample customer base over a six-month period. The first scenario depicts a customer base with no acquisitions; the second scenario includes an acquisition in the fourth month of the reporting period. Sample Customer Base Scenario 1 Scenario 2 (No (Including Acquisition) Acquisition) Beginning + New +Acquired -RMR =Ending =Ending Month RMR Cancels RMR 1 $ 50,000 500 0 300 $ 50,200 $ 50,200 2 $ 50,200 700 0 450 $ 50,450 $ 50,450 3 $ 50,450 850 0 550 $ 50,750 $ 50,750 4 $ 50,750 900 20,000 750 $ 50,900 $ 70,900 5 $ 50,900 1,000 0 800 $ 51,100 $ 71,100 6 $ 51,100 1,200 0 900 $ 51,400 $ 71,400 5,150 20,000 3,750 $ 304,800 $ 364,800 Using the above customer base sample, we have calculated the attrition level using five of the most prevalent attrition measurement methods currently being

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used in the industry. A (Multiple by 2 to annualize the cancellations for the sixmonth reporting period) 1. Typical Lending Covenant RMR Method Step 1: Cancelled RMR for the Reporting Period = Monthly Attrition Sum of Ending RMR for Each of the 6 Months Step 2: Monthly Attrition (from Step 1)* 12 =Annualized Attrition Calculation Examples: No Acquisition: Step 1: $3,750 / $304,800 = 1.2% Monthly Attrition Step 2: 1.2% * 12 = 14.4% Attrition Acquisition: Step 1: $3,750 / $364,800 = 1.0% Monthly Attrition Step 2: 1.0% * 12 = 12.0% Attrition Pros & Cons of Typical Lending Covenant RMR Method Pros Cons Accounts for and weights RMR acquisitions not the easiest of the calculations Accounts for timing of acquired RMR Accounts for rapid internal growth Accounts for timing of rapid internal growth Similar too many lending institution calculations 2. Modified Static Pool Method Total Attrition for Reporting Period * 2 a = Annualized Attrition RMR Beginning of Reporting Period Calculation Examples: No Acquisition: ($3,750 * 2) / $50,000 = 15.0% Attrition Acquisition: ($3,750 * 2) / $50,000 = 15.0% Attrition Pros & Cons of Modified Static Pool RMR Method Pros Cons Ease of computation Does not account for or weight acquired RMR Widely used Does not account for or weight rapid internal RMR growth

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3. Monthly Attrition Method Attrition for Most Current Month * 12 = Annualized Attrition Ending RMR of Previous Month Calculation Examples: No Acquisition: (900 * 12) / 51,100 = 21.1% Attrition Acquisition: (900 * 12) / 71,100 = 15.2% Attrition Pros & Cons of Monthly Attrition Method Pros Cons Ease of computation Reporting period not substantial Monthly results can vary greatly Results do not provide a meaningful trend 4. Average RMR Method Total Attrition for Reporting Period * 2 a = Annualized Attrition (Beginning RMR + Ending RMR) / 2 Calculation Examples: No Acquisition: (3,750 * 2) / 50,700 = 14.8% Attrition Acquisition: (3,750 * 2) / 60,700 = 12.3% Attrition Pros & Cons of Average RMR Method Pros Cons Accounts for RMR acquisitions does not account for timing of acquisitions Accounts for rapid internal growth does not account for timing of growth Ease of computation 5. Roll Forward Method Cancelled RMR during the Reporting Period * 2 a =Annualized Attrition Avg. Total of RMR Held during the Reporting Period Calculation Examples:

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 No Acquisition: (3,750 * 2) / 52, 5751 = 14.3% Attrition Acquisition: (3,750 * 2) / 62, 57511 = 11.9% Attrition 1 (New RMR for the Reporting Period/2) + Beginning RMR Pros & Cons of Roll Forward Method Pro Con Accounts for RMR acquisitions does not account for timing of acquisition Accounts for rapid internal growth does not account for timing of growth Complex calculation Summary of Results from the Various Attrition Calculation Methods The attrition calculation results obtained from the five methods are summarized in the following table: Summary of Attrition Calculations Results No RMR with RMR Calculation Method Acquisition Lending Covenant Method 14.4% 12.0% Modified Static Pool Method 15.0% 15.0% Monthly Attrition Method 21.1% 15.2% Average RMR Method 14.8% 12.3% Roll Forward Method 14.3% 11.9% The significant variance in the results obtained from the various calculations, as illustrated above, is the main reason for developing a consensus within the industry on the use of one or two primary industry standards for measuring attrition. THE ATTRITION CALCULATION OF CHOICE Based upon our experience in the Security Industry and after encountering the various attrition methods described in the previous section, we feel that the Security Industry should adopt the Typical Lending Covenant RMR Method of calculating attrition as the industry standard. This method of calculating attrition

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best represents a Companys attrition rate under a variety of different circumstances and situations. In addition to accurately representing attrition for a stable, constant growth Company, this method correctly represents the true attrition rate for Companies experiencing rapid growth and/or doing multiple acquisitions. Due to the weighting given to the ending RMR over the six-month reporting period, this attrition method is the most accurate of all methods described and can be used under any situation a company may be experiencing. Because of this, we feel the industry should standardize and use this common measurement of attrition that all Companies can be gauged against knowing that the rate of attrition was calculated in the same manner. The following template can be used to calculate attrition using the Typical Lending Covenant RMR Method: Lost RMR for the six-month period $ (I) RMR for each of the months ending for the six month period: Month one: Month two: Month four: Month five: Month six: $______________ $______________ $______________ $______________ $______________

Month three: $______________

$_________(II) RMR monthly attrition is defined as the quotient of (I) above divided by (II) above, expressed as a Percentage _____% Multiplied by twelve x 12 Actual Annualized RMR Attrition _____% This method also facilitates rolling the measurement forward as the months (period) progress.

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THE COST OF ATTRITION If the company and its management spent as much time and economic effort controlling attrition the loss of customers as they did trying to find and buy into the next new customer, the net value of the business would be enhanced. Example $50,000 RMR Company Adding 50 new customers per month at $30 for monitoring/service per month Market Value Assumption 35 Multiple Static Pool Method of Attrition Measurement Net Ending RMR Year 1 Year 2 Year 3 Year 4 Year 5 6% Annualized Attrition 65,000 77,876 89,984 101,360 112,502 8% Annualized Attrition 64,004 76,880 88,724 99,632 109,664 11% Annualized Attrition 62,504 73,628 83,528 92,336 100,184 Valuation Difference Year 1 Year 2 Year 3 Year 4 Year 5 6 vs. 8% Annualized Attrition 34,860 34,860 44,100 60,480 99,330 8 vs. 11% Annualized Attrition 52,500 113,820 181,860 255,360 331,800 6 vs. 11% Annualized Attrition 87,360 148,680 225,960 315,840 431,130 A 2% attrition difference can make a significant difference in the ultimate value of the entity/customer base. Thus the importance of implementing meaningful and effective management tools such as attrition measurement and attrition cause analysis to help the management team focus on the symptoms of attrition within their organization. The whole management team and work force must be guided and motivated to minimize customer losses.

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WHAT ATTRITION MEASUREMENTS CAN TELL ABOUT A BUSINESS

Attrition can indicate direct and indirect conclusions about a business. Direct Conclusions Possible: Indication of a companys ability to set effective priorities Indication of the quality of customer care and service Indication of a companys operational strengths and weaknesses Indirect Conclusions Possible: Probability of the company retaining remaining customers and to what extent Probability of the company attracting new customers and to what extent Companys strength in managing their business in a competitive environment The attrition results can be traced back, in part, to the origin of the new system as marketed or sold. It continues to be supported by the figures that the greater the customer investment in a security system, the more likely that you will experience less attrition or customer losses. The financial community continues

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to focus on the credit score of a customer as a leading indicator of the likelihood of losses that a low credit score will yield. In the current multi-credit check environment that exists today, access to customer credit history is readily available. This multi-credit check environment has a negative impact on a consumers credit score through activity, which has nothing to do with increasing credit risk. This personal attrition characterization continues to lose some of its newfound validity as a leading indicator of predicting customers attrition.

