term paper of human resource management

8/8/2019 Term Paper of Human Resource Management

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Term Paper of Human Resource Management

Course Code: MGT513

Topic: Turnover Management in IT sector

Submitted to: Submitted by:

Mr. Ujjwal Kanti Paul Sajal Kumar

Regd. No.:3440070073

Section: K77B1A70

ACKNOWLEDGEMENT


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I convey my sincere thanks to those who have enabled me on different occasions giving their

valuable suggestions and ideas in order to improve my term paper. Apart from this I am highly

obliged and grateful to Mr. Ujjwal Kanti Pauland other faculty members for mentoring meduring the course of study, providing me the support to undertake this work and shared their

valuable time to go through the report and have given me valuable suggestions. In conclusion I

am once again mentioning that it would not have been possible for me to complete the paper

without cooperative assistance.

Sajal Kumar (3440070073)

Lovely Faculty Of Technology and Sciences

Lovely Professional University

Preface


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The objective of this term paper is to provide an exhaustive detail of the Turnover Management

and the various restraints of the subject keeping the IT industry as prime. In this term paper,

examples of the major IT players have been sited and the analysis has been done on the basis of

several data sources. The term paper has been an outcome of the exhaustive study of the subject

with due support from the mentors and worthy classmates but the limitations mentioned could

not be avoided.

Contents


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1. Introduction

1.1 Meaning of the topic

1.2 Factors affecting the turnover

2. Background of the Study

2.1 Objective

2.2 Defining the problem

2.3 Analysis

Turnover rates of major IT players

Reasons in the sector

Effects of employee turnover

Methods of reduction of the same

Managing retention strategies

3. Turnover practice as a lead of HRM

4. Benefits of managing turnover

5. Conclusion5.1 Suggestions

5.2 Conclusion

5.3 Limitations of the study

6. Bibliography


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1. Introduction

There are some keys to win over the employees in an India Software Company. The IT managers

have forgotten those soft-skills and techniques in the long-coarse of time. This is one of the

reasons why Software Companies faces high ratio of employee turnover in a firm. The survey

carried on Top Software Companies in India tells that the employee dissatisfaction level has

increased up to 27% in 2007. Most of the employees complained that the pressure given by their

boss and dumping work-load in Software Outsourcing setting. Now what worst could happen in

Software Company, if the company fails in delivering positive energy to the employees and cares

less about their employees. Such companies usually lack the motivation to deliver to its worker

due to ill-prospect manager in the firm. Most of the managers find difficult to delegate the work

to their employees. They are not at fault perhaps, but even they are not talk to do the same. India

Software Development needs to have an organized structure and management so as to retain their

employees for long-time. Consolidations should not be only in the words, but all also action

performed by the IT Manager.

1.1 Meaning of employee turnover: Employee turnover occurs when employees voluntarily

leave their jobs and must be replaced. Turnover is expressed as an annual percentage of the

total workforce. For example, 25 percent employee turnover would mean that one-quarter of

a company's workforce at the beginning of the year has left by the end of the year. Turnover


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should not to be confused with layoffs, which involve the termination of employees at the

employer's discretion in response to business conditions such as reduced sales or a merger

with another company. Employee turnover has been defined as the rate of change in the

working staff of concern during the definite period.

Employee turnover is the cause and effect of instability of employment, apart from being a

major of the morale and efficiency or otherwise of worker. Therefore, it can be concluded

that Employee turnover management is a perpetual concern for companies. Having to

replace staff at regular interval can be headache for a busy manager and the entire resource-

shaping circus of hiring and training new employee is one that company scarcely look

forward to.

1.2 Factors related to employee turnover management

There are several factors which are related to employee turnover, thus, as shown with the help of

diagram as below:


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The explanation of these factors related to Turnover Management is as under:

1. The Economy in this model, the overall economy sets the stage for alternative employment

opportunities. In a tight economy, generally there are less alternative opportunities and

employees are less willing to leave their current jobs even if they are dissatisfied. 2. Company

culture is another strong determinant of turnover intentions. Company culture is determined by a

bunch of things as skills, leadership, rewards/recognition, and communications. 3.

