attrition f1
TRANSCRIPT
ATTRITION
“A reduction in the number of employees through
retirement, resignation or death”
“Unpredictable and uncontrollable, but normal,
reduction of work force due to resignations,
retirement, sickness, or death.”
ATTRITION
RESIGNA-TION
RETIRE-MENT
SICKNESS
DEATH
MEANING
Attrition is loss of a resource through obsolescence or spoilage. Attrition in
various forms at various different places means different things. In general the term
attrition may have the following meanings:
In military it means:
a) Loss of person by withdrawal military.
b) Attrition welfare, the military strategy of wearing down the
enemy by continual losses in personal and material.
In medical terms:
The loss of participants during an experiment.
In terms of Dental Studies it means:
Loss of tooth structure by mechanical forces from opposing teeth.
In terms of weathering as a natural phenomenon:
a) The wearing away of rocks in the sea.
b) A rubbing away or wearing down friction.
In the Catholic Theology it means:
Imperfect contrition also known as attrition, in catholic theology.
In terms of Language it means:
Loss of a first or second language or a portion of that language by
that community or an individual.
Attrition also has a historical significance:
War of attrition, a limited war fought between Egypt and Israel from
1968 to1970.
In corporate terms:
gradual, natural reduction in membership or personnel, as through
retirement, resignation, or death.
In relation to a customer in business it means:
Customer attrition, a business term used to describe loss of client
and customers.
In various other terms:
a) Repentance for sin motivated by fear of punishment rather than by
love of god.
b) A gradual diminution in number or strength because of constant
stress.
This project deals with attrition in any business organization.
Attrition is one of the biggest issues that any organization faces and in fact the
growing industries are facing presently. In any organization that is employee
centred, attrition means a situation, which an employer faces when any employee
leaves the organization due to any avoidable or unavoidable reason such as job
dissatisfaction, new opportunity in the market, retirement or any natural
causes such as sickness or death. The reasons for attrition may range from
professional to personal.
Attrition is a common phenomenon in any organization. Attrition in any way is not
beneficial for the organization. It is a very negative phenomenon and causes huge
loss to the company. The loss can be in terms of money as well as in terms of
manpower.
The effects and impacts of attrition are also mostly negative resulting in
various types of losses for the organization like the loss in costs acquired by
the organization due to the processes of hiring; recruitment, training of the
employees.
It also results in various incompetent processes like the inability of the
company to offer services for various technical processes.
ATTRITION: AN INTRODUCTION
Any new employee joining any organization usually has various dreams regarding
his/her job and the nature of the job and work atmosphere. Ideally, any employee
would expect the organization has a goodwill in the organization, get good
compensation for the service that they would offer to the organization, get ample
chance for their career growth and advancement within the organization, good
working conditions, co-operative coworkers and staff, future stability within the
organization, get ample flexible schedule so that they can attend to their family and
personal needs when necessary. In return the employee is more than happy to offer
his services with full hard work and dedication to the organization.
But then this is just the mind full of dreams and hopes of any person who is yet to
enter the organization and start with his career. This person is a person full of
enthusiasm and youthfulness to give all he can to the organization and considers all
the above said conditions to be just too minimal and minute. But dreams are
dreams. And then there is the real world when the person really enters the
organization and gets to set in the work culture that the harsh realities of the world
come in front of him and cause him to exit the organization. And there are various
reasons for them to leave.
The reasons may be:
Wanting more remuneration.
More benefits.
Do not like the work atmosphere.
Hate their coworkers.
Inflexible and tight work schedules.
Attrition is one of the biggest nuisances in the organizations today, not only in India
but also all over the world. High attrition rates significantly increase the
investments that are made on the employees. Companies invest a lot of time and
money in training the employees but theses investments do not always get
converted into profits. Though the attrition rates in India is not as high as those in
the US but it is still a great challenge to keep attrition rate under control in India.
A glimpse of attrition rates all over the world
US 42%
AUSTRALIA 29%
EUROPE 24%
INDIA 18%
GLOBAL AVERAGE 24%
ATTRITION & HR
In any organization, in any sector, in any department the Human Resource manager
has the most important and perhaps the most challenging task to maintain a steady
workforce in the organization. And for this the HR manager has to make sure that
he appoints competent and reliable workforce into the organization. For
maintaining a steady workforce it is important for him to maintain a balance
between the demands and supply of workforce in the organization, which in no
sense, is an easy job. Hence it is very important for the HR manager to find the
right kind of people for the organization who can suit and fit in well in the
organization. Not only this, also it is very important to see that the workforce
appointed is consistent in performance. It is also the duty of the HR personnel to
keep the motivation level of the employees high and see to it that the employees are
performing their tasks with full efficiency. Then it is also the task of the HR to see
that the employees are comfortable in their work atmosphere and have no problems
regarding their job and work security.
Thus it can be said that it is the HR personnel who are responsible to see that
the attrition rates of the organization are well in control. It is a tough concern
for the HR manager to see that the attrition rates are well in control.
The telecom industry is being looked upon as the next big employment-generating
sector in India. It is however no easy task for an HR manager in this sector to
bridge the ever-increasing demand and supply gap of professionals. The telecom
HR manager is not only required to fulfill this responsibility, but also find the right
kind of people who can keep pace with the unique work patterns in this industry. It
is also his duty to keep the motivation levels high, despite the monotonous work. In
India, the average attrition rate in the telecom sector is approximately 30-35
percent though it is far less than the prevalent attrition rate in the US market, which
is around 70 percent. Keeping low attrition levels is a major challenge in this
industry.
REASONS GIVEN BY HR FOR ATTRITION
The reasons cited by various HR Personnel for attrition in the Telecom Sector are:
1. The salary growth plan for employees is not well defined. This
encourages poaching by other companies who can offer a higher salary to
the employees.
2. Long working hours and monotony of the job causes employees to leave.
3. The toughness of the job and timings is not adequately conveyed. No
effective training programs have been evolved.
4. Motivational training is still to evolve in this industry.
5. This industry sees a high percentage of females in the workforce. Most
women leave their job either after marriage or because of social pressures
caused by irregular working hours in the industry. Thus females also
become one reason for high attrition.
Amongst all these reasons and all so many things happening, the HR manager is
expected to put his best foot forward and straighten all things. The HR manager
believes that for sorting out and handling this situation of attrition, the
responsibility of the manager increases of finding out “the best man” for the job
and creating a “conducive work environment”.
Thus, most of the HR managers are seen busy putting in all the efforts to develop
their employees, sort out their problems and try all that is possible to maintain all
the competent employees within the organization, build innovative retention and
motivational schemes.
Thus, the HR manager has got a significant role to play in managing
employees within the organization and controlling the attrition rate.
ATTRITION RATES IN ASIA
In Asia, the attrition rates of various organizations in past few years have been as:
2003 10%
2004 14%
2005 16%
To study the growing rate of attrition in the coming years in Asia a study was
conducted and reasons for attrition were found out.
Hewitt’s Attrition and Retention Study Asia Pacific 2006 has given reasons for
the growing attrition in the organizations.
The reasons given are:
1. Compensation unfairness. 21% of the organizations who took part in the
survey said that their employee left the organization because they got offers
from other organizations offering better pay packages.
2. Less growth opportunities
3. Role stagnation
The study also revealed the various strategies sought by the companies in Asia to
combat attrition.
The various strategies being used are:
1. Pay above the industry standards.
2. Providing opportunities to employees to learn new
skills.
3. Provide work life balance.
Attrition at various levels within an
organization from employees’ point of view
A survey was conducted where the employees of various organizations were asked
questions on attrition. Employees gave a feedback on the attrition rates at various
levels in the organization. Accordingly,
Professional/supervisor/technical level highest (39%)
Senior/Top management level lowest (1%)
ATTRITION IN INDIA
ATTRITION RATES IN VARIOUS
SECTORS IN INDIA (2007)
The attrition rates in different sectors for the year ended 2007 are shown in the
following table: -
Sector Attrition Rate FMCG 17 Manufacturing 20 Capital Goods 23 Construction 25 Non Voice BPO 25 IT – ITES 27 Telecom 30 Pharmaceuticals 32 Bio Technology 35 Services 40 Financial 44 Aviation 46 Retail 50 Voice - Based BPO 50
From the above table it can be concluded that by the end of 2007,attrition rate in
various sectors was quite grim. And on an average the attrition rate in Indian
economy is around 20% whereas the global average is around 24%.
And rate hasn’t decreased since then. Attrition rate is on a continuous rise ever
since showing no signs of slow down.
Comparison of Attrition Rates across Industries in previous few years
Sr. No
Sector 0-3
years 4-7
years 8-12 years
13+ years
% change from
2006 to 2007
Increase in 2008
1 Pharma & Chemicals
25.00% 10.00% 5.00% 2.00% -5.00% 6.00%
2 Manufacturing 8.58% 2.46% 2.46% 3.00% 5.00% -3.50%
3 Financial Services
20.00% 20.00% 20.00% 20.00%
4 Hospitality 35.00% 25.00% 20.00% 7.50% 13.00% 20.00%
5 Ad & Media 40.00% 35.00% 20.00% 15.00% 17.00% 22.00%
6 BPO 40.00% 30.00% 20.00% 10.00%
7 Automobile 7.00% 3.00% 2.00% 2.00% No visible
14.00%
8 Auto Component
12.00% 15.00% 20.00% 12.00% 5.00% 6.00%
9 Banking 10.00% 5.00% 2.50% 2.50% 2.00% 2.00%
10 Infrastructure 16.00% 11.00% 7.00% 11.00% 9.00% 20.00%
11 IT & Telecom 32.00% 25.00% 10.00% 5.00% 5.00% 9.00%
In this table it can be clearly seen that except for a few occasion none of the
sectors have shown a decline in attrition rates. Rather a constant and steady
increase in the attrition rates has been noticed.
