A Study on Employee Retention & turnover in IT Industry

A STUDY ON EMPLOYEE RETENTION AND TURNOVER IN SOFTWARE INDUSTRY A project report submitted in partial fulfillment of the requirements for the award of the degree in MASTER OF BUSINESS ADMINISTRATION To

XYZ University

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A STUDY ON EMPLOYEE RETENTION AND TURNOVER IN SOFTWARE INDUSTRY

Submitted in partial fulfillment of requirements for the award of degree in Master of Business Administration course, BANGALORE UNIVERSITY Is my original work and has not been submitted for the award of any other Degree / Diploma / Fellowship or other similar titles or prizes.

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A STUDY ON EMPLOYEE RETENTION AND TURNOVER IN SOFTWARE INDUSTRY

Submitted in partial fulfillment of requirements for the award of degree in Master of Business Administration course, BANGALORE UNIVERSITY Is a record of bona fide research work carried out by,

NAME: XYZ Reg. no: XYZ Under my guidance and no part has been submitted for the award of any Degree/diploma/fellowship or similar titles or prizes and that the work has not been published in any scientific or popular magazines.

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A STUDY ON EMPLOYEE RETENTION AND TURNOVER IN SOFTWARE INDUSTRY Is approved to be

Submitted in partial fulfillment of requirements for the award of degree in

MASTER IN BUSINESS ADMINISTRATION XYZ UNIVERSITY

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ACKNOWLEDGEMENT

Executive Summary A conservative estimate says that the different Indian Software Organizations are facing an employee turnover rate of up to 40%. The exact data regarding the employee turnover in different software organizations in Indian software Industry is either not available or not shared.

Time to time, various Indian software organizations have attempted to curb down the employee turnover rate by launching programmes, which are mainly based on prescriptions. These programs have not generated much success. It is proposed in this paper that rather than approaching employee turnover based on prescriptions, the causes of employee turnover should be understood in a particular organization’s context. The understanding hence reached would serve as a sound basis for managing employee turnover in that organization.

To undergo the research work, sample survey method was adopted. Based on this, one set of questionnaire was prepared that was used to collect responses from IT’s within Bangalore. The questionnaire was designed mainly to generate information about “Employee Retention”. The information was value able for the dissertation work as it helped in proving the hypothesis that implementation of Employee Retention strategy helps in Retaining quality employees in the organization.

The analysis clearly establishes the presence of a number of debilitating conditions that are triggering employees too loud for an alternative employer. Non-competitive compensation, lack of travel opportunities, lack of growth and the nature of work came out as most significant debilitating conditions.

The analysis also clearly establishes the presence of a number of supporting elements in the organization. Culture & working environment, friendly and pleasant atmosphere came out as the most significant supporting elements in the organization.

Depending upon who can influence, the debilitating conditions as well as the supporting elements have been classified into four clusters – Business related” ,”System related”, “Supervisor related”, and “Individual Person Related”. It is argued that the employee turnover in an organization is a function of balance between the debilitating conditions and the supporting elements. Once these factors are identified and established, the organizations should launch program that would remove the debilitating conditions while making sure that the supporting elements are further strengthened.

INDEX Chapter 1: Executive Summary Chapter 2: Introduction  Background of the study  Statement of the Problem  Need and Importance of the Study  Objectives of the Research

Chapter 3: Review of the Literature Chapter 4: Research Methodology 

Type of Research



Sampling Technique



Sample Size



Instrumentation Technique



Actual Data Collection



Tools Used for Testing of Hypothesis



Software used for Data Analysis

Chapter 5: Presentation and Analysis of Data & Interpretation 

Hypothesis Testing



Presentation of Data



Conclusions from the Analysis

Chapter 6: Summary & Conclusions Annexure – 

Bibliography



Questionnaire

Content of Graph Sr. No.

Title

Graph 1 Graph 2 Graph 3 Graph 4

Corporate Services Rated by the employees Is it your first job The Age Profile of the Employees Experience Profile of the Employees The top 14 main reasons cited by the

Graph 5

engineers for quitting Cluster Frequency of the main reason cited

Graph 6

by the employees Cluster frequency of the Debilitating

Graph 7

conditions cited by employees Supervisors as rated by Employees Peers as rated by employees Direct reports as rated by employees Subordinate – Superior Relationship Top 25 Supporting Elements cited by

Graph 8 Graph 9 Graph 10 Graph 11 Graph 12

employees Orientation and Induction Programs Rated

Graph 13

by Employees Employee Empowerment in the

Graph 14

Organization : Employee Response towards the

Graph 15

Recruitment Strategies Employee Response towards the Training

Graph 16

Graph 17 Graph 18

And Development Programs Employee Response towards Open and free

Page No. 42 44 46 47 50 52 54 56 57 58 60 62 64 65 67 69

Communication Culture

71

Response of the employees regarding their

73

satisfaction

Employee Response towards Job –Hopping

Graph 19

74

Graph 1: Corporate Services Rated by the employees Graph 2: Their first job Graph 3: The Age Profile of the Employees Graph 4: Experience Profile of the Employees Graph 5: The top 14 main reasons cited by the engineers for quitting Graph 6: Cluster Frequency of the main reason cited by the employees Graph 7: Cluster frequency of the Debilitating conditions cited by employees Graph 8: Supervisors as rated by Employees Graph 9: Peers as rated by employees Graph 10: Direct reports as rated by employees Graph 11: Subordinate – Superior Relationship Graph 12: Top 25 Supporting Elements cited by employees Graph 13: Orientation and Induction Programs Rated by Employees Graph 14: Employee Empowerment in the Organization Graph 15: Employee Response towards the Recruitment Strategies Graph 16: Employee Response towards the Training And Development Programs Graph 17: employee Response towards Open and free Communication Culture Graph 18: Response of the employees regarding their satisfaction Graph 19: Employee Response towards Job –Hopping

Contents of Table

Sr. No.

Title

Page No.

Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10

Table 11

Corporate Services Rated by the employees The Experience Profile of the Employees The Age Profile of the Employees Reasons for Quitting Triggering Reasons for Quitting Supervisors, Peers and Direct Reports as rated by Employees Subordinate – Superior Relationship Orientation and Induction Programs Rated by Employees Employee Empowerment in the Organization : Employee Response towards the Recruitment Strategies Employee Response towards the Training And Development Programs

40 43 45 51 53 55 59 63 65 66

68

Employee Response towards Open and free Table 12

Table 13 Table 14

Communication Culture Response of the employees regarding their satisfaction Employee Response towards Job –Hopping

Table 1: Corporate Services Rated by the employees Table 2 The Experience Profile of the Employees Table 3: The Age Profile of the Employees Table 4 : Reasons for Quitting Table 5 Triggering Reasons for Quitting

70

72 74

Table 6: Supervisors, Peers and Direct Reports as rated by Employees Table 7: Subordinate – Superior Relationship Table 8: Orientation and Induction programs Table 9: Employee Empowerment Table 10: Recruitment Strategies Table 11: Training programs Table 12: Open and Free Communication Culture Table 13: Employee Satisfaction Table 14: Job – Hopping

Introduction It is the intent of this paper to analyze the causes of employee turnover in an organization operating in Indian Software Industry. The software development operation of the organization under study is located in Bangalore. It is assumed that a clear understanding regarding the causes of employee turnover is a must for organization to devise methods for managing the employee turnover.

The Indian IT Industry is poised for exponential growth. However, if IT companies are to grow and prosper, they must first tackle the escalating attrition rates, a key challenge for the industry.

Attempting to garner good growth rates, companies often poach on each other for the right talent, thus further fuelling employee turnover. Clearly, the cause of the problem IT companies are facing is rooted in the nature of the industry itself. Attrition is not easy to resolve in an industry where the workforce is young, has high growth expectations and is willing to change jobs easily in search of professional fulfillment.

However it is not necessary that a IT worker is interested in monetary considerations only.

Employees prefer creativity, Job satisfaction, Workplace atmosphere, and brand equity than monitory benefits.

Thus it is clear that to retain the young, skilled and ambitious IT employees, there is a need to look beyond compensation. Companies need to overhaul HR practices to contain attrition and optimize hiring and training costs.

With their expertise in outsourcing, some companies have learnt that people have

different career aspirations. They believe that by instilling a sense of pride in the employees they can foster long – term ties with them.

Experts say, it is better to retain the exiting talent than to hire continuously. A recent survey calculated that the cost of replacing a high level employee might be as much as 150% of that departing employees salary. Some reasons to why companies should focus on retaining current employees are: 

It helps to save and reduce recruitment costs.



It spreads the training costs over the years of employees stay in the organization.



It helps the HR department of the organization to concentrate on the other important things like training, apart from recruitment.



It portrays a culture among the employees towards organization and also that of organization towards its employees



It helps reduce the overall cost of the organization by reducing replacement costs(this would also include reduction of costs on regular induction program).

Retaining good employees has always been an issue of utmost importance. Companies have to focus on this. In order to retain the best of the organization’s talents the organization should follow a very systematic process as mentioned below:

Step 1: Calculate the company’s present retention and employee duration in a specific position.