Organizational Characteristics nested within an industry is the specific organization. Within

any industry, there are some organizations that simply do a much better job of retaining

employees than others. Some of this has little to do with enlightened practices and is simply a

product of workforce demographics. 4. Industry Trends the Health Care industry is a good

example of how industry trends interact with the general economy. With managed health care

has come an increased focus on profitability and cost reduction, and rapid consolidation of

hospitals. This has created an atmosphere of uncertainty and dissatisfaction for many health care

professionals. 5. Job Characteristics one of the most researched areas is the relationship

between job satisfaction and turnover. There is a well documented body of research that suggests

the following job characteristics are most commonly associated with job satisfaction: Variety,

Autonomy, Identity, Feedback.


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2. Background of the Study

2.1 Objective: To analyze the employee turnover problem in IT Sector.

2.2 Defining the Employee Turnover Problem:

Global outsourcing and the astounding amount of foreign direct investment pouring into China,

Russia, and India have created tremendous opportunities and competition for talented IT

professionals in those countries. The downside of this increased competition is a rising rate of

turnover, particularly in India. Almost every sector in India is facing high rates of turnover these

days. A recent study revealed that employees leave either because of compensation reasons or

due to better growth opportunities.

3. Analysis: According to NASSCOM, Indian IT-ITES industry recorded US$ 39.6 billion in

revenues in 2006-07. The revenue of US$ 49-50 billion has been projected in 2007-08 at a

growth rate of 24-27 per cent. The IT industry's contribution to GDP was 4.8 per cent in 2005-

06. Though the IT/ITES sector is booming, it is constantly facing high turnover rates of 25% -

30%. Even the big brands are also facing the same problem.

3.1 Turnover Rates of Major IT Players

To put these turnover numbers into perspective, if a company has 100 programmers and a

turnover rate of 25%, then 25 of its IT staff will leave each year. Think about the time and

money it took to find, interview, hire, train, and coach those 25 people.

3.2 Reasons for Employee Turnover

It is not easy to find out as to who contributes and who has the control on the attrition of

employees. Various studies/survey conducted indicates that everyone is contributing to the

prevailing attrition. Turnover does not happen for one or two reasons. The way the industry is

projected and speed at which the companies are expanding has a major part in employee

turnover. Even today, the main reason for changing jobs is for higher salary and better

benefits. The other factors are: Organizational Matters, Working Environment, Job Matters,

Monotony, Salary and Other Benefits, Personal Reasons, Poaching.

3.3Effects of Employee Turnover

There is no set level of employee turnover which effects on the employing organisation becomedamaging. Mostly it is said that employee turnover is not good for the organizations. But

employers should remember that turnover is not that bad either. What is required is an optimum

mix of turnover, not too high-not too low. An optimum mix of employee turnover can help in

many ways.A little rate of employee turnover may result into: 1. Bringing in new ideas and skills

from new hires. 2. Better employee-job matches. 3. More staffing flexibility. 4. Facilitate change

and innovation.


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High rate of turnover may lead to decrease in: 1. Productivity 2. Service delivery 3. Spread of

organizational knowledge 4. Interdependence of workers which creates bottlenecks in the smooth

flow of activities which affects the overall co-ordination. 5. Additional direct and indirect cost

increase the cost of production and in turn there is a reduction in the profit.

3.4 Reducing Employee Turnover

With today's baby boomer generation beginning to retire from the labor market, many IT

companies are finding it increasingly difficult to retain employees. Turnover is becoming a

serious problem in today's corporate environment. The employment culture is changing as well.

It is now relatively common to change jobs every few years, rather than grow with one company

throughout the employment life as was once commonplace. In addition, employees are

increasingly demanding a balance between work and family life. Therefore, there are Seven

Major Areas of Intervention that helps to Reduce Employee Turnover mentioned below:

1. Early Interventions 2. Skill Interventions 3. Leadership Interventions

4. Communication Interventions 5. Reward/recognition Interventions 6. Job Enrichment

Interventions 7. Selection Interventions

3.5 Managing Employee Retention Strategies

Apart from above mentioned Intervention Techniques another means to Reduce Employee

Turnover, is applying Employee Retention Strategies. Therefore, the basic practices which

should be kept in mind in the employee retention strategies are as following: 1. Hire the right

people in the first place. 2. Empower the employees: Give the employees the authority to get

things done. 3. Make employees realize that they are the most valuable asset of the organization.

4. Have faith in them, trust them and respect them. 5. Provide them information and knowledge.

6. Keep providing them feedback on their performance. 7. Recognize and appreciate their

achievements. 8. Keep their morale high. 9. Create an environment where the employees want to

work and have fun.