The highest attrition rate has been seen in the advertisement and media industry
while the manufacturing industry has been lucky enough to show a decrease in
attrition rate of 3.5%. The telecom industry has also seen an increase of 9% from its
previous years.
ATTRITION IN THE IT SECTOR
IT sector is one of the most flourishing sectors in the present scenario. The number
of jobs is ever increasing and this industry always has space for every new entrant.
But interestingly the attrition rate is also ever increasing in this sector. The reason
for high attrition rate in this sector has been credited to the immense mental
pressure, unconducive work environment and lack of job security amongst the
employees.
Here is a small summary on the attrition rate of the top 4 IT giants of India i.e.
Satyam, TCS, Wipro and Infosys.
ATTRITION RATES OF WIPRO, TCS, INFOSYS
& SATYAM
Despite being IT giants and despite being one of the most flourishing industries in
India, the industry is also facing huge rates of attrition since the past few years.
Infact the workforce in this sector has been stated as one of the unstable workforce.
The biggest problem with this industry is its inability to retain back employees in
spite of giving really well and commendable salary packages. Infact IT
professionals are one of the most well paid professionals.
On comparison of the 4 giants it has been found that Wipro, TCS & Infosys have a
much higher rate of attrition as compared to Satyam.But during this recent Satyam
fiasco even this company has noted down a considerably high rate of attrition.
WIPRO: Wipro has the highest attrition rate in the industry. During the last
quarter of 2006-2007 the attrition rate of wipro accounted to about 16.2%. Whereas
the attrition rate of Wipro BPO on an annual basis has been around 48%.
INFOSYS: Attrition rate for infosys for the period April-June 2006 was 11.9%.
But later it had increased to 13.7%
TCS: The attrition rate for TCS was 11.5 % in 2006-2007, up from 10.6% in
2005-2006.
SATYAM: Attrition rate for Satyam for the period January-March 2007 was
15.7%. It has declined to 14.9% during the last quarter of the year.
ATTRITION IN TELECOM SECTOR IN
INDIA
The telecom industry is one of the most flourishing industries in India today. It is
providing employment opportunities at a very huge scale. At present the telecom
industry over here is growing at a very rapid pace of 40-50% growth rate
annually. It is the 2nd largest telecom market in the world only after China. In
2007,India achieved the distinction of having the lowest call rates in the world and
fastest growth rate in terms of number of subscribers.
But along with the huge employment the industry provides also comes high rates of
attrition as a big deterrent for the industry. This industry at present is facing a
very high rate of attrition of 30-40% annually. One of the most critical problems
being faced by this industry presently is Attrition.
Attrition arises generally when an employee leaves the organization due to any one
of the following reasons:
Death of employee
Retirement
Better opportunities else where
The telecom industry is facing great challenges in finding quality human resources.
Attrition rates at an average vary between 20-40% while the top telecom companies
vary at least at an average of 15%.
In this organization, the attrition rate averages to about 2.4% per month. But
in this era of recession the attrition rate has reduced a little bit to around 1.9%
per month.
The reasons for high rates of attrition is due to various factors like:
Salary
Work Timings
Other career options.
The rates of attrition also differ according to the level at which the employee is
working. In this organization, the second level employees change their organization
and job at an average of 2 to 2.5 years. While the top-level employees are relatively
more stable in this respect. They change their jobs at an average of 4-5 years.
But attrition is not the only problem creeping in this industry. Along with high
attrition rate is also comes in hand the problem of poaching which is just adding to
high attrition rates. Poaching is taking over of the employees of one organization
by another at a higher salary. This is the world of cutthroat competition. Each
company is on the hunt of competent employees and if they find any employee who
is already experienced and competent enough to be fruitful to the organization, each
organization will try to grab that person.
Thus attrition coupled with poaching leads to the increase in the costs for the
company. India has always been one of the favourite destinations for telecom
activities. One of the reasons is the cheap labour available over here. However,
it may be quite ironical or interesting to know that the attrition rates in India and
the costs associated with it are so high that they override the benefits of lower
wage costs. It is said that it is just this low wage cost that has caused various
foreign players to move into the Indian market.
High rates of attrition do not cause the people to stay long enough into any
organization to learn their job completely. Thus the labour here no doubt is
cheaper but if they are not able to learn the new job then there is no use of the cheap
labour available and the investment done on them goes for a waste. Thus,
managing attrition in the telecom sector is not just good for industry but
rather important as a means for survival.
Hence, it is an area where the HR manager has to take a lead. Understand the causes
of attrition, see the factors affecting attrition, measuring attrition and set out
targets to curb the growing attrition within the organization.
In the following pages are given the factors, causes, impacts and methods to
curb attrition in the telecom industry with special reference to this
organization.
WHO IS RESPONSIBLE FOR
ATTRITION?
Before moving on to the causes and various factors related with attrition it is
important to know who is exactly responsible for attrition. For understanding this, a
survey was conducted amongst the entire HR department to find out who the HR
thinks is responsible for attrition. The HR personnel were given three choices and
asked to rank among the 3 choices the one, which they feel, is the most accurate
cause for attrition starting from the most obvious cause ranked at the first spot.
The three choices given were:
1. Employee
2. Supervisor or Line Manager
3. Compensation & Job Profile
RESULTS OF THE SURVEY
The result of the survey was as follows:
REASONS FOR EXIT % OF RESPONDENTS
EMPLOYEE 08.03%SUPERVISOR OR LINE MANAGER 38.15%COMPENSATION & JOB PROFILE 53.82%
ANALYSIS OF THE RESULTS:
The results of the survey were interesting and were helpful in providing deep
insights into why attrition happens and what can be done to solve it.
1. EMPLOYEE AS A REASON FOR ATTRITION
Only 8% HR professionals felt that employees leave organizations on their
own. Except in a few cases such as personal reasons, family issues, location
preference, company brand and peer relationships, employees are not self-
motivated to leave the company they are working in.
2. SUPERVISORS OR LINE MANAGER AS A CAUSE OF ATTRITION
A majority of HR professionals polled that immediate managers are a bigger
reason for attrition. It confirms the theory that "Employees don't leave their job
or company, they leave their manager".
Meeting employees' expectations is a difficult task, and most managers cannot do it
effectively and consistently. 'Satisfying employee needs' often gets lower priority in
the eyes of the manager. Further managers do not have appropriate tools to manage
employee related tasks and this leads to further dissatisfaction.
Thus, HR should continually train managers in handling employee expectations and
provide them with tools to manage tasks related to their teams. HR should also be
able to track changes in employee performance rating, gaps between employee and
manager performance, sudden increase in paid-time-off and should be prepared to
act quickly if any visible trends are evident.
3. COMPENSATION AND JOB PROFILE
HR Managers voted unanimously that 'Compensation and Job Profile' are the
primary cause of attrition.
With a war for talent, disparity in the compensation packages is bound to occur and
a mismatched job profile increases the likelihood of an exit.
The responsibility for compensation policy and enriching the job profile lies on the
senior management. However often this is not possible despite the best efforts made
by the managers. Every company wants to become the 'best paying employer', but
market forces, tough competition and a slow economy do not allow them to do so
When all employees work on goals that are aligned to the company objectives and
there is a fair and transparent system to capture employee performance, the
likelihood of a satisfied and motivated workforce increases and Compensation or
Job Profile become manageable causes.
CAUSES OF ATTRITION
There are various causes for attrition to occur in any organization. Each employee
working in the organization has his or her different view on why do employees
generally leave organization and their preferences and wants also differ
accordingly.
An employees’ leaving the organization can be looked upon differently by different
organization. While a person’s quitting the job is seen as attrition, loss of
productivity and increase in costs of organization by way of recruitment by the
organization the employee had been working in; it is seen as talent acquisition by
another organization which is in search of employees while for the person himself it
is a career move, economic growth and enhanced quality of life.
There are various reasons why people leave their current job. If these reasons are
controllable-one attempts to control. If these are not within the control of the
organization, the organization should prepare itself for managing attrition.
When a person leaves it causes a lot of disturbances in the organization. If it is a
small organization the disturbance is even greater. Hence it is important to
understand and manage attrition. There can be various reasons for people leaving
their current jobs.
On analyzing all the reasons given by the employees, various causes of attrition
were found in the organization, which compel employees to leave the company they
have been working in.
VARIOUS POSSIBLE REASONS FOR ATTRITION
Higher pay
Most of the employees leave the organization when they are not getting a
satisfactory pay for the work they do or when some other company is piping in to
pay them a much better remuneration for the same work that they are presently
doing.
Supervisors
A bad supervisor is ninety percent times the reason for the employee to leave the
organization.If the supervisor is not good,not co-operative,doesnot care for the
employees,doesnot give him ample training and feedback required,doesnot
appreciate his good work then probably he is not a supervisor with whom the
employees will be carry on for much time and will in all probability leave him.