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Reasons for attrition

It is not easy to find out as to who contributes and who has the control on the attrition of employees. Various studies/survey conducted indicates that every one is contributing to the prevailing attrition. Attrition does not happen for one or two reasons. The way the industry is projected and speed at which the companies are expanding has a major part in attrition. For a moment if we look back, did we plan for the growth of this industry and answer will be no. The readiness in all aspects will ease the problems to some extent. In our country we start the industry and then develop the infrastructure. All the major IT companies have faced these realities. If you look within, the specific reasons for attrition are varied in nature and it is interesting to know why the people change jobs so quickly. Even today, the main reason for changing jobs is for higher salary and better benefits. But in call centers the reasons are many and it is also true that for funny reasons people change jobs. At the same time the attrition cannot be attributed to employees alone. Organizational matters:

The employees always assess the management values, work culture, work practices and credibility of the organization. The Indian companies do have difficulties in getting the businesses and retain it for a long time. There are always ups and downs in the business. When there is no focus and in the absence of business plans, non-availability of the campaigns makes people to quickly move out of the organization. Working environment:

Working environment is the most important cause of attrition. Employees expect very professional approach and international working environment. They expect

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very friendly and learning environment. It means bossism; rigid rules and stick approach will not suit the call center. Employees look for freedom, good treatment from the superiors, good encouragement, friendly approach from one and all, and good motivation. Job matters:

No doubt the jobs today bring lots of pressure and stress is high. The employees leave the job if there is too much pressure on performance or any work related pressure. It is quite common that employees are moved from one process to another. They take time to get adjusted with the new campaigns and few employees find it difficult to get adjusted and they leave immediately. Monotony sets in very quickly and this is one of the main reasons for attrition. Youngsters look jobs as being temporary and they quickly change the job once they get in to their own field. The other option is to move to such other process work where there is no pressure of sales and meeting service level agreements (SLA). The employees move out if there are strained relations with the superiors or with the subordinates or any slightest discontent. Salary and other benefits:

Moving from one job to another for higher salary, better positions and better benefits are the most important reasons for attrition. The salary and offered from MNC companies in Bangalore, Delhi and Mumbai have gone up very high (Rs 15000 to Rs 18000 per month) and it is highly impossible for Indian companies to meet the expectation of the employees. The employees expect salary revision once in 4-6 months and if not they move to other organizations. Personal reasons:

The personal reasons are many and only few are visible to us. The foremost

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personal reasons are getting married or falling in love or change of place. The next important personal reason is going for higher education. Most of the BE, MCA and others appear for GATE examination or other examinations and once they get cleared they quickly move out. Health is another aspect, which contributes for attrition. Employees do get affected with health problems like sleep disturbances, indigestion, headache, throat infection and gynecological dysfunction for lady employees. Employees who have allergic problems and unable to cope with the AC hall etc will tend to get various other health problems and loose interest to work. Poaching:

The demand for trained and competent manpower is very high. Poaching has become very common. The big companies target employees of small companies. The placement agencies have good days for doing more business. The employees with 4-6 months experience have very good confidence and dare to walk out and get a better job in a week's time. Most of the organizations have employee referral schemes and this makes people to spread message and refer the know candidates from the previous companies and earn too. Employees advocate: One of the main reasons why employees leave companies is because of problems with their managers. An HR professional can be termed an employees advocate and a bridge between top management and employees at all levels. There is a huge gap between HR professionals and employees in terms of understanding challenges and delivering requirements. HR has not really understood the problems associated with employees careers and jobs. The companys overall plans and strategies also depend on HR professionals as they voice employees problems and requirements. The HR department should have 37

genuine interest in the employees welfareit is responsible for making sure that their expectations are met. By doing this it is easier to meet the companys business targets. TRACKING ATTRITION CAUSES Attrition is a measurement of the companys ability to provide timely and competent service, from the installation thru to the termination process (move to a rest home/nursing care). There will be Acts of God (Hurricane Andrew Homestead, Florida in 1992) and economic downturns (1991 Recession with the Northeast and Southwest United States) that also impact attrition beyond service causes. The reasons for the dissatisfaction measurement are, for the most part, company caused and the attrition tracking process should be managed to identify and rectify those causes within each organization. Listed below are some of the main reasons why an account cancels its monitoring/maintenance service: Poor Service Slow Respond to Add, Move and Change Lost to Competitor Out of Business Relocated Out of Market Bad Debt Monitoring Response Problems Billing Problems Deceased/Rest Home Price Increase End of Contract Term TRG Associates implemented a universal Excel/Lotus attrition tracking system that creates a template by which to measure the causes and amount of attrition. A copy of the template is attached in Exhibit A.

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Reason for leaving an organization

Employees expectations of the job. Absence of conducive workplace environment. Mismatch of job profile. Lack of opportunities for pursuing higher studies and career growth. Lack of recognition/appreciation. Lack of trust. Lack of empowerment and employee engagement. Lack of confidence in peers, seniors and the management. Stress and work-life imbalance. Odd working hours. More lucrative job offers.

Employee Attrition- causes and remedies

Employee attrition is caused not only by natural inevitabilities like disability and death or workplace phenomena such as retirement and resignation, but also by the burgeoning mobility of HR Resources or the Human Capital. This mobility On its part assumes, very often, endemic traits and on occasions even epidemic dimensions. Efforts for survival of corporate amidst the competitive environment have thrown up new avenues that aided attrition. Also, ergonomic discomfort, functional incompatibility and inadequate pay package have accelerated attrition. Hence, the policies aimed at controlling attrition should be fully oriented towards assuring that the needs and welfare of the employees would be taken full care of and in addition should project the right employer brand or an agreedable organizational behavior towards the employees so that it instills confidence and trust in their minds and motivates them to stay on.

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LACK OF CAREER MOBILITY & CHANLLENGES

CAUSES OF ATTRITION
LACK OF CONFIDENCE IN SUPERVISORS

WORKING ENVIRONMENT

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ROLE OF HR
It is time to think scientifically and have a concrete approach in implementing the actions. It is not the money alone that retains employees. Management should also consider other aspects such as secure careers, benefits, perks, transparent communication in the HR policies, etc. In certain sectors such as BFI where the companies do not invest a huge amount in training the new entrants, a marginal rate of attrition could be acceptable. However, the attrition battle could be won by focusing on retention, making the work environment a fun place and providing career growth prospects for employees. Here the HR should be treating the employees or the workforce as customers. Organizational culture also has an impact on the employees who stay or leave. This could be due to the relationship between the bosses and the subordinates. The following are the other tools to retain the employees or minimize the rate of attrition:

EMPLOYEE RETENTION TOOL

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COMBATING ATTRITION

4. 5. 6. Strengthen the recruitment process referral helps Employees Make induction program a pleasant experience. 7. 8.

Career opportunities Working environment Training & Development Eliminate the poor Managers Show deadwood the door

9. Involvement of employees in the decision-making process 10. Employee satisfaction surveys 11. Work-life balance 12. Making the Org. very transparency

Handling attrition?
Earlier the retention was the sole responsibility of HR Department and at the most the department heads will be accountable for the retention of talent. In companies the wheels have changed and multi dimensional approach needs to be adopted. More of concerted efforts only would help to retain the talent. Everyone has to contribute to hold the employees little longer period. All the leading companies are trying several methods to retain the talent and few of those innovative HR practices are: (based on a survey)

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Providing stimulating work environment:

In terms of stated work pressure, only 17% have claimed light pressure. This may point to a reasonably high-pressure environment in conventional terms, not realized as most respondents have no other industry experience. The atmosphere at the workplace however, was generally positive. Almost half worked more than 45 hours per week.

Free transport and free food:

Majority of the breaks were for meals and there were no significant problems faced in taking the breaks.

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Almost 2/3rd employees travel more than 10 kms to work everyday. This is a huge strain on quality time available with the family and ostensibly results in stress in numerous ways compared with other industries. The root cause is that most BPOs are located outside the city as government lands have been allocated to the MNCs at better rates there.

Although taxi / bus services are provided by most employers, as many as 30% workers travel crammed (more than 5 persons to a taxi). Whats more, 79% waste more than 30 minutes of their productive lives everyday waiting for commute. Interestingly, lower salary workers get no such benefits. Good rewards and recognition programmes:

As many as 56% admitted to being asked to work overtime. 44% refused the question implying that conditions are created such that all probably are coerced

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into working overtime. The oppressive part was further that as high as 41% claimed to not having been paid for overtime.

Recreation clubs, Canteens, Entertain programmes , fun activities with in the work area:

Many companies have canteens though the quality of food is not great.

Good pay and benefits:

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A huge 58% of starters are dissatisfied with their promised packages vis--vis delivered salary.

Other practices include:

- Promotions and salary increase on a regular basis. - Better learning opportunities, Encourage enroll for distance learning programmes. - Regular holiday packages, gifts, outings etc. All the above activities are being undertaken to a greater extent or little more in all large Companies. Surprisingly the attrition rate is not coming down in any of the companies, but it is going up and it may increase in the coming days. This is a time to introspect as to what is lacking in the approach. One thing is missing is attention to individual needs. Employees have varied expectations and it is becoming difficult to understand them and by the time you make an attempt to understand the expectation changes and it is still becoming difficult to meet the customized demands or expectations. To quote an example, if a friend leaves, 46

another close friend will also leave and he will lure another 3-5 persons. Moving for higher education and marriage are the major reasons for attrition. To tackle these will be impossible with any type of strategies and approaches. The HR personnel have become silent spectators and start hunting for new personnel to replace. The broader approach is to bring sanctity in the recruitment process like demand the relieving letter from the previous company, have non-hire agreements with the companies in the particular area. It is not easy to bring the entire company under a forum. Nasscom has attempted to bring out certain guidelines on the matter and the impact is not felt yet. The MNC culture, high salary level and benefits offered by them are the only two major aspect of attrition and no one can halt them doing so. How Insights Can Help Build Strong Manager/Employee Relationships:

The Insights Discovery System is based on perspectives and attitudes relevant to understanding organizational and cultural requirements and needs of people in relation to motivation and leadership. The understanding of individual differences that Insights provides is fundamental to improving communication, co-operation and building effective and high morale teams. This understanding is what bridges the gap between manager and employee. The Insights Discovery System generates reports that reveal personal preferences or triggers of each individual - including issues that cause stress. In essence, Insights can bring about a closer relationship between employee and manager to enable both parties to better adapt, connect and understand one another. An employee may be highly competent but his or her style may be different from that of the direct manager. The "Value to a Team" section of an Insights report provides crucial information to a manager who tends to evaluate all employees against one set of standards. Insights can help managers recognize the value

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and uniqueness of each person's contributions then reward them accordingly. Insights also serve as a communication vehicle for discussions about an employee's current and future interests. Insights help managers and employees better identify what values (needs) are most important to each individual and how these values impact the person's attitude towards work. Values can range from an employee feeling stable and secure to someone enjoying challenge. The Insights Discovery System is a powerful workforce enhancement tool. It can: - Enhance the effectiveness, commitment and retention of an incumbent workforce though increased understanding of human behavior - Motivate and retain employees whose basic monetary and material needs may have been satisfied, but who are seeking their internal drives - Improve HR planning and development - Identify motivational and managerial issues related to interpersonal style - Reduce the impact of turbulence and organizational transition on employee commitment and productivity.