3.6 How to Restraint Employee Turnover Employee Turnover has become a major concern for

organization today with labor shortage and competitive pressure making retention of key

employees a strategic issue, thus, following are the ways to curb employees in an organization as

under: Money is not everything: Although the importance of higher packages is slowly

diminishing, among fresher or laterals with less than three years of work experience, money is

still considered to be the highest priority. Employees want not only work recognition, but also

extra perks. A number of professionals are looking at more challenging jobs. "In several cases,

faced with a choice between more money and a challenging job, employees have opted for the

latter as it allows them to learn new technology and increase domain expertise." People analyze


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the training programmes of prospective companies with those of their current organization,

which means that how an organization grooms an employee is weighed to a greater extent. This

is because they know that developing next-level skills will keep them ahead in the job market,

and finally result in better compensation. They also look for a job with higher levels of

responsibility, better learning opportunities. Vision and Objectives: The next level of

communication, a crucial part of retention, starts with acquainting employees with the

companys vision and objectives. Organizations successful in retaining employees clearly pass

on their goals and achievements. Conducting regular meetings and updating employees,

especially new entrants, about the companys status and achievements is a must. They should

concentrate on leadership and brand building as people prefer to be associated with a brand. The

youth should feel proud to be a part of the billion-dollar industry.

3. Truly an HR practice!

Mentoring and handholding new recruits from day one to four months are important tasks;

during this period, they should be familiarized with the culture of the company. It is at this timethat new entrants experiment with different options. Hence they should be exposed to the best

values the company has. If they are informed about regular happenings in the company,

employees will be confident about the future and not try to look for better options. Treat

Employees like Customers: Even while companies strive to understand which organizational,

job, and reward factors will contribute to holding back employees, industry experts have found

several loopholes at the top management and HR management level. Companies should have a

similar approach to employees and customers. If a company strives to retain an employee in the

same way it tries to retain a customer, him leaving the organization could be out of question.

Since software professionals have different priorities at different points of time, organizations

need to structure their offer-mix while recruiting new hires, as well as promoting potential ones.

Communication is the foundation for the entire process of managing attrition. This

communication begins right from recruitment. In cases of peer pressure, an employee aims to

join a well-known company. This could be achieved by brand building, which attracts the right

talent and helps in retention as well. Understanding an employees needs at various levels is a

recommended HR practice. Consider Feedback: It is important to take feedback from employees

through different means and work with the HR department to iron out differences. As industry

experts point out, feedback can be got in two waysduring the employees tenure, and through

exit interviews. Inputs can be secured from existing employees through various employee

relationship management tools. The Wipro Listens and Responds initiative at Wipro aims tocapture the concerns and grievances of its employees.

Exit interviews help management learn the reasons why employees leave the company; based on

their revelations, the organization can address the problems of existing employees, thereby curb

attrition. Spend Time Developing and Benchmarking Incentives: Whenever the demand for a

professional arises in a particular field, the perks associated with the job start to pile up.


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Standard perks for an India-based "fresher" (a new entrant in the IT services industry with little

work experience) typically include free transportation, educational assistance, healthcare

benefits, performance-based bonuses, onsite cafeteria, stock options, and interest-free loans to

absorb the cost of relocation or maybe to finance the purchase of a two-wheeler. According to

Wipro's web site, its employees even have access to an agency that will handle such "domestic

chores" as paying bills, thereby giving IT workers more free time. IT service providers have to

offer innovative compensation and benefitsor risk losing valued employees to competitors.

Nonstop evaluation and benchmarking are "need to do" activities for IT managers. Change

Locations: The high prices and resource crunch in top-tier Indian cities such as Bangalore and

Mumbai have led many companies to execute alternative location strategies. Many vendors are

sending work to tier-two cities (Hyderabad or Chennai) or even tier-three cities (Noida or

Chandigarh), where labor and real estate costs as well as attrition may be cut in half. Such

benefits come at a price: The infrastructure quality lags that of more advanced cities, and the

search to find qualified people may take longer.

4. Benefits of Turnover

Turnover is not bad always if it happens in a controlled manner. Some turnover is always

desirable and necessary for organizational growth and development. The only concern is how

organizations differentiate good turnover from bad turnover. The term healthy turnover or

good turnover signifies the importance of less productive employees voluntarily leaving the

organization. This means if the ones who have left fall in the category of low performers, the

turnover in considered being healthy. Turnover rates are considered to be beneficial in some

ways:

1. If all employees stay in the same organization for a very long time, most of them will beat the top of their pay scale which will result in excessive manpower costs.

