Contents TABLE OF CONTENTS 1 Background 1 1
Contents TABLE OF CONTENTS 1. Background 1. 1 Engagement Objectives 1. 2 Research Methodology 1. 3 Sampling Plan 2. Profile of companies in sample 2. 1 Type of business activity 2. 2 Annual turnover in the last financial year 2. 3 Rate of growth of turnover in the last three years 2. 4 Number of employees 2. 41 Rate of growth of number of employees 2. 42 Comparison of turnover with that of growth of turnover 2. 43 Number of employees in different industries 2. 44 Comparison between type of industries and growth of employees 3. Long term goals 4. Growth of industry 4. 1 Rate of growth of industries v/s growth of employees 4. 2 Stage of growth of industry 4. 3 Rate of growth of industries and rate of growth of companies 4. 4 Growth of industries with relation to growth of turnover of companies 5. Break up of employees 5. 1 Break up into Technical and Non Technical 5. 2 Break up of employees department wise 6. Job Description 7. Promotion 7. 1 Change in nature of work 7. 2 Additional or higher job responsibility 8. Employee retention 8. 1 Meaning 8. 2 Responsibility wrt type of industry Retention strategies-AIMA Page No. 5 6 7 8 9 10 10 11 12 13 14 15 16 17 18 19 20 21 22 24 25 26 27 28 1
Contents TABLE OF CONTENTS 1. Background 1. 1 Engagement Objectives 1. 2 Research Methodology 1. 3 Sampling Plan 2. Profile of companies in sample 2. 1 Type of business activity 2. 2 Annual turnover in the last financial year 2. 3 Rate of growth of turnover in the last three years 2. 4 Number of employees 2. 41 Rate of growth of number of employees 2. 42 Comparison of turnover with that of growth of turnover 2. 43 Number of employees in different industries 2. 44 Comparison between type of industries and growth of employees 3. Long term goals 4. Growth of industry 4. 1 Rate of growth of industries v/s growth of employees 4. 2 Stage of growth of industry 4. 3 Rate of growth of industries and rate of growth of companies 4. 4 Growth of industries with relation to growth of turnover of companies 5. Break up of employees 5. 1 Break up into Technical and Non Technical 5. 2 Break up of employees department wise 6. Job Description 7. Promotion 7. 1 Change in nature of work 7. 2 Additional or higher job responsibility 8. Employee retention 8. 1 Meaning 8. 2 Responsibility wrt type of industry Retention strategies-AIMA Page No. 5 6 7 8 9 10 10 11 12 13 14 15 16 17 18 19 20 21 22 24 25 26 27 28 2
An AIMA Study on Retention • Presented By Business Today Retention strategies - AIMA 3
Contents Page No. 8. 21 Responsibility wrt number of employees 8. 22 Area of concern wrt turnover of the company 8. 3 Problem of retention wrt type of industry 8. 31 Problem of retention wrt number of employees 8. 32 Problem of retention wrt turnover of companies 8. 33 Problem of retention wrt growth rate of industries 8. 34 Problem of retention wrt growth rate of turnover 9. Turnover rate 9. 1 Turnover rates in the last three years 9. 2 Department wise turnover rate Technical v/s Non technical 10. Induction Rate 10. 1 Induction rates in the last three years 10. 2 Department wise induction rate Technical v/s Non technical 11. Retention levels wrt turnover of companies 11. 1 Retention level wrt. type of industry 11. 2 Status of retention levels and the reasons 12. Attrition 13. Factors in external environment 14. Attitude towards employee retention 15. Change in employee retention strategies 15. 1 Due to change in economic environment 15. 2 Due to change made by the competitor within the industry 15. 3 Due to more opportunities across industries Training budget 16. 1 Training budget wrt type of industry 16. 2 Training budget wrt turnover 16. 3 Training budget wrt growth rate of employees 17. Improving employee commitment 18. Measures adopted to create internal environment for employee retention 29 30 31 32 33 34 35 Retention strategies-AIMA 36 37 38 39 40 41 42 43 47 49 50 51 52 16. 53 54 55 56 57 4
Contents Page No. 19. Promotion from within 19. 1 Type of industry 19. 2 Turnover 19. 3 Number of employees 19. 4 Growth of number of employees 20. Increase in average compensation package by the organisation 21. Increase in compensation package in the industry 22. Increase in non monetary package by the organisation in last three years 23. Increase in non monetary package by the industry in last three years 24. Components of non monetary package 25. Relationship between organisation culture and employee retention 26. Techniques used for external image building 27. Reasons for employees to leave 28. Innovative ways to retain employees 29. Trigger points to improve retention 30. Switchover Inter v/s Intra industry 31. Commitment levels 32. Subcontracting 33. Conclusions 61 62 63 64 65 69 73 75 77 78 79 80 82 83 87 88 89 90 ANNEXURES I Questionnaire II List of companies contacted Retention strategies-AIMA 5
1. Background This is the age of “knowledge workers” and people are the best assets one can have. The corporates are grappling with the problem of high employee turnover and the general exodus of their best talents to the bigger companies and MNCs. Even with the prevailing high rate of unemployment in the country, finding and retaining good and right people is a no mean task. as a result the companies are feeling the need to develop a countrywide company culture to attract and retain best talents. They are trying to be extremely careful in the way they go about selecting the right people. Right now the problem lies in the way in which the HR professionals go about recruiting managers. In most of the companies(barring a handful) the first step in recruiting a candidate is to conduct a group discussion, in which these professionals select a few candidates (rather reject a few) on the basis of entirely subjective judgements, sometimes based on just the appearance of the candidate. Those who are selected after such a process are often not interested in the job or the company and leave within a few months of joining and sometimes they don’t even accept the offer in the first place. Moreover when it comes to the interviewers often come unprepared without doing their homework. They are not clear exactly what they are looking for. The interviewers hardly list down what attitudes, skills, interests, abilities they are looking for in a candidate, what are the weightages of each and how to measure them accurately. This is the reason why we still have managers who worship the proprietor to go up in the corporate ladder. Wide unprofessionalism is one of the main reasons that the MBAs leave companies, frustrated and dejected. And here is where HR can play an effective role. HR management the world over shows that the role of the HR professionals is changing rapidly. They are now more proactive. The primary role of an HR professional in future would be to enable the line managers to perform the role of an HR manager as well as decide on recruitment, training etc. The HR manager’s role will become the role of a missionary, where he empowers, enables the line managers and thereby makes the traditional HR functions of a personnel manager, obsolete. There will only be few HR professionals in the organisation but their roles will be very important. Source: Business Standard Retention strategies-AIMA 6
1. 1 Engagement Objective • To ascertain whether then exist differences between different sizes of employees, different types of industries wrt. retention level. • Identify the key cause-and-effect relationships in maintaining a healthy employee retention level. • Ascertain whethere exist differences between retention level v/s no. of employees & growth in number of employees. • To ascertain whethere exist differences between retention level v/s no. of employees & growth in number of employees. Retention strategies-AIMA 7
1. 2 Research Methodology Information collection • Primary research on a sample of 135 in-depth interviews with Indian and multinational companies across various cities and different industry sectors • Secondary research on current body of literature on retention and strategies Retention strategies-AIMA Analysis and modelling • Current retention levels • Reasons therein • Key triggers that impact retention • Strategies being used by Corporate India to improve retention levels Report and discussions • Report on current retention levels, relationships, triggers, strategies in use, gaps therein. 8
1. 3 Sampling design In-depth interviews were conducted with ten companies to understand the issues involved in retention strategies in Indian scenario. After the questionnaire was drafted pre-test was conducted with three companies. The questionnaires were administered to senior HR professionals in various companies. All the companies contacted had a turnover above Rs. 25 crores. 135 interviews in the form of structured questionnaires were conducted in six cities across India. City Delhi Bangalore Chennai Ahmedabad Mumbai Jamshedpur Retention strategies-AIMA No of companies 71 38 7 6 8 5 The study was focused on sunrise industries like Software Development and telecom which are based in the North and South primarily. 9
2. Profile of companies in sample 2. 1 Type of business activities Type of company Number Per-cent Traditional 37 27. 0 Marketing 32 24. 0 Services 40 30. 0 IT & Telecom 26 19. 0 • Traditional industry would include Steel, Power, Textiles, Chemicals, Cement, Pharmaceutical • Marketing industry would include FMCG, Food processing, Two Wheelers, Airlines, Tyres, Exports • Services industry would include Advertising, Courier, Consulting, Media, Tourism, Hotels, Financial services, Banking, Insurance • IT & Telecom would include Software, Telecom Services, IT (The list of companies contacted is in Exhibit - II) There is an almost equal distribution across the four types of industries considered. All subsequent analysis is based on this classification. Retention strategies-AIMA 10
The rate of growth of turnover in last three years in the companies in the sample has been between to twenty five per-cent and another 33 percent companies have achieved a growth rate between five to ten percent. There are very few companies whose turnover has been growing too slow or too fast. 2. 2 Annual Turnover in the last financial year Turnover Number Per-cent Rs. 25 - 50 crores 49 36. 8 Rs. 50 -100 crores 18 13. 5 Rs. 100 -200 crores 23 17. 3 Rs. 200 -500 crores 19 14. 3 Rs. 500 -1000 crores 11 8. 3 Greater than Rs. 1000 crores 13 9. 8 2. 3 Rate of growth of turnover in last three years Growth rate Number Per-cent Less than 5% 7 5. 3 5% - 10% 44 33. 3 10% - 25% 58 43. 9 25% - 50% 12 9. 1 More than 50% 11 8. 3 Retention strategies-AIMA 11
2. 4 Number of employees ( In Percentage Terms) Turnover/No. of employees 50 -100 100 -500 500 -1000 >1000 Rs. 25 -50 crores 33 43 20 4 Rs. 50 -100 crores 17 44 28 11 Rs. 100 -200 crores - 44 35 21 Rs. 200 -500 crores - 21 32 47 Rs. 500 -1000 crores 18 - 18 64 >Rs. 1000 crores - - - 100 Retention strategies-AIMA The companies having a turnover between Rs. 25 -200 crores are mostly having between 100 -500 employees and also about 30% of these companies are having between 5001000 employees. Most of the companies whose turnover is between Rs. 200 -1000 crores are having more than 1000 employees but some of these companies also have between 500 - 1000 employees. 100% of the companies having more than Rs. 1000 crores of turnover have more than 1000 employees. The number of employees is directly proportional to the turnover of the company except in some case. 12
The growth of employees is directly proportional to the growth of turnover of the company to the level of 25% but beyond that any growth in the T/O is does not directly result in the growth of employees in the same proportion. It is lower. 2. 41 Rate of growth of number of employees in last three years Growth of turnover <5% Growth of employees (in percentage terms) 5 -10% 10 -25% 25 -50% Less than 5% 71 29 - - - 5%-10% 19 69 12 - - 10%-25% 14 34 48 2 2 25%-50% 18 36 18 18 9 Greater than 50% 18 44 28 6 3 Retention strategies-AIMA >50% In most of the cases the rate of growth of turnover and the rate of growth of number of employees is same I. e. a majority of companies in each category of rate of growth of turnover have witnessed a same rate of growth in number of employees. Only in case where the growth of turnover is more than 50%, the growth of number of employees is still between 5 -10%. These are generally PSUs which are already overstaffed and even when they grow at a very rapid pace, they don’t need to increase the number of employees to that extent. 13
