1.

INTRODUCTION
Human Resource Management (HRM) is the function within an organization that
focuses on the recruitment of, management of, and providing direction for the people
who work in an organization.
The HRM department members provide the knowledge, necessary tools, training,
administrative services, coaching, legal and management advice, and talent
management oversight that the rest of the organization needs for successful operation.
HRM functions are also performed by line managers who are directly responsible for
the engagement, contribution, and productivity of their reporting staff members. In a
fully integrated talent management system, the managers play a significant role in and
take ownership responsibility for the recruitment process. They are also responsible for
the ongoing development of and retention of superior employees.
Organizations also perform HRM functions and tasks by outsourcing various
components to outside suppliers and vendors. The tasks that are most frequently
outsourced are those that take HR time and energy away from the HR activities that
provide the most strategic value to the company.
This outsourcing most frequently involves payroll functions, but vendors and external
consultants can help an organization with HRM in many ways. Specifically, many HR
departments outsource background checking, benefits administration, training such as
sexual harassment training, temporary staffing, and the production of employee
handbooks, policy manuals, and affirmative action plans.
HRM is the organizational function that deals with or provides leadership and advice
for dealing with all issues related to the people in an organization. HRM, as such, deals
with compensation, hiring, performance management, organization development,
safety, wellness, benefits, employee motivation, communication, administration, and
training.
HRM is also a strategic and comprehensive approach to managing people and the
workplace culture and environment. Effective HRM enables employees to contribute

effectively and productively to the overall company direction and the accomplishment
of the organization's goals and objectives.
HRM is moving away from traditional personnel, administration, and transactional
roles, which are increasingly outsourced. The HRM function is now expected to add
value to the strategic utilization of employees and to ensure that employee programs
recommended and implemented impact the business in positive measurable ways.
Gone are the days when HR staff received direction from the executive team as to their
priorities and needs. HR is now expected to sit at the executive table and recommend
processes, approaches, and business solutions that improve the ability of the
organization's people to effectively contribute.
The new

role

of

HRM involves strategic

direction and HRM

metrics

and

measurements to demonstrate their value. Employees who work in HRM must

demonstrate their value by keeping their employer and company safe from lawsuits and
the resulting workplace chaos. They must perform a balancing act to serve all of an
organization's stakeholders: customers, executives, owners, managers, employees, and
stockholders.
It is difficult to underestimate the importance of an effective, modern HRM
function within an organization. An employee who retired from HRM twenty years ago
would not recognize the competence and capability of the best HRM organizations
today. You can choose to move your HRM function out of the dark days and into the
light. Organizations that do - are best served.

2.OBJECTIVES OF THE STUDY

1. To study the common reasons of employee voluntarily leaving from the
organization.
2. To suggest the strategies and steps for reducing turnover and improving retention.
3. To study efforts made by organization to retain employee.

SCOPE OF STUDY
The scope of the study is to extend the knowledge of employee retention strategies.

3.RESEARCH METHODOLOGY

Information collected from various websites and books.

4.INTRODUCTION OF EMPLOYEE RETENTION

Employee Retention involves taking measures to encourage employees to remain in the
organization for the maximum period of time. Corporate is facing a lot of problems in
employee retention these days. Hiring knowledgeable people for the job is essential for an
employer. But retention is even more important than hiring. There is no dearth of
opportunities for a talented person. There are many organizations which are looking for such
employees. If a person is not satisfied by the job hes doing, he may switch over to some
other more suitable job. In todays environment it becomes very important for organizations
to retain their employees.
The top organizations are on the top because they value their employees and they know how
to keep them glued to the organization. Employees stay and leave organizations for some
reasons.
Employee retention is a process in which the employees are encouraged to remain with the
organization for the maximum period of time or until the completion of the project.
Employee retention is beneficial for the organization as well as the employee.
Employees today are different. They are not the ones who dont have good opportunities in
hand. As soon as they feel dissatisfied with the current employer or the job, they switch over
to the next job. It is the responsibility of the employer to retain their best employees. If they
dont, they would be left with no good employees. A good employer should know how to
attract and retain its employees.

5.IMPORTANCE OF EMPLOYEE RETENTION

Now that so much is being done by organizations to retain its employees, why is retention so
important? Is it just to reduce the turnover costs? Well, the answer is a definite no. Its not
only the cost incurred by a company that emphasizes the need of retaining employees but also
the need to retain talented employees from getting poached.
The process of employee retention will benefit an organization in the following ways:
1. The Cost of Turnover: The cost of employee turnover adds hundreds of thousands of
money to a company's expenses. While it is difficult to fully calculate the cost of
turnover (including hiring costs, training costs and productivity loss), industry experts
often quote 25% of the average employee salary as a conservative estimate.
2. Loss of Company Knowledge: When an employee leaves, he takes with him
valuable knowledge about the company, customers, current projects and past history
(sometimes to competitors). Often much time and money has been spent on the
employee in expectation of a future return. When the employee leaves, the investment
is not realized.
3. Interruption of Customer Service: Customers and clients do business with a
company in part because of the people. Relationships are developed that encourage
continued sponsorship of the business. When an employee leaves, the relationships
that employee built for the company are severed, which could lead to potential
customer loss.
4. Turnover leads to more turnovers: When an employee terminates, the effect is felt
throughout the organization. Co-workers are often required to pick up the slack. The
unspoken negativity often intensifies for the remaining staff.
5. Goodwill of the company: The goodwill of a company is maintained when the
attrition rates are low. Higher retention rates motivate potential employees to join the
organization.