2. When certain employees leave, whose continuation of service would have negatively

impacted productivity and profitability of the company, the company is benefited.

3. New employees bring new ideas, approaches, abilities & attitudes which can keep the

organization from becoming stagnant.

4. There are also some people in the organization who have a negative and demoralizing

influence on the work culture and team spirit. This, in the long-term, is detrimental to

organizational health.

5. Desirable turnover also includes termination of employees with whom the organization

does not want to continue a relationship.

6. There are people who are not able to balance their performance as per expectations, lack

potential for future or need disciplinary action. Furthermore, as the rewards are limited,


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business pressures do not allow the management to over reward the performers, but when

undesirable employees leave the company, the good employees can be given the share

that they deserve.

However, some companies believe turnover in any form is bad for an organization for it means

that a wrong choice was made at the beginning while recruiting. Even good turnover indicatesloss as recruitment is a time consuming and costly affair. The only positive point is that the

realization has initiated action that will lead to cutting loss.

5. Conclusion

5.1 Suggestions

Employee turnover for instance may include cost that results from employees slower work pace

and increased absenteeism. A company puts in maximum investment towards developing its

manpower in order to get best output which results in high profit and productivity for the

company. Following suggestions are given to decrease the percentage of Employee Turnover in

IT Industry as under:

1. Clearly define targets and goals.

2. The grievance redressed procedure can be improved.

3. Better pay package for deserving employee can be considered for their retention.

4. Implement careful and strategic planning for targeted individuals career development. Being

identified is not enough. Consider potential benefits of encouraging informal mentoring.

5. Ensure there is strong leadership and commitment from senior management. Initial and on-

going personal involvement of the Chief Executive is crucial to success.

6. Integrate succession planning into business and diversity objectives. A clear link between

business goals and the desired results of the succession planning will assist in gaining

commitment from the organization and staff. To be successful it must be portrayed as a core

issue. 7. The 3 Rs that is Recruitments, Retentions, and Retirement benefits should be properly

imposed.

5.2 Conclusion

The ever-increasing tangible and intangible costs of replacing an existing employee with known

skill sets and knowledge of the organizational culture would leave any HR executive with

sleepless nights. But the fact remains that however satisfied they may seem employees leave. So

employee turnover is sometimes referred to as a symptom of many hidden problems. The main

objective of this report is to study vital causes of employee turnover and their effects on the IT

industry and to discover those hidden roots of the trouble to reduce such employee turnover.


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5.3 Limitations of the Study

Every project has its limitations and this project is no exception. There were some hurdles

during the study. Following are the limitations of this study:

1. Time devoted for the study was short due to which many aspects could not be covered.

2. The project is entirely based on secondary data.

6. Bibliography

1. http://www.chillibreeze.com/articles/AShortWhitePaper.asp, Accessed on 28th March 2009

2. http://www.syncaline.com/hrservices.html, Accessed on 28th March 2009

3. http://retention.naukrihub.com/attrition-rate-in-it.html, Accessed on 28th March 2009

4. http://www.financialexpress.com/news/india-trumps-us-uk-on-ites-employeeturnover/79971/,Accessed on 9th April 2009

5. http://www.hrprofessor.com/article16.html, Accessed on 9th April 2009

6. http://retention.naukrihub.com/employee-turnover-cost-calculation.html, Accessed on 14th

April 2009

7. Poornima S C, Preferences as a Strategic Approach to Tackle Attrition: IT and ITES Industry

Perspective ,ICFAI Journal of Management Research, Vol. 3, March 2008, PP. 24-37.

8. Joshi Rashmi, Combating Attrition : An Emerging Challenge in the IT Sector, ICFAI HRMReview, Vol. 3, March 2008.

9. Srikanth P, Ramamirtham L,Strategies to Deal with Attrition Rate in the Indian BPO Industry

Using maslows Need Hierarchy Theory, Management Accountant, Vol.43, No.2, February

2008, Page 71-78.

10. Meier Kenneth J, Hicklin Alisa, Employee Turnover and Organizational Performance,

Journal of Public Administration Research and Theory, Vol.18, No.4, October 2008, PP 73-90

term paper of human resource management

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