2. 42 Comparison of turnover with that of growth of turnover Turnover Growth of turnover (In percentage terms) <5% 5 -10% 10 -25% 25 -50% >50% Rs. 25 -50 cr 4 47 35 10 4 Rs. 50 -100 cr 11 11 44 11 22 Rs. 100 -200 cr 4 26 56 4 9 Rs. 200 -500 cr 11 33 33 17 6 Rs. 500 -1000 cr - 27 64 - 9 > Rs. 1000 cr - 27 54 9 9 About 50% of the companies in all the turnover categories are growing at the rate between 2550% in the last three years. The medium sized companies having 50 - 100 crores turnover have shown the maximum growth. Companies can achieve certain high growth rates only after reaching a threshold level of their turnover. Retention strategies-AIMA 14
The traditional industries largely have more than 1000 employees on their rolls while the service industries have lower number of employees comparatively. 2. 43 Number of employees in different types of industries Type of industry Number of employees (in percentage terms) 50 -100 100 -500 500 -1000 >1000 Traditional 11 27 19 43 Marketing 22 22 19 37 Services 13 43 24 19 IT & Telecom 15 31 38 15 Retention strategies-AIMA About 45% of the traditional companies have more than 1000 employees. These are big companies in infrastructure, power, steel, construction etc. These companies are generally old and very big. About 40% marketing companies also have number of employees more than 1000 but there are 22% companies each who have employees between 50100 and 100 -500. In services industry maximum number of companies have between 100 -500 employees. In IT & Telecom industry a majority of companies have between 100 -500 and between 500 -1000 employees. 15
The largest growth in the number of employees has been witnessed IT & Telecom sector followed by services and then by marketing. The lowest growth of employees has been experienced by the traditional industries. 2. 44 Comparison between Type of industry and Growth of employees Type of industry Growth in number of employees (in percentage terms) <5% 5 -10% 10 -25% 25 -50% >50% Traditional 29 50 18 - 3 Marketing 19 45 29 7 - Services 14 51 26 6 3 IT & Telecom 4 27 46 15 8 In traditional industry most of the companies have witnessed the growth of employees between 5 -10% or less than 5%. In marketing and services industry the trend is almost similar, with most of the companies having a growth in number of employees between 5 -10% and the next lot between 1025%. In IT & Telecom about 46% companies have growth in number of employees between 10 -25%. The highest growth rate in number of employees in maximum number of companies is in IT & Telecom industry. Growth in number of employees Retention strategies-AIMA 16
Increase in T/O & market share were the common long term goals across the industry segments. However, computerisation and improvement of product and services were important acheivables the services & IT & Telecom companies had laid down. 3. Long term goals TRADITIONAL Primarily all of them mentioned that they want to improve the growth rate and want higher turnover in the future. Some companies also said they want to double their turnover. Also it was stated that high customer satisfaction levels was also very important to achieve. A few companies also said that they would like to expand their activities and take up bigger projects. The companies involved in export wanted to achieve rapid growth for meeting all the export orders. Most of the companies also said that they wanted to increase their profitability and market share by increasing their productivity MARKETING These companies too wanted to increase their growth rate and the turnover. Some companies whose turnover was not that much said that their turnover should touch over Rs. 100 crores by year 2000. The companies in food processing business wanted to become the market leaders in their respective categories. Those who were already on No. 1 position wanted to retain their place and also wanted to make their presence felt globally. Some of these companies also mentioned that they want to diversify their product line and have higher growth rates. SERVICES All these companies wanted their growth rates to increase phenomenally and to make their turnover touch the Rs. 100 crores mark by the year 2000. These companies also said that to improve the quality of their services is also one of the main agenda. Some companies said that they wanted to expand their activities of work while others mentioned that they wanted to achieve total computerisation and tight span of control. IT & TELECOM All these companies wanted to increase their growth rates, they waned to be the leader in their fields and want to make their presence felt through out the world. They want to increase the turnover and their market share. Retention strategies-AIMA 17
The growth in the number of employees, in most cases, is proportional to growth in the industry. 4. Growth of industry 4. 1 Rate of growth of industries v/s. Growth of employees Rate of growth of industries (in percentage terms) <5% 5 -10% 10 -25% 25 -50% >50% Less than 5% 32 36 27 - 4 5 -10% 2 58 35 2 4 10 -25% - 25 61 11 3 25 -50% - - 25 62 13 Greater than 50% 33 - - 33 33 The rate of growth of industries in this case pertains to the industry category to which the company belongs. Growth of industry Growth of number of employees Retention strategies-AIMA 18
4. 2 Stage of growth of industry Type of industry Stage of growth (in percentage terms) Infancy Growth Maturity Decline Traditional - 60 35 5 Marketing 3 53 44 - Services 6 58 36 - IT & Telecom 4 56 40 - Across all the industries, all the companies are either in the growth stage or in the maturity stage. About 55 - 60% of the companies in each of the four industries are in growth stage. 4. 3 Rate of growth of number of employee v/s. Stage of growth of industry. Growth of employees Stage of growth (in percentage terms) Infancy Growth Maturity Decline <5% 4 58 38 - 5 -10% - 60 40 - 10 -25% 8 44 47 - 25 -50% - 85 14 - >50% - 33 33 33 Retention strategies-AIMA 85% of the companies whose growth of employees is from 2550% are in the growth stage. 19
The stage of growth of industry and stage of growth of company are in tandem with one another. All companies have kept pace with their respective industry growth rate. 4. 3 Rate of growth of industry and rate of growth of company Rate of growth of industry Infancy Rate of growth of company (in percentage terms) Infancy Growth Maturity Decline 25 50 25 - Growth 3 91 6 - Maturity - 35 64 1 Decline - 50 Percent Rate of growth of industry Rate of growth of company Retention strategies-AIMA 20
The growth of turnover and the growth of the industry is almost equal in majority of the companies, almost 60 -85% of the companies show this trend. 4. 4 Growth of the industries with relation to the growth of turnover of the companies Growth of turnover Rate of growth of industry (in percentage terms) <5% 5 -10% 10 -25% 25 -50% >50% <5% 14 86 - - - 5 -10% 14 67 16 2 - 10 -25% 2 22 73 2 2 25 -50% 8 17 8 58 8 >50% - 9 36 18 36 Within the companies having >50% growth rate of turnover; 36% of the companies have overtaken the industry growth rate. Retention strategies-AIMA 21
In the IT & Telecom industry segment there are more junior employees compared to others. The middle level is highest in the marketing company senior management is highest in the services industry. The IT & Telecom companies are characterised by a very high number of technical employees across all levels. In all other industries the ratio of technical to non technical is almost the same. 5. Break up of employees 5. 1 Break up into Technical and Non Technical Industry : Traditional Industry : Marketing Employees Total % Technical Non Technical Junior 56 62. 5 37. 5 Junior 56 64 36 Middle 24 62. 5 37. 5 Middle 31 58 42 Senior 11 55 45 Senior 13 54 46 Top mgmt 3 47 53 Top mgmt 6 50 50 Industry : Services Industry : IT & Telecom Employees Total % Technical Non Technical Junior 53 60 40 Junior 62 79 21 Middle 26 58 42 Middle 26 69 31 Senior 14 50 50 Senior 10 60 40 Top mgmt 4 50 50 Top mgmt 6 33 67 Retention strategies-AIMA 22
5. 2 Break up of employees department wise INDUSTRY: TRADITIONAL Production Marketing Finance Junior 52 19 13 Personnel / Administration 11 Middle 39 14 11 Senior 30 14 Top Mgmt 25 14 IT/Systems Others 12 9 5 8 8 7 5 4 6 12 6 5 8 In Traditional industries the production department dominates all the levels of employees. IT/Systems are dominated by the junior level employees. INDUSTRY: MARKETING Production Marketing Finance Junior 45 16 8 Personnel / Administration 5 Middle 40 14 9 Senior 35 12 Top Mgmt 30 13 Retention strategies-AIMA IT/Systems Others 6 7 4 5 8 9 4 4 12 15 4 4 11 In Marketing industries too production dominates all employees levels followed by marketing. 23
5. 2 Break up department wise INDUSTRY: SERVICES Production Marketing Finance Junior 35 20 17 Personnel / Administration 9 Middle 40 22 12 Senior 34 21 Top Mgmt 27 21 IT/Systems Others 9 8 6 4 12 14 5 5 6 19 6 5 4 In Services the domination of production is not as high as in Traditional and Marketing. The marketing function too dominates all levels equally. INDUSTRY: IT & TELECOM Production Marketing Finance Junior 28 19 4 Personnel / Administration 3 Middle 23 15 3 Senior 21 5 Top Mgmt 21 15 Retention strategies-AIMA IT/Systems Others 41 5 2 16 4 3 2 9 3 9 5 7 15 The IT & Telecom industry segments are dominated by the IT/System at the junior levels. 24
The formal or written job description are prevalent best in the IT & Telecom industry. In the other industries they are left open ended. Written job description limits creativity and flexibility of the job. This was the common belief across all the four industry segments. 6. Job description 6. 1 Formal or written job description TRADITIONAL In most of the companies the job description is partly written and partly not written. Moreover where ever it is written, it is mentioned in the appointment letter itself. About equal number of companies have a written job description and no formal job description. Moreover some companies are such that they have a written job description for some jobs and for the rest of the jobs it is supposed to be understood in conventional terms. MARKETING A number of companies feel that it is generally understood in conventional terms but ofcourse it is very much made explicit at the time of the interview. About 50% of the companies felt that there was no need of a formal or written job description. SERVICES About half the companies said that they do have a written job description but that they keep on expanding it from time to time. Also in most of the companies it is partly formally written and partly not written. IT & TELECOM In this industry about 60% of the companies do have a written job description and that too for all levels of employees. The rest 40% companies either have a partly written job description or they don’t have anything written at all in this respect. 6. 2 Problems faced due to written job descriptions TRADITIONAL The only major problem that all the companies faced is that where ever the written job description is there the employees don’t take initiative to be innovative. It makes the working environment too rigid. There is more flexibility when there is no written job description. Some companies also mentioned that when there is a new concept people don’t take any interest and the additional work never gets done. Retention strategies-AIMA MARKETING In this category about 80% of the companies do not think there is any problem due to written job description, those who said that there was a problem said that the employees become very dull and do not use their creativity when set boundaries of work are given to them. SERVICES Most of the companies did not find any problem but some of them did mention that a written job description does not leave much room for innovation. IT & TELECOM Most of the companies did not have any problem but according to some it made things very rigid to work out. 25
In all the industry segments there is some change in the nature of work in more than 50% of the companies. In marketing & services the change in nature of work at the time of promotion is to a large extent in larger number of companies. 7. Promotions 7. 1 Change in nature of work Traditional Extent of change (in percentage terms) No change Some change Large extent Completely at all of changed 3 64 33 - Marketing 4 46 50 - Services 3 46 46 5 IT & Telecom 4 60 36 - Industry Retention strategies-AIMA In 64% of the traditional companies there is some change in the nature of work at the time of promotion and in 33% companies there is a large extent of change. The trend in IT & Telecom industry is also quite similar. In marketing and services industry the distribution between some change and large extent of change is almost same i. e. around 45 -50%. 26