Work timings
Work timings are a major cause for people to leave the job specially for females or
for people working in call centres or any other job that has no fixed work timings.
Career growth / Role Stagnation
Employees will also leave the job if they feel that the company has stagnated their
career graph or if the company doesnot have much to offer to them to satisfy their
career needs.Since for them it is not just about getting into a job but rather to see
themselves grow both by stature as well as by knowledge.
Job Security
Employees will also leave the organization if they are not sure that the organization
is happy enough with them to restore them as a part of organization.Employees who
are in doubt that organization might at any them ask them to leave,will quit it much
before themselves for sure.
Uninterseting Job
Monotonous,uninteresting job with the same thing to do everyday is also one of the
reasons for the employees to quit their job.
Work Environment
Often the employees are heard complaining of the unfriendly work environment in
which they are liable to work. The supervisor, co-workers, nature of job all is parts
of this work environment. When the environment crosses beyond the tolerance
level of the employee, he is forced to quit.
Work pressure
Mostly the employees are given targets on weekly or monthly basis which they are
supposed to fulfilled in order to be in the job.These weekly and monthly targets
often are more of a headache for the employees and create emmense mental
pressure on them. Such circumstances often lead to taking away the mental peace of
the employees.Such employees are often heard complaining about sleepless nights
and headaches.To avoid such situations,many of them quit.
Poor performance
Employees often leave even when they are not able to deliver upto the set standards
of performance.They have the fear of being asked to quit the organization.This
causes them to quit themselves.
Women leave the job after marriage to take up their house-hold duties
Females form a larger part of the workforce specially in the telecom sector.But
women are the most uncertain workforce.There are various reasons because of
which females leave the work.It may be the uncertain work timings,other career
options and above them all marriage which causes them to quit and take up new job
of house wife.marriage may also cause them to shift to a new place thus casuing
them to quit.
Verbal abuse
Verbal,physical abuse and sexual harrasment are few things which are much
prevelant in the organization specially the corporate world.This fear causes many to
quit.
Relocation to other places
Transfer to other cities also causes employees to change organizations.If they find
the new place uncompatible or unadjustable they are likely to move over to a new
organization.
Higher education & other personal reasons
Last but not the least employees leave the organization owing to various personal
reasons or for pursuing higher education so that they can give their career a better
direction.
In short ,the various reasons for attrition can be grouped together under the
following heads:
The reasons for attrition have been grouped under basically three heads:
1. Individual Factors
2. Organizational factors
3. Other Factors.
FACTORS AFFECTING ATTRITIONFACTORS AFFECTING ATTRITION
INDIVIDUAL ORGANIZATIONAL
Role Related
OTHERS
Peer pressure
Environment
Ambitions/Career aspirations
Parental/Family mobility
Personality factors
No challenge
No learning
Style of boss
Role clarity
Role stress
Lack of independence
Culture
Growth and
career paths
Pay packets
INDIVIDUAL FACTORS
Ambitions or Career Aspirations:
Today each person is much aware of what he wants. It is not just about studying
somehow and getting into a job just for the sake of earning money. It is more about
building up their career and fulfilling all their aspirations and dreams. These can be
economic, professional, family aspirations and ambitions. Either the organization is
too small to fulfill their aspirations or the organization cannot offer them the career
growth, which they are aspiring for. At times other organizations provide the career
opportunity that the individual is seeking for. It is also not possible to provide each
employee the career growth that each one is seeking since each employee seeks to
rise higher in his career and it is almost impossible to give each employee the top
most position in the organization. Thus organizations just have to satisfy
themselves by taking attrition as a natural phenomenon and accepting the fact that
each person here has come to earn money and make career and not to just be loyal
to their organization and that each person has the right and will move around if
given the opportunity. However, if the organization can do something to create new
opportunities, that meet the growing aspirations of competent people, it should
certainly be attempted. However, such attempts require correct diagnosis of the
situation.
Parental and family mobility:
People also move about if their family is at distant places. Staying away from home
causes homesickness and many cannot take up such conditions for long enough.
Hence to be with their family they may leave and move. Need for being close with
the family, spouse, children, parents etc. at different stages of one’s life to fulfill
different types of affiliation needs prompts a few people to leave their jobs and
move from one city to another.
Personality factors:
Then there is a certain restless lot, which cannot just stick to one place. They have a
continuous urge to do something different, something exciting to keep themselves
going. They always are on a lookout to explore new heights always. Such people
keep on changing their jobs very quickly. They are highly ambitious and restless.
They are highly achievement driven and want to achieve new heights in the shortest
time.
ORGANIZATIONAL FACTORS
Role related factors :
The job related factors that cause the decision to leave include the following:
1. Inability to use ones’ competencies.
2. Lack of challenge.
3. Boss and his styles.
4. Lack of scope for growth in terms of position, salary, status and other
factors.
5. Role clarity.
6. Job Stress or role stress or role stagnation.
7. Lack of independence or freedom and autonomy.
8. Lack of learning opportunities.
9. Lack of excitement and innovation, novelty in the job.
These factors may be intrinsic and job related or extrinsic and job related.
Intrinsic factors
Factors related to the characteristic of the job. It includes the work conditions
(work at odd hours, the nature of clients, the work load) and all such factors, which
cause difficulties.
Extrinsic factors
Factors like role clarity, independence and autonomy, bad boss, wrong
chemistry of the team, lack of respect shown to the individuals, etc. A large
number of the extrinsic factors can be controlled.
OTHERS
o ECONOMIC FACTORS
This deals with the aspirations in relation to salary and perks, housing, quality of
living, need for savings etc.
Apart from this, the various other factors are:
o Mobility of partner
o Fatigue
REASONS GIVEN BY EMPLOYEES
Employees themselves have cited various reasons for leaving the organization.
The most obvious reason for employees leaving any organization is higher
pay. Most employees in telecom are approached with two or three jobs
every week, and obviously good offers are hard to resist by anyone.
Another factor is the work timings. In some organizations, work timings
are such that they are making employees leave the organization. The work
timings in telecom industry are very odd. This affects the family life of the
employee.
Another factor is career growth. In many organizations, only 20% of
employees are able to go to senior levels. This means that the remaining
80% of employees look for other organization where they can get
opportunities for growth. Only 2 out of 10 employees on an average go on
to be at the senior level. Mismatch of qualification and the job offered to
them is also a problem. Along with that, some employees see no career
growth in this sector, so they move on to other companies in search of
changing the sector.
One more reason for leaving the organization is higher education. These
days, in many organizations, employees are joining at very young age
because of lucrative salaries being offered. But with time, they apply for
higher education and try to move on to other organizations or sectors to
occupy top management positions.
The percentage of women workers is also responsible for higher attrition
rate. The percentage of women workers in the telecom sector is around
30%. Generally, women workers leave the organization after marriage to
take up their household duties thus leaving behind their irregular work
hours.
Dislike for the job or place.
Unsatisfactory work conditions leading to strained work relationships with
the employer.
Lack of security of employment has also contributed to higher attrition
rate.
Monotonous job. Many see this space to be a sweatshop where all that the
employees are required to do is just mechanically input numbers into excel
sheets or, worse still, work on the same lines and repeat the same work
many times a day and night.
Instability of the employees themselves. People who join a telecom
usually do so to make a 'quick' buck. They are bound to quit because sooner
or later they will find something more attractive in terms of the job profile
or pay.
Talent in this space is generally overlooked, which leaves the deserving few
disgruntled with top management and hence fosters attrition.
Other factors include accident making the worker permanently incapable of
doing work.
Mistakes during the hiring process.80% of employee turnover can also be
attributed to the mistakes during hiring process The industry has
concentrated on hiring young, dynamic and these are looking for more than
just a job.
According to the HR manager of this organization, the reasons cited for
employees to leave the organization (in the order of most common to least) are:
Compensation
Job assigned not interesting
Environment not friendly
Personal Reasons
TYPES OF ATTRITION IN TELECOM INDUSTRY
Attrition in this industry is of two types.
1. One part of the attrition is where the employee leaves the industry
entirely.
2. Second part is where the employee joins another firm in the industry.
Both these are two separate parts which need to be identified.
REASONS FOR EMPLOYEES LEAVING THE INDUSTRY
1. The primary reason for people leaving the industry is due to the cause that
the industry is viewed as a gap filler occupation.
2. Unfriendly working conditions, late night work shifts, high-tension jobs acts
as a deterrent for people to stick to this industry for long time
REASONS FOR EMPLOYEES JOINING ANOTHER FIRM IN THE
SAME INDUSTRY
1. The chief cause is the unavailability of resources in the job market
causing a great demand compared to the supply available. There is no
certified institute providing telecom specific training and education. The
scarce resource in the market leads to wide scale poaching and head hunting
amongst the competitors for the common pool.
2. There is a lot of immaturity in the industry. Industry has not witnessed
mature HR processes such as Work force planning being implemented by
the firms. The lack of preplanned recruitment causes the firms to fulfill their
immediate requirement by poaching resources working on similar projects
in other firms.
ANALYZING CAUSES OF ATTRITION: MASLOWS THEORY APPROACH
The best method to understand the causes of employee attrition is through the
Maslow’s Hierarchical Model of Needs.
Maslow’s Model helps in analyzing the causes of attrition and also a better
understanding on how to motivate employees. It gives an insight on what are the
expectations of the employees, the gap between reality and expectations and how
this gap can be filled up.