How to save high attrition rates?

How much would you invest to keep your employees focused and happy? This is the question on the minds of CEOs and managers worldwide as the technology boom lifts and the employment market opens. From the employer's perspective, employees are an investment. You interview to make sure an individual has good work ethic, motivation, and drive. Most of the time, employees are considered a financial investment. Yet there's much more to it than that. There is a significant emotional investment that is crucial to accelerating business strategies and reaching organizational goals.

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You probably know someone who owns an outdated, overused vehicle but won't entertain the thought of trading it in even though they can afford to upgrade. Why, you might ask, do they keep it? Well, the owner has probably invested substantial time, money and care into keeping it in top condition, not to mention the dependability that has taken them to countless doctors appointments, baseball practices and events. It seems senseless to throw it away. The cost of replacing the vehicle would be enormous compared to the cost of upkeep on the old one. Even with inanimate objects, we become accustomed to personality and quirks and develop a common trust. When this same logic is applied to employees, we find the cost of replacing employees comparable to that of investing in a new automobile. Recruitment, hiring, benefits and administrative costs put an organization upside down on the investment. Thankfully, companies have come to realize that keeping employees is more cost-effective than replacing them. Retaining valuable employees has other benefits - retaining the vault of knowledge that's been accumulated, skills learned and trust and relationships they have built with customers and co-workers. People Are Not Easily Replaced

Even though today's pool of unemployed workers is deep, organizations choose to spend more time and resources on retaining existing employees than starting from scratch. Yes, there are financial reasons behind this focus on retention. However, there are many other contributing factors such as the effect attrition has on customer service, corporate culture and employee morale and loyalty. All these factors can and will be effected by turnover. Basically, when good people leave an organization they take their training and knowledge and often times, relationships with them.

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Drivers of Turnover

Turnover is often driven by corporate restructuring and tight competition for key talent. For many firms, surprise employee departures can have a significant effect on the execution of business plans and may eventually cause a parallel decline in productivity. This phenomenon is especially true in light of current economic uncertainty and following corporate downsizing when the impact of losing critical employees increases exponentially. When managers or supervisors are asked why good people leave, most respond, "Its about money." Or, they dismiss the departure matter-of-factly by stating the employee "received a better offer." Contrary to popular belief, research indicates that money is not even on the list of top five reasons employees give when asked why they are leaving an organization. When viewed from the employees' perspective, a healthy organization is one in which people are generally satisfied with the quality of their work life. On most days they feel good about going to work. They feel empowered to help shape decisions that affect them, they have the resources and skills to satisfy customer needs and they are generally confident in the abilities of the leadership team. From the organization's perspective, the organization is healthy if it is viable as measured by profitability, competitive market position and customer satisfaction. A healthy organization also responds well to the need for change; it is adaptive and thereby ensures its future - meaning that following a major upheaval or transition, the healthy organization rebounds and employees remain committed. Bottom line, it is the role of the manager, that most influences an employee's

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decision to stay or depart from an organization. People will leave if they don't like their manager - even when they are well paid, receive recognition and have a chance to learn and grow. In fact, disliking or not respecting the boss is the primary reason for talent loss. Research shows the reasons for employee departures are (in descending order): 1. Employee/manager relationship 2. Inability to use core skills 3. Not able to impact the organization's goals, mission 4. Frequent reorganizations; lack of control over career 5. Inability to grow and develop 6. Employee/organization values misalignment 7. Lack of resources to do the job 8. Unclear expectations 9. Lack of flexibility; no 'whole life balance' 10. Salary/benefits It is very important to know that the above factors are often NOT the ones mentioned in most attrition studies published by individual organizations. Additionally, this information does not match the data frequently obtained during an employee's exit interview when asked about the reasons for departing. The rationale behind this discrepancy is that exit interviews are frequently conducted by the departing employee's manager or HR manager, hindering honest responses. Typically, employees are hesitant to tell these company representatives the truth for fear of burning bridges or getting a bad reference.

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How to curb attrition?

Money is not everything

Although the importance of higher packages is slowly diminishing, among fresher or laterals with less than three years of work experience, money is still considered to be the highest priority. Employees want not only work recognition, but also extra perks." A number of professionals are looking at more challenging jobs. "In several cases, faced with a choice between more money and a challenging job, employees have opted for the latter as it allows them to learn new technology and increase domain expertise." People analyze the training programmes of prospective companies with those of their current organization, which means that how an organization grooms an employee is weighed to a greater extent. This is because they know that developing next-level skills will keep them ahead in the job market, and finally result in better compensation. They also look for a job with higher levels of responsibility, better learning opportunities. Vision and objectives The next level of communication, a crucial part of retention, starts with acquainting employees with the companys vision and objectives. Organizations successful in retaining employees clearly pass on their goals and achievements. Conducting regular meetings and updating employees, especially new entrants, about the companys status and achievements is a must. They should concentrate on leadership and brand building as people prefer to be associated with a brand. Respect for the job should be created by BPOs. The youth should feel proud to be a part of the billion-dollar industry.

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Mentoring and handholding new recruits from day one to four months are important tasks; during this period, they should be familiarized with the culture of the company. It is at this time that new entrants experiment with different options. Hence they should be exposed to the best values the company has. If they are informed about regular happenings in the company, employees will be confident about the future and not try to look for better options. Treat employees like Customers

Even while companies strive to understand which organizational, job, and reward factors will contribute to holding back employees, industry experts have found several loopholes at the top management and HR management level. Companies should have a similar approach to employees and customers. If a company strives to retain an employee in the same way it tries to retain a customer, him leaving the organization could be out of question. Since software professionals have different priorities at different points of time, organizations need to structure their offer-mix while recruiting new hires, as well as promoting potential ones. Communication is the foundation for the entire process of managing attrition. This communication begins right from recruitment. In cases of peer pressure, an employee aims to join a well-known company. This could be achieved by brand building, which attracts the right talent and helps in retention as well. Understanding an employees needs at various levels is a recommended HR practice. Firing

Sometimes, firing can look like attrition. Looking at firing and attrition together in a different light, firing can be an excellent tool to contain attrition. Attrition can simply be defined as employee leaving his current job due to reasons like, job 53

pressure, health problems, personal reasons, inefficient boss, lack of job security etc. All the above reasons are interlinked and can be the reasons for good workers to quit. If the team has under-performers who despite given sufficient support and training is unable to perform, but they continue to be part of the team damage the morale of the team. A performer will not want to be part of the team, which has non-performers because he will have to compensate for the nonperformer, thereby increasing his job output/pressure. A continuous job pressure results in health problems. Having frequent health problems not only reduces his performance, but also affects him financially. At this juncture, the performer realizes that he is working with an inefficient manager who is not capable of cleaning up the team by firing non-performers. With the above, the performer employee feels insecure and resigns. Firing non-performers can be an efficient tool to contain attrition. Consider feedback

It is important to take feedback from employees through different means and work with the HR department to iron out differences. As industry experts point out, feedback can be got in two waysduring the employees tenure, and through exit interviews. Inputs can be secured from existing employees through various employee relationship management tools. The Wipro Listens and Responds initiative at Wipro aims to capture the concerns and grievances of its employees. The feedback we get through this tool will be analyzed, and action will be taken on it. Our employees are very excited that their feedback is being taken seriously, says Sahoo. Exit interviews help management learn the reasons why employees leave the company; based on their revelations, the organization can address the problems of existing employees, thereby curb attrition.

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Spend Time Developing and Benchmarking Incentives

Whenever the demand for a professional in a particular field heats up, the perks associated with the job start to pile up. Standard perks for an India-based "fresher" (a new entrant in the IT services industry with little work experience) typically include free transportation, educational assistance, healthcare benefits, performance-based bonuses, onsite cafeteria, stock options, and interest-free loans to absorb the cost of relocation or maybe to finance the purchase of a twowheeler. According to Wipro's web site, its employees even have access to an agency that will handle such "domestic chores" as paying bills, thereby giving IT workers more free time. An important part of designing incentives is aligning them with market benchmarks. As far as salaries, HR firm Hewitt Associates reports that India showed the largest overall salary increase in the Asia-Pacific region in 2004. Salaries in India grew by 11.6% overall, while China trailed with a 6.4%8.4% hike, the Philippines showed a 7.4%7.7% increase, and Korea saw wages jump by 6.4%6.8%. Salary increases for middle managers in India were even more dramatic: Nasscom, India's software association found that salaries for middle managers rose by as much as 30% in the last two years. These salaries are often paired with expansive benefit packages that include standard entry-level benefits as well as special services such as help finding and buying a home or enrolling children in school. Captive centers and IT service providers have to offer innovative compensation and benefitsor risk losing valued employees to competitors. Nonstop evaluation and benchmarking are "need to do" activities for IT managers. Subsidize Education and Certification

In the United States, many companies reimburse employees for advanced degrees or certifications that relate to their area of expertise. Until recently, the

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opposite was true in India, but that trend has begun to change as businesses have discovered that a significant portion of their attrition problems stem from employees leaving to pursue a master's degree. Several offshore service providers have teamed with universities to offer their workers management-level master's courses at a subsidized rate, and watched attrition rates drop as a result. For example, Cognizant Technology Solutions, an IT service firm with 17,000 employees, partially reimburses Indian staff that pursues master's degrees at BITS, a higher-education institution located in Pilani, India. Business process outsourcing (BPO) player 24/7 Customer, in association with the Indian Institute of Management Bangalore, launched a management-education seminar series called "Beyond Knowledge," through which 24/7 aims to educate employees about the BPO industry and discuss related careers. Multiple providers have followed the lead of Cognizant and 24/7. In several offshore countries, advanced degrees are considered crucial to social standing. It's important for U.S. firms with little international experience to recognize this desire among employees and design programs accordingly. Change Locations

The high prices and resource crunch in top-tier Indian cities such as Bangalore and Mumbai have led many companies to execute alternative location strategies. Many vendors are sending work to tier-two cities (Hyderabad or Chennai) or even tier-three cities (Noida or Chandigarh), where labor and real estate costs as well as attrition may be cut in half. Such benefits come at a price: The infrastructure quality lags that of more advanced cities, and the search to find qualified people may take longer.