6. Regaining efficiency: If an employee resigns, then good amount of time is lost in

hiring a new employee and then training him/her and this goes to the loss of the
company directly which many a times goes unnoticed. And even after this you cannot
assure us of the same efficiency from the new employee.

WHAT MAKES EMPLOYEE LEAVES?

Employees do not leave an organization without any significant reason. There are certain
circumstances that lead to their leaving the organization. The most common reasons can be:
Job is not what the employee expected to be: Sometimes the job responsibilities dont come
out to be same as expected by the candidates. Unexpected job responsibilities lead to job
dissatisfaction.
1. Job and person mismatch: A candidate may be fit to do a certain type of job which
matches his personality. If he is given a job which mismatches his personality, then he
wont be able to perform it well and will try to find out reasons to leave the job.
2. No growth opportunities: No or less learning and growth opportunities in the current
job will make candidates job and career stagnant.
3. Lack of appreciation: If the work is not appreciated by the supervisor, the employee
feels de-motivated and loses interest in job.
4. Lack of trust and support in co-workers, seniors and management: Trust is the
most important factor that is required for an individual to stay in the job. Nonsupportive co-workers, seniors and management can make office environment
unfriendly and difficult to work in.
5. Stress from overwork and work life imbalance: Job stress can lead to work life
imbalance which ultimately many times lead to employee leaving the organization.
6. Compensation: Better compensation packages being offered by other companies may
attract employees towards themselves.
6

7. New job offer: An attractive job offer which an employee thinks is good for him with
respect to job responsibility, compensation, growth and learning etc. can lead an
employee to leave the organization.

EMPLOYEE RETENTION STRATEGIES

The basic practices which should be kept in mind in the employee retention strategies are:
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.

These practices can be categorized in 3 levels: Low, medium and high level.
<Low>

<Medium >

<High>

RETENTION DETERMINANTS
It has been recognized by both employers and employees that some common areas affect
employee retention. If certain organizational components are being provided, than other
factors may affect retention. Surveys of employees consistently show that better
compensation package and better career opportunity are the two most important determinates
of retention. Finally, job design and fair and supportive employee relationship with others
inside the organization contribute to retention. Following are the components that affect
employee retention: Career opportunities
1. Training
Continuity.
2. Development &

Organizational Components
1. Values and Culture.
2. Strategies & Opportunities.
3. Well managed & results-oriented.
4. Job continuity & security.

Employee Relationship
1. Fair/nondiscriminatory
treatment.
2. Supervisory/management
support.

Rewards
1. Competitive pay & benefits.
2. Performance reward
differentiation.
3. Recognition.
4. Special benefit & perks.

Job design & work

1. Job responsibility &
autonomy.
2. Work flexibility.
3. Working conditions.
4. Work/Life balancing.

These were the determinants of retention. An affective leadership assumed by the top
management would be a very important feature that keeps the work force intact and loyal. In
fact, the approach to the task of formulation of strategies for employee retention should be
comprehensive and the honest intention of the employer to implement every stipulation in the
package of appointment should be evident. However, there would, in each employing
corporate, be a section of so-called good employees, whom it would be unwise to loose.
Special strategies and special kind of efforts are required in the task of retaining them.
Probably it would be the hardest task for the employer to retain them as persons and rivals
would be making relentless bids to woo this section of employees. To counter these
onslaughts from peers, special efforts are called for.

10

6.MANAGERS ROLE IN RETENTION

When asked about why employees leave, low salary comes out to be a common excuse.
However, research has shown that people join companies, but leave because of what their
managers do or dont do. It is seen that managers who respect and value employees
competency, pay attention to their aspirations, assure challenging work, value the quality of
work life and provided chances for learning have loyal and engaged employees. Therefore,
managers and team leaders play an active and vital role in employee retention by creating a
motivating team culture and improving the relationships with team members. This can be
done in a following way:
1. Creating a Motivating Environment: Team leaders who create motivating
environments are likely to keep their team members together for a longer period of
time. Motivation does not necessarily have to come through fun events such as
parties, celebrations, team outings etc. They can also come through serious events e.g.
arranging a talk by the VP of Quality on career opportunities in the field of quality.
Employees who look forward to these events and are likely to remain more engaged.
2. Standing up for the Team: Team leaders are closest to their team members. While
they need to ensure smooth functioning of their teams by implementing management
decisions, they also need to educate their managers about the realities on the ground.
When agents see the team leader standing up for them, they will have one more
reason to stay in the team.
3. Providing coaching: Everyone wants to be successful in his or her current job.
However, not everyone knows how. Therefore, one of the key responsibilities will be
providing coaching that is intended to improve the performance of employees.
Managers often tend to escape this role by just coaching their employees. However,
coaching is followed by monitoring performance and providing feedback on the same.
4. Delegation: Many team leaders and managers feel that they are the only people who
can do a particular task or job. Therefore, they do not delegate their jobs as much as
they should. Delegation is a great way to develop competencies.
11

5. Extra Responsibility: Giving extra responsibility to employees is another way to get

them engaged with the company. However, just giving the extra responsibility does
not help. The manager must spend good time teaching the employees of how to
manage responsibilities given to them so that they dont feel over burdened.
6. Focus on future career: Employees are always concerned about their future career. A
manager should focus on showing employees his career ladder. If an employee sees
that his current job offers a path towards their future career aspirations, then they are
likely to stay longer in the company. Therefore, managers should play the role of
career counselors as well.