Step 2 : A survey as to why people are leaving (conducting Exit surveys is always helpful).

Step 3: Prioritizing the causes of turnover.

Step 4: Strategies to increase the retention rate by company policies.

Step 5 : Revising the strategies for retention on a timely basis.

An organization which will follow this systematic procedure would definitely be benefited.

Employ ee Turnover

Employee turnover is an enormous problem for any company and creates negative bottom-line impacts. The costs associated with employee turnover show up in such areas as advertising for new employees and the time and money necessary to screen the applicants, training new employees, lost productivity, decreased accuracy and quality of work among the employees left behind who are upset about their colleague's departure, using expensive contract and temporary employees to do the work until a permanent employee is hired, and the expenses associated with replacing lost business. Employee turnover costs can amount to thousands of dollars, annually. It can also prevent companies from pursuing their growth opportunities and acquiring new business. According to an article in the San Fernando Valley Business Journal published on September 15, 2003, employee turnover in the United States averages between 25 to 30 percent per

year;

middle-management

turnover

is

even

higher.

Beginning 1990s, the Indian business environment has undergone remarkable changes. Most organizations viewed the presence of a long serving group of employees as an indication of internal efficiency. However, with economic liberalization opening up new career horizons for professionals in most industries, and thereby tremendously enhancing their prospects for mobility from one organization to another, turnover has come to be understood as a negative ‘spill over’ effect of industrial growth. This phenomenon commonly called turnover had been of secondary interest to most researchers but increasingly more and more attention is beginning to pour in this direction.

As the paradigm of lifetime employment becomes unrealistic, the question ‘who stays with you?’ has assumed great importance in organizations today. Simultaneously,

there has been an increasing tendency to ‘buy in’ the talents of professionals with crossfunctional skills in order to create a competitive advantage. One visible effect of this has been a consistent rise in the pay packages of most organizations so as to attract and retain the most desirable employees. Such a trend over the last few years has resulted in an unstable labor market, especially for industries such as marketing, advertising, finance and software where the skills are by and large transferable, from one work environment to another.

This paper is an attempt to identify the causes of employee turnover in a software firm the software industry has been the sunrise industry in India. As Bill Gates mentioned: “The software industry will create millions of new jobs in the years ahead. India more than any other developing nation, is seizing this opportunity, and will become a huge exporter of software expertise. In fact, India is likely to be a Software superpower…” (Gates, 1997).

India is an important player on the IT map of the world on account of it being an important source of technically qualified and English speaking manpower. The Indian IT sector has enlarged from US $ 1.73 billion in 1994-95 to a US $ 5...81 billion in 2004-05. One of the most distinctive characteristics of those software organizations is that they have only the expertise of their staff as assets with which to trade. The task of a leader in such organizations is therefore to recruit, train, empower and retain the best and the Brightest professionals.

Turnover: good or bad?

This is what brings us to the very important question: is employee turnover good or bad? It was reported in the results of a survey that the prime issue that companies are facing today is hiring and keeping good employees. Across the country, the average turnover rate is 12%. The problem with employee turnover is that it is extremely

expensive. There are a lot of costs associated with employee turnover which lead to the final result coming out as: employee replacement costs can be as much as 150% of the departing person's salary.

There are a lot of factors which go into this: the headhunter's fee, the defector's lost leads and contacts, the new employee's depressed productivity while they are learning, and the time coworkers spend guiding the new employee, attracting applicants, entrance interviews, testing, preemployment administrative expenses, medical exams; and acquisition and dissemination of information. There is no arguing with this point: employee turnover is bad because it takes a lot of time, energy and resources Employee turnover however, gives employers a chance to refresh the company and rid it of people who are not helping the company’s cause in the grand scheme of things. When a company tries too hard to retain employees who simply don’t belong, it introduces in the environment certain blandness and mediocrity. The company feels that it has to keep all of its employees and tries to please them in every possible way. Employees start to stay because of the benefits plan of the company, and not because they are particularly passionate about the company and its culture.

Before long, the talented employees start paying attention to headhunters, since they want to be in a company which regards success in terms of market share and the below average employees secure their place in the company knowing they won’t get these fringe benefits anywhere else.

Secondly, employees who want to leave but are persuaded by employers to stay often do so out of loyalty or pressure. These are dissatisfied employees who will not be very productive anyway at the end of the day. Hence, turnover can be good, in certain situations. But turnover of talented employees must be avoided.

What Causes Employee Turnover?

Mergers, acquisitions, divestitures, and corporate reorganizations have been major factors in increased employee turnover during the past two decades. However, the top reason cited in most studies is low compensation and inadequate benefits. Lack of appreciation and feeling that the employer values the employees' contributions also ranks high on the list of reasons for employee turnover.

Surprisingly, most people do not leave their jobs for money. While money usually plays some role in a person's decision to leave a company, it is not normally the deciding factor. Research indicates that bad management practices are the real reasons employees leave. Management controls the majority of the reasons people leave. Overwhelmingly, it is the day-to-day interaction between management and their employees that create what are often called "dissatisfies." Among the most common dissatisfies cited by employees in exit interviews are:  Lack of recognition and rewards  Lack of advancement opportunities  Family obligations  Lack of feedback/communication from management  Not being made to feel like a valued part of the company  Lack of training/education

 Non-competitive compensation packages  Lack of responsibility/challenging work

What Reduces Employee Turnover?

People will always be attracted by greener pastures such as higher salaries and better benefits, so companies need to conduct market surveys to ensure they are competitive. However, the best strategy for reducing employee turnover is increasing employee loyalty. This is best accomplished by investing in the employees and establishing training programs that provide employees with career development opportunities. Promotions from within are an important component of this strategy. Another crucial component is encouraging employees to make suggestions and rewarding them for contributions that help the business grow. Tying compensation incentives to such activities is a popular way to ensure these goals are met.

Most companies show little attention to the loss of their talent. For instance, if an Rs20000 computer disappears from an employee's desk, I guarantee there would be an investigation and all heck would break loose. But what happens when an Rs100, 000 executive with critical client relationships gets stolen by a competitor? No one investigates the cause. No one is trained to prevent it from happening again. In fact, we usually throw the executive an incredible goingaway party!

The company must have a planned approach in order to provide successful solutions to employees' concerns. Approach the retention plan as a long-term objective rather than a quick fix. It needs to become part of the company culture, embraced by all levels of management and kept

on

the

front

burner

at

all

times.

The next step is to address the specific concerns of employees. That is the tricky part. There is not one simple solution, however, if the company can demonstrate to employees that they are willing

to

make

an

investment

in

them,

positive

results

are

sure

to

follow.

Some issues can be addressed immediately and without a lot of expense. For instance, establish an Employee Recognition Program. Reward those employees that go above and beyond with a day off, flowers, a gift certificate to a chic restaurant or another gesture. Simply acknowledging all the hard work the employees do goes a long way in raising their level of job satisfaction. To help ease the burden of employees with family obligations allow flex-time so parents can drop off or pick up their kids from school. Other quick and inexpensive programs include mentoring programs,

employee

communication

forums

and

frequent

performance

evaluations.

Many larger companies, with the financial means to do so, also offer their employee’s daycare services, concierge services, tuition reimbursement, stock options, profit sharing and performance based bonuses.

Calculati ng Employee Turnover Cost A general approach to calculate employee turnover cost is to use 50% to 200% of an employee's annual salary. Another more accurate method has been developed by Price waterhouse Coopers Saratoga Institute.

This calculation uses the cost of hiring and training new staff. We will adjust some variables to match the needs of small business.

Total employee turnover cost = Costs of hiring new employees + Costs of training new employees

Costs of Hiring New Employees The cost to your business when hiring new employees includes the following 6 factors plus 10% for incidentals such as background screening:



Advertising



Bonus signing



Relocation pay



Time for interviewing



Travel expenses



Pre-employee assessments

Costs of Training New Employees 

Training materials



Technology



Employee benefit set up



Time for trainers

Emplo yee Retention Employee retention and turnover are topics of a lot of conversations centering on HR. in today’s competitive world, company loyalty and a familiarity with the organization most often takes a back seat when a talented employee gets an attractive offer from another company. As he decides whether to take the leap or not, his predicament is made worse by his present firm whose members decide to try every trick in the book to persuade him to stay. If he decides to leave, the story does not finish here. Rather, the pressurizing tactics only get worse. Some people succumb to this pressure and stay while others are slightly braver and enter the world of the unknown, specifically a new company. But the question is, when do organizations go too far in trying to keep an employee who has decided to leave? There must be a boundary between acceptable and unacceptable behavior. And is employee turnover really so bad? These are the questions to be answered from here on.

IMPOR TANCE OF EMPLOYE E RETENTIO N-ASK ANY BUSINESS OWNER OR HUMAN RESOURCES MANAGER what they consider to be their primary staffing objective and they'll most likely say that they are focused on hiring only the best employees into their organization. While this is an important objective indeed, there is a key element of personnel management that is every bit as important, but often overlooked retention of current employees.