7. 2 Additional or higher job responsibilities Traditional Additional job responsibility (in percentage terms) No addition Some Large extent Ver large extent at all addition of addition 44 53 3 Marketing - 35 65 - Services - 42 58 - IT & Telecom - 44 56 - Industry There is a large extent of addition in the job responsibility at the time of promotion in the marketing and services industry. In traditional & IT & Telecom the addition is to a somewhat lower extent. In all the industries except marketing companies, there is large extent of addition in more number of companies and the difference between large extent of addition and some addition is almost 10%. In marketing companies this difference is as much as 30% i. e. in 65% companies there is large addition and in 35% companies there is some addition. Retention strategies-AIMA 27
8. Employee retention 8. 1 Meaning TRADITIONAL According to these companies, retention means retaining good, hardworking people who work for the benefit of the company. For retaining these people in the company they were ready to pay higher pay packages and were ready to motivate these employees by other means too like providing latest training etc. Some companies said that retention means motivating the employees only while some others did say that it means retaining the whole lot of people. Retention strategies-AIMA MARKETING Most of the companies thought that it means retaining good people in the organisation who have key role to play. The turnover of these people should definitely be less than 10%. All the companies unanimously agreed that retaining all the people would do no good to the company. They wanted to retain only those people who would add to the outcome or results of the company in terms of quality goods and services, satisfied customers etc. Very few companies agreed that they would try to keep all the employees in the organisation. Overall about 90% companies wanted that only performing employees should be retained in the organisation. SERVICES These companies also wanted to retain only good people in their organisation so that they could provide better services to their customers. Some other companies did mention that it means motivating employees so that they don’t think of leaving the organisation or switching jobs frequently. IT & TELECOM To most of the companies in this industry employee retention means retaining all the people in the organisation and motivating all of them to perform well. These companies said that it would be a waste of effort not to make all of them perform well because a lot has been invested in each one of the employees. Still there were some companies to whom retention meant only retaining good people in the company and making such situation for the non performing employees that they have to quit on their own. 28
8. 2 Employee retention: Responsibility w. r. t. type of industry Department Per-cent of response(Overall) HR Department 58 Type of industry (in percentage terms) HR Dept Traditional Marketing Services IT & Telecom 20 26 26 28 External HR Consultant 0. 7 Eternal HR Consultant - - 100 - Individual Department 41 Individual Dept 25 24 31 20 Top management 50 Top Mgmt 22 22 24 32 Working team 36 Working team 37 24 35 4 Union/Association 16 Union/Association 50 18 32 - • 58% companies thought that retention was the responsibility of HR Department, and the distribution between the industries is between 20 to 28% in each industry. Just one company employed an external HR consultant. This was a company in the services industry. • It was the responsibility of the individual departments in 41% companies out of which highest 31% belonged to the services sector. • Top management was responsible in 50% of the companies out of which 22% each belonged to the traditional and marketing industries but the highest was seen in IT & Telecom companies. • It was the responsibility of the working team in 36% companies and out of those only 4% belonged to the IT & Telecom industry, the rest were almost equally divided with marketing companies being the lowest. • The unions or association were mentioned by just 16% of the companies and out of that 50% of them belonged to the traditional industries mainly because in these companies the unions are very old and strong. Not even a single company from IT & Telecom has marked this option because this is a new industry and unions are either not there or are not very powerful. Retention strategies-AIMA 29
8. 21 Employee retention: Responsibility w. r. t. number of employees Number of employees (in percentage terms) HR Dept 50 -100 100 -500 500 -1000 >1000 11 31 23 35 External HR Consultant - 100 - - Individual Dept 13 42 18 15 Top Mgmt 18 42 19 21 Working team 4 26 29 41 Union/Association - 14 45 41 In companies with greater than 1000 employees the HR department is strong. In mid sized companies individual department is responsible along with Top management. The union is responsible only in companies with more than 500 employees. Retention strategies-AIMA 30
8. 22 Employee retention: Area of concern w. r. t. turnover of the companies Turnover (Rs. crores) (in percentage terms) HR Dept 25 -50 50 -100 100 -200 200 -500 500 -1000 >1000 32 14 20 18 8 8 Eternal HR Consultant - - 100 - - - Individual Dept 39 13 22 9 9 7 Top Mgmt 42 13 22 12 4 6 Working team 35 14 14 14 12 10 Union/Association 32 9 9 18 18 14 In the 25 - 50 crores turnover companies the responsibility of employee retention is handled by HR department, Individual department, Top management and working team. Unions are responsible in >200 crores turnover companies. In smaller companies the responsibility of employee retention is not well defined. However as the size of the company increases the individual department, Top management and working team are not directly concerned with employee retention. It is the responsibility of the HR department as well as the union. Retention strategies-AIMA 31
8. 3 Employee retention: Problem of retention w. r. t. type of industry Traditional Retention problem (in percentage terms) Very high Quite high Somewhat Not at all high 46 51 3 Marketing 34 62 - 3 Services 47. 5 5 - IT & Telecom 73 23 4 - Type of industry The problem of retention was the highest in the IT & Telecom industry while it was lowest in marketing. Retention strategies-AIMA 32
8. 31 Problem of retention w. r. t. number of employees Number of employees Problem of retention (in percentage terms) Not at all Somewhat Quite high Very high 50 -100 62 33 5 - 100 -500 57 43 - - 500 -1000 47 50 3 - >1000 34 58 3 5 Retention strategies-AIMA Problem of retention is higher among companies with more number of employees. It increases with the number of employees. This is on account of the bigger companies becoming stagnant & employees wanting to migrate to more attractive smaller set ups. 33
8. 32 Problem of retention w. r. t. turnover of the companies Turnover (Rs. crores) Problem of retention (in percentage terms) Not at all Somewhat Quite high Very high 25 -50 56 40 2 2 50 -100 67 33 - - 100 -200 44 52 4 - 200 -500 42 53 - 5 500 -1000 18 82 - - >1000 42 50 8 - Retention strategies-AIMA Small sized companies have lesser problem of retention compared to larger companies. 34
The problem of retaining employees was felt in slow growth industries the most. 8. 33 Problem of retention w. r. t. Growth rate of industries Growth rate Problem of retention (in percentage terms) Not at all Somewhat Quite high Very high <5% 50 50 - - 5 -10% 32 62 2 4 10 -25% 61 35 4 - 25 -50% 55 45 - - >50% 67 33 - - Retention strategies-AIMA The companies growing at the rate between 10 -25% or between 25 -50% or at greater than 50%, all felt that the problem of retention was not at all there but growing between the rate of 5 -10% felt that the problem was somewhat there. 35
8. 34 Problem of retention w. r. t. Growth rate of turnover Growth rate Problem of retention (in percentage terms) Not at all Somewhat Quite high Very high <5% 57 43 - - 5 -10% 35 58 5 2 10 -25% 60 36 2 2 25 -50% 42 58 - - >50% 40 60 - - Retention strategies-AIMA The problem of retention is not directly proportional to the rate of growth of the company. In the lower growth companies it is high and in the higher growth companies it is low. It is highest in the medium growth (10 25%) companies. 36
In all the industries the turnover in the junior level employees is the most. The top management people are most committed towards the company and don’t leave the company very often. The turnover of the employees at all levels and in all the industries has been the highest in year 1997. 9. Turnover rate 9. 1 Turnover rates in last three years 1997 Year 1996 1995 Industry TRADITIONAL J M S T 7. 0 5. 0 4. 0 3. 2 7. 0 4. 5 3. 6 3. 9 6. 0 4. 0 3. 8 4. 2 In traditional industries the employee turnover rate is continuously increasing in the middle & senior levels while it is low in the top level. MARKETING J M S T 8. 0 5. 0 3. 0 4. 0 7. 0 4. 0 3. 5 1. 0 6. 0 4. 5 3. 0 1. 5 In marketing industries the highest turnover rate is in the junior and middle. However, there is a high turnover rate in the top management also. SERVICES J M S T 8. 0 5. 0 3. 0 2. 5 7. 5 5. 0 3. 3 1. 0 6. 5 4. 5 2. 5 10. 0 3. 7 2. 3 - 7. 5 3. 1 2. 0 - IT & TELECOM J 13. 0 M 4. 2 S 2. 5 T - Retention strategies-AIMA In service industries high turnover rate are witnessed in junior levels and the top end. They are driven by creativity and are in continuos search for newer challenges. In the IT & Telecom industry the highest turnover rate is at the junior level followed by the middle. 37
9. 2 Last year turnover rate department wise Technical v/s Non technical TRADITIONAL Production Marketing Finance Personnel/Admn IT/Systems MARKETING Production Marketing Finance Personnel/Admn IT/Systems SERVICES Production Marketing Finance Personnel/Admn IT/Systems IT & TELECOM Production Marketing Finance Personnel/Admn IT/Systems Retention strategies-AIMA Per cent leaving last year (turnover) Technical Non Technical 5 5 5 4 - 67 60 50 50 - 33 40 50 50 - 9 4. 5 3 3 - 75 62 50 47 - 25 38 50 53 - 6 4. 5 3 - 70 53 32 35 - 30 47 68 65 - 3 2 1. 6 7. 5 23 45 40 80 77 55 60 20 The turnover in the Marketing, Services and IT & Telecom industry is highest in the production, marketing, & IT systems departments respectively. Moreover the turnover in the marketing industry is more in the Technical departments. The same is true for Services. In Services sector however the T/O is high among the non-technical staff like the finance & personnel in case of the finance companies/banks and HR personnel in case of placement consulting companies. These however cannot be deemed as non-technical as they are technical in their own field say the CAs/ICWA’s etc. would be the technical staff for finance companies. In the Telecom companies very high T/O rate is experienced in the technical staff and the non-technical staff in the production department like the operations and maintenance and other support staff. 38
In the traditional industry the replacement rate as well as induction on account of new business has been declining. The induction rate in the marketing industries on a/c of new business has gone up in the junior & middle levels. Replacement rate are however declining. In services industries the induction rate for new business as well as replacement has been continuously declining at all levels. In IT & Telecom the induction rate for new business has seen an upward trend in the senior management level as well as replacement level. 10. Induction rate 10. 1 Induction rates in last three years New Business 1997 Replacement 1996 New Business Replacement 1995 New Business Replacement TRADITIONAL J M S T 37. 5 18 10 2. 5 40 14 13 2. 5 43 17 11 - 42 17 12 5. 5 43 18 14 5. 0 40 19 12 5. 5 MARKETING J M S T 41 33 8 25 36 16 8 10 43 20 10 5 36 15 10 3 41 20 11 15 33 18 9 2. 3 SERVICES J M S T 35 14 12 3 38 15 13 4. 5 36 15 12 5 37 15 12 7 38 17 12 6 39 16 12 6 IT & TELECOM J M S T 9. 5 5. 3 20 7 4. 8 16 9. 8 3. 5 19 5 2. 7 16 11 2. 8 24 6 3. 0 15 Retention strategies-AIMA 39
The induction rate is highest in the production department and marketing department among the technical employees across all industries. 10. 2 Last year induction rate department wise Technical v/s Non technical TRADITIONAL Production Marketing Finance Personnel/Admn IT/Systems MARKETING Production Marketing Finance Personnel/Admn IT/Systems SERVICES Production Marketing Finance Personnel/Admn IT/Systems IT & TELECOM Production Marketing Finance Personnel/Admn IT/Systems Retention strategies-AIMA Per cent joining last year Technical Non Technical 7 6 4 3 - 57 45 57 57 - 43 55 43 43 - 8. 5 4. 5 3 2. 3 - 67 68 62. 5 50 - 33 32 37. 5 50 - 8 6 4. 5 3. 5 - 60 47 44 42 - 40 53 56 58 - 6. 2 3. 6 2. 1 1. 7 6 56 40 45 45 70 44 60 55 55 30 40