12

7.RETENTION MYTHS
The process of retention is not as easy at it seems. There are so many tactics and strategies
used in retention of employees by the organizations. The basic purpose of these strategies
should be to increase employee satisfaction, boost employee morale hence achieve retention.
But some times these strategies are not used properly or even worse, wrong strategies are
used. Because of which these strategies fail to achieve the desired results. There are many
myths related to the employee retention process. These myths exist because the strategies
being used are either wrong or are being used from a long time. These myths prevent the
employer from successfully implementing the retention strategies. Let us have a look on
some of these myths:
1. Employees leave an organization for more pay: Money may be the motivating
factor for some but for many people it is not the most important factor. Money matters
more to the low-income-employees for whom its a survival issue. Money can make
an employee stay in an organization but not for long. The factors more important than
money are job satisfaction, job responsibilities, and individuals skill development.
The employers should understand this and work out some other ways to make
employees feel satisfied. When employees leave, management tries to retain them by
offering more money. But instead they should try to figure out the main reason behind
it. Issues that are mainly the cause of dissatisfaction are organizations policies and
procedures, working conditions, relationship with the supervisor and salary, etc. For
such employees, achievement, growth, respect, recognition, is the main concern.
2. Incentives can increase productivity: Incentives can surely increase productivity but
not for long term. Cash incentives, volume work targets and speed awards are old
management beliefs. They can generate work speedily and in volumes but cant boost
employee commitment. Rather speed can hamper the quality of work produced. What
really glues employees to their work and organization is quality work, meaningful
responsibilities, recognition, respect, growth opportunities and friendly supervisors.

13

3. Employees run away from responsibilities: It is a myth that employees run from
responsibilities. In-fact employees feel more responsible if they are given extra
responsibilities apart from their regular job. Employees look for variety, greater
control on the processes and authority to take decisions in their present job. They
want opportunities to learn and grow. Management can assign extra responsibilities to
their employees and appreciate them on the completion of these tasks. This will
induce a sense of pride in the employee and will improve the relationship between the
management and the employee.

4. Loyalty is a thing of the past: Employees can be loyal but what they need is an
employer for whom they can be loyal. There is no reason for the employee to hop jobs
if hes satisfied with the employer.
5. Taking measures to increase employee satisfaction will be expensive for the
organizations: The things actually required improving employee satisfaction like
respect, career growth and development, appreciation, etc. cant be bought. They are
free of cost. An employer or management that reacts well to the employees ideas and
suggestions is enough for the employees to be retained.

14

8.RETENTION SUCCESS MANTRAS

1) Transparent Work Culture
In todays fast paced business environments where employees are constantly striving to
achieve business goals under time restrictions; open minded and transparent work culture
plays a vital role in employee retention.
Companies invest very many hours and monies in training and educating employees. These
companies are severely affected when employees check out, especially in the middle of some
big company project or venture. Although employees most often prefer to stay with the same
company and use their time and experience for personal growth and development, they leave
mainly because of work related stress and dissatisfactions.
More and more companies have now realized the importance of a healthy work culture and
have a gamut of people management good practices for employees to have that ideal fresh
work-life. Closed doors work culture can serve as a deterrent to communication and trust
within employees which are potential causes for work-related apathy and frenzy.
A transparent work environment can serve as one of the primary triggers to facilitate
accountability, trust, communication, responsibility, pride and so on. It is believed that in a
transparent work culture employees rigorously communicate with their peers and exchange
ideas and thoughts before they are finally matured in to full-blown concepts. It induces
responsibility among employees and accountability towards other peers, which gradually
builds up trust and pride. More importantly, transparency in work environment discourages
work-politics which often hinders company goals as employees start to advance their
personal objectives at the expense of development of the company as a single entity.
Employees comprise the most vital assets of the company. In a work place where employees
are not able to use their full potential and not heard and valued, they are likely to leave
because of stress and frustration. In a transparent environment while employees get a sense of
achievement and belongingness from a healthy work environment, the company is benefited
with a stronger, reliable work-force harboring bright new ideas for its growth.
15

2) Quality of Work
The success of any organization depends on how it attracts recruits, motivates, and retains its
workforce. Organizations need to be more flexible so that they develop their talented
workforce and gain their commitment. Thus, organizations are required to retain employees
by addressing their work life issues.
The elements that are relevant to an individuals quality of work life include the task, the
physical work environment, social environment within the organization, administrative
system and relationship between life on and off the job.
The basic objectives of a QWL program are improved working conditions for the employee
and increase organizational effectiveness.
Providing quality work life involves taking care of the following aspects:
1. Occupational health care: The safe work environment provides the basis for the
person to enjoy working. The work should not pose a health hazard for the person.
The employer and employee, aware of their risks and rights, could achieve a lot in
their mutually beneficial dialogue.
2. Suitable working time: Organizations are offering flexible work options to their
employees wherein employees enjoy flexi-timings for dedicating their efforts at work.
3. Appropriate salary: The appropriate as well as attractive salary has always been an
important factor in retaining employees. Providing employees salary at par with the
other counterparts of above that what competitors are paying motivates them to stick
with the company for long.
QWL consists of opportunities for active involvement in group working arrangements or
problem solving that are of mutual benefit to employees or employers, based on labor
management cooperation. People also conceive of QWL as a set of methods, such as
autonomous work groups, job enrichment, and high-involvement aimed at boosting the
satisfaction and productivity of workers. It requires employee commitment to the
organization and an environment in which this commitment can flourish.
Providing quality at work not only reduces attrition but also helps in reduced absenteeism and
improved job satisfaction. Not only does QWL contribute to a company's ability to recruit
16

quality people, but also it enhances a company's competitiveness. Common beliefs support
the contention that QWL will positively nurture amore flexible, loyal, and motivated
workforce, which are essential in determining the company's competitiveness.