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Another option to combat the rising attrition rates in India is to locate in other countries. Sykes Enterprises, for example, disclosed that it is relocating the customer contact management work at its Bangalore, India, facility because the center delivered an inadequate return and a limited competitive advantage. The Tampa-based company thinks the work is better suited for the other Asia-Pacific offshore centers in its portfolio, such as China. Sykes expected to incur total charges of approximately $0.8$1.5 million for its plan to relocate work. Rotate Employees

Employees who don't feel challenged by their work often leave. In response, companies such as TCS have programs that rotate employees into different disciplines about every two years and expose them to new locations, projects, and technologies. L&T InfoTech, a software solutions provider with 4,000 employees and six development centers in India, has implemented a similar program. Offshore employees are asking for a clear career path with increased responsibility and frequent recognition of achievement. Established U.S. and European multinational companies have long had learning programs that set expectations for performance goals such as learning a particular tool or proprietary software. Companies practicing off shoring need to provide new challenges and opportunities for skills development through training or job rotation. It may become the only reason your best employees stay with you. Combat Poaching by Encouraging Referrals

Rather than going through a prolonged posting process and screening a deluge of rsums, some companies poach employees directly from their competitors and offer to double salaries or buy out contracts on the spot to scale up quickly.

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Poaching is generally a bad idea, as it drives up salaries and discourages employee loyalty. An employee referral program can serve as an alternative and effective recruiting strategy. Satisfied employees can be a company's best sales tool and add a personal touch that a print or radio campaign lacks. A Voice & Data survey of the top 15 Indian outsourcing companies with 1,000-plus employees found that referrals constituted 23% of new hires. For some companies, the number was even higher, at 40%. The study also observed that recruits hired through employee referral programs are "stickier"; that is, they stay with companies longer than non-referrals. Just Ask: Are Your Employees Satisfied?

Retention is inextricably linked to employee satisfaction, so it pays to periodically survey employees hopefully before their exit interviewsabout job satisfaction issues, and act on the data gathered. The aim is to determine why some employees depart and some remain with the company, and to define the traits of productive, successful employees. Many companies examine the reasons employees leave, which don't reveal as much as the reasons they stay. An important aspect of implementing a retention program understands that it should not be one-size-fits-all. If incentives are meant to keep employees happy, then they truly have to be designed with the employee in mind. Too often, employers and employees disagree on what constitutes a good incentive. For example, a company might reward a father with three young children a monetary bonus as thanks for working overtime for five months straight. To the father, however, days off might have been more attractive, since they would have allowed him to spend time with his family.

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Knowing your employees and personalizing rewards makes a difference. The global workforce has different, individualized needs, and organizations should tailor incentives for their employees if they want to retain them. If your company doesn't bother, don't be surprised if workers head for the door as soon as yearend bonuses are handed out or stock options vest. Spend More Time Recruiting

With huge projects ramping up within exceedingly short windows, it can be hard to convince management to allot more time to the recruiting process. However, it's difficult to retain good employees if the company doesn't have a process to hire the right people in the first place. Simple measures, such as incorporating skills tests that relate directly to the job in question, can help companies to determine whether the applicant is indeed an expert programmer or merely an intermediate programmer. Having employees interview candidates also may increase the chances of success, as these employees can better identify potential personality clashes that HR personnel may not spot.

Costs of Turnover
The impact of employee turnover on company performance is often understated by organizations. This describes how the cost of turnover is can be calculated using some basic organizational parameters. The purpose of this document is to provide talent cost of turnover calculator with insight into how costs are calculated and the reasons why certain costs were include or excluded form the calculator. The calculator should only be used as a guide in understanding the impact of turnover on a company. If the desire is to understand the true cost of turnover then it is suggested that a greater degree of analytical work is undertaken. The key areas used in the calculation of turnover are: 59

 Administration and sourcing costs

These include the administration of the termination and recruitment functions together with the costs associated with interviewing, testing and attracting applicants. New Hire costs

Once a person has been employed an organization generally spends significant resources in the induction and administration of bringing them into the organization. Lost productivity

The hidden costs associated with lost productivity of employees prior to leaving the organization and new less skilled employees are one the largest components of the total cost associated with turnover. Dysfunctional and avoidable turnover

Determining the level of dysfunctional and avoidable attrition provides a perspective on the scope of control that a company has to manage their turnover costs. Determining the cost of turnover is the first step in the process of developing a management plan. To deal with an attrition issue effectively the reasons for turnover and an understanding of the demographics of turnover need to be understood. Undoubtedly, the financial costs of turnover have attracted the attention of academics and practitioners alike. Besides the more familiar costs associated with the administration of terminated employees the economic costs such as 60

productivity losses need to be included in any calculation. In particular, departure of employees - especially experienced or talented ones - may threaten overall firm productivity or client retention. Furthermore, personnel losses may endanger the firms future opportunities in the marketplace or the morale of their remaining work force. Human resource accounting experts Cascio, Hom and Griffeth define exit expenses as having two main components - direct and indirect costs. A company incurs both direct and indirect costs that result in losses in production dollars and overall production volume, as well as increased administrative costs. Direct Costs are actual dollars spent each time an employer has to attract, select, and induct a replacement for an employee who leaves the organization. Indirect costs are those expenditures attributable to turnovers affects on production - that is costs for incomplete or disrupted work, loss of quality, etc. The cost of turnover can be calculated by measuring the time taken to administer each activity plus the direct costs such as advertising costs. The turnover costs calculated using the calculator represent dollars spent. The potential loss of revenue if these dollars were invested elsewhere or through lost productivity is not calculated. Therefore, the figures are an indication of the minimum costs that the organization is subjected to when an individual leaves the company. Administration & Sourcing costs

The most visible cost of turnover is incurred by organizations in the area of recruitment administration and sourcing. The time associated with processing terminated employees and recruits places a burden on organizations where staff turnover is excessively high. The assumption is that this is largely an administrative task conducted by people at 80% of the average company salary. In addition the direct costs to a company for recruitment agency and advertising costs are highly transparent.

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1. Process Administration: Resignation Administration The time taken to administer a resignation will include activities such as: conducting exit interviews & processing of administrative tasks. The time taken to perform these activities is ideally measured as a result of analyzing the processes involved. Recruitment Administration A large amount of time is often spent in administering the recruitment process. Writing the job ad, posting it onto job boards, organizing agencies and reference checking all require the use of organizational resources, whether internal staff or outsourced. The hours spent involved in these activities does need to be factored into the cost of turnover. 2. Sourcing Costs: Agency expenses The cost of sourcing a successful applicant from an agency may be one of the largest single direct costs associated with recruitment. Advertising costs The cost associated with posting job ads to job boards or traditional media such as newspapers can be significant. The average cost per vacancies is used within the calculation. 3. Interview Costs: Interview A core component of recruitment administration is the cost associated with interviewing applicants. Interviews make use internal resources. The more interviews held and the greater the number of candidates interviewed the larger the costs associated with these activities.

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Testing Companies are making greater use of psychometric and aptitude testing in their recruitment processes. These tests can be costly to administer and as such need to be factored into the overall attrition costs. Travel Companies may pay the costs associated with bringing an applicant to the interview location. Although this may not be done for every candidate an average is used in the I4 calculator. Cost of New Hire

The two costs measured in this area are the administrative tasks associated with inducting a new hire into the organization and the associated induction training. When measuring the cost of attrition sometimes the total cost of training that an individual has received whilst in the employment of an organization is included. However, as all learning undertaken by employees will be used back on the job an add value to the business it is inappropriate to count it as a cost of attrition. Also, where particular jobs have high training, often there is a corresponding lower rate of pay which acknowledges the investment that the organization is making in the individual, eg. Youth wages. One aspect of training directly associated with turnover, however, is the induction of new staff to the organization. High staff turnover will necessitate greater levels of resources being made available to induct new employees. It is the opportunity costs of these resources that must also be calculated. 1. Induction Administration The process of induction into an organization can involve a substantial amount of time. The activities included here would include the processing of new hires into organization systems (HR) and introductions to fellow employees.