MASLOW’S HIERARCHY OF HUMAN NEEDS
Maslow’s Hierarchy of Needs is a theory in psychology. It was proposed by
Abraham Maslow.It is a model which identifies the needs which act as factors of
motivation for the human behaviour. This approach basically shows that there is
certain basic human needs which if fulfilled lead to the motivation of people
and help them to perform better at work. This model has been applied over here
in reference to the employees to see what it takes to motivate the employees. Thus it
helps in understanding the needs of the employees, motivating them, which further
helps in retention of the employees and lowering in the attrition in organization.
According to him, the needs are present in the form of a hierarchy and are
present in form of 5 levels. The needs need to be fulfilled in this hierarchical
order. Fulfillment of the basic level of need leads to the arousal of next higher level
of need. Next higher level of needs cannot arise if the lower level of needs are not
fulfilled.It is only when all the 5 levels are satisfied is the employee satisfied and
motivated to perform.
These levels have been presented in the form of a pyramid. The pyramid shows the
following 5 needs:
1. Physiological needs
These are the basic human needs or the biological needs of food, water, shelter,
sleep, and oxygen. These are the strongest needs because until all these needs are
not fulfilled the person cannot think of any other needs. Man first needs to get these
basic amenities, which are necessary to support life.
2. Safety Needs
After the physiological needs have been fulfilled comes the need for safety and
security. It is the need for Security of body, of employment, of resources, of
morality, of the family, of health, of property.
3. Needs of Love, Affection and Belongingness
After the above two needs have been satisfied arises this need. This is the need for
feeling of love, affection and belongingness. People seek to overcome feelings of
loneliness and alienation. They always want to be loved, to be cared of. This
involves both giving and receiving love, affection and the sense of belonging.
4. Self- Esteem Needs
This involves the respect of others as well as the respect by others. Each person
wants to be respected by others and would in turn respect others. Humans have a
need for a stable, firmly based, high level of self-respect, and respect from others.
When these needs are satisfied, the person feels self-confident and valuable as a
person in the world. When these needs are frustrated, the person feels inferior,
weak, helpless and worthless.
5. Self-Actualization Needs
When all of the foregoing needs are satisfied, then and only then are the needs for
self-actualization activated. Self-actualization is a person's need to be and do that
which the person was "born to do." The need that a person is himself worth of
doing various things. His thirst for creativity, problem solving, seeking personal
growth, self-fulfillment etc.
If a person is hungry, unsafe, not loved or accepted, or lacking self- esteem, it is
very easy to know what the person is restless about. It is not always clear what a
person wants when there is a need for self-actualization.
MASLOW’S HIERARCHICAL MODEL OF NEEDS
According to the Model, once the human being moves up the pyramid, the lower
level needs have been fulfilled and are of no more importance to the person. If a
person having moved up the pyramid feels an urge of any unsatisfied lower level
need, he will focus himself to the fulfillment of that lower level need but will not
permanently move down to the lower level.
Maslow's Hierarchy of Needs states that each need must be satisfied in turn, starting
with the first, which deals with the most obvious needs for survival itself. Only
when the lower order needs of physical and emotional well being are satisfied the
person is concerned with the higher order needs of influence and personal
development. Conversely, if the things that satisfy the lower order needs are swept
away, maintenance of our higher order needs is no more important.
THE MODEL IN RELATION TO THE TELECOM
INDUSTRY
1. Physiological Needs
These are the biological needs. These are the most basic needs and the strongest
because these are the most important for a person’s satisfaction.
Any person, who takes up the first job, takes it to fulfill its bare minimum
“Physiological Need”. Each person keeps his dreams aside and takes up a career,
which will fetch him “money” so that he can fulfill his basic needs. The first
factor, which any person seeks while taking up his or her first job, is “money”.
Same is in the telecom industry. The basic need is the compensation. The person
expects this need to be updated continuously with time so that it fulfills all the
physiological needs. This need should be continuously updated with time so that it
fulfills his needs at every stage of his life.
Presently the industry is providing better salary at entry level but the industry does
not provide an adequate proportionate rise in salary with experience.
The Gap Between the Expectations and Reality
Though the salary in this industry is quite high and also may look satisfying enough
for people, but people working in this industry still look forward to opportunities
for making more money, which leads to dissatisfaction of these needs.
If for instance a person is satisfied with his salary, is comfortable with his work for
the starting few years of his job; then the person starts craving for the next level of
needs.
2. Safety Needs
Once the physiological needs of the person is satisfied and the person becomes
comfortable with his work, the next need arises in him. This is the need of job
security or security at workplace.
There are two aspects of security, which the people in telecom sector are mostly
concerned about. First, is the physical security of the person and his family. This
is specifically a prime concern for the female employees. Second, is the
psychological fear of job security.
The Gap Between The Expectations And Reality
As far as physical security is concerned, the company provides the best of security
but with the industry growing rapidly there is need to maintain same standards of
security. Quality of Work Life is an important factor in creating a “sense of
security” among employees. Asurity of being with the organization and retaining
their jobs and position is very important for the people. And with the recession
going on, job security is the prime concern for the employees.
People, who believe that their job is secure enough, still have some itch. Next arises
the urge for love, affection and belongingness.
3. Need of Love, Affection and Belongingness
People working in any organization want to feel closely attached to the
organization, teams and to the people they work with. They want to be
appreciated for the work that they do. They want to know how their contribution is
important to the company and is helping the company to grow. They want to bond
with their colleagues. They want to participate in Cafeteria discussions. In short
they want to have a family like feeling. But generally people in the industry are
not satisfied. They often feel that they are not credited for the work that they
do and their seniors often do not give them enough space to grow and do not
allow their colleagues to bond with them well. Also the employees are troubled that
they do not have a proper time leaving time from the office, which in turn
disturbs their family lives. They believe organization kills most of their time and
spares no time to live their private life. The company tries to compensate for this
loss by providing fun filled atmosphere and congenial supervisors and working staff
but still a large gap has been found between expectations and reality.
The Gap Between The Expectations And Reality
“Immediate Supervisor” plays a big role in filling this gap. It is up to him to
appreciate the employees’ work or not. Often seniors take away the credit of the
good work from the employees. Supervisor may also encourage the person to
mingle with the colleagues. At times the supervisor is good enough to pay attention
to personal problems of the employees and try to help him out by giving him some
leniency when it is required. But at times he might even give such hard tasks to
employees so that they have sleepless nights. Like for example in this organization
itself the employees are given just 4 days off even for an occasion like the marriage
of the employee. Thus the lack of family and social life along with a friendly and
appreciating work atmosphere is one of the major concerns for the employees
which needs to be dealt by the telecom companies.
4. Self-Esteem Needs
Having discovered all the love and affection, what employees next look in any
organization is the Self-Esteem needs. These involve needs for both self-esteem and
for the esteem a person gets from others. Each person always seeks high level of
respect from others as well as self-respect. Each person enjoys the respect, which
he gets from others at work place. And each person feels a natural inclination to
praise others, to appreciate their efforts, to praise their skills. And they expect the
same in return.
When these needs are satisfied the person feels self-confident and valuable.
When these needs are left unfulfilled, the person feels inferior, weak, helpless and
worthless.
Telecom industry is one industry, which requires highly qualified personnel at
every level. But at the same there are also posts and job requirements over here,
which do not require much qualification, or much qualified person. These are the
jobs, which are looked down by the society in the sense that people do not take such
posts in high esteem. For example the job of the sales person over here who is
required to do the sales. People do not appreciate such jobs so much. This attitude
has developed in general. Then how people develop a high self-esteem and get
respect from others depend a lot on themselves also as to how they themselves feel
about their jobs and how much they themselves value their jobs.
The Gap Between The Expectations And Reality
People working in this industry have an unsatisfied esteem need because of the
general perception of people about their own job. The industry needs to work
upon changing the image of such posts in the society and in the organization
itself since most of the times it is the people in the organization itself who look
down upon these posts and the employees in this posts. Thus the employees of the
organization themselves resort to such types of discrepancies. And this needs to be
seriously looked down upon and removed.
5. Self - Actualization Needs
When all of the foregoing needs are satisfied, then the need for self-actualization
gets activated. It is all about realizing our true selves and achieving it. People
who are successful in achieving it whether in work life or in normal life, are willing
to help others on or off record. They are ready to solve all the queries, ready to
listen with the same enthusiasm. They do not get irritated; do take care of the needs
of the younger ones. Such people are the greatest and the most selfless people in
any organization.
The telecom firms nowadays are trying to provide career growth path and higher
educational opportunities for employees as a measure of retaining them. These
steps are strides in fulfilling the discontented self-actualization needs of the
employees. These are one of the few long-term motivations provided by companies.
The Gap Between The Expectations And Reality
Though the companies have been trying to cater to the self-actualization needs of
their employees, this has been one of the major reasons for attrition. Unfulfillment
of such needs is a major reason for employee attrition.
It is important to cater to the above needs and explanations and pay attention
to them so that a deeper understanding on what employee want can be done so
that they can be retained into the organization for longer period of time and
attrition rate in the organization can be curbed.
IMPACTS OF ATTRITION
Attrition has various types of impacts on the organization. Attrition not necessarily
always has to be bad. It can also be good at times. Thus its impacts can be
favourable and unfavourable, direct and indirect. Both the favourable and the
unfavourable impacts can be studied differently.