3) Supporting Employees
Organizations these days want to protect their biggest and most valuable asset and they want
to do this in a way that best suits their organizational culture. Retaining employees is a
difficult task. Providing support to the employees acts as a mantra for retraining them.
Employers can also support their employees by creating an environment of trust and
inculcating the organizational values into employees.
The management can support employees directly or indirectly. Directly, they provide support
in terms of personal crises, managing stress and personal development. Management can
support employees, indirectly, in a number of ways as follows:
1. Manage employee turnover: Employee turnover affects the whole organization in
terms of productivity. Managing the turnover, hence, becomes an important task. A
proactive approach can be adopted to reduce attrition. Strategies should be framed in
advance and implemented when the times arrives. Turnover costs should also be taken
into consideration while framing these strategies.
2. Become employer of choice: What makes a company an employer of choice? Is the
benefit it offers or the compensation packages it gives away to its employees? Or is it
measured in terms of how they value their employees or in terms of customer
satisfaction? Becoming an employer of choice involves following a road map which
tells where to go as a brand.
3. Engage the new recruits: The newly hired employees are said to be least engaged in
the organization. Keeping them engaged is an important task. The fresh talent should
be utilized to maximum before they start feeling bored in the organization.

17

4. Optimize employee engagement: An organizations productivity is measured not in

terms of employee satisfaction but by employee engagement. Employees are said to
be engaged when they show a positive attitude toward the organization and express a
commitment to remain with the organization. Employee satisfaction also comes with
high engagement levels. So, organizations should aim to maximize the engagement
among employees.
5. Coaching and mentoring: Employees whose work performance suffers due to poor
interpersonal relationships or because of lack of interpersonal skills should be
provided proper coaching by their superiors. Planed coaching sessions help an
individual to work through issues, maximize his potential and return to peak
performance.

4) Feedback
Feedback acts as a channel of communication between the employee and his manager. The
amount of information employees receive about how well or how poorly they have performed
is what we call feedback. It is a dialog between a manager and an employee which acts as a
way of sharing information about the performance. It suggests where the employee
performance is effective and where performance has to improve.
Managers can provide either positive feedback or negative feedback to employees. This
feedback helps the employee assess his performance and identify the improvement areas.
Positive feedback communicates managerial satisfaction. Positive recognition for good
performance boosts up morale of employees and results in performance improvement to a
higher productivity level. It is believed that positive feedback is the only type of feedback
that generates performance above the minimum acceptable level.
Negative feedback obviously communicates managers dissatisfaction. However,
negative feedback sometimes make employee to put more efforts to improve his performance.
But such times are very rare. Moreover this improvement is short term.

18

Some managers do not provide any kind of feedback to their employees. Due to no
feedback, employees may assume that they are performing productively or they may feel that
the manager is satisfied with their performance. Studies reveal the performance tends be same
or even decreases if no feedback is provided.
Thus, feedback is necessary because:
1. It builds trust and enhances communication between manager and employee.
2. It gives managers and employees a way to identify and discuss skills and strengths.
3. Positive feedback leads to employee retention and motivation.
4. It helps in identifying performance areas that need improvement and specific ways to
improve them.
5. It acts as an opportunity to enhance performance by identifying resources for skill
development.
6. It is an opportunity for managers and employees to assess and identify career and
advancement opportunities.
7. It helps employees to understand the effectiveness of their performance and
contributes to their overall knowledge about the work
Managers have tendency to ignore good performances of their employees.
Providing no feedback may de-motivate employees and may lead to employee absenteeism.
Input from managers side is necessary as it help employees to improve their performance
and increase productivity.

5) Communication between Employee and Employer

Communication is the solution to almost everything in this world. Same applies to employee
retention also. Straight-from-the-shoulder communication is what the employees need from
their employers. Employees look for organizations where communication and process are
transparent. Nothing is hidden and shared with the employees. Communication is also the
way to win the employees trust in the organization. Employees trust the employers who are
friendly and open to them. This trust leads to employee loyalty and finally retention.
Employers also feel that the immediate supervisors are the most authenticated and trusted
source of information for them. So the organizations should hire managers who are active
communicators.
19

Communication mediums
1. Open door policy: Organizations should support open door policies so that the
employees feel comfortable and are able to express their doubts and feeling to their
employers.
2. Frequent meetings and Social gatherings
3. Emails, Newsletters, Intranet and many more.
So there should be effective communication across the organization & this communication
should be two-way. Communication alone can lead to unimaginable heights of employee
retention.

20

9.EMPLOYEES TURNOVER
Employees turnover has always been a sensitive issue for all organizations. Calculating
employee turnover rate is not that simple as it seems to be. No common formula can be used
by all the organizations. A formula had to be devised keeping in view the nature of the
business and different job functions. Moreover, calculating attrition rate is not only about
devising a mathematical formula. It also has to take into account the root of the problem by
going back to the hiring stage.