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Induction Fixed Costs The fixed costs associated with inductions include the cost of materials such as induction kits and staff manuals. Induction Training Any initial training received by an employee on joining the company. This includes the costs of the materials, presenters and the opportunity costs associated with the new employee taking time off work to participate. Relocation Expenses Similar to travel these cost are incurred by companies in an effort to source the best talent for alternate locations. An average cost needs to be captured as part of the calculation process. Productivity Losses

The most detrimental aspect of staff turnover is lost productivity. Evidence has found that leavers often miss work or are tardy before they depart. Deery and Iverson argue that according to progression-of-withdrawal models the productivity of leavers may deteriorate before they depart. Turnover is commonly viewed as belonging to a family of withdrawal behaviors that physically distance employees from unpleasant work settings. Serving a common psychology function, withdrawal actions reduce the time spent in an adverse environment and thus reduce job dissatisfaction. Studies have shown that employees leaving a company will have a greater level of absenteeism prior to leaving. Excessive sick leave is not only costly, but is also an early warning signal that an individual may be considering resigning from the organization. Not only does staff take more sick leave but Hom and Griffeth state that their overall productivity decreases as well. Furthermore, resignations

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may disrupt other employees work if their work depends on the leavers or they must assume the leavers duties. The second effect of loss of productivity occurs when new hires join the organization. They will not have the networks, understanding of organizational processes or product/service knowledge to be effective. Studies have shown that a new hire will generally take between 3- 8 months to become effective in their new role. The longer period is associated with more senior roles. Excluded costs

Not all the costs associated with turnover have been included in the i4 attrition calculator. Costs that cannot be accurately measured or assumed have been excluded. These costs, although hidden, may be the most critical in terms of organizational impact. Examples of hidden costs are included below to highlight the organizational impact of attrition. Employee Demoralization

Turnover may erode the morale and stability of those who remain employed. Their morale suffers because they lose friends and may interpret motives for quitting as social criticisms about the job. A belief that a leaver has a better job elsewhere may change employees perceptions of their jobs. As a result stayers may denigrate their present position in the light of superior alternatives and begin contemplating other employment. This phenomenon may lead to a cycle of attrition whereby employees leaving a company prompt other to do the same. Impaired Quality of Service

Turnover also hinders the delivery of service and retention of customers. Attrition among service personnel impairs customer service because understaffed

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branches delay or withhold service. Unlike experienced leavers, new employees may also provide less competent or less personalized service because they do not know the clients and cant meet customer expectations through lack of knowledge and experience. If satisfied employees make customers feel well treated, disgruntled employees may provide careless service before they leave. Turnover also interrupts the transmission of service values and norms, which are the essential underpinnings of high quality service, to successive generations of employees. Customers' perceptions, attitudes and intentions seem to be affected by what employees experience, both in their specific role of service employees and their more general role of organizational employees. It has been found that there is a high correlation between employee turnover and customer turnover. Therefore, the cost of decreased customer satisfaction and loyalty should be taken into account when considering staff turnover. Turnover reason & cost impact

Just as attrition can lower productivity, incur financial costs, and undermine stayers' morale, turnover can have the opposite ramifications under certain circumstances or for certain firms. That is that the exit of marginal performers may improve overall firm productivity, while new replacements for leavers can infuse companies with new ideas and technology. Though turnover is obviously costly, personnel shrinkage - especially among administrative staff - can nonetheless reduce overhead costs. Further resignations may create more job and empowerment opportunities for employees who remain in firms. Functional and Dysfunctional Turnover

Departing from conventional beliefs, some academics point out that turnover can prevent stagnation and complacency, facilitate change and innovation, and

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displace poor performers. Turnover is not inherently negative. Although it creates personnel costs, the organizational consequences of turnover are dependent on who leaves and who stays. The departure of good performers is construed as dysfunctional turnover - representing a loss to the organization - for their replacements are likely to be of lower caliber. The departure of poor performers is viewed as functional turnover - because they are apt to be replaced by better performers. Research into whether high performers or low performers leave tends to have found mixed results. A meta-analysis conducted by McEvoy and Cascio found that generally it is the poor performers that will leave their place of work. There are two possible explanations for this: firstly, terminated staff has on average a lower tenure than current staff and so have not had the time or opportunity to develop the skills necessary to perform well; or the current performance management systems which exist are encouraging high performers to stay and poor performers to quit. Avoidable and Unavoidable

Further differentiation should occur between organizationally avoidable turnover and organizationally unavoidable turnover. For example, organizations cannot control (that is, it is unavoidable) turnover caused by an employees death, or by an employees quitting to follow a relocating spouse. It is important to identify carefully those exits that are avoidable and those that are unavoidable. After all, leavers whose departures are unavoidable resemble stayers more than they resemble the leavers whose departure is avoidable; they do not resign because they are unhappy with their jobs or the organization. Despite the appeal, determining whether exits are avoidable or unavoidable may prove difficult because employees may falsify reports of their reasons for leaving, they may not wish to burn their bridges behind them.

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The cost of attrition is only calculated on the level of avoidable turnover. There is no benefit in including the cost of unavoidable turnover since a company has no control over these events and can therefore not put in place action plans to minimize the negative consequences of staff turnover.

ATTRITION CASE STUDY

CASE 1. Recently TRG Associates, Inc. (TRG) completed an historical attrition analysis on one of the larger electronic security alarm companies in the industry. The company had accumulated customers through all the varied growth channels, which offered an opportunity to complete an attrition analysis on those different channels. TRGs analysis was designed to segregate the existing customer base by the various types and sources in order to determine which segments of the base were responsible for the majority of the Companys attrition. Clearly, the growth channel analysis that follows demonstrated that the customer origination channel contributed to the attrition characteristic of that segment of the base. The following is an overview of the analysis process and associated results. Analysis of RMR The customer database provided both active and inactive customer RMR, the information also included several identifying codes designed to give company management the ability to track the customer RMR using various criteria. The following tables describe the segregation of the RMR by types and sources included in the data: RMR by Type Commercial Accounts Residential Accounts Dealer Program Accounts

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National Accounts Wholesale Accounts Other Accounts RMR by Source RMR by Acquisition RMR by Dealer Internally Generated RMR/ Other The annual attrition calculation was based on the RMR at the start of each year plus the RMR added during the year (Modified Static Pool Calculation). It is important to note that the amount of RMR cancelled in the analysis was in part due to an over 90 day accounts receivable status (120 days for National Accounts) and was not adjusted for slow pay accounts (accounts that pay RMR charges consistently despite maintaining a balance past due 90/120 days or more). All accounts with an over 90/120 status were simply cancelled in this calculation process to yield a conservative nonperforming account status and thus force the account into a cancelled status. Attrition Results Based on the review, TRG compiled a detailed RMR analysis by customer RMR source and type (channel). These calculations reflect the gross attrition levels experienced by the various segments of the customer base, and do not take into consideration any account re-signs or other RMR Adds, Moves and Changes that may have coincided with the cancellations. Any account with an over 90 day due status, regardless of extenuating circumstances, was included in the attrition figures at the point the account became 90 days past due. We purposely pushed the attrition back to properly restate the import of non-paying accounts that were still active in the billing system.

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Acquired RMR The customer base included customer accounts divided almost equally between residential and commercial. It is important to note that the National account RMR and the Wholesale account RMR were analyzed separately, and are not included in this Acquired RMR attrition analysis. The attrition rates for the acquired RMR portion of the base were calculated as follows: Acquisition Coded RMR Gross Attrition Analysis Commercial Residential (No Over 90 (Including Over RMR Adjustment) 90 RMR as Attrition) RMR Adjustment) 90 RMR as Attrition) Year 1 Annual 26.57% 26.97% 26.47% 26.56% Year 2 Annual 16.14% 19.36% 14.99% 16.74% The early acquisitions suffered from all the ills of account assimilation, as the acquisition program remained active during Year 1. As the acquisition pace slowed, the newly acquired RMR of Year 2 cancelled at a slower pace. Also the Year 1 acquired customer bases were predominately residential. The later acquisitions were more focused on the commercial market place. Internally Generated RMR The customer base included customer accounts that were approximately 2/3 residential and 1/3 commercial. The attrition rates for this portion of the base were as follows: Internally Generated RMR Attrition Analysis Commercial Residential (No Over 90 (Including Over (No Over 90 (Including Over RMR Adjustment) 90 RMR as Attrition) RMR Adjustment) 90 RMR as Attrition) Year 1 Annual 21.84% 22.45% 24.30% 24.38% Year 2 Annual 13.88% 18.09% 10.95% 15.22% Even in the most difficult of operating environments, the internally generated accounts experienced lower attrition characteristics versus the Acquired RMR.