IMPACTS
POSITIVE
IND
IREC
T
NEGATIVE
DIR
EC
T
POSITIVE IMPACTS
“Good attrition minimizes the adverse impacts on business while
bad attrition accentuates the loss."
Attrition is also good at times. Good attrition reduces the adverse impacts on the
business. It can be said as Desirable attrition or Healthy attrition.
HEALTHY ATTRITION
It signifies the importance of less productive employees voluntarily leaving the
organization. There are some people who have a negative and demoralizing
influence on the work culture and team spirit. This, in the long-term, is detrimental
to organizational health. It benefits the organization when these employees leave,
whose continuation of service would have negatively impacted productivity and
profitability of the company.
DESIRABLE ATTRITION
It means getting rid of the employees with whom the organization does not
wish to continue with. This can be done through resignation on part of the
employees or termination of services on part of the employer.
BENEFITS OF ATTRITION
1. Removes the bottlenecks (in form of unproductive employees) in the
progress of the company.
2. It makes space for the entry of new talent. This new talent can be both from
outside the organization or someone from inside.
3. Entry of new talent also brings into the organization new thoughts, ideas
hence more innovation and creativity.
4. If the recruitment is external it infuses fresh blood into the organization.
5. It is an opportunity for the organization to induce fresh blood into the
organization with fresh skills and competencies at a lower cost.
6. It gives a chance to gather knowledge about any new and better practices
going on in the industry.
7. It assists in evolving high performance teams.
8. It also enhances the ability for execution.
ATTRITION RATE CAN ALSO PROVE TO BE
BENEFICIAL IN THE FOLLOWING WAYS
1. If employees stay in the same organization for a long time, most of them have
maximum chances of being promoted. If it happens they will be at a very high
pay scale, which in turn result will result in excessive manpower costs.
2. If such employees leave who have been unproductive for the organization and
have been affecting the profitability of the company, the company is surely
benefited.
3. Then there are also a few people who have a negative or detrimental impact on
the organization’s work culture and atmosphere. So it is rather a necessity to get
rid of such people.
4. There are also people who are not able to work up to there performance
expectations, they lack the potential for future growth or the potential to remain
a permanent part of the organization. So such people are also better getting rid
off.
5. It is good to motivate the good performers of any organization by rewarding
them. But budget constraints sometimes do not allow them to do so. But if the
unwanted employees leave the organization, the company can use this budget in
rewarding the good performers, which they deserve also.
Thus, Attrition can said to be a boon in disguise. Desirable attrition not only
motivates the people of the organization right from higher level to the lower
hierarchy but also warns each of them that there is no scope for incompetence in the
organization. Thus each employee sets to do his or her work sincerely since he
knows that any underperformance could show him the doors of the organization.
But then again, there is also a flip side of positive attrition.
1. It points at the flaws existing in the system of the organization. It clearly
points out at the inability of the organization to recruit the right kind of
employee, groom him, train him and motivate him properly in the
correct direction.
2. Then, productivity and profitability is always impacted.
3. The loss of employee means a new recruitment which means a loss in
terms of new recruitment, time consuming and costly.
Thus, the organization should adopt good retention policies as early as possible and
the companies should be more employee centered to bond with the employees well
so that attrition can be understood well and effective measures can be taken to curb
it.
NEGATIVE IMPACTS
“Wrong attrition means that a wrong choice was made at the
beginning. It leads to a dip in the entire organizational efficiency.”
Attrition in any form is bad for the organization. The negative impacts of attrition
can be studied both in the tangible as well as in the intangible form.
TANGIBLE ASPECTS
These are the aspects, which are under the control of the organization, and if
worked upon, these can be reduced.
The tangible aspects are:
Loss of knowledge since certain brains leave the organization and take
away with them their share of knowledge.
Delay in execution of projects since many places fall vacant and this may
also include some of the important posts of the organization.
Loss of production since delay in projects will result in delay and hence
loss of production.
Increasing cost of recruitment for hiring new employees for all the vacant
positions. This is a great loss in monetary terms. Hiring costs are
sometimes as high as 2-3 times the salary of the employee.
INTANGIBLE ASPECTS
These are the aspects, which are not under the control of the organization.
The intangible aspects are:
Impact on the brand name. Attrition affects the reputation of any
company badly. Attrition rate does point out at the flaws existing in the
organization. If any company comes to know of the weak points of the
organization it will definitely try its level best to take advantage of that
organization. It gives the company a bad market reputation.
Burden and burn out on existing employees. It increases the burden and
workload on the existing employees till the time new employees are
recruited and trained according to the work that is to be done.
Internal information and knowledge is being shared outside. Once an
employee walks out he takes with him a great deal of knowledge as well
regarding various matters concerning the organization. This may also
contain some of the very private and delicate issues. And if the employee
gets into any competitive or rival organization, the organization is sure to
exploit the person fully and use the information gained for its own benefit.
Existing team also gets de-motivated for sometime. On seeing any
employee moving out of organization, many of them fear being thrown out
as well thus increasing their fear and de-motivating them. Adding to this it
may also influence some more employees to walk out of the organization.
Poaching. It is a very serious negative impact of attrition. Poaching refers
to one company trying to take away the experienced candidates from
other telecom company to save on the training and other administrative
costs. Most companies are on the hunt of such employees who are on the
look out for a better job or a better remuneration. Companies try their best to
grab such employees.
DIRECT IMPACT
1. A high attrition rate indicates the company’s failure to set effective
HR policies in terms of recruitment, selection and retention policies.
2. The companies’ strengths and weaknesses both are highlighted.
3. New recruitments need to be done adding to more costs of training,
getting them used to the company culture, work environment etc.
4. Besides, it also affects the clients’ relationship of the organization
and thus the business.
INDIRECT IMPACT
1. It becomes difficult for the company to retain the present workforce.
Even if they are able to retain, up to what time period they will be able
to retain them is definitely not ascertained.
2. Then it is also a problem for the companies to attract a potential
employee.
3. It brings decreased productivity. When some people leave burden on the
remaining workforce increases since they are now expected to finish up
that unfinished part as well thus leading to more attrition.
4. It impacts the companies’ image in the market and also its ability to
manage its business in the competitive market.
IS ATTRITION ALWAYS BAD FOR THE ORGANIZATION?
Attrition has some associated benefits along with low cost of operation, knowledge
sharing amongst the firms, thus benefiting the overall industry in increasing its
competencies. Attrition is actually not detrimental for an organization. It is a
myth that every time an employee walks out of the door, the organization suffers.
Some attrition is indeed desirable and necessary for organizational growth and
development.
“Typically when you walk out people, you are setting an example.
Certain things cannot be compromised on."
ATTRITION COSTS
The company incurs a number of costs when it hires any new employee. But this is
not just a theoretical concept but all these costs can be calculated in monetary terms
very well. The sum total of attrition cost includes various types of costs. These
costs can be summed up as:
HIRING OR RECRUITMENT COST
It includes cost of advertisement, agency, employee referrals, internet postings etc.
TRAINING COSTS
It includes various costs as induction program cost, lodging costs during that
period, orientation material and cost of the person who conducts orientation.
LOW PRODUCTIVITY COSTS
These costs are incurred as new employee is learning new job, company policies,
etc. they are not fully productive.
LOW SALES COSTS
It includes all those costs that are incurred in terms of experience and the contacts
that were lost during the time for which the position was vacant and other such
costs that result in either loss of customers or lower sales.
Thus, in general the cost of attrition includes the following:
ATTRITION COST = COST OF HIRING (RECRUITMENT
COST)+COST OF TRAINING + INTANGIBLE
LOSSES
During attrition cost calculation, there may be various direct and indirect costs
included.
COST OF HIRING = Direct cost
It includes 90% of the total costs included during the entire process. The hiring cost
includes the following:
1. COST OF ADVERTISEMENT
It includes the cost incurred by placing advertisements regarding new
recruitments within the company, in the newspapers, on company’s website
etc.
2. SOURCING
These are the costs incurred while sourcing for candidates, which includes
print ads, online job posting boards and resume banks.
3. SCREENING
It involves:
i. Time and expense spend by the administrative staff to open,
respond and route resumes to the hiring team.
ii. Time the hiring team or the recruiter spends screening
through the resumes.
iii. In case of telephonic interviews, how many of them were
conducted and the time spent by the recruiter to prepare,
conduct, summarize and communicate the results of those
interviewed.
4. COST OF CONDUCT OF INTERVIEW
i. Any traveling expenses incurred by the hiring team or the
interviewee.
ii. The time spent in scheduling the interviews.
iii. The number of staff members involved in the interview,
number of interviews, duration of the interview and the
average cost of the interviewer’s time used in conducting the
interviews.
5. COST OF RECRUITMENT
It includes salary package, family shifting expenses , canteen , car expenses,
medical expenses, office setup , training expenses and miscellaneous
expenses depending upon company policies apart from above.
It includes the following six factors:
Time spent on sourcing replacement.
Time spent on recruitment and selection.
Travel expenses, if any.
Re-location costs, if any.
Training time.
Background or reference screening.