The retention levels have declined the most in the medium sized companies having turnover between Rs. 200 -500 crores. In large companies with >1000 crore turnover the retention levels have increased. Size lends stability to the retention levels. Mid sized companies witness very high volatility while very small and very large companies are stable. 11. Retention levels w. r. t. turnover of the companies Retention levels (in percentage terms) Decreased Turnover (Rs. crores) Increased Remained same 25 -50 17 21 62 50 -100 33 17 50 100 -200 30 17 53 200 -500 16 42 42 500 -1000 27 27 46 >1000 17 - 83 Retention Levels Retention strategies-AIMA 41
The retention levels have declined the most among the marketing companies followed by the services industry. However 35% of the marketing companies also reported increased retention levels. Apart from marketing companies in all other industries maximum number of companies about 50 to 70 per-cent said that the retention levels have remained same over the years. 11. 1 Retention levels w. r. t. Type of industry Retention levels (in percentage terms) Decreased Industry Increased Remained same Traditional 11 19 70 Marketing 35 26 39 Services 24 26 50 IT & Telecom 19 16 65 11. 2 Retention levels w. r. t. Growth of employees Retention levels (in percentage terms) Decreased Growth of employees Increased <5% 26 26 48 5 -10% 10 25 65 10 -25% 31 17 52 25 -50% 37 25 38 >50% 67 - 33 Retention strategies-AIMA Remained same What ever the growth rate of the number of employees, the highest percentage of the companies have said that their retention levels have remained same. The percentages vary from 38 to 65 percent. Only in companies whose growth rate is greater than fifty percent, the retention level has increased in more number of companies. 42
11. 2 Status of retention levels in the last two years and the reasons thereof TRADITIONAL In almost 70 per-cent cases it has been mentioned that retention level has remained the same. In cases where it has increased or remained the same, the reason is that the employees are satisfied with the company, the profits of the company have increased and they don’t want to shift. The employees are happy with the working conditions and the environment of the company. In very few companies the retention levels have decreased and the reasons are that the company is cutting down their activities and one or two companies also said that the employees found that there were better opportunities available in he MNCs and abroad. . More over some companies also mentioned that due to recession people are not leaving the current jobs so the retention levels have increased. MARKETING Most of the companies said that the employee retention levels have increased over the past two years and the main reasons are that there are better career prospects in the company, the company is showing higher profits and good working conditions exist. Some people also mentioned that this industry is growing very rapidly and the company takes good care of its employees. Many companies also mentioned that the companies are on expansion plans and that the employees are paid higher remuneration for their work, they are provided with good working conditions so the retention is not a big problem at all. SERVICES Very few companies in this category also, said that the retention has decreased and the reason that they cite is that some employees leave due to fast promotion opportunities outside in other companies. Other companies mainly said that the retention has increased due to good policies of the company, motivation and good compensation etc. Some other companies said that since there are no jobs in the market so the retention levels have increased as none of the employees want to leave on their own. IT & TELECOM Retention has either increased or remained the same due to better compensation, healthy competitive environment, increase in profitability of the company and good working conditions. Retention strategies-AIMA 43
12. Attrition TRADITIONAL INDUSTRY • The most important department in which maximum attrition takes place : The dept. in which maximum attention takes place is different across various companies. About 38 percent companies felt that production was the most important department in this context. Another 11 percent companies said that highest attrition rate is in finance department. 8 percent companies thought it to be marketing department. About 5 percent each said that most attrition takes place in engineering and IT department. • The second most important department in which most of the attrition takes place : The second most important department in which the maximum attrition takes place is the finance department as stated by 21 percent of the companies. Another 24 percent companies said it to be marketing department and around 11 percent companies said that it was the production department. The rest was a mixture of design, maintenance and other departments. • The third most important department in which high attrition takes place : The third most important department is the finance department said by 16 percent companies. 24 percent companies said it to be the marketing department. 5 percent companies each said that the third most important department would be personnel and production. Rest of the departments that were mentioned were software, support and IT. Retention strategies-AIMA 44
12. Attrition MARKETING INDUSTRY • The most important department in which maximum attrition takes place : In marketing industry around 47 percent companies said that maximum attrition takes place in production department. The other departments were materials, operations, software development and travelling. • The second most important department in which most of the attrition takes place : Around 41 percent companies in marketing industry said that the second most important department is the marketing and 19 percent companies said the finance department was the department in which the second highest attrition takes place. 6 percent of the companies said that the department was the production department. The other departments that were mentioned were sales and technical departments. • The third most important department in which high attrition takes place : 22 percent companies said the third most important department in which high attrition takes place is the finance department and another 13 percent said it was the marketing department, 6 percent companies said it to be the administration department. The other departments that were mentioned this were accounts, IT, maintenance, personnel, production and services. Retention strategies-AIMA 45
12. Attrition SERVICES INDUSTRY • The most important department in which maximum attrition takes place : The most important in which maximum attrition takes place is the finance department. This was stated by as many as 30 percent of the companies. Next 15 percent of the companies said it was the marketing department and another 12. 5 percent companies said it to be the production department. The rest of the companies stated different departments such as the administration, the advertisement, the IT, the R &D, and the projects. In this section another important department was mentioned as the creative department in ad agencies where there is maximum attrition. • The second most important department in which most of the attrition takes place : The second most important department in which the second highest attrition takes place is the marketing department as mentioned by 38 percent companies. Another 10 percent companies said it to be the finance department and around 8 percent companies mentioned the production department. The rest of the companies mentioned the other departments such as customer service, personnel. Operations, IT etc. • The third most important department in which high attrition takes place : In the services industry the third most important department where the high attrition takes place is the IT department as mentioned by 23 percent companies. Another 13 percent companies said finance department. 5 percent each mentioned marketing, media and personnel. The rest of the companies mentioned departments such as accounts, operations, production and tenders etc. Retention strategies-AIMA 46
12. Attrition IT & TELECOM INDUSTRY • The most important department in which maximum attrition takes place : In this industry as many as 50 percent companies said the IT department has the maximum attrition rate. The next 23 percent companies felt it was the marketing department. The rest of the companies mentioned the software development department, the systems department, the sales department etc. • The second most important department in which most of the attrition takes place : Here almost 42 percent companies did not say that any second department existed having high attrition rates. 27 percent companies said it was the marketing department. Around 12 percent companies felt it was the services department and 8 percent companies said it was the operations department. The rest of the companies again mentioned the software development department, production department etc. • The third most important department in which high attrition takes place : 92 percent companies felt that there was no other important department in which the attrition was high and the rest 8 percent companies felt it was the finance department. Retention strategies-AIMA 47
13. Factors in external environment TRADITIONAL INDUSTRY End of licensing/ Govt. control Mean 2. 05 Increased competition from MNCs 2. 59 Increased competition from new Indian companies 2. 59 Change from cost-plus to market driven 2. 65 Emergence of new competing industries 2. 59 MARKETING INDUSTRY End of licensing/ Govt. control Mean 2. 23 Increased competition from MNCs 2. 74 Increased competition from new Indian companies 2. 58 Change from cost-plus to market driven 2. 93 Emergence of new competing industries 2. 81 Retention strategies-AIMA In the traditional industry most of the companies said that all the factors external to the organisation are some where between not important to important. The end of licensing or government control is more or less not important in having an impact on the employee retention, whereas the factors like increased MNC competition, increased competition from new Indian companies, and emergence of new competing industries almost between not important and important. The factor which has some impact on employee retention is change from cost plus to market driven. In marketing industry the most important factor is the change from cost plus to market driven, This is stated to be an important factor to impact the employee retention. Another factor which is important in impacting the retention level is emergence of new competing industries. Only Government controls and end of licensing are not important factors but the other two factors such as the increasing MNC competition and increased competition from new Indian companies also are important factors in having an impact over employee retention. 48
13. Factors in external environment SERVICES INDUSTRY End of licensing/ Govt. control Mean 2. 06 Increased competition from MNCs 2. 70 Increased competition from new Indian companies 2. 59 Change from cost-plus to market driven 2. 58 Emergence of new competing industries 2. 73 In services industry all the factors are important in influencing the employee retention levels except for one which is the end of licensing and government control. This factor is not important, rest of the factors have their skewness towards important in influencing the employee retention the highest being for emergence of new competing industries. IT & TELECOM INDUSTRY End of licensing/ Govt. control Mean 1. 96 Increased competition from MNCs 2. 77 Increased competition from new Indian companies 2. 23 Change from cost-plus to market driven 2. 50 Emergence of new competing industries 2. 81 Retention strategies-AIMA In IT & Telecom industry the end of licensing and government control is between not at all important in having an impact on employee retention. Emergence of new Indian companies is also more or less not important for employee retention. The important factors in influencing the employee retention are the emergence of new competing industries and increase in competition from MNCs. 49