Employees Turnover rate or Attrition rate means:

In terms of numbers:
Total number of resigns per month (whether voluntary or forced) divided by (Total Number
of employees at the beginning or the month plus total number of new joiners minus total
number of resignations) multiplied by 100.

If calculating in monetary terms, it includes the following:

Costs Due to a Person Leaving
1. Calculate the cost of the person(s) who fills in while the position is vacant. Calculate
the cost of lost productivity at a minimum of 50% of the persons compensation and
benefits cost for each week the position is vacant, even if there are people performing
the work. Calculate the lost productivity at 100% if the position is completely vacant
for any period of time.
2. Calculate the cost of conducting the exit interview to include the time of the person
conducting the interview, the time of the person leaving, the administrative costs of
stopping payroll, benefit deductions, benefit enrollments.
3. Calculate the cost of the manager who has to understand what work remains, and how
to cover that work until a replacement is found.

21

4. Calculate the cost of training your company has invested in this employee who is
leaving.
5. Calculate the impact of departmental productivity because the person is leaving. Who
will pick up the work, whose work will suffer, what departmental deadlines will not
be met or delivered late.
6. Calculate the cost of lost knowledge, skills and contacts that the person who is leaving
is taking with them out of your door. Use a formula 50& of the persons annual salary
for one year of service, increasing each year of service by 10%.
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 costs; Internet posting costs.
2. The cost of internal recruiters 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
candidates skills, abilities, aptitude, attitude, values and behaviors.

22

Training costs
1. Calculate the cost of orientation in terms of the new persons salary and the cost of the
person who conducts the orientation. Also include the cost of orientation materials.
2. Calculate the cost of departmental training as the actual development and delivery
cost plus the cost of the salary of the new employee. Note that the cost will be
significantly higher for some positions such as sales representatives and call center
agents who require 4-6 weeks or more of classroom training.
3. Calculate the cost of the person(s) who conduct the training.
4. Calculate the cost of various training materials needed including company or product
manuals, computer or other technology equipment used in the delivery of training.

Lost productivity costs

As the new employee is learning the new job, the company policies and practices, etc. they
are not fully productive. Use the following guidelines to calculate the cost of this lost
productivity:
1. Upon completion of whatever training is provided, the employee is contributing at a
25% productivity level for the first 2-4 weeks. The cost therefore is 75% of the new
employees full salary during that time period.
2. During weeks 5-12, the employee is contributing at a 50% productivity level. The cost
is therefore 50% of full salary during that time period.
3. During weeks 13-20, the employee is contributing at a 75% productivity level. The
cost is therefore 25% of full salary during that time period.
4. Calculate the cost of mistakes the new employee makes during this elongated
indoctrination period.

23

New Hire Costs

1. Calculate the cost of bring the new person on board including the cost to put the
person on the payroll, establish computer and security passwords and identification
cards, telephone hookups, cost of establishing email accounts, or leasing other
equipment such as cell phones, automobiles.
2. Calculate the cost of a managers time spent developing trust and building confidence
in the new employees work.

Lost Sales Costs

1. Calculate the revenue per employee by dividing total company revenue by the average
number of employees in a given year. Whether an employee contributes directly or
indirectly to the generation of revenue, their purpose is to provide some defines set of
responsibilities that are necessary to the generation of revenue. Calculate the lost
revenue by multiplying the number of weeks the position is vacant by the average
weekly revenue per employee.

The cost of employees turnover or attrition is:

(Total staff * employees turnover rate/attrition rate %) * (annual salary *
80%)
The rule of thumb appears to be very inaccurate indeed and, while it depends upon the
category of staff, it is probably better to estimate around 80% of salary as a truer rule of
thumb- and this will be on the conservative side.
What kind of strategies would be effective in producing the desired results of maximum
Employee Retention and minimum Employee Turnover? The answer is obvious. It
should be the aim of each employee to keep his work force fully satisfied with no room for
disgruntlement.
Retention of employees has become a primary concern in many organizations foe several
reasons. As a practical matter, with lower turnover, every individual who is retained means
one less person to have to recruit, selects, and trains. Also, the continuity employees who
24

know their job, co-workers, organizational services and products and firms customers
enhance organizational and individual performance. One survey of supervisor and workers
found that losing high performance made it more difficult for organizations to reach their
business goals. Additional continuity of employees provides better Employee image for
attracting and retaining other individuals.

25

10.WAYS TO REDUCE EMPLOYEE TURNOVER

Following are some of the ideas to reduce employee turnover:
1. Hire the best candidate.
2. Welcome new employees. Customize your induction program for new employees
according to the requirements. Same induction program can not be applied to all the
candidates. Make them feel welcomed.
3. Produce quality managers who can really manage employees well.
4. Provide employees with work schedules that are flexible enough to suit their needs.
5. Dont be too demanding. You re hiring human beings who have their own life and
family commitments. Respect them.
6. Provide career counseling and development.
7. Discuss your future plans regarding the candidate with the candidate. Let them know
that the management is interested in retaining them and cares for them.
8. Take proper feedback from employees regarding their grievances.
9. Remember your former employees. They can be helpful to you in future. It is also a
part of employee retention.