Philosophically, employee retention is important; in almost all cases, it is senseless to allow good people to leave your organization. When they leave, they take with them intellectual property, relationships, investments (in both time and money), an occasional employee or two, and a chunk of your future.

And from a more practical standpoint, retention is important for the following reasons:  Replacing qualified employees can be extremely difficult, exceptionally expensive, and very often unnecessary.  Training new employees is costly.  Poor retention creates a "revolving door" culture within the organization, lowering morale and confidence.  Poor retention affects the Company’s customers (no matter what type of business is, the customers develop important relationships with their contacts within the organization).

 High turnover eats away at the organization's productivity, ability to deliver, and overall efficiency. This sad reality always manages to impact customers negatively in one way or another.

The first thing to understand about employee retention is that there is no magic wand, no single answer as to how to retain the employees. Many factors that the company cannot control affect retention, including but not limited to: 

Shifting markets



Demand for specific skills



Business conditions



Demographics



Lifestyle changes



Technology issues



Trends in work/life decisions as employees' needs change

Employee retention is significant in theory, elusive in practice, and never-ending as a good and noble objective.

Retentio n Mechanisms When valuable workers want to quit their job, how does the organization encourage them to reconsider their decision? How does management convince them to work out any problems that might be acting as a ‘push’ factor in their decision to leave; or to re-evaluate the benefits of offers acting as a ‘pull’ factor.

Some of the retention techniques practiced by software companies today are described below.

1. Hire only the best candidates. The interviewers and those who make the final hiring decisions are the gatekeepers of an organization. They should be allowing only the cream of the crop to enter — no compromises. So often people join an organization because of the quality of the staff already in place. It is critical that the co. understand this point. If you let this standard slide, you eradicate this very significant reason for people to join your company. Great companies are, for the most part, made up of great employees. The company should hire only the best candidates and this is a good way to remain in that position.

2. Work to make sure employees are satisfied with their jobs. Create reasons for people to join the organization and to stay. See that they enjoy their jobs, their responsibilities, and their possible career paths. They should also have a good understanding of how their work supports the objectives of the organization, and the company should offer ongoing feedback so they know if they are meeting expectations. Talk to the employees on a regular basis. Never assume things are rosy because you have not heard otherwise. By the time you hear bad news, things are probably far worse than you expect. These surprises are seldom positive, and the results can be downright disastrous. Above all, be sure to communicate with new employees on a regular basis.

Do not watch them "sink or swim." Set goals, coach, and give them every opportunity to succeed. I suggest a one-on-one with each new

employee at least once a week. Do this for a few months to review progress and address concerns that arise both for the employee and/or the manager. In this way, you are being proactive rather than reactive, and it allows you to catch minor problems before they become major ones. The new employees will feel valued, motivated to do their best, and will take pride in being part of a successful organization.

3. Let it be known that the organization wants the best. It is important that the organization informs its employees that, as a company, it is always on the lookout for exceptional talent and not just trying to fill open positions. But what happens if a stellar candidate arrives at your door and there is no position for that candidate? What do you do? You figure out a way to create a place because brilliance and ability demand a place.

If you locate a candidate who is clearly a "must have," make room for that candidate. Most importantly, it is more effective to change the position to fit the person than the other way around (people don't change all that easily). This behavior demonstrates your commitment to hiring the best and speaks volumes about the organization's overall commitment to seeking excellence.

4. Develop the employees. Exceptional employees want to become even better. The co. can help by developing them in the following ways: 

Develop a comprehensive career advancement program.



Utilize mentoring and coaching where appropriate.



Allow employees to move in different directions within the organization (this develops perspective).



Always look within before you look outside to promote. The employees who took the company to its present position deserve the first shot at the new jobs that will in turn help the company to get to the next level

5. Create an atmosphere where fun is valued. People want to have fun, but the corporate culture sees very little value to this most important and often overlooked attribute. Fun lowers blood pressure, releases tension, eases stress, humanizes the workplace, and helps people to think. We all know that work is tiring, stressful, competitive, and demanding. This is all the more reason to create some diversion in the workplace.

6. Communicate often and honestly. One of the complaints I hear most often from employees is the lack of communication from senior management and between departments. How does an organization exist if sales and marketing do not communicate? Set the tone at the senior management level and work on communication. Make certain information is disseminated among your employees. Employees kept in the dark on news both good and bad are generally not the happiest of employees. Regardless of the message, communicate often and effectively. An informed workforce is more effective than an uninformed workforce.

7. Pay your employees well. Compensation is extremely important. It buys all the things people need, and more to the point, it buys all the things people want. It reinforces their sense of value and worth to the organization. Is compensation the most important element in employment? No. Studies have shown that it is generally fourth or fifth in terms of importance. But rest assured that order will change quickly if employees feel they are under-compensated for their contributions; no one wants to feel underpaid. Employees must feel good about their compensation package. Allowing good people with track records to leave the organization because of inappropriate compensation is indefensible.

8. Conduct exit interviews. Exit interviews are as important as employment interviews and are invaluable to the organization. They provide the kind of sincere insight that will allow you to craft a better organization. In an exit interview, the employee tends to be honest since he or she has no reason to lie or to embellish (as might be tempting in an employment interview). This brutal honesty can evolve into

an unpleasant experience for the company. Try to make it as relaxed as possible or have another more neutral manager from a different department conduct the interview. The company will hear things in exit interviews that it may not want to hear, but should. It is vital that the co. try to understand issues from the employee's perspective and give him or her the opportunity to be heard. There is a great deal to be learned from exit interviews.

9. Make sure managers can and want to manage. How often does this happen? Employees do well in their positions and are promoted to managers — and then, the beginning of disaster.

People are not necessarily good managers because they are capable employees. Some don't even want the role or the responsibility. But as companies grow, they need more good managers, so the best contributors are given the golden opportunity to manage. With a raise and reassurances, they are sent out into the cruel managerial world with no training and no real understanding that their new role will be significantly different from the old one.

Develop a training program for first-time managers. That will sensitize them to their new role and teach them the basics of managing people and problems.

Make no mistake. Implementing the above mentioned ideas and making them a part of the organization's culture is no easy task. It is not done in a day, nor done by executive order or edict.

Rather, it is a gradual process that should be championed by the organization's leaders and led by examples that are highly visible in an ongoing and consistent manner.

Organizational change can be a slow and arduous task, but once again, if management is willing to lead by example, they can do virtually anything. The commitment to employee retention is clearly worth the effort if the company is trying to build a business.

Bond as Retention Measure To bond or not to bond? Most companies today are forced to ask themselves this question on an ever-increasing basis. The employer invests a considerable amount of time, money and resources in training and brings the new entrant to a stage where after the employer feels that he can begin to get a decent return on investment. It is at this point of time that the employee decides to leave the firm for better prospects, having gained a degree of experience and expertise at the employer’s expense. The employer is bound to feel whether the sole purpose of recruiting people is to retain them for a better job opportunity.

After all he is not running a training institute and paying people to get trained too. As far as the employee goes he sees no harm in accepting a job offer if one comes his way and the prospects are better. An employer being a businessman needs to take care of his own interests. He cannot afford to be altruistic. If he on the other hand is too hard-nosed about this affair, he can actually prevent the right people from joining his company. The right part would be the middle path (Bulsara, 1997). Bonds are justified

and acceptable if the company is clearly spending significant money and/or time for training the employee and hence expects the employee to spend a minimum prefixed period after getting the training.

Bonds are not justified when the person is going abroad or working in India on revenue earning assignment. Some companies claim that the experience gained on an assignment abroad is actually training and hence the person needs to return and work with the company in India to pass on his knowledge to other employees. By the same argument every employee working on assignment in India is continuously getting trained and hence needs to continue to work and should also be required to sign a bond.

The true HR challenge in is in retaining as is evident from our previous discussion where the demand for a particular skill is high and supply far short of demand. In such a scenario there is bound to be high mobility among such professionals. Before addressing the problem of retention one needs to seek answer to the question why do people quit? What are the factors one weighs in deciding if one wants to be in an organization or not?

Employee retention is more than a buzz word, it is a very real and powerful part of doing business in today's marketplace. It is becoming more and more difficult to find and retain top talent. The company that recognizes and embraces the need to be competitive in meeting the expectations of its employees is the one that will hold on to its most valuable asset - its employees. It must be realized that attrition will attack, damage, and even kill the most successful companies. The company cannot achieve its long-term goals if turnover is commonplace within the organization.

Indian IT Industry:Technological revolutions sometimes bring unexpected opportunities for countries. India, a relative laggard among developing countries in terms of economic growth, seems to have found such an opportunity in the information technology revolution as an increasingly favored location for customized software development. India’s success at software has led to speculation about whether other developing Countries can emulate its example, as well as whether this constitutes a competitive challenge to software industries in the developed world.