14. Attitude towards employee retention TRADITIONAL The attitude towards employee retention is very positive. They want to retain good and loyal people in their companies They want to develop their employees. The positive attitude gives the employees a sense of security and motivates them. They do activities like counselling and promotions are given timely. The employees in this industry get better compensation and pay packages. They want to retain self motivated, hardworking and good people who can be imparted the training and who can show good results for the company. MARKETING To most of the companies it is a matter of concern, companies feel that they want to retain good people who are self motivated, result oriented and more committed. The attitude in this industry is also very positive and supportive. The employees are given better compensation so that they don’t quit. Only those employees who show good results are retained and the rest are either sacked or are made to leave the organisation. The employees are given healthy working environment. It is an area of concern to every one in the organisation. SERVICES In the services industry it is said that good people have to be retained, so they are motivated and kept satisfied. Also it is mentioned that pay the employees better salary and provide them better perquisites as well as training because employee retention is very important for good working of the company. IT & TELECOM The attitude is very positive and pragmatic. A high amount of money is spent on training and better working conditions are provided to the employees to keep their morale high so that they don’t shift the organisation frequently. Retention strategies-AIMA 50
15. Change in employee retention strategies 15. 1 Due to change in economic environment TRADITIONAL They retain good workers. They communicate their strengths to their employees. They give the employees performance awards. ESS has been introduced. When a promotion is given an under taking is taken that the person would not leave for at least a stipulated period. It is also felt that due to the recession the retention problem is not there any more as people do not leave the organisation very easily. Some companies also give more non monetary benefits and better compensation but still about 50 percent companies had to say that there is no change due to change in economic environment. MARKETING The companies are interested in retaining only the committed and high performing employees. There is more responsibility along with higher authority and there is more flexibility in the job. Higher monetary incentives are given to the people who perform well and no incentive is given to the non performers. They try to make things more systematised. Some people also had an opinion that the retention depends on how important is the employee to the organisation. But along with all these responses many people also said that there are no major changes in the strategies due to change in the economic environment. SERVICES The main response has been that the employees are given the compensation at par with the industry standards. High achievers are given all the awards and the recognition. Here again some people were of the view that less number of employees are leaving the organisation as a result of the depression in the economy and hence there is not much problem of retaining the employees in this scenario. IT & TELECOM In this industry too there have been changes such as better compensation is paid to high performing employees, performance related awards and recognition is given and better working conditions are provided to the employees. Retention strategies-AIMA 51
15. 2 Due to change made by the competitor within the industry TRADITIONAL Most of the companies stated that there have been no changes with respect to the changes made by the competitor. Some other companies said that they need to change the compensation packages they offer to their employees if the competitor makes a change and provide them with training in latest technology. MARKETING Some companies had made no changes at all while some others better pay packages were paid to the employees working in key departments of the organisation. More participative type of management should be adopted, more career planning opportunities and job enrichment should be provided was also mentioned by some people. But inspite of all these the main thing that emerged is that compensation was always kept at par with the industry standards. SERVICES In this industry the employees are given differential pay packages, better training facilities depending on performance are provided. Some others mentioned that they have to provide equal benefits as are provided by the competitors. Here again the main focus is on keeping the compensation at par with the industry. IT & TELECOM Not many companies have agreed for this. They say that no change is made due to the competitor’s action, but they do say that they have to fix up the pay packages according to the industry standards, good working conditions, recognition and some non monetary benefits also have to be provided to the employees. Retention strategies-AIMA 52
15. 3 Due to more opportunities across industries TRADITIONAL Industry benchmarks are defined and all the actions are taken accordingly, good compensation is given and good training facilities are provided. Some other companies mentioned that benefits are provided after assessing the qualities of the person. But again the better pay package is the most important factor. MARKETING Here again the main factor is better pay package. Some companies laid more emphasis on training and development. Lucrative offers are given to key performers and better care is taken by the top management of he employees. The people in the industry have become more conscious of retaining employees. SERVICES Employees are given more responsibility along with the authority. They are also given performance based incentives. Here again the pay packages and training are one of the most important considerations IT & TELECOM The main things that need to be done are provide the employees with better working conditions, better training compensation at par with the industry and some times better than the industry standards, regular performance appraisals, perfection awards among others. Retention strategies-AIMA 53
The training budget as a % of turnover is highest among the marketing and Telecom companies with 5% of the Telecom companies having a training budget exceeding 7. 5% of the turnover. 16. Training budget 16. 1 Training budget w. r. t. type of industry Type of industry 0 - 0. 5% Training budget (in percentage terms) 1 -2% 3 -5% 5 -7. 5% >7. 5% Traditional 43 46 11 - - Marketing 19 55 23 3 - Services 51 23 21 5 - IT & Telecom 12 40 40 - 8 In traditional and services industries the training budget is mainly between 0 to 0. 5 percent and in marketing and IT & Telecom industry it is between 1 to 5 percent. Retention strategies-AIMA 54
The training budget and turnover of the company follow a cyclical pattern. Initially training budget are high, when the company attains a particular size it declines. Again after some time the training budget receives a boost. Thus training is continuously propped up as and when the company attains a targeted turnover. 16. Training budget 16. 2 Training budget w. r. t. turnover Training budget (in percentage terms) 0 - 0. 5% 1 -2% 3 -5% 5 -7. 5% >7. 5% 25 -50 35 46 19 - - 50 -100 50 22 17 6 5 100 -200 23 36 36 4 - 200 -500 42 32 21 - 5 500 -1000 9 82 9 - - >1000 42 17 33 8 - Turnover Rs Crores The majority of the companies having a turnover between Rs. 25 -50 crores and between Rs. 500 - 1000 crores are having a training budget between 1 -2 percent. Most of the companies having a turnover between Rs. 100 - 200 crores are having a training budget between 1 -5 percent. And the companies having a turnover in the range of Rs. 200 - 500 crores are having a training budget of less than 0. 5 percent. Retention strategies-AIMA 55
The training budget as a % of turnover increases in direct proportion to the growth rate of employees. . 16. Training budget 16. 3 Training budget w. r. t. Growth rate of employees/ Training Budget (in percentage terms) 0 - 0. 5% 1 -2% 3 -5% 5 -7. 5% >7. 5% < 5% 68 18 9 5 - 5 -10% 36 46 18 - - 10 -25% 14 51 31 3 - 25 -50% - 29 71 - - >50% - 25 25 - 50 With respect to the growth of employees, the companies in which the growth of employees is less than five percent the training budget is between 0 to 0. 5 percent. Where growth rate is between 5 - 25 percent the training budget is mainly between 1 -5 percent. The companies having growth of employees between 25 -50 percent the training budget is between 3 -5 percent and those companies whose growth rate greater than 50 percent the training budget is more than 7. 5 percent. Retention strategies-AIMA 56
17. Improving Employee Commitment TRADITIONAL There are frequent company meetings and problem solving exercises, they are given team work, there is a balance between the authority and responsibility. There is involvement in decision making, good working conditions are provided and compensation packages are at par with the industry standards. The employees are provided with training. They are given performance awards and incentives. A lot of emphasis is put on the team work, performance appraisals, job satisfaction, financial incentives, growth of employees by training and promotions, good working conditions, better pay package and transparency in the work of the company. MARKETING There are performance based appraisals and special awards and recognition for high achievers. There is also participative management and better working conditions are provided the employees. Apart from all this, employees should be given better pay packages, their career development takes place in the organisation. Profit sharing, performance appraisals and good working conditions are provided to the employees. Motivation, involvement in decision making, recognition, team awards etc. are also a good way to improve the employee commitment. Some companies also provide the employees with proper and timely training to increase the commitment. SERVICES The employees in this industry are given better working conditions, they are provided with better training facilities, there are performance related appraisals and incentives. Better pay package is provided to them. Verbal and written appreciation are also a part of the employee commitment building exercise. Also there is a balance between the authority and responsibility. IT & TELECOM In this industry too employees are given authority along with the responsibility. They are motivated and there are target related benefits. There is counselling for the employees and welfare of the employees is taken care of. Retention strategies-AIMA 57
18. Measures adopted to create internal environment for employee retention TRADITIONAL INDUSTRY MEASURES DESIRED Achieved • Increase in level of professionalism • Change in value systems from family managed to professional • Objectivity of Performance appraisal • Predicted criteria for employee retention • Employee involvement in decision making • Level of delegation commensurate with accountability and responsibility • Measurement of employee satisfaction level • Evaluation of employee goal v/s organisation goal • Competitive design of compensation package • Increased organisational transparency • Promotion from within • In house training in newer skills • Stock options • Increased welfare measures 3. 34 2. 91 3. 34 2. 97 2. 90 3. 08 3. 16 3. 24 3. 35 3. 21 3. 12 3. 30 2. 85 3. 18 3. 21 2. 13 2. 97 2. 68 3. 03 3. 06 3. 00 2. 82 2. 88 2. 85 3. 00 3. 18 1. 96 2. 88 The most desired option created by companies to create internal environment for employee retention are: 1. Level of delegation commensurate with accountability and responsibility. 2. Increase in level of professionalism 3. Objectivity of performance appraisal. Out of these the increase in level of professionalism has been achieved to a very low extent in most companies. Stock options is the least desired measure preferred by companies. Most companies have been able to attain the desired level of the organisational transparency. Retention strategies-AIMA 58
18. Measures adopted to create internal environment for employee retention MARKETING INDUSTRY MEASURES DESIRED ACHIEVED • Increase in level of professionalism • Change in value systems from family managed to professional • Objectivity of Performance appraisal • Predicted criteria for employee retention • Employee involvement in decision making • Level of delegation commensurate with accountability and responsibility • Measurement of employee satisfaction level • Evaluation of employee goal v/s organisation goal • Competitive design of compensation package • Increased organisational transparency • Promotion from within • In house training in newer skills • Stock options • Increased welfare measures 3. 44 3. 07 3. 56 3. 00 3. 19 3. 40 3. 35 3. 32 3. 30 3. 17 3. 33 2. 90 3. 20 3. 38 2. 30 2. 83 2. 87 3. 16 3. 10 3. 03 2. 93 3. 17 2. 77 2. 97 1. 96 2. 87 In the marketing industry the measures most of adopted are objectivity of performance appraisal and increase in level of professionalism. They have not been achieved as much as the desired level. Retention strategies-AIMA 59