26

11.FACTS ABOUT EMPLOYEE TURNOVER

It is difficult to accept when organizations say they have zero attrition rates. Companies may
have healthier turnover rates, however, there is no such thing as zero attrition. There are other
such facts about turnover, about which most of us are not aware. Some of such facts have
been highlighted below:
1. Turnover always happens: Companies who believe in zero attrition rates only fool
themselves. This happens because employees keep on moving due to reasons like
marriage or further education. Nothing can stop these employees from moving on. So,
rather than achieving zero attrition companies should focus on identifying whom they
want to keep so that they have healthy attrition rate.
2. Some Turnover is Desirable: Zero attrition is not desirable mainly because of two
reasons. Firstly, if all employees continue to stay in the same organization, most of
them will be at the top of their pay scale which will result in excessive manpower
costs. Secondly, new employees bring new ideas, approaches, abilities & attitudes
which can keep the organization from becoming stagnant.
3. Turnover includes costs: Turnover always includes some costs. Consider the costs of
replacing the key employee who falls in to the category of high performers. This
includes the costs of recruitment advertisement, referral bonuses, selection testing,
training costs, etc. Moreover, turnover results in loss of time & efforts, low
productivity, loss of morale, loss of knowledge and so on.
4. High salary doesnt work: Most managers assume that a high salary package is
enough to keep employees loyal to their organization. Employees may face other
problems like low job satisfaction, low engagement levels, no recognition, poor
working conditions, less support from superiors and so on. Salaries are not always the
solution to attrition. Managers should try to identify the roots of the problem and then
find a feasible solution.

27

5. The manager can reduce attrition: Managers should take primary responsibility for
retaining their employees. Much of the employees perception of job satisfaction
stems from the relationship they share with their immediate supervisor. Managers
should try to support their subordinates and give proper feedback on performance. HR
managers should work in collaboration to make the key employees last in their
organization.
6. Reducing Turnover takes Commitment: Reducing turnover takes an investment in
coaching, developing, motivating, mentoring & listening to people. There should be
universal acceptance of the goal of reducing turnover along with top management
commitment and dedication.

28

12.GOOGLES EMPLOYEE RETENTION STRATEGIES

Google, through its branding, PR and recruiting efforts, has made itself so well-known and
attractive to professionals from every industry and university that they have essentially
changed the game of recruiting forever.
The worlds first recruiting culture
Google has accomplished something that no other corporation has ever accomplished. In less
than a handful of years, they have developed what can only be categorised as a recruiting
machine. What they have done better than anyone else is to develop the worlds first
recruiting culture. What that means is that recruiting and the need for it permeates the entire
organisation, from the key leaders on down to the entry-level employees.
As a result of this culture, not only does Google fund recruiting to the point where the
function is in a league by itself, but they have also gone to the extraordinary step of changing
the way employees work in order to attract and retain the very best.
Working with 20 per cent time
Many organisations have changed their pay or benefits in order to attract better workers, but
none has changed every professional job in the company so that the work itself is the primary
attraction and retention tool. Rather than letting work, jobs and job descriptions be put
together by the out of touch people in corporate compensation, Googles founders Larry
Page and Sergey Brin, HR director Stacy Sullivan and the leadership team at Google have
literally crafted every professional job and workplace element so that all employees are
working on interesting projects, learning continuously, constantly challenged to do more and
feeling that they are adding value.
The key element of changing the work so that the work itself becomes a critical attraction
and retention force and driver of innovation and motivation is what Google calls 20 per cent
work. There is no concrete definition of what 20 per cent work means, but generally for
professional jobs it means that the employee works the equivalent of one day a week on their
own, researching individually selected projects that the company funds and supports. Both
the Google Groups and Google News products are reported to have started as a result of
29

personal 20 per cent time projects. In addition to being a phenomenal attraction tool, it also
keeps their attrition rate at, as one HR executive put it almost nil, but its greatest value is
that it drives innovation and creativity throughout the organisation.
The worlds largest recruiting budget
Google recruiting is the best-funded recruiting function in any major product-driven
corporation. Arnnon Geshuri, the head of recruiting, and Sullivan, have done what can only
be classified as an unbelievable job in convincing senior management to fund the recruiting
effort beyond that of any corporation in history.
My own calculations indicate that, at times, Google recruitment has a ratio of one recruiter
for every 14 employees (14:1). That ratio surpasses the previous record of 65:1, held by
Cisco during the first war for talent in the late 90s. If on the surface this ratio doesnt
impress you, might I suggest that you compare it to the typically much larger ratio of
employees to all HR professionals, which is about 100:1.
The benefits are breathtaking
Google offers spectacular benefits even though they are not designed just for recruiting
purposes. Instead, these benefits are also designed to encourage collaboration, to break down
barriers between functions and to stimulate individual creativity and innovation.
These benefits do attract some of the wrong people, that is, talented individuals who are
seeking benefits rather than an opportunity to do their best work, which creates a screening
challenge.
The take away for other firms is that, even if you do match Googles non-work benefits (as
firms like SAS have almost done), you are not automatically going to attract the very best and
the most innovative.
Recruiting structure
Google has plans to nearly double its workforce, growing from approximately 5,000 to
10,000 employees in the near future. The recruitment structure they have designed to enable