India has a new mantra - Information Technology (IT) - and almost everyone has started chanting it. This IT mantra has its roots in the "passionate and strategic infection" spread by the unrivalled success of India’s export led software industry. This passionate infection has not only made the software sector as one of the high value-addition and net foreign exchange earning industry, but has created history of sorts on the Indian stock exchanges. The potential of its high capacity to generate wealth, foreign exchange and employment has already caught the

imagination of India’s businessmen, citizens, economists, bureaucracy and politicians, alike.

Software driven IT industry is today at the top of India’s national agenda as an instrument and a model, for the modernization of India’s economy.

The Indian software industry is remarkable in a number of respects. It is service rather than product oriented; heavily export oriented, and is largely managed by professional and entrepreneurial managements. Also, domestic market experience and expertise appears to have very little benefits for successful importers. Although the industry has grown in spectacular fashion, sustaining this performance will pose a number of challenges. In order to counteract the widely reported shortages of skilled software professionals and the possible competition from other low wage, human capital rich countries, Indian firms are trying to move up the value chain by acquiring deeper knowledge of business domains and management capability, and to reduce costs by

developing superior methodologies and tools. Whether and how many firms will be a key test of the management skills and willingness to invest along a number of dimensions. From a social perspective, the disconnect between domestic and export markets is a major challenge, but one that the growing diffusion of computers and the improvement of the communication infrastructure should make easier to confront. In the end, the greatest impact the software industry is likely to have on the Indian economy is indirect, in its role as an exemplar of the new business organizational form and as an inspiration to other entrepreneurs.

These projections are likely to be excessively rosy.7 The Indian software industry faces a number of challenges as the labor cost advantages diminish and competition from other countries with supplies of educated and underutilized workers increases. However, even if the projected goals are only partially achieved, the Indian software industry will still have achieved a substantial role in the world software industry, especially in customized software and software services. If the projected trends in demand for skilled workers hold, demographics alone should continue to ensure the survival and growth, albeit perhaps at a reduced rate, of the Indian software services industry.

The Indian success story has, for the most part, been a combination of resource endowments (created in part by a policy of substantial investments in higher education), a mixture of benign neglect and active encouragement from a normally intrusive government, and good timing. By the late 1980s, India was graduating approximately 150,000 English-speaking engineers and science graduates, with only a limited demand for their services from the rest of the economy. By the late 1980s as well, India’s economic liberalization was also well under way. Around this time, the information technology revolution in the developed world had begun to take root and shortages of skilled programmers and IT professionals were beginning to develop. By this time a number of Indians were working in very substantial numbers in US firms. Some of them played an important, although as yet undocumented role, in bridging the gap and matching the buyers in the US with the suppliers in India. Responding quickly to the growing demand, a number of Indian firms arose in quick time.

Contrary to its normal practice, the State encouraged this growth by considerably simplifying the process for obtaining the numerous clearances and permits that any firm in the organized sector in India typically needs. Finally, given the many weaknesses in the Indian financial system, Indian entrepreneurs greatly benefited from the low levels of initial investment required to start a software services firm.

In India, there has been a gradual shift towards usage of IT in government, public sector, private sector as well as public services and education. However, usage of computers is yet to reach many homes in the country. Undoubtedly, it was the computerization of railway passenger reservation system in 1986- that brought computers closer to masses. And, in the last two years it is the power of internet, E-Commerce as well as Government of India’s thrust - which is bringing I.T. in daily life of a common person in India.

India has many advantages to become an important player in the global IT industry. By marshalling its vast human, industrial and technological resources, especially with expansion of its software sector – the engine of the IT Industry, India can raise productivity of domestic manufacturing and services. Obviously, this will lead to IT in governance, IT in industry and IT for every citizen of the country. There are even talks of infusing tangible productivity gains amongst various sectors and communities through use of IT. The domestic opportunity is evident.

Software continues to contribute a major portion of Indian IT Industry’s revenues. During the year 1994-05, the Indian software industry’s revenues constituted almost 65% of Indian IT industry’s revenues.

The major sectors which are witnessing a special thrust on adoption of IT are Central / State Administrations, Insurance, Banks, Energy, Financial Institutions, Defense, Public Tax System, Ports, Customs, Telecom, Education and Small Office Home Office / Individuals.

The break up of more than one million IT professionals:  The Indian IT software and services employee base has grown at a cumulative annual growth rate of 23.6%, from 242,000 in fiscal year 2001-02 to 697,000 in fiscal year 2004-05.  Wipro is the biggest IT employer in India.Wipro employs 41,857 people in the country. The strength of Wipro Technologies and Wipro BPO combined as of April 2005 stands at 41,857 employees. Wipro has grown by over 40 per cent in employee strength making it one of the largest recruiters in Indian IT service organizations.

The India’s 10 biggest employers in IT:

Company Wipro Tata Consultancy Services Infosys Technologies HCL Ltd Satyam Computer Services Cognizant Technology Solutions

Employees 41,857 40,992 35,000 22,034 20,000 17,000

Patni Computers BFL MphasiS Polaris i-flex

10,000 8,375 6,003 4,747

The three largest multinational IT employers in India:IBM

23,000 (as of Dec 2004)

Hewlett-Packard

13,000 approximately

Accenture

7,000 in IT services

 According to an Infosys spokesperson, recruitment process in Infosys is aligned to its business requirements and hence the number of employees recruited in any given year is a factor of multiple such parameters. "In FY 04-05, Infosys recruited 11,597 employees.

Infosys recruited 11,597 employees in FY 05, 10,077 in FY 04, 5,509 in FY 03, 1,548 in FY 02 and 5,303 in FY 01.  The overall median age of the software professionals is about 27.5 years  The men-women ratio of employed IT professionals: 76 per cent of software professionals in software companies are men, whereas 24 per cent are women. However, Nasscom says this ratio is likely to be 65:35 (men: women) by the year 2007. This ratio is reversed in the ITESBPO sector where the ratio of men to women is 31:69.

Statement of the Problem : The organization need to look beyond compensation to reduce the attrition rate and implement innovative Retention strategies like creating excellent career growth, prospects, rewards and recognition focused training and development programs, open culture, improved work life etc.

The main problem is job satisfaction, which depends upon many factors other than monitory benefits. If IT’s don’t implement the retention strategies it will lead to increased attrition rate and increased cost for organization. Therefore, IT’s cannot afford to ignore Retention initiatives to stop loosing valued employees and generate stronger profit.

Need and Importance of the Study Indian software industry enjoyed a good growth in last decade. Low cost has delivered the main source of competitive advantage for Indian Software Industry. Due to the new entrants and its own soaring costs, the suppliers in Indian Software Industry are now finding it difficult to compete on the cost basis alone. The answer is to move up the value chain. Rather than acting as a resource supplier, the organization in Indian Software Industry should start owning and delivering solutions. Though the answer is obvious, one of the key challenges for the implementation of this strategy would be know-how retention and build-up on constant basis.

High Employee turnover could be fatal to this strategy.

The subject of employee turnover has to be approached at a much more exhaustive level. Rather than approaching employee turnover based on prescriptions, the phenomenon of employee turnover should be understood in particular organization’s context. The understanding hence reached could serve as sound basis for designing programs to manage employee turnover.

The research is important in following ways: •

To provide a comprehensive framework and method for the development of HR in an organization.

•

To increase the productivity and efficiency of employees .

•

To create a climate that enables every employee to discover, develop and use his/her skills and capabilities to a further extent.

Objecti ves The objective of this study is to explore and gain understanding of the phenomenon of employee turnover in an Indian Software Industry. It is assumed that with this understanding the organization would be able to manage employee turnover much better than they are able to do now. The purpose of the study was to examine the factors that influence turnover intentions.

The specific objectives were: 1. Does company image influence employee turnover intentions?

2. Does pay satisfaction influence employee turnover intentions?

3. Is nature of work an important determinant of employee turnover intentions?

4. Does nature of peer group influence employee’s intentions to stay with the Organization?

5. Does peer-self comparison influence turnover intentions?

6. Does internal career/growth opportunity provided by the organization influence employee’s intentions to leave?

7. Does outside career opportunity influence employee’s intention to stay with the organization?

8. Does the degree of match between what was expected and what was achieved in the present job influence turnover intentions?

Review of Literature For every research work reviewing the literature has become a part in designing the study that is being proposed. The basic purpose of reviewing the literature is :•

To get an in-depth idea.

•

To fill the informational gaps.

•

To facilitate in designing the research work.

The literature review section examines the recent or historically significant research studies, company data or industry reports that acts as a basis for a proposed study. To begin with the research discussion of the relevant literature and relevant secondary data from a comprehensive perspective, moving to more specific studies that are associated with the research problem.

The literature may also explain the need for the proposed work to appraise the shortcomings and informational gaps in secondary data sources. A choice often reveal by this exercise is that of using a secondary approach instead of collecting primary data. So, last but not the least a comprehensive review lays the basis of this choice.