18. Measures adopted to create internal environment for employee retention SERVICES INDUSTRY MEASURES DESIRED ACHIEVED • Increase in level of professionalism • Change in value systems from family managed to professional • Objectivity of Performance appraisal • Predicted criteria for employee retention • Employee involvement in decision making • Level of delegation commensurate with accountability and responsibility • Measurement of employee satisfaction level • Evaluation of employee goal v/s organisation goal • Competitive design of compensation package • Increased organisational transparency • Promotion from within • In house training in newer skills • Stock options • Increased welfare measures 3. 34 2. 97 3. 45 2. 92 2. 78 2. 97 3. 19 3. 37 3. 42 3. 24 3. 18 3. 34 2. 97 3. 19 3. 21 2. 41 3. 08 2. 70 2. 97 2. 92 2. 87 2. 72 2. 79 2. 90 2. 95 2. 85 1. 93 2. 71 In the services industry the level of delegation commensurate with accountability and responsibility coupled with objectivity of performance appraisal are the most adopted measures. These are however not fully achieved as yet with these being a large gap between desired and achieved levels. Retention strategies-AIMA 60
18. Measures adopted to create internal environment for employee retention IT & TELECOM INDUSTRY MEASURES DESIRED ACHIEVED • Increase in level of professionalism • Change in value systems from family managed to professional • Objectivity of Performance appraisal • Predicted criteria for employee retention • Employee involvement in decision making • Level of delegation commensurate with accountability and responsibility • Measurement of employee satisfaction level • Evaluation of employee goal v/s organisation goal • Competitive design of compensation package • Increased organisational transparency • Promotion from within • In house training in newer skills • Stock options • Increased welfare measures 3. 21 3. 05 3. 25 3. 60 3. 67 3. 80 3. 13 3. 21 3. 08 3. 22 3. 13 3. 17 3. 13 2. 91 3. 17 3. 56 3. 48 3. 64 3. 56 3. 60 3. 75 3. 29 3. 60 3. 63 3. 00 3. 52 In the IT & Telecom industry a number of measures are collectively adopted - increase in level of professionalism, objectivity of performance appraisal, employee involvement in decision making, level of delegation commensurate with accountability and responsibility, measurement of employees satisfaction level and competitive design of compensation package. These has been achieved at higher than the desired level. Retention strategies-AIMA 61
The extent of promotion from within is happening to the tune of 5 - 10% among 60% companies in all industries. In marketing companies the promotion from within is also happening to an extent of 25% in 34% companies. 19. Promotion from within 19. 1 Type of industry Extent of promotion from within (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% Traditional 15 68 12 - 6 Marketing 6 50 22 12 9 Services 10 63 21 - 5 IT & Telecom - 69 19 - 11 Percent Type of industry Extent of promotion from within the organisation Retention strategies-AIMA 62
19. Promotion from within 19. 2 Turnover (Rs. crores) Extent of promotion from within (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% 25 -50 11 72 13 - 4 50 -100 17 39 22 6 17 100 -200 4 78 17 - - 200 -500 5 58 21 5 10 500 -1000 9 55 27 9 - >1000 - 46 18 9 27 The extent of promotion from within is mainly 5 - 10 percent across all size of companies. In companies having turnover more than Rs. 1000 crores the extent of promotion is greater than 50 percent from within the company in 27 percent of the companies. Retention strategies-AIMA 63
In companies with either less than 100 employees or >1000 employees the extent of promotion from within the company is higher compared to the companies having 100 - 1000 employees. Who believe in fresh recruitment's. 19. Promotion from within 19. 3 Number of employees Extent of promotion in house (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% 50 -100 16 47 37 - - 100 -500 7 71 9 5 7 500 -1000 6 72 19 3 - >1000 8 51 19 3 19 Here again the extent of promotion from within is between 5 - 10 percent in most of the companies having between 100 - 1000 employees. In companies having less than 100 employees the extent of promotion that happens from within the company is between 5 - 25 percent in almost 85 percent of the companies and in 50 percent of the companies having more than 1000 employees, Retention strategies-AIMA 64
19. Promotion from within 19. 4 Growth of number of employees. Extent of promotion in house (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% <5% 13 55 13 - 17 5 -10% 11 68 16 4 2 10 -25% 3 69 26 - 3 25 -50% - 50 13 12 25 >50% 33 - 34 According to the growth of number of employees, the extent of promotion from within the organisation is mainly between 5 - 10 percent or between 10 - 25 percent. In companies having more than 50 percent growth rate in number of employees, the extent of promotion is either less than 5 percent, or between 10 - 25 percent or greater than 50 percent. Retention strategies-AIMA 65
The compensation packages have increased the most in the marketing and IT & Telecom industries. 20. Increase in average compensation package by the organisation in last three years 20. 1 Type of industry Increase in average compensation package in last three years < 5% 5 -10% 10 -25% 25 -50% > 50% Traditional 9 54 34 3 - Marketing 6 31 44 19 - Services 3 61 32 3 3 IT & Telecom - - 73 15 12 The increase in average compensation in traditional, marketing and services industry is mainly between 5 - 10 percent. In IT & Telecom industry and marketing in majority of the companies the increase in average compensation is between 10 - 25 percent. Retention strategies-AIMA 66
The average compensation packages have increased to the tune of 10 - 25% in the mid-sized companies having Rs 100 - 500 crores turnover in the last three years. 20. Increase in average compensation package by the organisation in last three years 20. 2 Turnover Increase in average compensation package in last three years (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% 25 - 50 2 50 33 11 4 50 -100 22 28 28 17 6 100 -200 4 35 56 4 - 200 -500 - 26 68 - 6 500 -1000 - 45 45 10 - >1000 - 42 42 16 - Turn over (Rs. Crores) The increase in average compensation package in the last three years has been mainly between 5 - 25 percent in about 50 to 95 percent of the companies across all sizes. Retention strategies-AIMA 67
More companies having higher number of employees tend to increase the compensation package compered to companies with 500 employees. 20. Increase in average compensation package by the organisation in last three years 20. 3 Number of employees Increase in average compensation package in last three years < 5% 5 -10% 10 -25% 25 -50% > 50% 50 - 100 11 26 53 10 - 100 - 500 7 33 45 12 2 500 - 1000 3 47 38 6 6 >1000 - 47 42 8 3 Increase in average compensation package over the last three years has again been between 5 - 25 percent in almost 75 percent companies whatever the number of employees in the organisation. It is more pronounced in the companies having more than 500 employees. Retention strategies-AIMA 68
The increase in compensation package in the last three years has been directly related with growth of number of employees. 20. Increase in average compensation package by the organisation in last three years 20. 4 Growth of employees Increase in average compensation package in last three years (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% <5% 13 26 52 4 4 5 -10% 5 50 38 7 - 10 -25% - 40 54 6 - 25 -50% - 13 37 37 12 >50% - - 33 - 67 Growth of number of employees The increase in average compensation package in the last three years according to the growth of number if employees has been between 5 - 10 percent in almost 85 percent companies having a growth rate of employees between 0 - 25 percent. The companies whose growth rate of number of employees is between 25 -50 percent or it is greater than 50 percent, the increase in compensation is mainly between 10% to greater then 50 percent. Retention strategies-AIMA 69
The increase in average compensation package in the last 3 years has been the highest among IT & Telecom companies have exhibited a 10 -25% increase in the compensation package. In all other industries most companies have exhibited a 5 -10% increase in the compensation package. 21. Increase in average compensation package by the industry in last three years 21. 1 Type of industry Increase in average compensation package in the industry in last three years (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% Traditional 8 42 44 6 - Marketing - 38 47 15 - Services 3 50 42 3 2 IT & Telecom - 4 73 12 11 In traditional, marketing and services industry the increase in the average compensation has been between 5 - 10 percent in almost 50 percent of the companies. And in rest of the companies the increase has been between 10 - 25 percent. In IT & Telecom industry the increase has been between 10 to 25 percent in as many as 73 percent companies. Retention strategies-AIMA 70
21. Increase in average compensation package by the industry in last three years 21. 2 Turnover (Rs. Crores) Increase in average compensation package in the industry in last three years (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% 25 -50 4 40 43 9 4 50 -100 - 38 44 13 6 100 -200 4 26 61 9 - 200 -500 5 26 63 - 5 500 -1000 - 55 36 9 - >1000 - 25 58 17 - The increase in the compensation package has been to the extent of 10 -25% in among 60% of the mid-sized companies. In very large companies too, the increase in compensation package has been considerably high -25 -50% in about 17% of the companies. Retention strategies-AIMA 71
21. Increase in average compensation package by the industry in last three years 21. 3 Number of employees Increase in average compensation package in the industry in last three years (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% 50 -100 - 30 65 5 - 100 -500 7 32 49 10 2 500 -1000 3 32 52 7 6 >1000 - 45 42 11 3 Again the increase in compensation package in the industry in the last three years is not dependent on the number of employees in the organisation. The increase has been between 5 - 25 percent whatever the number of employees. In companies with less than 100 employees, however, 65% of the companies exhibited a 10 -25% increase. Retention strategies-AIMA 72
21. Increase in average compensation package by the industry in last three years 21. 4 Growth in number of employees Increase in average compensation package in the industry in last three years (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% <5% 4 29 58 4 4 5 -10% 6 39 48 7 - 10 -25% - 40 54 6 - 25 -50% - 13 50 25 12 >50% - 33 - - 67 Majority of the companies almost 50 percent of them show an increase in compensation between 10 - 25 percent but others says that the increase is between 5 - 10 percent. Where the growth of number of employees is more than 50 percent there 67 percent of the companies say that the increase in compensation in the industry has also been more than 50 percent. Retention strategies-AIMA 73
The IT & Telecom companies are increasingly preferring growth in the non-monetary package. 22. Increase in non monetary package by the organisation in last three years 22. 1 Type of industry Increase in non monetary package in the last three years (in percentage terms) <5% 5 -10% 10 -25% 25 -50% >50% Traditional 18 62 15 6 - Marketing 13 52 29 6 - Services 13 62 22 3 - IT & Telecom 4 23 65 4 4 In traditional, marketing and services industry the increase is mainly in the region of 5 - 10 percent where as in IT & Telecom industry it is between 10 - 25 percent which is the highest. Retention strategies-AIMA 74
22. Increase in non monetary package by the organisation in last three years 22. 2 Turnover (Rs. Crores) Increase in non monetary package in the organisation in last three years (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% 25 -50 11 55 28 6 - 50 -100 29 41 18 6 6 100 -200 9 39 52 - - 200 -500 6 53 29 19 - 500 -1000 9 82 9 - - >1000 18 45 36 - - The increase in non-monetary package has been most preferred by the mid-sized companies having T/O of Rs 100 - 200 crores. The smaller companies or Rs 200 - 1000 crores turnover companies non monetary packages have not received on major boost However in very large companies the non-monetary package has been increased to the tune of 10 -25% among 36% of the companies. Retention strategies-AIMA 75