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Dealer Program RMR The customer base included accounts that were obtained thru a national dealer program. The attrition rates for this portion of the base are as follows: Dealer RMR Attrition Analysis Residential (No Over 90 RMR Adjustment) (Including Over 90 RMR as Attrition) Year 1 Annual 34.87% 35.55% Year 2 Annual 13.77% 29.79% A significant portion of the RMR added in Year 1 and the beginning of Year 2 came from aggressive mass marketing efforts, and as a result the quality of customers added during the period slipped. These efforts were significantly scaled back towards the end of the year 2 and as a result, the attrition levels consistently decreased. National Account RMR The customer base included a substantial amount of actively billed National Account RMR. The attrition rates for this portion of the base were as follows: National Account RMR - Attrition Analysis (No Over 120 RMR Adjustment) (Including Over 120 RMR as Attrition) Year 1 Annual 22.3% 22.3% Year 2 Annual 22.4% 60.7% The high levels of attrition experienced in early Year 1 were in part due to the method employed to convert the billing of acquired accounts into the billing software used by the Company. The Company did not eliminate inactive accounts from the acquired databases prior to converting to a new billing system; instead these accounts were transferred into the new system and then eliminated (cancelled). During the project, TRG worked to remove the impact of some of the data base inaccuracies so as to be dealing only with the customers start date, last pay date or cancelled date which ever was earlier. We also worked to transpose the appropriate customer start date versus the acquired date (date of assimilation) as we presented the vintage of the performing account base by channel. This analysis led to being able to represent the true length of service that the

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segments of the performing customer base had been active for no matter when acquired or internally generated. CONSENSUS AND ATTRITION MANAGEMENT While we have discussed multiple methods of calculating attrition and given examples of TRGs clients most frequently used methods; the purpose of this discussion is to generate a conversation/exchange of ideas about these methods to encourage forming a consensus on the measurement methods and definitions for attrition terms. With a common, selected method or methods, the industry can begin to better identify, in a comparable form, the attrition characteristics of a customer base as a whole or within the channels of the customer base as we described in our example. This dialogue on Attrition is intended to generate an exchange of ideas that will culminate in a special presentation on Attrition in April at the Mid-Year CSAA meeting in Tucson, AZ. As importantly, we will discuss in detail, at that time, the various methods, policies and incentive plans available to minimize attrition gross and net. Case 2. 'I'll never work at a call centre again!' Subhash Mukherjee | November 18, 2009 The BPO/ITES sector is only expected to grow larger, and more profitable, over the next few years. Most young people are eager to jump on the money-making BPO bandwagon. But is working for a BPO all that it's made out to be? No, says Subhash Mukherjee (name changed on request), who recently quit his job at a call centre.

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This, in his own words, is his story: I am 20 years old. I was recently hired by a call centre in Kolkata to work for an overseas-based company. I was earning Rs 7,500 per month. My workday began with calls I had to answer for five hours continuously, without a break. As soon as I was through with one call, the next one would be waiting. There was no time for me to even say a few words to the person sitting next to me. After five hours of constantly answering calls, I would get a 20-minute break. Then, I would take calls again for another three hours. Without a break. I would take around 350 calls a day. One day, I reached breaking point. After taking 156 calls at a stretch, my throat started to hurt terribly. I paused to take a breath and, in the process, I missed a call. The calls that are directed to us were constantly monitored by a machine. Immediately, it alerted my supervisor to the fact that I had missed a call. My supervisor came and asked me why I was in the 'wrap mode'. What this means is that my dialer shows a red bar when the person on the other end of the line hangs up without getting a response. The red bar is an indication that I did not take the call -- that the call was not 'live'. At that moment, I just wanted to pick up my bag and leave. Permanently. Instead, I stayed calm for the duration of my hours at work. I fielded all my calls till 1 am. But I had made up my mind -- I would quit this job with its inhuman pressures and its lack of empathy for employees. Workplaces like this have only one goal -- to make money. This job expects you to work even if you are feeling ill; even if your throat hurts. You cannot take even a 10-second break; the dialer throws calls at you continuously and you have to start pitching (taking them) immediately. If you do not respond to the person at the other end of

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the line, s/he might hang up. That shows on your machine. You have to ask for permission to go to the toilet. Often, your request is denied by your supervisor. You repeat the same five sentences 350 times a day. Isn't it pathetic? When I started out, there was no pressure. Gradually, though, the stress grew beyond the levels of human tolerance. Working at the call centre was a great learning experience for me. Now, it was time for a break. When I worked, I had no time to watch a film, no time to read a book, no time to meet friends, no time to swim. For the last few months that I worked at the call centre, I had time only for two meals a day. As a result, I lost my appetite. I would return home at 2.30 am and go to sleep at 4 am. I would get up at noon and go back to work at 3.30 pm. Now that I have quit, I can go out with my friends. I can spend time rediscovering myself. With the approximately Rs 65 per hour that I made, I can buy a few books and have some fun. Maybe that will take away the pain that came with this job. But, believe me; the money could in no way make up for the pain! I'll never work at a call centre again. Nothing is worth the ordeal I went through.

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Guiding Model of Employee Retention

Job embedded ness theory argues that the organization and the community to which the employee belong generate 3 sets of forces that combine to make it more likely that they will stay on in their job: The extent to which people have links to other people, institutions or activities; The extent to which their job and community are similar to, or fit with the other aspects in their life space and; The ease with which links can be broken individual perceptions about cost or sacrifice if they leave their job or community.

Guiding Model of Employee Retention

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PRIYA (Proactive Retention Interventions among Young Associates)

is a conceptual model that has evolved from HR practices based on intuitive common sense. It works. While this author has thought through the Tool elaborated here, a lot of ideas and practices used in it owe their existence to various HR & Business Leaders across BPO organizations. Hence this is truly a piece of collaborative development and should therefore be shared freely for the benefit of this new growth space. Let us begin by reviewing the numerous innovative HR initiatives & interventions that are constantly being tried by most industry leaders today (Example: Tie up with distance learning MBA programmers, providing discotheques / fun at work, etc.). Somehow none of these interventions seem to work consistently across an organization, nor can they be said to be having a highly significant impact across the board on the attrition level in the targeted employee population in a BPO organization handling diverse variety of work. What works for one organization, seems to be an impossibility to even consider in another organization. While these HR interventions & initiatives certainly work in pockets, there are some limitations in their approach: 1. Business Imperative: The current attrition management outlook assumes that the absolute attrition percentages are of utmost importance. Logically however, the Clients would be more worried about the organizations ability to meet the SLAs (Service Level Agreement) consistently, and not the absolute attrition percentage levels. (Yes, lower attrition percentages help quite a lot in that!) 2. CostBenefit: The costbenefit of these HR initiatives are very difficult to calculate at the design stage. (Usually the cost calculations do not capture the disproportionate amount of time the senior management spends in creating, validating, implementing & troubleshooting these initiatives specially in terms of the opportunity cost due to time spent away from the business opportunity) 3. Effectiveness & Impact: The effectiveness of an initiative is very difficult to predict, and the actual impact is usually out of whack with the originally estimated 76

level. The choice of initiatives is usually someones preference / gut feel instead of a very rigorous business decision. (Since some of these initiatives work, there is a sort of organizational legitimacy granted to this deciding by gut feel when it comes to HR interventions related decision-making.) 4. Monitoring & Control: These initiatives / interventions tend to get out of control quite quickly, and it takes a Herculean effort for the organizational leadership to rein it in. The organizational leadership also does not have very clear decision-making data to choose between similar / overlapping interventions or to stop ineffective interventions. The in-process monitoring of these initiatives /interventions is quite difficult given the biases of the implementers & their varying levels of buy-in. 5. Implementation: The success of most of these HR interventions is driven by the passion of the implementers, specially the first level managers. This does create a possibility of a less effective initiative being continued without knowing clearly that there was a better one available, and would have had a higher organizational impact, given the quality of involvement of the first level managers. 6. Focus: These initiatives / interventions are usually backward looking. They are typically driven by the data from exit interviews of the preceding month / quarter. Also given the fact that the reasons why people leave are known to be different from why people stay, organizations might be aiming the interventions at the wrong population, if not also a significantly smaller one! Reliability of exit interview data is another issue, as call-back validation is typically not a standard practice. One really does not know how many employees actually joined the organization next door instead of that MBA they said they wanted to join. 7. Linkage & Alignment: These HR interventions usually do not provide any linkages to other HR & business processes in the organization & hence to that extent do not add value. Their alignment to the overall HR framework is therefore tenuous at best, if not completely out of sync. It is in this context that this Retention Planning Tool is extremely powerful, while being very simple to understand (almost intuitive) & easy to implement.

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Research Methodology

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Research Methodology Research:

It comprises defining and redefining problems, formulating hypothesis or suggested solution; collecting, organizing and evaluating data; making deductions and reaching conclusions; and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis.

3.1 Title of the Study:

To analysis the Attrition Rate in LIC Insurance.

3.2 Objective of Study:

To document the nature and extent of employee turnover within several meat processing plants To collect data relating to underlying causes of employee retention and turnover within these meat processing plants To assist these plants in the development of a focused employee retention strategy To study the attrition rate. To study the effect of attrition in every field; especially in insurance sector. To know causes and remedies of attrition. To know how to retain talented employees.

0 3.3 Type of Research:

Four types of data (interviews, employee survey, focus groups, and turnover records) were collected during the production workforce employed by each company ranged from just over 100 in the smallest to just

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fewer than 900 in the largest. Each company received a report and recommendations for improving employee retention specific to its own operations.

1 2 3.4 Sample Size and method of selecting sample:

I took sample of size 100 I collected the information based on the questionnaires filled up by the employees. Under secondary method I took the help of various reference books which I mentioned in bibliography and also by way of surfing through the company website. Sample method There are many techniques of sampling that can be used to obtain a sample for statistical analysis. The sampling technique used in the current study is Non Convenience Sampling.

3.5 Scope of Study:

The scope of my study at SMC Insurance Broker Pvt. Ltd., Udaipur is to know the rate of attrition.

3.6 Limitation of Study:

Respondents are very helpful but they are so busy. I did my research work in the month of March thats why I didnt get full response from the senior managers. Lack of time.