The collection of literature concerned to the research work undertaken by the researcher has become crucial. The entire design of the proposed research work is fully depending on the

significant studies. The secondary data may be used as the soul for a research study. Since in many search situations one cannot conduct primary research because of physical, legal or cost influences. The researcher classified the secondary data, depending upon the gathering or distributing sources, the primary data as well as external secondary data. The researcher provided or complied the data

in its normal operations within the premises. the external secondary data resource has been obtained by researcher from the central library, government sources as well as from the internet.

In the present scenario, the internet facilitate the researcher in such a way that where the researcher can collect every thing.

The information were collected from the various sources facilitated the researcher to carry out this research work very effectively. The review of literature has facilitated the researcher to have a familiarity with the research problem undertaken and also it indicates the deficiencies as well as informational gaps. It has helped the researcher to explore the research problem in an improved way.

Type of research Two types of researches are conducted :

Exploratory



Description

Exploratory research is a type of research conducted because a problem has not been clearly defined. Exploratory research helps determine the best research design, data collection method and selection of subjects. Given its fundamental nature, exploratory research often concludes that a perceived problem doesn't actually exist.

Exploratory research often relies on secondary research such as reviewing available literature and/or data, or qualitative approaches such as informal discussions with consumers, employees, management or competitors, and more formal approaches through in-depth interviews, focus groups, projective methods, case studies or pilot studies.

The results of exploratory research are not usually useful for decision-making by themselves, but they can provide significant insight into a given situation. Although the results of qualitative research can give some indication as to the "why", "how" and "when" something occurs, it cannot tell us "how often" or "how many."

In the field of business and marketing, exploratory research is often used to test concepts before they go into the market. In concept testing, a consumer is provided with a written concept/prototype for a new or revised product, service or strategy.

Descriptive research, also known as statistical research, describes data about the population being studied. Descriptive research answers the following questions: who, what, where, when and how.

Although the data description is factual, accurate and systematic, the research cannot describe what caused a situation. Thus, descriptive research cannot be used to create a casual relationship, where one variable affects another.

The description is used for frequencies, averages and other statistical calculations. Often the best approach, prior to writing descriptive research, is to conduct a survey investigation.

Thus, the development of hypothesis provides guidance to the researcher by introducing more details to the research question. The exploratory research is conducted primarily to study the feasibility of the research work and to analyze how the respondents responds and what will be the outcomes. Then descriptive research is conducted for collection data analysis. The clear – cut hypothesis were built and tested for the completion of work.

The research was conducted using information from sources as follows:-

Source of Information

Pri mar

Se

SurveyQuestionnaire Internet

Periodicals Books

Samplin g Technique The various steps involved in a sampling process are given in the figure.

Identifying the target population

Determining the sampling frame

Resolving the differences

Selecting the sampling procedure

Determining the relevant sample size

Execute Sampling

Sample size The research was carried out using random sampling technique. Sample size of 100 employees was taken from different software organizations. This sample was analyzed in terms of what was the perception of employees in the organizations with regard to implementation of employee retention strategies and how far these strategies are successful in retaining the employees in Software industry. Thus the hypothesis was proved and accepted using tables and graphs.

The Instrumentati on technique used for data collection The data from the research can be collected from the organization only through the personal interview technique. The instrument used for data collection is a self questionnaire. For this purpose a questionnaire needed to be constructed.

administered

Construction of the Questionnaire: The questionnaire construction is properly regarded as a very imperfect art. There are no established procedures that will lead consistently into a good questionnaire. Although each questionnaire must be developed with specific research objectives in mind , there is a sequence of logical steps that every researcher must follow to develop a good questionnaire. They are:1) Planning what to measure.

2) Formulate the questions to obtain needed information.

3) Decide on the order and wording of the questionnaire and the layout of the questionnaire.

4) Using a small sample, test the questionnaire for omissions and ambiguity.

5) Correct the problem

The composition of the questionnaire:The questions consist of four types of questions they are:

General awareness questions



Dichotomous questions



Choice questions



Ranking questions

The questions are essentially about how are the organizations successful in retaining their employees and the major factors responsible for their turnover. A sample of the questionnaire used for data collection is given in the annexure.

Actual collection of data Primary data is collected by administering a questionnaire (both open ended and closed ended) to the employees. The questionnaire will be set on a four point scale.

Secondary data from manual, Exit interview records and other sources such as Internet, magazine and newspapers.

Data collection The method adopted for data collection was personal interviewing. The human resource Managers of the organization are personally visited and interviewed with a self – administered questionnaire. In the organization where there is no separate personnel department, the managers of those organizations themselves are interviewed. For the data collection, there were some constraints such as time cost and the non – response problems for some questions.

Tools used for Testing of Hypothesis Both parametric and non – parametric (with correction) will be used to test the hypothesis. One structured questionnaire developed and administered to the employees to elicit the information.

The questionnaire was based on retention of the employees. The parameters of the questionnaire for the retention process will be based on the growth opportunities, job content, pay structure and other benefits, people, training program’s etc In attempting to arrive at decisions about the populations, on the basis of sample information it is necessary to make assumptions or guesses about the population parameter involved. Such an assumption is called statistical hypothesis. The procedure which enables us to design on the basis of sample regards whether hypothesis is true or not is called “Test of hypothesis”.

Chi – Square Test : Probably the most widely used nonparametric test of significance is the Chi – Square Test. It is particularly useful in tests involving nominal data but can be used for higher scales. Typical are

cases where persons, events., or objects are grouped in two or more nominal categories such as “yes or no” , “favor – undecided – against ”.

Using this technique, we test for significant differences between the Observed distribution of data among categories and the Expected distribution based on the Null Hypothesis. Chi – Square is useful in cases of one – sample analysis, two independent samples. In the one – sample case, we establish a null hypothesis based on the expected frequency of objects in each category. Then the deviations of the actual frequencies in each category are compared with the hypothesized frequencies. The greater the difference between them, the less is the probability that these differences can be attributed to chance. The value of χ2 is the measure that expresses the extent of this difference. The larger the divergence, the larger is the χ2 value.

The formula by which the χ2 test is calculated is :

χ2 =

∑ (Oi – Ei )2/E

in which Oi = observed number of cases categorized in the i th category.

Ei = Expected number of cases in the i th category under H0.

K = The number of categories.

The “Degree of freedom” is defined as rows minus 1(r - 1) times columns minus 1 (c – 1). d.f. = (r – 1) (c – 1)

OTHER SOFTWARE USED FOR DATA ANALYSIS :

For the data analysis, and the subsequent interpretation the researcher has adopted advanced version of MS – EXCEL 2000. This application software has facilitated the researcher to construct the frequency table, various kinds of graphs and to find out the average responses from the sample. By this automated data analysis it has minimized the researcher’s time constraint and reduced human errors and also accurate outlay of information.

Testing of Hypothesis Following table shows the relationship between the Corporate function like Human Resource Department, Finance & Administration services and the satisfaction level of the Employees in the Software Industry.

Are employees supported well in this organization? The engineers have rated all these central services and the results are shown in the diagram below….

Table: 1

Support>>>

Excellen

Goo

Mediocr

Poo

Didn’

TOTA

t

d

e

r

t Ans.

L

HR F &

46

29

20

0

05

100

28

40

25

0

07

100

18

22

12

0

48

100

Sys. Admn.

38

32

18

0

12

100

TOTAL

130

123

75

0

72

400

A Trave l

Source: Primary Data Step – 1 Setting up of Hypothesis: Null Hypothesis Ho : There is no significant association between corporate services and the Employee Satisfaction.

Alternate Hypothesis Hi : There is a significant association between corporate services and the Employee Satisfaction.

Step – 2 Level of Significance: Let ∝ = .05 with d. f. = (4-1) (5-1) = 12

Step – 3 Calculation of Expected Frequency: The numbers of Expected Observations in each cell are calculated by multiplying the two marginal totals common to a particular cell and dividing this product by n.

For Example, 130 × 100/400 = 32.5, the Expected Value in Cell 1,1.

Step – 4 Calculation of Test Static (χ2): χ2 calculated value = 91.73 Step – 5 Critical test value: χ2 value at degree of freedom 12 with 5% level of significance = 21.03.

Step – 6 Interpretation: The χ2 calculated value is greater than the χ2 critical value (91.73 > 21.03), we reject the null Hypothesis and accept the Alternative Hypothesis.

Hence, we can say that there is a significant association between corporate services and the Employee Satisfaction.

Graph: 1

Source: Table 1 (Page 41)

Figure 1: Corporate Services Rated by the employees Inference: It can be seen that almost none of engineers has rated the corporate services poor. Most of the engineers have rated all the corporate services either excellent or good.

It must also be noted that as much as 50 % of the employees have not rated corporate service – travel at all. Does this indicate anything? The answer is yes. As has been discussed under debilitating conditions, many engineers have cited lack of travel opportunity as triggering reason for exiting. Since many engineers had not got an opportunity to travel while in the organization, they could not rate the corporate service – travel.

PRESENTATION OF DATA: Analysis of employee retention was done for each individual. The percentage of employees accepting each factor was tabulated and explained in the graphs.