The growth of the non monetary package is directly related with the growth of the number of employees. In IT & Telecom industry the increase in non monetary package has been between 10 -25 percent in the industry. In rest of the segments the increase has been between 5 -10 percent. 22. Increase in non monetary package by the organisation in last three years 22. 3 Growth in number of employees Increase in non monetary package in the last three years (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% <5% 32 50 18 - - 5 -10% 5 62 27 5 - 10 -25% 11 43 45 - - 25 -50% - 50 38 12 - >50% - - - 67 33 23. Increase in non monetary package by the industry in last three years 23. 1 Type of industry Increase in non monetary package in the industry in last three years (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% Traditional 21 58 18 3 - Marketing 22 53 22 3 - Services 15 63 15 6 - IT & Telecom 8 20 60 8 4 Retention strategies-AIMA 76
Across all sizes of companies the increase in non monetary package in he industry is between 5 -10 percent. 23. Increase in non monetary package by the industry in last three years Increase in non monetary package in the 23. 2 Turnover industry in last three years (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% 25 -50 13 53 27 7 - 50 -100 40 40 7 7 6 100 -200 9 45 45 - - 200 -500 12 47 29 12 - 500 -1000 27 64 9 - - >1000 18 54 27 - - Turnover (Rs. Crores) 23. 3 Number of employees Increase in non monetary package in the industry in the last three years (in percentage terms) < 5% 5 -10% 10 -25% 25 -50% > 50% 50 -100 20 50 25 5 - 100 -500 13 42 37 8 - 500 -1000 14 54 29 - 4 >1000 22 57 16 5 - Retention strategies-AIMA 77
24. Components of non monetary package TRADITIONAL Medical facilities, education for children, accommodation, loans, good working conditions and recognition, vehicle HRA, motivation through recognition and opportunities for career development. Good working conditions and employee recreation like get together along with the management. Annual holiday tours, challenging jobs, books and magazines. MARKETING The families of the employees are taken care of by providing them leave facilities, the company lease accommodation, in house training programme. Foreign tours with family, good working conditions, loan facility to employees children, etc. Vehicle, vehicle loans, telephone, medical benefits, welfare and media-claim policy etc. Performance related appraisals, LTC, medical facilities, LIC, , involvement in decision making, sponsors. good working conditions. SERVICES Mobile phones, medical reimbursements, group insurance scheme, awards to committed people. Accommodation should be provided. Scholarships to children, good working conditions are also needed. Training is also demanded for. Job security, involvement in decision making and sports and other facilities are some of the thing most required. IT & TELECOM Good working conditions and employee recreation like get together with management etc. LIC policy foreign trips, credit cards, stock options, career development plans etc. are some of the things needed by the employees. Retention strategies-AIMA 78
25. Relationship between organisational culture and employee retention TRADITIONAL In a democratic culture the employees feel more comfortable. Most of the people thought that there was not much relationship. Some companies in this industry are family type of management in which the employees are a big priority. Training and development are given as per the government norms and there is a very healthy relationship among the employees and the management. MARKETING There is a high degree of relationship between organisation culture and the employee retention. There should be integration of employee retention and organisation value system. Mostly the system is very open, transparent and conducive. Still some companies stated that there is a very low degree of relationship between the two. They give optional holidays to the employees on their festivals. The organisational culture is very friendly, the relation is there, in bad, rigid organisational environment the employees don’t like to work. SERVICES In most of the companies the environment is totally transparent and healthy, closely related and informal culture. The environment is very professional. Some companies stated that the organisational culture is very open and friendly which makes the retention easy and high. IT & TELECOM Most companies said that the relation is healthy and there is quite open culture with total transparency in the working of the company. This helps in increasing the retention. Retention strategies-AIMA 79
26. Techniques used for external image building TRADITIONAL Corporate communication, customer satisfaction, charity, advertisement, social responsibility, good quality products, maintenance standards, sponsorshipsare some of the effective tools. Satisfied employees, satisfied customers and past projects all speak for themselves. But still around 50 percent of the companies said that they don’t make any conscious effort for external image building. MARKETING Advertisements, media, sponsorships of events, charity, ensuring the shareholders the return on investment, customer satisfaction, maintain good relationship with employees are some of the tools. PR activity is also important in this industry. Some companies also indulge in training programs for the employees. SERVICES Management training programs are provided. In most of the companies the PR wing takes care of such things. Highlight company profile and performance, satisfaction of employees and media coverage. Satisfied clients are also very important. Keeping business commitment and setting best standard in the industry. IT & TELECOM Advertisements, road shows, seminars, workshops, healthy relationship with customers, satisfied employees, sponsoring events are some of the tools that the companies in this industry adopt. Retention strategies-AIMA 80
27. Reasons for employees to leave (In percentage terms) Junior Middle Senior Top Management 76 67 3 3 11 5 62 76 5 8 13 - 57 67 3 11 32 22 38 43 24 24 32 27 Junior Middle Senior Top Management 75 69 3 12 9 6 66 75 9 12 19 6 50 72 22 22 37 22 34 47 25 32 32 32 Traditional Better compensation Better career opportunities Peer pressure Family problems Work profile Health problems The junior level employees leave for better compensation, the middle level for better career opportunities and the senior as well as top management for work profile and peer pressure. Marketing Better compensation Better career opportunities Peer pressure Family problems Work profile Health problems Retention strategies-AIMA The junior level employees leave for better compensation, the middle and senior levels for better career opportunities, the top management for work profile and peer pressure. 81
27. Reasons for employees to leave (In percentage terms) Junior Middle Senior Top Management 75 75 10 15 20 15 60 77. 5 2. 5 10 20 7. 5 52. 5 70 12. 5 15 37. 5 20 40 45 22. 5 30 25 Junior Middle Senior Top Management 42 85 4 4 4 27 88 4 11 4 15 65 4 23 27 38 4 11 4 4 8 4 Services Better compensation Better career opportunities Peer pressure Family problems Work profile Health problems The junior level employees leave primarily for better compensation. The middle and senior level as well as a sizable top management level leave on account of better career opportunities. IT & Telecom Better compensation Better career opportunities Peer pressure Family problems Work profile Health problems Retention strategies-AIMA The junior as well as middle level and senior levels leave on account of better career opportunities. The senior and top management leave on account of the work profile. 82
28. Innovative ways to retain employees TRADITIONAL Work as a family, fast career growth, involvement in decision making, good working conditions and personal development, periodic promotions and lucrative pay hikes, sophisticated training facilities with latest equipment, better perks, authority and responsibility, give employees cross functional responsibility and challenging jobs. Career counselling, regular appraisal and promotion and facilities like vehicle, accommodation and better compensation package are very important. MARKETING Giving the employees good compensation package and also giving them fair rewards for special performance. Other facilities like accommodation, car loans etc. should be provided. Employees should be given higher responsibility along with appropriate authority. They should be involved in decision making and should be given opportunity for career growth and training and development. It is mainly that high performers are given more compensation in terms of rewards. Emphasis on total employee commitment, profit sharing and pay package at par with the industry. Give them a chance to go abroad with family. SERVICES Profit sharing and other compensation at par with industry and competitors, try to build a family type of atmosphere, motivating the team workers and employees. Challenging job, recognition, good and healthy working condition, regular promotions and involvement in decision making. Occasional office parties are also recommended. IT & TELECOM Motivation, training programs, compensation based on performance, good salary, better pay package, loans to employees and benefits are given. Healthy working conditions, career counselling, regular appraisal and promotions. Retention strategies-AIMA 83
The trigger points to improve retention at the junior level is through career counselling, training for skill building & design for better pay package. The middle level is motivated by reviewing performance appraisal strategies, team building communication, job enrichment and design for better pay package. The senior management in traditional industries is motivated through vision sharing and welfare measures along with building a cohesive organisational culture. 29. Trigger points to improve retention (In percentage terms) Junior Middle Senior Top management 57 49 16 57 43 40 24 32 38 27 22 46 49 62 22 24 49 67 46 62 54 70 54 62 67 59 57 62 57 40 8 11 43 13 13 30 28 13 16 27 22 13 8 24 22 TRADITIONAL Career counselling Revising performance appraisal strategies Vision sharing Training for skill building Opening new positions for insiders within Welfare measures Building a cohesive organisational culture Conflict Resolution program Team building communication Joint decision making Leadership workshops Quality workshops Job enrichment Design for better pay package Exit interviews Retention strategies-AIMA 57 78 49 65 59 46 73 59 62 65 70 70 43 84
In the marketing industry, the junior levels are motivated through career counselling, training for skill building and welfare measures. The middle levels are motivated through quality workshops and better pay packages. The senior management is enthused through vision sharing, design of better pay package and building a cohesive organisational culture. The top management retention is triggered through joint decision making and team building communication. 29. Trigger points to improve retention (In percentage terms) Junior Middle Senior Top management 66 47 44 66 50 66 53 47 50 50 37 53 53 59 34 32 41 66 47 41 56 69 62 62 66 53 53 59 76 37 3 34 9 19 25 31 22 37 41 19 12 16 34 19 MARKETING Career counselling Revising performance appraisal strategies Vision sharing Training for skill building Opening new positions for insiders within Welfare measures Building a cohesive organisational culture Conflict resolution program Team building communication Joint decision making Leadership workshops Quality workshops Job enrichment Design for better pay package Exit interviews Retention strategies-AIMA 62 62 69 69 62 62 66 62 72 56 75 59 85
In the services industry the junior level is triggered through career counselling, quality workshops and job enrichment. The middle level is triggered through revision of performance appraisal strategies, training for skill building and team building communications. The top management is triggered through welfare measures, vision sharing and joint decision making. 29. Trigger points to improve retention (In percentage terms) Junior Middle Senior Top management 75 50 35 65 47. 5 45 42. 5 55 40 45 65 70 60 37. 5 40 47. 5 67. 5 57. 5 72. 5 62. 5 52. 5 75 65 62. 5 60 40 65 47. 5 25 7. 5 37. 5 15 42. 5 55 22. 5 27. 5 45 22. 5 15 50 30 SERVICE Career counselling Revising performance appraisal strategies Vision sharing Training for skill building Opening new positions for insiders within Welfare measures Building a cohesive organisational culture Conflict resolution program Team building communication Joint decision making Leadership workshops Quality workshops Job enrichment Design for better pay package Exit interviews Retention strategies-AIMA 67. 5 70 42. 5 75 60 55 55 72. 5 67. 5 62. 5 65 37. 5 86