Other hiring costs include:
6. Payment of consultants.
7. Man hours of the person lost conducting the interview.
8. Wastage of productivity for a new recruit.
9. Agency and search firm fees.
10. Travel costs incurred by both recruiters and applicants.
11. Referral bonuses paid to the employee.
COST OF TRAINING = Direct Cost
It includes the following costs:
1. Cost of training material.
2. Number of days when a person is non functional which is an indirect cost.
3. Time that a person takes while adjusting in the office that is an indirect cost.
4. Stipend paid during training.
5. Cost of registration if training is external.
6. Fees of trainee if the trainee is external.
INTANGIBLE LOSSES
It includes:
1. Loss of sales
2. Loss of production
ANALYSIS OF ATTRITION COST:
ANALYZING THE COST PER HIRE
EXTERNAL COST PER HIRE
Analyzing the cost of each hire is very important for the company and it is more
important for the company to analyze the quality of the hire. A cost benefit analysis
needs to be done to evaluate the recruiting efficiency and effectiveness.
Hiring on so many employees each year consumes a large part of the
companies’ budget.
What methods are being used to appoint the employees is also
equally important: whether traditional methods are being used or
new electronic methods are being used.
Which standard method is being used to analyze the cost per hire?
The Saratoga Institute includes six basic elements to calculate cost per hire:
1.Advertising
2. Agency and search firm fees
3. Referral bonuses paid to employees
5. Travel costs incurred by both recruiters and applicants
6. Relocation costs
7. Company recruiter costs (including salary and benefits prorated if the
recruiter performs duties other than staffing).
INTERNAL COST PER HIRE
The internal cost per hire calculation is also done on the same lines. It includes four
data elements:
1. Any internal advertising costs,
2. Travel and interview costs,
3. Relocation costs, and
4. Internal recruiter costs.
The combination of both external and internal hiring costs provides a total cost
analysis of the recruiting efforts.
ATTRITION COSTS MAY BE AFFECTED BY THE
FOLLOWING:
Regional Differences
Higher costs of Hire are seen for the pharmaceuticals, medical and manufacturing
industries. Apart from this companies located in the western parts of the world also
have higher costs of hire. This regional difference can be attributed to several
factors like:
The costs of doing business are higher over there.
The costs of living are higher and hence are higher the salary demands.
Same can be said for the difference in the cost per hire in India. In India itself the
cost per hire in the metros like Mumbai, Delhi, Bangalore etc. is much higher than
that in Lucknow.
Costs By Source
On breaking down the total hiring cost for detailed analysis it has been found that
on an average 18.4 percent of the total hiring cost are spent on advertising, 19.9
percent are paid to agencies and search firms; only 1.8 percent is kept for referral
bonuses, 2.7 percent for travel costs, 32.9 percent is paid for relocation expenses,
and 24.3 percent for recruiter pay and benefits.
The breakdown for external exempt hires shows that close to 50 percent of the costs
are allocated to agencies fees and relocation expenses.
ATTRITION RATE
“The rate of shrinkage in size or number”
Or
“A reduction in the number of employees through
retirement, resignation or death.”
It depicts the overall percentage change in the workforce of an organization. It
calculates in percentage the number of employees leaving the organization due to
various reasons. Thus, it is understood that high percent of attrition rate anyhow is
not desirable for organization.
FORMULA FOR CALCULATING THE ATTRITION RATE
1.
Total number of resigns per month * 100
Total number of employees at the beginning of the month
+ Total number of new joinees – Total number of
resignations
2.
No. of employees resigned in that month * 100
Available manpower
ATTRITION CALCULATION
A number of methods can be used to calculate attrition. Different companies use
different methods for attrition calculation.
METHODS TO CALCULATE ATTRITION
There are basically two methods to calculate attrition. The two methods are:
1. ANNUAL CALCULATION
2. COHORT CALCULATION
These methods compare employees who leave the organization with the total
employees or a part of the total number of employees.
ANNUAL CALCULATION
It indicates the broad attrition pattern from year to year. It calculates attrition by
dividing the employees who left the organization in a given year by an average of
employees working in the organization at the beginning and end of the year.
COHORT CALCULATION
It indicates the attrition over a period of time for a specific group at a specific time
or a part of the total employees. This method is calculated by tracking a specific
group of employees hired during a specific timeframe. These hires are tracked for
selected intervals. Different timeframes are used for tracking in this method. It does
not take the average of the total workforce.
There is no one standard formula for the calculation of attrition. This can be
attributed to many factors like:
The types of attrition that may or may not be taken into account:
1. The employee base on which the rate has to be calculated changes every
often. So there is no fixed base.
2. The firm does not include the employees who are freshers who leave the
organization within 3 months of joining or for further studies.
3. At times the attrition of poor performers is also not treated as attrition.
The types of attrition that are taken into account while calculation:
1. Fresher attrition that tells the number of employees who have left the
organization within one year.
2. Infant mortality attrition. It tells the percentage of the people who left the
organization within one year. It helps in calculating the ease with which
people adapt themselves to the organization.
3. Critical resource attrition. It tells the attrition of the key personnel of any
organization like the senior executives leaving the organization.
4. Low performance attrition. It tells the attrition of those who left the
organization due to poor performance.
CALCULATING ATTRITION RATE
In terms of number:
Total number of resigns per month (Voluntary or forced) / (total
number of employees at the beginning of the month + total
number of new joinees – number of resignations) * 100
In monetary terms:
COSTS DUE TO A PERSON LEAVING
1. Calculate the cost of the person who fills in while the position is vacant.
Calculate the cost of lost productivity at a minimum of 50% of the person's
compensation and benefits cost for each week the position is vacant, (till the
time the seat is vacant) even if there are people performing the work.
Calculate the lost productivity at 100% if the position is completely vacant
for any period of time.
2. Calculate the cost of conducting an exit interview
It includes the time of the person conducting the interview, the time of the
person leaving, the administrative costs of stopping payroll, benefit
deductions, benefit enrollments.
3. Calculate the cost of the manager
This is the manager responsible to understand what work remains, and how
to cover that work until a replacement is found.
4. Calculate the cost of training
The amount invested by the company in training the employee who is
leaving.
5. Calculate the impact on departmental productivity
Since the person is leaving, who will pick up the work, whose work will
suffer, what departmental deadlines will not be met or delivered late.
6. Calculate the cost of lost knowledge, skills and contacts
The person who leaves takes away with him out of the door various
knowledge, contacts.
7. Subtract the cost of the person who is leaving for the amount of time the
position is vacant.
RECRUITMENT COSTS 1. The cost of advertisements; agency costs; employee referral costs; internet
posting costs.
2. The cost of the internal recruiter's time to understand the position
requirements, develop and implement a sourcing strategy, review candidates
backgrounds, prepare for interviews, conduct interviews, prepare candidate
assessments, conduct reference checks, make the employment offer and
notify unsuccessful candidates. This can range from a minimum of 30 hours
to over 100 hours per position.
3. Calculate the cost of the various candidate pre-employment tests to help
assess a candidates' skills, abilities, aptitude, attitude, values and behaviors.
TRAINING COSTS 1. The cost of orientation in terms of the new person's salary and the cost of
the person who conducts the orientation. And the cost of orientation
materials.
2. The cost of departmental training as the actual development and delivery
cost plus the cost of the salary of the new employee. This cost is
significantly higher for some positions such as sales representatives who
require 4 - 6 weeks or more of classroom training.
3. The cost of the person who conducts the training.
4. The cost of various training materials needed including company or
product manuals, computer or other technology equipment used in the
delivery of training.
LOST PRODUCTIVITY COSTS
1. After training, the employee contributes at a 25% productivity level for the
first 2 - 4 weeks. This cost is therefore 75% of the new employees full
salary during that time period.
2. During weeks 5 - 12, the employee contributes at a 50% productivity level.
The cost is therefore 50% of full salary during that time period.
3. During weeks 13 - 20, the employee contributes at a 75% productivity level.
The cost is therefore 25% of full salary during that time period.
4. The cost of mistakes the new employee makes during this elongated
indoctrination period.
NEW HIRE COSTS 1. The cost of bringing the new person on board including the cost to put the
person on the payroll, establish computer and security passwords and
identification cards, telephone hookups, cost of establishing email accounts,
or leasing other equipment such as cell phones, automobiles.
2. The cost of a manager's time spent developing trust and building confidence
in the new employee's work.
LOST SALES COSTS
The revenue per employee is calculated by dividing total company revenue
by the average number of employees in a given year. Whether an employee
contributes directly or indirectly to the generation of revenue, their purpose
is to provide some defined set of responsibilities that are necessary to the
generation of revenue. Hence, the lost revenue is calculated by multiplying
the number of weeks the position is vacant by the average weekly revenue
per employee.
TURNOVER COST OF THE EMPLOYEE
It helps in calculating the cost per employee. It is defined as the percentage of
annual salary including other cost benefits given to an employee.
The formula used for the calculation of Turnover cost of employee is:
TURNOVER COST = HIRING COST + TRAINING COST + LEARNING
CURVE LOSS COST + TERMINATION / SEPARATION
COST + VACANCY COST
TACKLING ATTRITION
“ Ninety percent of the world’s woe comes from people not
knowing themselves, their abilities, their frailties, and even
their real virtues.
Most of us go almost all the way through life as complete
strangers to ourselves.”
Just understanding attrition, its types and causes is not enough. It is more important
to understand how such a thing can be dealt with since it is one of the most critical
things in any organization now a days. Hence understanding how it can be dealt
with and then trying the methods in the organization to curb attrition is equally
important. Since for curing any disease a proper quarantine is required.