Examination of the results of the analysis helped to identify the importance of each factor responsible for employee retention.

Table: 2 RESPONSE YES NO

TOTAL

NO. Of Employees citing 55 45 100

Source: Primary Data

Inference: The employees were asked about their experience in the industry. 55% of the employees were doing their first job and 45% of the employees had an experience of 1 – 3 years.

Graph:2

Source: Table No.2 Figure 2 : Is it your first job?

Demographics of the Employees What are the age and the experience profile of the engineers of the company?

Following diagrams show the results.

Table: 3

TOTA AGE

22

23 24

25 26

27 28 29 30 31 32 33

L NO.

of

Employees

1

16 24

Source: Primary Data Inference:

26 7

9

9

1

4

1

1

1

100

It must be noted that the 65% of the employees fall in the age group 23-25 years.

Graph: 3

Source: Table 3 Figure 3: The Age Profile of the Employees

Graph:4

14% 12% 10% 8% Exp. At resignation

6% 4% 2% 0%

0.6 0.8

1

1.2 1.4 1.6 1.8

2

2.2 2.4 2.6 2.8

3

3.2 3.4 3.6 3.8

4

4.2 4.4 4.6 4.8

5

5.2

Figure 4: Experience Profile of the Employees Inference: It can easily see that the experience of the majority of the engineers falls into following two groups.



1 - 2.8 years.



3.4 - 4 years

Reasons for Quitting the Organization What are the various reasons specified by the engineers for exiting the Company? The results of second complete iterations are given in the Appendix I.

The Four Clusters The reasons specified by engineers for exiting the organization are classified in following four clusters:

Business Related Reasons: The reasons/ conditions that are caused by the way of the business are done/defined. Such conditions can probably be changed only by the owners of the company.

Absence of ESOP (Employee Stock Option Plans), kind of technology domain are examples of reasons that fall in this cluster.

Systems Related Reasons: Every organization has a set of systems of policies/ procedures/ practices. These systems are seen helpful as well as limiting by the employees. Some employees have resented against these systems. Performance Appraisal system is one such example. It is assumed that top management of an organization, if willing, can alter/ define part of the system.

Supervisor Related Reasons: A Supervisor has a direct influence on an employee’s performance/ contribution and hence on her motivation. Some engineers have expressed their incompatibility with their immediate superior as the driving reasons for decision to quit the organization. All such reasons have been clustered and named Supervisor related.

Individual Person Related Reasons: The reasons that stem out of personal realm of the engineer. Some engineers have specified that they have to leave the organization, because they have to change their location due to personal reasons (like moving with spouse or should stay with ageing parents). Some other engineers left organization for acquiring further qualifications.

Such reasons have been clustered and titled Individual Person Related.

The four clusters of reasons specified by engineers as given in the Appendix II.

The Frequency Distribution of Main Reason cited for Quitting How many engineers left the organization citing a particular issue as main reason for exiting the company? The answer to this question would give insights into “what can be managed from an organization point of view?” and “what can not be managed from an organization point of view?”

The most frequently quoted 14 main reasons for quitting are depicted in the following figure.

Graph: 5

40%

1.Main Reasons for Exiting

35% 30% 25% 20% 15% 10% 5% 0%

Figure 5: The top 14 main reasons cited by the engineers for quitting

Inference: It must be noted in the figure above that around 35% of the engineers exited the organization in want of a job abroad. The second most frequently cited reason (8 %) for quitting is marriage (moving with the spouse).

Distribut ion of Main Reasons in four Clusters Following Table summarizes the distribution of the reasons within 4 clusters.

Table: 4 Reasons for Quitting

No. of Responses

Business Related Reasons

8

System Related Reasons

14

Supervisor Related Reasons

6

Individual Related Reasons

72

TOTAL

100

Source: Primary Data

Inference: This diagram seems to suggest that 72% of the engineers have quit because of personal reasons. Similarly 8 % of the engineers have done so because of conditions that can probably be altered/influenced/by the owners of the organization. This means that only 20% of the engineers have quit because of reasons/ conditions that can be controlled by the management of the organization. But this may not be the right conclusion. Though the most quoted main reason in this organization seems to be “Wanted to work in USA”, but it is needed to find out reasons that

have triggered people to look for alternative to their present job. Are there reasons/ conditions within an organization that are triggering their employees to look for jobs outside?

Graph - 6

Source: Table 4 Figure 6: Cluster Frequency of the main reason cited by the employees

The Debilitating Conditions

What triggered an employee to look for a job outside and ultimately led to the exit? Appendix IV gives the results of the analysis of the triggering reasons given by the engineers.

A significant number of the engineers have mentioned “Non-competitive compensation” as a debilitating condition. Many engineers have also suggested that though the organization was competitive in terms of compensation in the beginning, recently the organization seems to have lost its market position.

The distribution of the triggering reasons (debilitation conditions) in the four clusters is given in the diagram below.

Table: 5 Triggering Reasons for Quitting

No. of Responses

Business Related Reasons

32

System Related Reasons

49

Supervisor Related Reasons

18

Individual Related Reasons

01

TOTAL

100

Source: Primary Data

Inference: Only 6% of the exiting engineers cited “Supervisor Related” as main reason for exiting, 18 % of the exiting engineers expressed “Supervisor Related” reasons that triggered them to look for an alternative job.

Graph - 7

Source: Table 5

Figure 7: Cluster frequency of the Debilitating conditions cited by employees

Supervisors as Rated by Employees Following table summarize the results of how Supervisors, peers and Reports were rated by the employees.

Table: 6

Support>>>

Excellent

Good

Mediocre

Poor

TOTAL

Superiors

25

58

12

05

100

Peers

43

50

07

0

100

Direct Reports

25

64

09

02

100

TOTAL

93

172

28

07

300

Source: Primary Data

Inference: It should be noted that 17 % of the employees have rated their supervisor either mediocre of poor.

In contrast to the Supervisors, only 7 % of the employees rated their peers as mediocre (0% rated peers as poor) It should be noted that 19% of the employees rated their reports either mediocre or poor.

Graph:8

Source: Table 6 Figure 8: Supervisors as rated by Employees

Inference:

It should be noted that 17 % of the employees have rated their supervisor either mediocre of poor.

Graph: 9 Following diagram shows how Peers were rated by the employees

Source: Table 6

Figure 9: Peers as rated by employees

Inference: In contrast to the Supervisors, only 7 % of the employees rated their peers as mediocre (0% rated peers as poor)

Graph: 10 Following diagram captures how Direct Reports have been rated by the employees

Source: Table 6 Figure 10: Direct reports as rated by employees

Inference: It should be noted that 19% of the employees rated their reports either mediocre or poor.

Table: 7 Table shows the Subordinate – Superior Relationship

Subordinate Relationship

–

Superior

No. of Responses

Fully Satisfied

21

Satisfied

45

Partially Satisfied

22

Not Satisfied

12

TOTAL

100

Source: Primary Data

Inference: It must be noted that major of the employees were satisfied with sub – superior relationship and were motivated by open communication culture.

Graph: 11

Source: Table 07

Supporti ng elements in the Organizatio n What are the supporting elements in the organization? There appear to be a number of positive points about the organization, which have been acknowledged by the employees. The results of the analysis of the supporting elements are given below.

Inference: The culture and working environment of the organization has been acknowledged as supporting elements by as many as 56 % of the employees. 29 % of the employees have acknowledged a pleasant atmosphere in the organization.

Following diagrams shows the frequency with which a supporting element (only top 25 have been shown here) got acknowledged by the employees.

Graph: 12

Figure 12: Top 25 Supporting Elements cited by employees

Table: 8

Following table shows the Employees response towards the Orientation and Induction Programs provided by the Organization.

Orientation and Induction programs

No. of Responses

Fully Satisfied

17

Satisfied

61

Partially Satisfied

15

Not Satisfied

07

TOTAL

100

Source: Primary Data

Inference: Employees are satisfied with the Orientation and Induction programs provided by the organization. .

Graph:13

Source: Table 08 Figure 13: Orientation and Induction Programs Rated by Employees

Table: 09

Following shows the Employees response towards the Employee Empowerment.

Employee Empowerment

No. of Responses

YES

33

NO

67

TOTAL

100

Source: Primary Data

Inference: Around 67% of the employees disagreed with the Employee Empowerment being implemented in their organization as they don’t have the authority to take decisions at critical situations.

Graph: 14

Source: Table 09 Figure 14: Employee Empowerment in the Organization

Table: 10

Following table shows the Employee Satisfaction towards the Recruitment Strategies of the company.

Recruitment Strategies

No. of Responses

Fully Satisfied

13

Satisfied

59

Partially Satisfied

21

Not Satisfied

07

TOTAL

100

Source: Primary Data

Inference: More than half of the employees are satisfied with Recruitment Strategies of the organization.

Graph: 15

Source: Table 10 Figure 15: Employee Response towards the Recruitment Strategies

Table: 11

Following table shows the employees response towards the Training and Development Programs organized by the organization.