In the IT & Telecom industry building a cohesive organisational culture, team building communication and quality workshops are trigger points for the junior employee levels. In the middle management opening of new positions for insiders within is used to improve retention. Joint decision making and better pay package are used for senior employees. Vision sharing and design for better pay package are needed for the top management. 29. Trigger points to improve retention (In percentage terms) Junior Middle Senior Top management 81 81 77 77 81 81 85 77 85 73 81 85 69 81 73 73 61 77 42 42 65 69 42 61 85 77 46 35 81 31 35 11 61 11 19 27 46 15 19 54 35 15 4 65 4 IT & TELECOM Career counselling Revising performance appraisal strategies Vision sharing Training for skill building Opening new positions for insiders within Welfare measures Building a cohesive organisational culture Conflict resolution program Team building communication Joint decision making Leadership workshops Quality workshops Job enrichment Design for better pay package Exit interviews Retention strategies-AIMA 69 88 85 77 92 73 85 69 88 81 85 73 77 85 81 87
Inter Industry switchovers are least in the IT & Telecom industry. Intra industry switchover is highest in the middle management level in the IT & Telecom industry. 30. Switch Over: Inter v/s Intra industry TRADITIONAL Junior Middle Senior Intra Industry 40 62 54 Inter Industry 46 51 43 Intra Industry 44 66 56 Inter Industry 41 47 50 Intra Industry 52. 5 57. 5 45 Inter Industry 27. 5 42. 5 40 Intra Industry 65 77 65 Inter Industry 15 11 8 MARKETING SERVICES IT & TELECOM Retention strategies-AIMA 88
The commitment levels is the lowest among the junior level in the traditional industry. In the middle management level the IT & Telecom industry has the highest commitment level. In the senior management level the highest is in the IT & Telecom industry. 31. Commitment Level Type of industry (mean values) Traditional Junior Middle Senior 2. 39 2. 78 3. 17 Marketing 2. 50 2. 88 3. 31 Services 2. 67 2. 95 3. 36 IT & Telecom 2. 54 3. 56 3. 88 Retention strategies-AIMA 89
32. Subcontracting or outsourcing TRADITIONAL Mainly the response is that subcontracting is not to be done. There may be some functions which can be out sourced like training arrangement, document handling etc. Some companies do feel that outsourcing is increasing as it is more cost effective but it can be in only selected few jobs. Some people had an opinion that the outsourcing can be done only at middle and senior levels. In this industry some of the companies are already outsourcing while some others say that in future they might go in for it for the same levels. Those who are already outsourcing are doing at all levels. Still about 60 percent of the companies do not favour this. MARKETING Fifty percent of the companies did not want to outsource any of their activities and the rest said that they might do at all levels. One response was also that at junior and senior level they might outsource works are activity based and conceptualising respectively but middle level implementation is to be done hence no outsourcing. SERVICES Mostly they said that they don’t have such policies so they can’t outsource. But a few things like printing work and other junior level works can be outsourced because it is more cost effective. Mainly there is nothing in this industry to outsource or sub contract. IT & TELECOM Most companies in this industry are already doing subcontracting in the middle and lower levels and those who are not doing are planning to do so in future. Retention strategies-AIMA 90
33. Conclusions Employee retention as a term did not hold the same meaning across the different industry segments. For companies operating in the traditional industry it was construed as retaining only good employees and motivating them to perform well. However, companies operating in the IT & Telecom segments were of the opinion that retention meant retaining all the employees in the company since the company had invested a lot in each one of them. Employee retention as a responsibility and a planned strategy has yet to take its proper shape in most companies. In larger companies, however, this is being increasingly taken care of by the HR Department as one of its functions. The IT & Telecom industry has reported the problem of retention to be the highest followed by the marketing companies. The problem of employee retention is related with the number of employees - it increases with the number of employees. It has also been seen to be related with the size of the company. The mid sized companies faced this problem to a large extent. Employee retention is an area of concern in companies operating in slow growth industries. Employee retention is thus a function of the number of employees, the size of the company and the rate of growth of the industry. The problem of employee retention is highest among the junior level employees across all the industries. However, in the sunrise industries and the IT and Telecom industries the turnover rates are high in the middle as well as senior levels. Across all industry segments, the turnover among the technical staff is higher than the non technical staff. However, it is highest in the IT and Telecom industry. The replacement as well as the induction rate for new business is on a decline in the traditional and services industries. The induction rate for replacement as well as new business has witnessed high growths among marketing and IT & Telecom companies. Size lends stability to the retention levels. Retention rates have declined in the medium sized companies but have gone up in large sized companies. Traditional companies mention that retention of employees is not an issue at all since at the time of recession in the industry employees are reluctant to leave. In marketing companies retention levels had Retention strategies-AIMA 91
gone up due to better growth opportunities within the company but in case of service industries the turnover has been rapid as most opportunities are sensed outside. In the IT and Telecom industry, however, the turnover rates have increased at all levels but most companies have become conscious towards this and have introduced better working conditions and compensation packages for all levels and technical as well as non technical employees. The maximum attrition takes place in the technical functions of the production departments across all industry segments. This is followed by the marketing department and the finance department. The traditional companies have cited the factor of the change from cost plus to market driven as the most important reason for the employee retention levels to decline. in marketing companies, besides this factor, increased competition from MNCs and emergence of new competing industries has impacted employee retention. In the services industry on the other hand, the emergence of new competing industries is the most important factor. The same is true for IT & Telecom companies. The external environment changes have therefore largely impacted retention levels across all industry segments. Employee retention is emerging to be a genuine area of concern among all the companies. The measures adopted by companies currently are very ad hoc. In IT and Telecom companies the need for retention being very critical the attitude towards retention is more pragmatic and a very high amount of money is spent on training. There has been no perceptible change in any other industry segment in employee retention strategies adopted. The competitor strategy has also not been directly used as an input to formulate retention strategy. At best, companies in the services and the IT and Telecom industries have designed compensation packages at par with the industry. The inter industry opportunities are an area of concern in terms of lower retention levels among the marketing and services companies. The training budget as a percentage of turnover is highest in the IT and Telecom companies followed by the marketing companies. The training budget is also a function of the size of the company with it being regularly increased as the size of the company attains a certain turnover. Retention strategies-AIMA 92
The measures adopted by traditional industries to create an internal environment for better employee retention are very subjective. They are desired but not achieved primarily because they are not properly defined. The same holds true of the marketing companies as well as services industry. In the IT and Telecom industry however, objective measures like objectivity of performance appraisal. measurement of employee satisfaction and competitive design of compensation package have been identified as important and have also been achieved. The extent of promotion from within an organisation is taking place to the tune of 5 -10% among 60% of the companies. In larger companies with more than 1000 employees the extent of promotion is much higher from within the company which implies higher retention levels. The compensation package has been increased the most in the IT and Telecom industry followed by the marketing industry companies. The average compensation package has increased from 5 -10% in most companies but 10 -25% in the IT and Telecom industry in the last three years. The compensation package increase is higher among the companies having more number of employees and is also directly proportional to the growth in the number of employees. The IT and Telecom companies are increasingly preferring growth in the non monetary package. Also in smaller sized companies, non monetary packages have been growing. The mid sized companies have not increased the size of the non monetary packages but very large companies have done so. The retention levels also follow the same pattern implying that non monetary packages are very important in contributing towards lowering attrition rates. The components of the non monetary package used by the Telecom companies are stock options and career development plans. These are innovative compared to the other industries wherein the traditional non monetary packages like medical facilities and education for children are being increasingly used. An open and friendly organisational culture is important for employee retention. However, the traditional as well as the marketing companies felt that there was not much of a relationship between organisational culture and retention levels. The companies in the services industries as well as in the IT and Telecom industries however felt that a transparent and an informal culture goes a long way in improving employee retention levels. Retention strategies-AIMA 93
Companies in the traditional industries do not make a concerted effort towards external image building. On the other hand the companies in the marketing, services as well as the IT and Telecom industries indulge in seminars, road shows and other media sponsored events for higher visibility and external image building. Across all types of industries, the junior level of employees leave on account of better compensation packages, the middle level and senior levels for better career opportunities while the top management for better work profile and peer pressure. Profit sharing and loans to employees are some of the objective measures appointed by companies in the marketing and IT and Telecom industry to retain employees. The trigger points to improve retention at all levels are better pay package at the junior levels, vision sharing at the senior level and welfare measures and joint decision making at the top management level. Inter industry switchovers are the highest in the IT and Telecom industry. In general, most switchovers at the middle and senior levels happen intra industry whereas at the junior level they also take place inter industry. The companies have to make a conscious effort to retain employees since the investment required to train new employees are high. Companies operating in industries which have slowed down have to take cues from the fast growing industry companies. The medium sized companies across all industries should learn from the smaller and large sized companies to check employee retention at different stages of the company growth by introducing better compensation packages and also non monetary packages. Companies who are under an illusion that recession implies lesser retention problems must realise that in recessionary times it is much more crucial to retain good employees because they would understand the needs of the company better and be able to chart a sharper strategy for the company growth. Retention strategies-AIMA 94
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