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1 FACTS AND FINDINGS

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2 4. Facts and Findings

The research found that turnover for the 12 months prior to data collection had increased significantly in all plants, with annual estimates ranging from 37% through to 90%.For a medium-sized plant, costs associated with this degree of turnover were estimated to be between $650,000 and $1.3 million per annum. The project found that there was considerable variability in the manner in which data on employee voluntary turnover information was recorded and stored. This severely limited the degree to which plants were able to use this information to accurately monitor turnover trends and to diagnose factors underlying poor employee retention. Some plants collected exit interviews, but the information they generated was not regarded as being particularly useful or useable in most cases. Measures obtained from a sample of nearly 600 employees indicated that there is considerable scope for firms to improve employee job embedded ness, a factor linked to employee retention, by adopting measures designed to increase employee fit, strengthen links, and intensify sacrifices both on- and off-job. Links refer to the formal or informal connections people have, both on and off the job, either between themselves and institutions (e.g. sporting or community organizations; work project teams; financial commitments; home ownership; schools) or with other people (e.g. family, friends and co-workers). Fit is defined as a persons perceived compatibility or comfort with an organization and with his or her environment. Finally, Sacrifice is defined as the perceived cost of material or psychological benefits that may be forfeited by leaving ones job.

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ANALYSIS AND INTERPRETATION

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1.

Is there any attrition in your company? 1. Yes

50 45 40 35 30 25 20 15 10 5 0

2. No

Yes No

Yes

No

S.No. 1. 2.

Response Yes No Total

Respondent 30 0 30

Interpretation It is clear from the above histogram that all the employees of my sample are fully agreed with the attrition in the company.

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2.

Is the company provide any compensation at the time of attrition? 1. Yes

50 45 40 35 30 25 20 15 10 5 0

2. No

Yes No

Yes

No

S.No. 1. 2.

Response Yes No Total

Respondent 14 16 30

Interpretation The above fig. shows that their company provide compensation at the time of attrition but 16 of them says that the company doesn't provide.

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3.

Is there any effect on company's profit? 1. Yes

50 45 40 35 30 25 20 15 10 5 0

2. No

Yes No

Yes

No

S.No. 1. 2.

Response Yes No Total

Respondent 5 25 30

Interpretation It is a fact that if company attries employees such as monthly, Quarterly etc. there is a big effect on company's profit 5 out of 30 people are satisfied that attrition have bad effect on company's profit.

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4.

Do you think attrition should be there in the company? 1. Yes

50 45 40 35 30 25 20 15 10 5 0

2. No

Yes No

Yes

No

S.No. 1. 2.

Response Yes No Total

Respondent 7 23 30

Interpretation 7 employees says yes there should be attrition in the company because some employees get their salaries although their performance is low which demotivated the employees working hard with less salary.

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5.

Is the attrition rate of your company is more than your competitor company? 1. Yes
50 45 40 35 30 25 20 15 10 5 0

2. No

Yes No

Yes

No

S.No. 1. 2.

Response Yes No Total

Respondent 2 28 30

Interpretation Though the attrition rate of insurance company is more than any other company hence the attrition rate of their company than competitor to employees are agreed with it.

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6.

Is attrition due to the selection procedure? 1. Yes

50 45 40 35 30 25 20 15 10 5 0

2. No

Yes No

Yes

No

S.No. 1. 2.

Response Yes No Total

Respondent 24 6 30

Interpretation Most of the employees of my sample are agree that the attrition is due to the selection procedure. 24 respondent are agreed.

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7.

Does your company think people are more than tast? 1. Yes
50 45 40 35 30 25 20 15 10 5 0

2. No

Yes No

Yes

No

S.No. 1. 2.

Response Yes No Total

Respondent 0 30 30

Interpretation All the respondents said that their company think task is more important then employee. In Insurance sector performance of employee is more important than him.

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8.

Do you think ineffective management of the company is a attrition? 1. Yes

50 45 40 35 30 25 20 15 10 5 0

source

of

2. No

Yes No

Yes

No

S.No. 1. 2.

Response Yes No Total

Respondent 17 13 30

Interpretation 17 Respondent says ye and 13 are not agreed that in ineffective management of the company is a source of attrition.

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9.

When attrition is being done? 1. Monthly 3. Half yearly 2. Quarterly 4. Yearly

50 45 40 35 30 25 20 15 10 5 0

Monthly Quarterly Half yearly Yearly

Monthly

Quarterly

Half yearly

Yearly

S.No. 1. 2. 3. 4.

Response Monthly Quarterly Half Yearly Yearly Total

Respondent 0 3 12 15 30

Interpretation In SMC insurance company attrition is being done yearly as the above data suggest. Attrition rate is high in insurance sector.

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10.

When is the main cause of attrition in your company? a. b. c. d. e. Lack of congenial work environment Lack of career mobility Crushing organization culture High level of stress Recession/crisis

30 25 20 15 10 5 0 a b c d e a b c d e

Interpretation Their are so many reasons for attrition in the company but the most effective reason is lack of congenial work environment. Lack of career mobility. Crushing organization culture. High level of stress. Recession/crisis are also the reason of attrition in the company.

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11.

Is there main cause of attrition in your company? 1. Exodus

50 45 40 35 30 25 20 15 10 5 0

2. Individual

Exodus Individual

Exodus

Individual

S.No. 1. 2.

Response Exodus Individual Total

Respondent 2 28 30

Interpretation 28 responded says that attrition of one employee at a time is being done in the company.

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12.

What are the effects of last attrition or employees themselves leave the company? a. I may be the next b. Start searching other job. c. Not doing their work properly as they do before attrition d. No effect

50 45 40 35 30 25 20 15 10 5 0

a b c d

Interpretation Last exit of employees effects other employees 16 of them think that they might be the next.

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13.

What is the effect on the company when it attires talented and qualified employee? a. b.
50 45 40 35 30 25 20 15 10 5 0

Diminish the effectiveness of current work force. Risk for organizational viability

a b

S.No. 1. 2.

Response Diminish the effectiveness of current work force Risk for viability organizational Total

Respondent 16 14 30

Interpretation 16 responded says that attrition diminish the effectiveness of current work force when it attires talented and qualified employees.

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14.

Are employees treated as asset or liquidity? 1. Asset

50 45 40 35 30 25 20 15 10 5 0

2. Liquidity

Asset Liquidity

Asset

Liquidity

S.No. 1. 2.

Response Asset Liquidity Total

Respondent 29 1 30

Interpretation 29 responded says that their company treated their employee as asset.

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15.

Is attrition rate of your company is more than your competitor company? 1. Yes
50 45 40 35 30 25 20 15 10 5 0

2. No

Yes No

Yes

No

S.No. 1. 2.

Response Yes No Total

Respondent 25 5 30

Interpretation Most of the respondents say that attrition rate of their company is more than their competitor company.

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16.

With the help of attrition company face the challenges inherent in today's rapidly change global markets easily? 1. Yes
50 45 40 35 30 25 20 15 10 5 0

2. No

Yes No

Yes

No

S.No. 1. 2.

Response Yes No Total

Respondent 6 24 30

Interpretation With the help of attrition company doesn't face the challenges inherent in today's rapidly change global markets easily

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17.

Is company willing to do attrition? 1. Yes

50 45 40 35 30 25 20 15 10 5 0

2. No

Yes No

Yes

No

S.No. 1. 2.

Response Yes No Total

Respondent 18 12 30

Interpretation 18 employees says that the company is willing to do attrition.

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18.

Is the position of leader effective? 1. Yes

50 45 40 35 30 25 20 15 10 5 0

2. No

Yes No

Yes

No

S.No. 1. 2.

Response Yes No Total

Respondent 23 7 30

Interpretation The above data suggest that the position of leader is effective.

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19.

Do you/your company give pre-information about the attrition? 1. Yes

50 45 40 35 30 25 20 15 10 5 0

2. No

Yes No

Yes

No

S.No. 1. 2.

Response Yes No Total

Respondent 2 28 30

Interpretation 28 respondents don't give pre-information about the attrition.

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Statistical tool for analysis and interpretation: Chi-Square

Chi-Square is a statistical measure used in context of sampling analysis for comparing to a theoretical variance. X= (O-E)/E Null Hypothesis H0= There is no significant difference between the observed answers given by employees and expected answers. Alternative Hypothesis H1= There is significant difference between the observed answers given by employees and expected answers.

Steps for Chi-Square test:

Step 1: Find out expected frequency E. Step 2: Find the difference between observed and expected frequency i.e. O-E. Step 3: Divide this difference by expected frequency (O-E)/E. Step 4: The level of significance =The hypothesis are tested on predetermined significance level i.e. 5% Step 5: Compare the calculate value of x with tabulated value. Computation of appropriate value=For Yes samples=11.71 and For No samples=35.41 Step 6: Testing the hypothesis=xc < x0.05

Interpretation: The xc is less than the x0.05, therefore, there is no significant difference between the observed answers given by employees and expected answers. So hypothesis is accepted.