Training programs

No. of Responses

Fully Satisfied

13

Satisfied

58

Partially Satisfied

19

Not Satisfied

10

TOTAL

100

Source: Primary Data

Inference: Training and development programs helps in developing the knowledge and skills of the employees. Most of the employees are satisfied with the Training and Development programs provided by the organization.

Graph: 16

Source: Table 11

Figure 16: Employee Response towards the Training And Development Programs

Table: 12 Following table shows the Employees satisfaction level towards the Open and free Communication Culture of the company.

Open

and

Free

Communication Culture

No. of Responses

Fully Satisfied

16

Satisfied

49

Partially Satisfied

25

Not Satisfied

10

TOTAL

100

Source: Primary Data

Inference: Transparency creates an environment of Open and Free Communication Culture and most of the employees are satisfied with the open culture provided in the organization.

.

Graph: 17

Source: Table 12

Figure 17: Employee Response towards Open and free Communication Culture

Table: 13 Let us look at “How many employees are satisfied/ dissatisfied?” Following table capture the proportion of the engineers who are satisfied with the organization.

Employee Satisfaction

No. of Responses

Satisfied

60

Partly Satisfied

28

Dissatisfied

10

Neither Satisfied nor Dissatisfied

02

TOTAL

100

Source: Primary Data

Inference: It must be noted that as many as 60 % of the engineers are satisfied with the organization.

Graph: 18

Source: Table 13 Figure 18: Response of the employees regarding their satisfaction

Table: 14 Following table shows the Employee Response towards the Job – Hopping.

Job – Hopping

Employee Response

YES

40

NO

60

TOTAL

100

Source: Primary Data

Inference: 40% prefer job hopping

because of pay and good will while the rest 60% of the

employees are satisfied with the benefits (monitory and Non - monitory) provided by the company.

Graph: 19

Source: Table 14 Figure 19: Employee Response towards Job –Hopping

Conclusi on from the Analysis: As can be seen from the Figure 1, the age group 23 – 25 years comprises of the biggest chunk of the exiting employees. It indicates that the organization is not able to cater to the aspirations of the engineers in the age group 23 – 25years. There is a need to understand aspirations of this age group. If employee’s turnover has to be reduced, the policies related to Human Resource Management of the organization should be amended accordingly.

Figure 2 shows that the experience of the majority of the employees falls into following two groups.  1 – 2.6 years  3.4 – 4 years

The engineering campuses supply most of the new entrants to the organization. In India, after 12 years of school and 4 years of engineering education, an engineer mostly starts his career at the age of 21 – 22 years. Most of the new entrants in the organization under study are fresh engineering graduates and most of them are recruited directly from the campus. Many of these engineers seem to get disillusioned with the organization after 1 – 2 years of experience.

There are very clear evidences that the organization has lost some of its attractiveness as an employer over a period of time. Though there are many supporting elements present in the organization (can be termed as strengths of the organization as far as handling the issue of employee turnover is concerned), many debilitating factors have also been identified in this study (can be termed as weaknesses of the organization as far as handling the issue of employee turnover is concerned). The employee turnover rate at any point in time is a function of balance

between supporting elements and debilitating factors. The employee turnover in an organization can be managed by :-

 systematically understanding the supporting elements and debilitating factors and  By implementing programs that would shift the balance in favor of supporting elements.

Concretely in the case of the organization following top 15 debilitating factors need immediate attention at the appropriate level (at the level of owner/ top management/ supervisor level depending upon the cluster the issue belongs to).

Top 14 Debilitating factors  Non – competitive compensation  Travel opportunities lacking  Lack of growth  Not liking nature of the work  No ESOP’s  Changing policies – Becoming employee unfriendly  In – transparent appraisal and promotion policies  Lack of incentives for long stay like loyalty bonus  Company not working towards retaining employees  Unjustified Appraisal rating  Insignificant Increments  Old technology  No proper recognition of the work done  Area of interest Mismatch

The organization should discuss these findings with their parent organization to find out the solutions. Together they are in a position to address almost all of the issues mentioned above.

The most significant issues that emerged from this analysis and are major factors for fuelling the employee turnover in the organization need immediate addressing and are discussed below.

The issue: Compensation The organization needs to re – look at many of its HR practices. One important area that affects employee’s intentions to leave, their level of job satisfaction, and organizational commitment is the organization’s HRM practices. For example, the firms that do not pay their employees equitably compared to what other firms are paying, may lose their employees because of non – competitive compensation package.

The issue: Travel Opportunity It is ironical that on one hand, the capable software engineers of the Indian software organization are leaving for lack of travel opportunities and on the other hand, the parent organization like other organization in the native country, are facing acute shortage of software skilled employees and inviting Indian software engineers to join the workforce in abroad. The parent organization and Indian software subsidiary could carve out a joint strategy to address this issue to create a WIN – WIN situation for both.

The issue: Lack of Growth The issue of lack of growth also comes out clearly in the analysis and needs addressing. Other research studies have also found that meaningful work and opportunities for promotion significantly affected employee’s intentions to leave an organization. Besides promotion opportunities, the evaluation criteria used in the promotion and reward system also had significant effects one employee’s turnover intentions. Ineffective performance appraisal and planning systems contributed to employees’ perception of unfairness and they were more likely to consider leaving the organization.

The issue: Recruitment and Selection Policy Apart from the issues mentioned above, the organization should also review its selection and recruitment system. Some engineers seem to have joined the organization with a plan to quit after gaining an experience around 2 years. They seem to have the plan to go to US. The question before the organization is, if they would like to live with such employees or would they like to avoid such employees. An appropriate recruitment & selection strategy could be adopted to address the issue.

An employee’s performance is seen as a result of her interactions with her work-environment. The work environment itself is seen as comprising of three layers. First layer aggregates the influences of her immediate supervisor. The second layer aggregates the influences of top management of the organization and comprises of the current systems of policies/procedures/ practices followed in the organization. The third layer aggregates the influences of the owners of the organization and

comprises of the way their business is defined. The economy and the industry trend provide the overall context for these influences. Two justifications for ignoring these influences are as follows:



The influences of the economy and industrial trends are assumed to be same for all the competing organizations operating in a certain environment.



A purpose of this study is to understand what an organization can do to manage its employee turnover. It is assumed that an organization alone can not influence/ alter the economy and industry trends.

The various elements of the work environment are seen as supporting elements of as debilitating factors by individuals. What is seen as supporting elements by one employee can well be seen as debilitating factor by others. An example of such dichotomy is the “flat organization structure”.

Flat organization structure is seen as supporting elements by some as it allows fast decision making without any bureau tic hassles. At the same time, it can also be seen reason for Lack of opportunities for hierarchical growth. The classification of an element of the work-environment into supporting element/debilitating factor is not only individual person dependent, but also changes with time for the same person. As individual learns with time, his/her expectations change. The change in expectation leads to change in classification of an element into supporting elements/ debilitating factor.

Organization need to understand the debilitating factors and supporting elements within and should monitor them on regular basis. (Via – Exit Interview Records, Employee Satisfaction Survey, or informal channels). Based on the understanding regarding debilitating factors and supporting elements, programs can be devised such that Employee Turnover can be managed & controlled.

Sugges tions Let us now discuss implications that can be derived from this study for the parent organization, for the subsidiary organization & the managers of the organization. At the end, we would look at the other implications from this study.



ESOP: Many of the Indian Software Organization (Examples: INFOSYS, WIPRO) and many subsidiaries of Multi-national organizations (Examples: Oracle, Microsoft) have Employee Stock Ownership Plans. The ESOP s has a positive effect on performance and productivity of an employee. Additionally ESOP also brings certain amount of stability in the employees. ESOP could help the organization to reduce its employee turnover.



Travel opportunity: Like many organizations in Europe, the parent organization is also facing shortage of skilled software engineers locally. The parent organization can invite engineers from their subsidiary to overcome this shortage of skilled manpower. This way, the engineers of the subsidiary organization in Bangalore would have increased opportunity for travel and hence would not leave the organization for the want of travel abroad. The parent organization can also help the subsidiary organization in Bangalore by allowing and facilitating a direct business relationship with their other subsidiaries around the world. This would not only add to the variety of the project getting executed by the

Indian subsidiary, but also would province travel opportunity to the engineers at the Indian subsidiary. 

Compensation: Non – competitive compensations has recently been the main cause of employee turnover in the organization. The organization should immediately take steps to rectify it.



Training for Supervisors: The organization should pay special attention to training the supervisor for their role. The supervisors in the organization need to be trained for their roles especially in the area of interpersonal and leadership skills.



Hire the Right : One of the best retention strategy is to have a right recruitment strategy. A right recruitment strategy would include a complete job analysis with the help of

clear job specification and Job description. Organizations should see that the

incumbent skills match the above. Discussion of employee growth and career opportunities during recruitment, initial interviews with job candidates, new employee orientation, creation of individual plans, performance feedback sessions and exit interviews will also help in charting a right recruitment strategy. 