Thus for dealing with attrition a proper look at how to tackle it is required so that
proper action can be taken at the right time.
Before going through the methods of attrition, it is important to have a closer look
at the following:
Where and Why?
It is important to identify the various sources of attrition. Where, at what levels
attrition is occurring and then going through the causes to analyze why is it
happening. Any method utilized for retention should be based upon the factors
responsible for attrition in the organization. The factors may at times be very simple
while at times quite complicated.
Understanding the factors of attrition may help in solving some of the questions
like:
Where is attrition occurring?
At what levels is it occurring?
Is it more in males than in females or vice versa?
Is it restricted to people from a particular department, region or group?
What age group?
Once the source or the causes of attrition have been identified, managing it becomes
relatively easier. Organization can decide upon it that whether any interventions can
help reduce attrition or something else needs to be done.
Following are the tools that help in checking attrition.
TOOLS TO MANAGE ATTRITION
The most important tool to manage attrition is the process of mentoring.
MENTORING
Mentoring is a term that is used to help, advise and guide employees through the
complexities of the business. It is a mutual learning partnership in which
individuals assist each other with personal and career development through
coaching, role modeling counseling, sharing knowledge and providing
emotional support.
It can be called as an offline help from one person to another that helps in making
significant transitions in knowledge, work or thinking. This is a tool used by
organization to nurture and grow their people. It can be an informal practice or a
formal program.
IMPORTANT ASPECTS OF MENTORING: It is both people and task oriented.
It contributes to the professional development of others.
It involves the presence of a good listener.
It involves the presence of an effective mentor.
The Mentor is expected to have empathy, not sympathy.
The mentor and learner both should be creative enough to bring in new
changes.
The mentor should not injure the learner’s self-esteem.
The mentor should be good at generating alternatives.
Should be held in high esteem by people working with.
The mentor should not develop dependency in the minds of the learner.
Should be a role model to the learner.
WHO IS A MENTOR?
A mentor can be any person who acts as a guide and helps the learner understand
and guides him in the correct path. He grooms the learner in the best possible
manner. He is a person with whom the learner develops a one to one developmental
relationship and develops his own skills and capabilities. The learner often develops
deep personal bonding with the mentor. And it is in the presence of him that the
person identifies having an enabled personal growth and enhancement taking place
in terms of a person as a whole.
A mentor demonstrates, explains and models. He is a
Friend
Philosopher
Guide
CHARACTERISTICS OF MENTOR
A mentor is any person who has the following skills:
A desire to help others.
Have had positive experiences
Any person who has had positive formal or informal experiences with a
mentor tends to be good mentor himself.
Good reputation for developing others
Experienced people who have a good reputation for helping others develop
their skills.
Time & Energy
People who have the time and mental energy to devote to the relationship.
Up-to-date knowledge
Individuals who have maintained current, up-to-date technological
knowledge and skills.
Learning Attitude
Individuals who are still willing to learn and who see the potential benefits
of a mentoring relationship.
WHO IS A LEARNER?
A learner is any person who is wanting to listen, succumb himself to another person
who will develop his skills and personality. He is a person who can lay down his
trust on another person and is committed towards the goal of enhancing his
personality.
CHARACTERISTICS OF A LEARNER
Committed to expanding their capabilities.
Open and receptive to new ways of learning and trying new ideas.
Ability to accept feedback whether positive or negative and act upon it.
Willingness to apply whatever learnt on the job.
Focused on achieving the desired results
Ability to communicate and work co-operatively with others.
Is not shy asking for help.
THE MENTORING PROCESS
EXPLORATION
1. EXPLORATION
It involves the following steps:
Taking the lead
Clarify aims and objectives of mentoring
Listen and ask open questions
Negotiate an agenda
Take lead in creating rapport
Show your commitment to the learner
Help mentee arrive at his / her own answer
2. NEW UNDERSTANDING
It involves:
Support and counsel.
Giving constructive feedback.
Coach and demonstrate skills.
Listen and challenge; ask closed and open questions.
Recognize strengths and weaknesses.
NEW UNDERSTANDING
ACTION PLANNING
Establish priorities.
Share experiences.
Offer encouragement.
Be supportive and sensitive to the mentee.
3. ACTION PLANNING
It involves:
Examine options for action and their consequences
Negotiate the action plan
Encourage new and creative ways of thinking
Help to make decisions and solve problems
Monitor progress and evaluate outcomes
Give advice whenever required
Celebrate progress
PHASES OF A MENTORING RELATIONSHIP
ORIENTATIONMIDDLE PERIOD
The mentoring relationship typically has four distinct phases:
1. ORIENTATION - BUILDING THE BASE
During the first three to six months, both the mentor and mentee get to
know each other, and build trust. The interaction, which occurs at this
stage, lays the foundation for a strong and beneficial relationship.
2. THE MIDDLE PERIOD
The middle phase is typically the most rewarding time for both mentor
and mentee. The mutual trust, which has developed between the two,
can give the protégé the confidence to challenge the ideas of the mentor,
just as the mentor will challenge the protégé’s ideas.
3. DISSOLVING THE RELATIONSHIP
The relationship begins to draw apart after a year or two. It is important,
at this stage that the mentor steps back from the formal relationship to
discuss together with the protégé how they wish to continue their
DISSOLVING THE
RELATIONSHIP
REDEFINING THE
RELATIONSHIP
relationship.
4. REDEFINING THE RELATIONSHIP
The mentor-protégé relationship enters a new phase, where both parties
can regard one another as equals. They continue to have some form of
interaction, although it is now on a more casual basis.
VARIOUS OTHER STEPS TO CURB ATTRITION IN
THE ORGANIZATION
The HR Manager told the various other steps to curb the attrition in the
organization. The steps are:
1. Bench marking of the employees.
2. Looking for work environment, employer-employee relationship.
3. Relevant grievance handling procedures for settling the grievances of the
employees.
Apart from this there are various other methods as well:
1. Hiring well and competent employees that are fit to be placed in the
position and will remain with the company for an extended period of
time.
2. Communicating the employees’ jobs, roles and responsibilities and
new policies to the employees well enough and also communicating it
within the organization.
3. Participative Decision-making. Including the employees in the
decision making process. This also helps to generate new ideas.
4. Sharing of Knowledge with Others. Sharing of knowledge with others
helps in retention of information within the organization.
5. Shortening the Feedback Loop. This helps employees know the
feedback of their work within a short interval of time. This helps in
keeping the performance levels high and reinforcing positive behaviour
amongst the employees.
6. Pay Packages. Employees should be paid appropriately and fairly for
the work they do.
7. Balancing Work and Personal Life. Company should help maintain a
balance between work and family life. This helps in retaining the
employees.
8. Exit Interview. Interview with the employees leaving the organization
will help employees find out reasons why the employees are leaving
and the drawbacks in the organization.
9. Motivational Training: It surely helps in training the employees. It is
important to make sure that the employees get ample of growth
opportunities within the organization.
10. No Favoritism. Favoritism and preferential treatment towards
employees is one of the surest reasons for employees to leave. Hence it
should be made sure that employees are treated equally and fairly.
EXIT INTERVIEW
One of the best methods to find the reasons for employees’ leaving the organization
is through conducting the Exit Interviews. It helps in finding out the exact reason
for why the employees leave. Most of the companies are troubled now a days with
the question that …."Why our attrition rate is higher than other company".
Thus it is helpful in finding out the real reason why employees leave which can be
helpful in identifying the departments or areas of the organization that require
improvements.
“Conducting exit interviews in the right manner can be an
invaluable management tool for companies.”
Exit Interviews have now become a routine in the organization. These are the
interview that is conducted with an employee just before he is leaving the
organization. The HR personnel or the immediate supervisor mostly conducts these
interviews. Employees are able to give various valuable information to the
organization that can be used by the organization.
It's easier to fight the enemy if you know where to hit. And
to fight the giant of 'attrition', exit interviews can be used as the
arrow to strike right at its Achilles' heel.
Exit interviews give an inner view to the internal systems and working within the
organization that affect an employees’ career in the company. Many reforms in the
existing appraisal system, leave management, human resource management system
and many more improvement initiatives can be taken on the basis of the exit
feedback.
These are the cost effective means of not just collecting the data regarding the
recruitment, selection, placement and training practices but also helps in reducing
the employee attrition. These help in identifying poor practices in organization that
can be eliminated.
These interviews can help in creating a positive environment, wherein the
employees if wanting to re-join later can do so without any hesitation. These are
conducted just before the employees’ departure; hence employees can disclose their
feelings about the company without fear of repercussion.
Anyhow the employees while giving the interview may be biased and judgmental
about the company. He may also give wrong information since he is leaving. The
organization should spent equal time gaining feedback from employees throughout
their association with the organization. Besides, these interviews can sometimes
lead to character assassination and may divert from the main goal of conducting
such interviews. Thus, these interviews should be conducted professionally and as
far as possible steer away from personal grievances.
This organization maintains an Employees Support Portal online in the company’s
website. This is a portal provided for the Employees’ Support System where
employees have been given various facilities like the online grievance redressal
mechanism where employees can write in their grievances online. Apart from this,
for the employees leaving the company also maintains an E-Separation Portal
which contains the employees name, code, designation, date of joining date of
resignation.