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CALCULATION OF CHI-SQUARE TEST S.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 TOTAL Observed Sample Yes No 7 5 9 3 8 4 8 4 8 4 9 3 8 4 11 1 8 4 9 3 10 2 8 4 10 2 8 4 8 4 8 4 5 7 9 3 10 2 8 4 9 3 8 4 10 2 11 1 5 7 10 2 8 4 8 4 6 6 9 3 253 107 No. of Questions 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 12 360 Expected Samples Yes No 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 7.48 2.52 O-E Yes -0.48 1.52 0.52 0.52 0.52 1.52 0.52 3.52 0.52 1.52 2.52 0.52 2.52 0.52 0.52 0.52 -2.48 1.52 2.52 0.52 1.52 0.52 2.52 3.52 -2.48 2.52 0.52 0.52 -1.48 1.52 O-E No 2.48 0.48 1.48 1.48 1.48 0.48 1.48 -0.52 1.48 0.48 -1.52 1.48 -1.52 1.48 1.48 1.48 4.48 0.48 -0.52 1.48 0.48 1.48 -0.52 -1.52 4.48 -0.52 1.48 1.48 3.48 0.48 (O-E)/E Yes 0.03 0.31 0.03 0.03 0.03 0.31 0.03 1.65 0.03 0.31 0.84 0.03 0.84 0.03 0.03 0.03 0.82 0.31 0.84 0.03 0.31 0.03 0.84 1.65 0.82 0.84 0.03 0.03 0.29 0.31 11.71 (O-E)/E No 2.44 0.09 0.86 0.86 0.86 0.09 0.86 0.91 0.86 0.09 0.91 0.86 0.91 0.86 0.86 0.86 7.96 0.09 0.11 0.86 0.09 0.86 0.11 0.91 7.96 0.11 0.86 0.86 4.8 0.09 35.41

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X= (O-E)/E
For Yes Samples=11.71 For No Samples=35.41s Degree of freedom in this case=(n-1) where n=100 then, v=degree of freedom=29 X0.05 (v=29) = 42.557 Xc < X0.05

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SWOT

6. SWOT
106

4
Major Strengths:

.Premium rates are increasing and so are commissions. . The variety of products is increasing. . Prospects expect more services from their brokers.
Major Weaknesses:

.Insurance companies are often slow to respond to changing needs. .There is an increasing trend of financial weakness among the companies. . There are more competitors for agencies to compete with banks and Internet
players.

Opportunities:

. The ability to cross sell financial services is barely being tapped. . Technology is improving to the point that paperless transactions are available. . The client's increasing need for an "insurance consultant" can open new ways
to service the client and generate income.

Threats:

. The increasing cost and need for insurance might hit a point where a backlash
will occur.

. Government regulations on issues like health care, mold and terrorism can
quickly change the direction of insurance. Increasing expenses and lower profit margins will hit hard on the smaller agencies and insurance companies.

. Increasing expenses and lower profit margins will hit hard on the smaller
agencies and insurance companies.

5
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6 7 8 9 10 11

12 13 14

Conclusion
15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 7. Conclusion
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35
Insurance sector has found an interesting way around the situation. Instead of quantity, companies are trying to recruit quality workforce capable of handling multiple operations. HR consultants say that insurance companies are now moving away from direct selling agents (DSA) model. Now their own employees manage the task, rather than outsourcing it to a DSA. Bajaj Allianz, for instance, has its own health administrators rather than third party administrators (TPAs); service engineers instead of a separate team to manage motor claims. So, the work that was typically outsourced is now managed internally. Most insurance companies are venturing into direct marketing, cutting down the need to hire aggressively. Bajaj Allianz had a 33% growth in hiring last year; this year it would not be more than 25%. When the responses to all items on INDSALES were totaled and regressed against performance (commission), the resulting correlation was 0.196. That correlation is similar to the results of laffaldano and Muchinsky's (1985) study. Their research showed an average correlation between job satisfaction scales and performance measures was 0.14, a correlation laffaldano and Muchinsky regarded as insignificant. However, when each of the dimensions of INDSALES was individually regressed against performance, there was wide variation in the resulting correlations. Correlations ranged from a respectable 0.368 for satisfaction with pay to an insignificant 0.016 for satisfaction with company policy and support. Although there is much literature to suggest that personal characteristics of employees will affect performance. Two of the dimensions of INDSALES (satisfaction with pay and satisfaction with promotion opportunities) had stronger correlations with performance than any of the PC variables that were considered. The best model of all the variables considered explained over one-third of the variability in productivity. This

109

model included three job satisfaction measures (supervision, pay, and promotion) and only one personal characteristic--tenure. A researcher would be unwise to discard the dimensions measured by INDSALES as being insignificant. While international banks such as Citibank and Bank of America have gone in for major job cuts globally, Indias largest private sector bank ICICI Bank announced its plans to halve its hiring and go slow on promotions this year. It will hire only 9,000 as compared to 15,000 last year. Citibank has announced a cut of as many as 15,000 jobs globally. That may impact India as well, primarily in operations and transaction processing. Talent crunch is going to be a major challenge for the sector in coming years. It is for this reason that many private insurance houses are increasingly tying up with local colleges to induct fresh blood. While insurance sector remains unsure of requisite talent at lower level, banking sector would suffer at middle and top management. The insurance sector has witnessed a 30-40% drop in senior level hiring. ICICI Prudential Life Insurance also plans to hire less this year. HR head at ICICI Prudential Life Insurance concedes that the reduced hiring is also because the company had added large headcount last year. ICICI Pru went in for aggressive hiring in 2007, when it increased its staff strength from 16,000 to 30,000. This year, however, it plans to hire just 6,000. Almost everyone acknowledges dearth of talent in the industry. So, instead of just adding numbers, the companies hope to build their own talent pool by tying up with education institutes. They have tied up with 21 management institutes to offer PG diplomas in insurance for fresh candidates. They have recruited 2,000 candidates through this route in the past six months and are likely to ramp that up to 6,000 this year. Its an irony of sorts. While the Indian retail industry is set to become a $430 billion industry by 2010 with organized retail hitting $90 billion revenue mark, Indian employers are circumspect about their hiring intentions. While the wholesale sector could have been affected by high

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commodity prices, the retail sector is said to be affected by lower investments. Entry of new players and ensuing scramble for talent should result in increased hiring. This is however, conspicuous by its absence in case of retail as of now. High level of attrition, particularly, at frontline level is due to the movement of employees within the existing players. Like in manufacturing, 80-85 % of the employees in retail work at the front-end. The sector has been considered the last refuge of the unemployed as high educational qualifications are not a precondition. However, this may see a change with retail giants focusing on quality over quantity. This report has sought to demonstrate that, regardless of external labour market conditions, meat-processing plants have the potential to improve considerably their capacity to attract and retain valued employees. A number of generic strategies have been outlined, collectively aimed at improving fit, strengthening links and intensifying sacrifices both on- and off- the job. Given uncertainties associated with the importation of internationally-sourced temporary labour.it would seem that this is an opportune time for forms to put in place a series of human resource management policies and practices that will reduce the potential for high voluntary turnover on the future. 36

37 38 39 40 41 42 43 44 45

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Recommendation and Suggestions

8. Recommendation and Suggestions

112

46 47
Suggestions:
In addition to a number of specific recommendations made to individual plants, following generic retention strategies are proposed for meat processing plants: 1. Improve collection and analysis of turnover data 2. Modify use of exit interviews 3. Setting targets and establishing managerial accountabilities in respect of retention 4. Developing and communicating an employee value proposition 5. Step up community-based activities in relevant labor markets 6. Select more rigorously, based on fit to the organization 7. Emphasize teamwork and employee engagement 8. Train more intensively and broadly 9. Increase organizational communication 10. Offer employment security guarantees 11. Reward based on organizational performance 12. Improve job design and working environments

48

49 50 51 52 53 54 55 56 57

113

Appendix
58 59

114

Questionnaire

I am Neha Mukhija student of MBA 4th sem. In apex institute of management and science, Jaipur. I am doing a research study of LIC Insurance Product as a part of my management curriculum. Information provided by you will be used for academic purpose only.

Name: Age: Designation: ATTRITION AT LIC

Q1.

Is there any attrition in your company? (a) Yes (b) No

Q2.

Does the company provide any compensation at the time of attrition? (a) Yes (b) No

Q3.

Is there any effect on companys profit? (a) Yes (b) No

Q4.

Do you think attrition should be there in the company? (a) Yes (b) No

115

Q5.

Is the attrition rate of your company is more than your competitor company? (a) Yes (b) No

Q6.

Is attrition due to the selection procedure? (a) Yes (b) No

Q7. Q8.

Does your company think people are more than task? (a) Yes attrition? (a) Yes (b) No (b) No Do you think ineffective management of the company is a source of

Q9.

When attrition is being done? (a) Monthly (b) Quarterly (c) Half Yearly (d) Yearly

Q10.

What is the main cause of attrition in your company? (a) Lack of congenial work environment. (b) Lack of career mobility (c) Crushing organization culture (d) High level of stress (e) Recession / crisis

Q11.

Is there exodus or attrition of one employee at a time? (a) Exodus (b) Individual

Q12.

Attrition is given by the company or employees themselves leave the

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company? .. Q13. What are the effects of last attrition on the other employee? (a) I may be the next. (b) Start searching other job. (c) Not doing their work properly as they do before attrition. (d) No effects. Q14. What is the effect on the company when it attires talented and qualified employee? (a) Diminish the effectiveness of current work force. (b) Risk for organizational viability. Q15. Are employees treated as asset or liquidity? (a) Asset (b) Liquidity Q16. With the help of attrition company face the challenges inherent in todays rapidly change global markets easily? (a) Yes Q17. (b) No

Is company willing to do the attrition? (a) Yes (b) No

Q18.

Is the position of leader effective? (a) Yes (b) No

Q19.

Do you/your company give pre-information about attrition? (a) Yes (b) No

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118

BIBLIOGRAPHY

119

Bibliography

1. HRM REVIEW, The Icfai University Press. 2. Kothari,C.R., Research Methodology 3. www.iupindia.org 4. www.icmrindia.org 5. www.google.com 6. www.smcindiaonline.com

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