The organizations seems to have successful in developing and installing systems for appraisal & promotion. There were many more people leaving the organization in the past due to ad-hoc-ism in these practice areas. Now organization needs to adjust the exiting system according to the demand of the time.



Managers need to handle their employees with sensitivity. What is considered insignificant by managers may be seen as insensitive by the employees. The exit interview records analysis highlighted many such issues.



Handling of employees after their resignation is also very important. There were examples of employees, who have cited treatment received by them after resignation as

major source of their dissatisfaction with the organization. The treatment given to an employee who has resigned gives signals to other employees in the team as well.



Managers should regularly analyze exit interview records of their team. This would provide them inputs on their own strengths and areas of improvements. The exit interviews records analysis would throw light on how the work, its management and the manager are perceived by the employees. These could serve as input for improvement programs for organizations and individuals.



Exit interview can provide useful insights into reasons for employee turnover and a starting point for progress, but only if conducted in a scientific manner. Organization should not only invest resources on conducting exit interview meticulously, but also analyze the data periodically to study patterns and trends of employee’s turnover.



A base level of employee turnover is inevitable. Organizations must put management processes in place to cope with this base level of employee turnover. Any additional turnover on top of the base level employee turnover should be viewed very seriously.

Steps should be taken to immediately correct the causes.



Exit Interview Records could be used for identifying the supporting elements as well as the debilitating factors in the organization. Employee Satisfaction surveys should be considered for confirming the findings of analysis of exit interview records.



Employees who are placed in jobs that are too difficult for them of whose skills are underutilized may become disheartened and quit. Inadequate information about skill requirements that are needed to perform a job may result in the hiring of either under – skilled or over – qualified employees. The requirement of a specific job should be carefully studied for the required skills and employees should be tested for requisite

qualification. A good job analysis and job description would help in over coming this problem.



Continuously recognizing employee contribution instills a sense of loyalty among the employees. A formal recognition of the work done can do wonders to boost the morale of the employees and to increase their loyalty towards the organization. Awards like “ Employee of the year”, “Best Employee of the Year” , “Best Performer of the year” , “Employee of the month” in a company newsletter or informal website can serve the purpose.



An open – door policy encourages employees at all levels to ask questions, contribute ideas and solve problems. This type of sharing atmosphere gives everyone voice in crafting the type of corporate culture in which they would like to work. Employees also value a work place In which their input is encouraged and valued.

Conclusi on Employee turnover is a chronic disturbance that the HR Department is exposed to. The recent times have a witnessed a steep increment in the employee turnover. The research analysis the cause of the rising employee dissatisfaction and hence turnover and also how successful are the organization in implementing strategies to retain their employees.

Even though all organizations taken in the sample are not successful in implementing Retention Strategies, they fully appreciate the Importance and effectiveness of using the concept.

It is importance to understand why there is attrition of employees at all. For organizations it is important to know whether their employee are dissatisfied or are there any other reasons for leaving the job. Before taking tany sudden action it is always wise to investigate into the root cause of the issue.

As an employee, there is good reason to be concerned about the findings like these and matters could become worse very quickly in future. While the economy continues to bounce back, exiting workers will find job – hopping and increasingly viable option and if predictions of widespread worker shortages by the latter half of the decade come true, these conditions will only be worsened.

Bibliogr aphy Bhasin, R

Seven keys to retaining good people

Buoy, M T

An Analysis of Employee turnover, the costs associated with the Phenomenon

Neumann, W L

Social Research Methods -- Qualitative & Quantitative Approaches.

Stephon Taylor

A Handbook on Employee Retention

Donald R. Cooper

Business Research Methods

Pamela S. Schindler http: // stats.blg.gov http: www.bna.com http : www.google.com

Appendix I: Various Reasons specified by Employees # Reasons for Exiting Changing policies of the company.

Non – competitive compensation.

Non – competitive remuneration.

Lack of technical career advancement..

Uncertainty regarding work availability in future.

Lack of opportunity for constant up – gradation of skills.

Delay in promotion.

In – transparent appraisal and promotion policies.

Unfair appraisal normalization Lack of challenging targets.

Lack of growth.

Better compensation at other company.

Slower process in the company.

Dissatisfaction with job satisfaction.

Unsure future.

Limited career growth opportunities.

Marriage (moving with husband)

Parent’s health requires moving to other city.

Wanted to pursue studies.

Financial problems at home, debt, house.

Not able to influence situation positively.

Wanted a job abroad.

Want to see new places.

Peer – pressure --- friends going abroad.

Saving potentials high in the US.

Going to the home town.

Want to work in new technology.

Want to have new experience, like working for start – up.

Most of the class mates in the US. Not liking the nature of the work.

Travel opportunities lacking.

Lack of variety of work.

Area of interest mismatch.

Way of management – unacceptable.

Bad appraisal.

Lack of independence of work – manager controlling.

Discontinuity – change of manager.

Non – trusting manager.

Oversized department – not much work.

Careless attitudes of managers.

Appendix II: Exiting Reasons in Four Clusters

Cluster 1: Business related Reasons Not liking nature of work.

Absence of hardcore state of the art telecom tech.

No ESOPs Travel opportunities lacking.

Lack of variety in the work.

Area of interest mismatch.

Proprietary technology – does not add value to Bio – Data.

Less interaction possibilities with end customers.

Cluster 2: System Related Reasons Changing policies of the company.

Non – competitive compensation.

Non – competitive remuneration.

Lack of technical career advancement.

Lack of perspective.

Uncertainty regarding work availability in future.

Lack of opportunity for constant up gradation of skills.

Delay in promotion.

In – transparent appraisal and promotion policies.

Post Graduates are not given any additional benefits.

Unfair appraisal normalization.

Lack of challenging targets.

Lack of growth.

Better compensation at other company.

Slower processes in the company.

Career advancement.

Dissatisfaction with job profile.

Limited career growth opportunities.

Cluster 3: Supervisor Related Reasons Way of management – unacceptable.

Bad appraisal.

Lack of independence at work – manager controlling.

Differential handling of people – very subjective.

Discontinuity – change of manager.

Insensitivity if manager.

Oversized department – not much work.

Careless attitudes of managers.

Cluster 4: Individual Person Related Reasons

Marriage (Moving with Spouse) Parent’s health requires moving to other city.

Wanted to pursue studies.

Financial problems at home, debt, house.

Disillusionment with IT industry itself.

Personal reasons.

Not able to influence situation positively.

Wanted a job abroad.

Want to see new places.

Peer pressure – friends going abroad.

Saving potentials high in US. Going to home town.

Want to work in new technology.

Want to have new experience.

QUESTION AIRE NAME: DESIGNATION: UNIT / DEPARTMENT DATE OF JOINING: TOTAL EXPERIENCE: QUALIFICATION:

1) Is it your first Job?

YES

NO

2) If Not the Reasons for quitting the previous job (tick multiple entries if needed): Job abroad Marriage

Studies abroad

Jobs in India

Compensation Career Adv.

Studies

in Location

India Work

Change

Environment

Supervision

a) What are the primary reasons for your leaving the company? b) Please indicate, other reasons if any, (in addition to the above) that prompted you to leave the company.

3) Do you prefer job – hopping to Rival firm? If yes, Prioritize the reasons:

Compensation

Working Environment

Social Pressure

Technology change

Supervision

Lack of Growth

Furthering Skills

Mgmt Education

Appraisal

Saving Potential

Travel Abroad

Life Style

4 ) Are u a satisfied employee or a dissatisfied employee? If dissatisfied, Why? a) If u have been dissatisfied, did you bring this to the notice of your Superiors? What was the result of such action?

5 ) What kind of support did you receive from your superior, peers and direct reports (if any)?

Support>>>

Excellent

Good

Mediocre

Poor

Superiors Peers Direct Reports a) R u satisfied with Subordinate – Superior Relationship ? If Yes, to what extent?

Not satisfied

Partially satisfied

Satisfied

Fully satisfied

6 ) What kind of support did you receive from the following departments?

Support>>> HR F & A

Excellent

Good

Mediocre

Poor

Travel System Adm.

7 ) What have been your major achievements in the company? Did you receive recognition for the achievements?

8 ) What are your views on the compensation package and benefits provided in the company?

9 ) Can u list the best work culture, practices in the company?

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------10 ) Orientation and Induction Programmes ?

Not satisfied Satisfied

Partially satisfied Fully satisfied

11 ) Open / Free communication culture ?

Not satisfied Satisfied

Partially satisfied Fully satisfied

12 ) Employee Empowerment ?

Not satisfied Satisfied

Partially satisfied Fully satisfied

13 ) Orientation and induction Programs ?

Not satisfied Satisfied

Partially satisfied Fully satisfied

14 ) Do you have any suggestions for improving the work culture, team working and efficiency in your area of work?

15 ) Training and Development programs ?

Not satisfied Satisfied

Partially satisfied Fully satisfied

16 ) Recruitment Strategies ?

Not satisfied Satisfied

Partially satisfied Fully satisfied

17 ) Any suggestions for the company ?

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