E-SEPARATION
To automate the HR processes, E-separation online system has been created for
automating the employees’ resignation process, helps an employee fill the Exit
Interview Report and complete his full and final separation from the organization
online.
It is a portal for entering the resignation request, relieving date, approval and exit
interview.
Its URL is http:// eseparation.relianceada.com
THE WIN WIN MODEL: MODEL TO
REDUCE ATTRITION RATE
This is a model that has been created to satisfy the needs of both the employer and
employee and thus give a better understanding of the attrition processes and
reducing it.
This model encloses the employee by 4 levels of strategies thus reducing the
attrition rate as well as minimizing the impact wherever it occurs.
The 4 stage framework:
1. Short Term Mitigation Plan
2. Short Term Contingency Plan
3. Long Term Mitigation Plan
4. Long Term Contingency Plan
This model is devised to reduce the impact of attrition by satisfying the needs of
both employer and employee.
Needs of the employer:
To get maximum returns from each employee.
Recover training and development costs.
Minimize cost in terms of time in training new workforce.
Ensure that adequate no. of people are there to carry on the process of
proper manpower planning.
Needs of the employee:
Enriched job profile
Better career path
Challenging work environment
Future prospects of the job
THE WIN-WIN MODEL
This model is conceptualized on the supposition that the employees need to be
enclosed from the competitive companies by strategies at each level such that the
attrition and its impact can be reduced to the minimum. Plans differentiate on the
basis of tenure into short and long term as well as on the basis of usage into
mitigation and contingency.
1. Short Term Mitigation Plan
Break Even Period
It involves retaining the employees for a specified period of time called as the
break-even period so as to recover the cost incurred on the employee. For this the
minimum time period to recover the cost of employee should be calculated so that
the employee can be retained for that time period.
Small Tenure Bond
After calculating the time-period measures should be taken to retain employees till
this minimum time period. For this companies adopt various measures. One such
measure is signing the bond between the employer and the employee.
2. Short Term Contingency Plan
It focuses on the work environment that enhances employee motivation for the job.
It involves the maintenance of a conducive, fun filled environment, informal work
culture according to the needs of the young employees. It is necessary for
compensating the loss that happens to the employees in terms of losing their social
life owing to the nature of job in the organization. For this the following can be
done:
Flexible Salary Structure.
Variable pay package based on performance.
‘Working from home' when required for a short term.
Added benefits like sponsored vacations.
Provide job rotation amongst related departments on a periodic basis
3. Long Term Mitigation Plan
These are the steps taken by the management to minimize the impact of attrition
such that the firm does not face losses on the long-term basis. These steps include:
Defining job roles helps in mitigating the effects of attrition.
Clear documentation of the process and the jobs performed.
Succession planning for the critical positions in the organization for
faster replacement.
An assessment and certification can also be helpful in creating an
employable talent pool.
4. Long Term Contingency Plan
These are the attempts by the telecom industry to reduce the attrition as a whole.
To minimize the training costs, the industry needs to work with the
government to introduce courses at a school and college level, which
are in line with the requirements of the telecom industry.
To reduce poaching of employees within the industry bilateral
agreements between companies should being signed. Basic norms
are being put in place and code of ethics is being stressed upon by
industry.
A Common Database should be maintained by all the players of the
industry to ensure that they are not cannibalizing each other’s
resources.
Focus should be on higher education and ongoing learning for the
workforce, sponsoring employees on post-graduate programs and
treating applicants and employees in the same way as one treats
customers.
ROLE OF THE HR DEPARTMENT IN
MANAGING ATTRITION
Attrition at a minimum level is good in itself as it will help the organization in
getting rid of unwanted employees, getting in new blood into the organization,
inflow of new ideas, new enthusiasm into the organization also developing a fear
into the minds of the people that any one can be thrown out which compels them to
work properly. But it becomes a problem when the attrition rate is abnormal.
Therefore, the HR Department has a very crucial role to play in managing attrition
and controlling it as well. Since it is the duty of the HR to bring in the right
candidate in the organization, provide him ample training, a good work atmosphere,
proper appraisal procedure and effective grievance redressal machinery. Thus,
when attrition rate increases it is the duty of the HR personnel to study the reasons
of attrition, explain it to the management and along with it devise steps to reduce it.
THE PRACTICES OF THE HR DEPARTMENT
The HR is the most crucial department in the telecom sector. It has a variety of
important roles to play right from recruitment of the person up to his exit from the
organization. For curbing attrition, the employee needs to start right from hiring.He
needs to do the following:
While conducting the recruitment, it is in the hands of HR to bring the
right kind of people. HR needs to identify the employees who would stick
with the company.
More diversity in the kind of employee hired needs to be brought so there
is a diversified culture within the company.
Keep an eye on good performing employees, reward them and have a
career plan for them in mind.
Discuss career plan with employees on a regular basis and take feedback
from them.
Quality of Work Life is important. They need to give their employees
personal space to grow and adjust with social life.
In case of employees leaving, a good exit-feedback system should be in
place so as to cover the reason for which the employees leave.
TACKLING ATTRITION HEAD ON
HR has been identified as one of the key departments in the telecom industry. HR
devises different strategies to address short term challenges such as Attrition and
also long term challenges such as ensuring availability of skilled talent pool.
To deal with the attrition rate HR specialist feels that a scientific and analytical
approach needs to be implemented.
According to the HR managers, Pay cheques are not enough to retain employees.
Other aspects like secure career, benefits, perks and communications also need to
be looked upon. One needs to focus on retention, making the work place healthier,
having education and further learning and training for the employees, treating
employees in a friendly manner.
Companies need to go for a more diverse workforce, in terms of gender, age, race,
experience. This results in innovation and success.
According to statistical analysis, the cost of attrition is 1.5 times the annual salary.
Age should not be a barrier for training employees.
COMBATING HIGH ATTRITION BY HR
The HR has found out various ways to combat attrition.
BELOW THE SURFACE
Going by the various surveys and exit interviews, professionals are switching jobs
either for money, career satisfaction and opportunity to work with newer
technologies. However when attrition was dealt minutely, various other reasons
have come to the forefront. It is found that lack of match between personal
requirements and organizational culture is quite prevalent. The employee is
concerned about the environment in the organization, his compatibility with the
supervisors, attention paid to him etc.
MONEY IS NOT EVERYTHING
Money is a higher priority amongst freshers with less than 3 years of work
experience. Professionals now look for more challenging jobs, exposure to newer
technologies and expansion of their domain capabilities.
“In several cases, faced with a choice between more money and a
challenging job, employees have opted for the latter as it allows
them to learn new technology and increase domain expertise.” -
V Bharathwaj, vice-president, global marketing, 24/7 Customer.
Workers generally analyze training programs of prospective companies with those
of their organization in terms that how an organization grooms an employee. They
believe that developing higher skills will keep them ahead in job market and result
in better compensation. They start looking for a job with higher levels of
responsibility.
Thus the employee can also leave the organization for his growth both vertical as
well as horizontal.
COMMUNICATION
“Companies should have a similar approach to employees and customers. A
company should strive to retain an employee in the same way it tries to retain a
customer.” -Bijay Sahoo, Vice-president, Talent Engagement & Development,
Wipro Technologies
Communication is said to be the foundation of the entire process of managing
attrition. The process of communication starts right at the time of recruitment. In
case of peer pressure, employee joins a well-known company. This act is a part of
brand building, which helps in attracting the right talent and retention.
Communication plays a very crucial role in retaining employees. It is said that the
organizations, which are successful in retaining employees, pass on their goals and
achievements very successfully.
VISION AND OBJECTIVES
When any new entrant comes in organization and is in his probation period, is being
introduced to the office culture, this is the time that he should be exposed to the best
values the company has.
If the employees are informed about the regular happenings in the company,
employees will be confident about the future and not try to look for better options.
Training the employees in the newest technologies and well-managed succession
plan also help to manage attrition. Thus identifying the right training for the right
person is very important.
CONSIDER FEEDBACK
It is important to take feedback from the employees on various issues and work
with the HR department to sort out the differences. Feedback can be got from the
employees:
1. During the tenure of the employees
2. By the Exit Interview
Inputs can be secured from employees through various employee relationship
management tools.
EMPLOYEES’ ADVOCATE
One of the important reasons why employees leave companies is because of
problems with their manager. The HR is termed as employees’ advocate and a
bridge between the top management and employees at all levels.
“The HR department should have genuine interest in the
employees’ welfare…it is responsible for making sure that their
expectations are met. By doing this it is easier to meet the
company’s business targets.”
CONCLUSION
Thus in a nutshell it can be said that Attrition whether good or bad can never be
good for any organization. It always shows the inability on part of the organization
to maintain its employees and also brings to the forefront many of the flaws of the
organization, which can prove harmful to the company and its image in the long
run. Various causes of attrition have been found out in the organization. Employees
themselves have stated various reasons for why they leave organization. These
causes have also been analyzed and a SWOT analysis on attrition has also been
conducted which explained in short the strengths and weaknesses of Attrition. Then
various methods for curbing attrition have also been devised and it was finally
found out that curbing attrition is actually not difficult and it is actually in the hands
of the HR manager who owns the maximum responsibility of managing and
curbing attrition. Thus attrition is bad and so are its consequences and managing
this evil has become more than a necessity for the organizations today.