30

such growth is, like most successful recruiting organisations, primarily a centralised
operations model.
The basic reason why firms use a centralised recruiting function is to ensure that most of the
recruiting is done by recruitment professionals, as opposed to generalists, who for the most
part dont have the skills or the attitude to be great recruiters. Centralisation also makes it
easier to share top applicants between business units, a key activity which seldom occurs
when decentralised generalists execute recruiting.
A key tenet of any successful recruiting function is that the function has the capability to
handle in-house the most important and visible positions, that is, executive search. At Google,
recruiting is responsible for filling both executive leadership and top-level technical
positions.
Because Google believes wholeheartedly in sourcing the best talent that is ferociously sought
after by competitors, every element of the recruiting function is abundantly staffed with
highly focused professionals.
To ensure that the company has the capability to recruit talent at the capacity needed, the
recruiting model has been broken up into very distinct roles, each requiring specialised
expertise. These activities, carried out in a highly choreographed manner by teams tied to
divisions and business units, include: recruiting research analysts; candidate developers
(sourcers); process coordinators; candidate screeners; specialised recruiters for college;
specialised recruiters for technical and leadership executive search; specialised international
recruiters to be located in Asia and Europe; recruiting program managers; and recruiting
project managers.
Such specialisation enables the function to be managed in a way similar to a supply chain.
Some outside consultants have argued that such a large number of recruiters and specialised
positions is an indication of inefficiency. Like many things in business, obtaining a specific
level of efficiency requires that one makes tradeoffs between output quality and input cost,
and at this point in time Google values the quality over the cost. The willingness to fund this
recruiting model is a clear indication that talent more than any other input is the most critical
at Google, a notion many pay lip service to but few actually execute.

31

Standard recruiting tools

Google has successfully implemented many of the standard best practice tools found at other
companies:
Employee referral: Googles referral program is without any industry leading features, but
the companys strong brand coupled with its highly enthusiastic workforce makes up for
weaknesses in the program.
College recruitment: Google hires a large number of PhDs on the premise that they enjoy
exploring areas that no one else has explored. To accomplish this, they have developed a
network of direct relationships with over 350 professors at major schools. In addition, Google
has an outstanding internship program that has a very high conversion rate to permanent
hires.
Professional networking: Google also effectively uses networking groups like Linkedin and
other live professional events to recruit top performers.
Recruiter training: Google is one of only a handful of companies that requires most newly
hired recruiters to go through extensive recruiter training prior to starting.
Wow recruiting tools
Google employs a variety of impressive recruiting tools that certainly wowed me while
researching this case study.
AdWords as a recruiting tool: Googles first wow approach is its use of its own Google
search tool to find passive candidates. Because Google is recognised as the master of
search, its not surprising that they utilise their own search tool to find top candidates without
active resumes. In addition, they attract top performers by placing their own job ads that
appear when certain keywords are typed into a search.
Contests as recruiting tools: A second wowaspect of Google recruiting is its use of a
contest to identify and attract top software engineers. The Google Code Jam, as they call it, is
a global online software writing contest that can attract over 7,500 people each year. The top
25 finalists are invited to the Mountain View campus to compete for US$50,000 in prizes as
32

well as a chance to work at Google. The contest is powered by TopCoder, a vendor that helps
manage the contest and score the winners.
Brain teasers as recruiting tools: The third wow aspect of Googles recruiting is its
creative use of roadside billboards and math tests placed in magazines to garner the attention
of math and programming wizards. Google has placed brainteaser billboards in the Silicon
Valley and by Harvard Square. The math puzzles on these billboards challenge mathematicsoriented people and get them thinking. Although they do not specifically mention Google, the
billboard puzzle does eventually lead interested participants to the Google site.
Friends of Google: The final wow recruiting tool is the friends of Google system. This
tool creates an electronic email network of people that are interested in Google and its
products but not necessarily interested in working for the company. By signing up these
individuals and then periodically sending them emails about the firms products and events,
Google can build a relationship with thousands of people that like the firm.
Weaknesses in the Google approach
Googles primary strength in recruiting comes from the fact that they change the work and
that they have, and continue to make, an outstanding business case to fund the recruiting
organisation at an unparalleled level. But its equally important to point out that Google
recruiting is not without weaknesses. Some of the current and potential issues facing Google
recruiting are outlined below.
Given the relative youth of the company, none of these weaknesses even reach the level of
being considered a threat, but in a company whose slogan is great isnt good enough, its
critical that HR and recruitment management spend some time and resources in the following
areas:
Employment branding: Although Google is clearly well-known as a great employer, it is
clear that much of that recognition has come as a result of programs and ideas that originated
outside of HR. It is critical that HR and recruitment devote resources to developing a formal
employment brand strategy and execution plan.
Metrics: At a technology company driven by mathematics and staffed largely with
mathematicians, its almost unbelievable how both the HR and the recruiting function have
33

dragged their feet on developing metrics. In particular, Googles inability to track the on-thejob performance of new hires is inexcusable.
Recruiting strategy: Although Google recruiting obviously does great things, those things
seem to occur at random and in spite of the fact that there is no formal, wellcommunicated recruitment strategy. Whether you talk to recruiters or hiring managers at
Google, no one seems to be able to clearly articulate the strategy and how it differentiates
Google from its talent competitors.
Speed: Almost everyone that has been a candidate at Google comments on how slow the
screening, recruiting, and interview process is. The fact that some stock option grants and all
new professional hires must be approved by senior management (an activity limited to one
day a week) is industry leading in a way that hurts the recruiting effort.
Contingent labour: The number of temps and contractors in the recruiting function at
Google is high. The unwillingness to give permanent jobs immediately to recruiters may
reduce Googles ability to get seasoned recruiters, who have mortgages and car payments like
the rest of and require a certain level of stability.
Emphasis on youth: Googles emphasis on youth culture might hurt its ability to attract
more senior and experienced personnel. I have heard concerns related to their emphasis on
youth from more than one employee, and at least one former worker has accused them of age
discrimination.
Employee benefits at Google
A partial list of Google's "I-bet-you-don't-have-that-where-you-work" benefits include:
Flexible hours for nearly every professional employee
Casual dress everyday (and this goes well beyond business casual)
Employees can bring their dogs to work, everyday
Onsite physician and dental care
Health benefits that begin as soon as an employee reports for work
34

Free massage and yoga

Shoreline running trails
Stock options everywhere
Free drinks and snacks everywhere (espresso, smoothies, Red Bull, health drinks, kombucha
tea, you name it)
Free meals, including breakfast, lunch and dinner (some have described this as a feast with
multiple locations and world-class chefs, including one that cooked for the Grateful Dead)
Three weeks' vacation during the first year
Free recreation everywhere, including video games, foosball, volleyball and pool tables
Valet parking for employees
Onsite car wash and detailing
Maternity and parental leave (plus new moms and dads are able to expense up to US$500 for
take-out meals during the first four weeks that they are home with their new baby)
Employee referral bonus program
Near site childcare centre
Backup childcare for parents when their regularly scheduled child care falls through
Free shuttle service to several San Francisco and East and SouthBay locations (San Francisco
is 45 miles away from the main campus)
Fuel efficiency vehicle incentive program (US$5,000 assistance if you buy a hybrid)
Onsite dry cleaning, plus a coin-free laundry room
A Friday TGIF all-employee gathering where the founders frequently speak
A 401k investment program
35

A "no tracking of sick days" policy

An onsite gym to work off all of the snacks
Here are a few strategies to help in the quest of recruiting and retaining the best and brightest
stars.

Get it right the first time

Hire the right person for the right job. Use tools to aid in identifying these candidates, the
ones who possess the suitable characteristics desired for the job. "Identifying accurate job
characteristics may seem like a daunting task, but it is actually quite straight-forward when
you have the right tools at your disposal," explained Bud Haney, Founder of Profiles
International. It is crucial that when looking at a person's eligibility for a job, that you are
looking at them as an opportunity for future success, not just as a function of human
resources.

Understand that money is not everything

Money - as important as it is in our daily lives, is just one component of employment value.
Businesses must ensure that they offer a great workplace, life balance, career development,
quality leadership and work flexibility. These additional benefits add to the employment
value and can range from a great financial package to employee appreciation and recognition
programs. Remember, they do not have to be expensive, see our recent post on How to
motivate without money

Create a caring work environment

Wages and salaries are the main reason why people come to work and do their jobs, but it is
not enough to motivate high productivity and innovation. A genuine, warm and caring
workplace has a high impact on staff and the quality of their work. The philosophy here is
simple: Give and you will get back tenfold. How employees and applicants are treated shows
a clear indication of the organizations passion for the business that they are in.

Promote from within

Give your people an opportunity to advance from within. This perpetuates company culture
and creates drive to further careers. "Knowing your employees' strengths, weaknesses and
36

what makes them productive gives employers a distinct advantage in retaining and
developing their workers," says Dario Priolo, Chief Marketing Officer of Profiles
International. Treat your people with dignity and respect, nurture those who want to move
ahead and create an environment in which they can excel.

Build your reputation

Organize and plan effective strategies. A successful brand and image in the workplace is key
to attracting and retaining good workers. Everyone wants to believe in and feel a part of
something. Employees are no different, they gravitate towards those organizations with
sterling reputations.

37

13.OBSRVATION & SUGGESTION

The suggestions for the findings from the study are follows

Most of the employees agree that the performance appraisal activities are helpful to
retain employees, so the company should try to improve performance appraisal
system, so that they can retain employees and improve their performance.

The trust and support is lacking in the co-workers so the organization should try to
focus on it.

In the organization climate collaboration is lacking so the organization has to make

efforts in this direction so that employees can work collaboratively.

Organization can reduce employee turnover by providing flexible work schedules.

The organization must consider about providing more growth opportunities for
employees.

38

CONCLUSION
As employees are the bases for company so retention of employees is a major focus for HR
department. The management should identify the important factors that affect retention and
should take necessary measures to improve these. Also, the management should take
appropriate measure to identify the reasons of employee voluntarily leave.
It is only the employees that implement and give tangibility to the corporates mission.
In other words if it is the highest rung in the corporate hierarchy that has ideas, it is the
employees rung that has the chisel to bring the vision to life. In the best of worlds,
employees would love their jobs. Like their co-workers, work hard for their employers, get
paid well for their work, have ample chances of advancement and flexible schedules so they
could attend to personal or family needs when necessary. And never leave.
But then theres the real world. And in the real world, employees, do, leave, either
because they want more money, hate the working conditions, hate their co-workers, want a
change, or because their spouse gets a dream job in another state. Unlike inanimate products
and systems that subject themselves to fine tuning without any reaction, employees would not
subject themselves to any measure taken without reaction and analysis. Hence managing
human resources, particularly retaining them, is an art that calls for special skills and
strategies.
Employee survey and exit interviews can be used for assessing the reasons of employee
voluntarily leave. HR interventions such as improving selection process, effective orientation
and training, better employee relation, better career development programs and planning etc
should be used to improve employee retention.

39

BIBLIOGRAPHY
Name of author: Aswathappa
Name of book: Human Resource Management Text and Cases
Name of Publisher: Tata Mc Graw-Hill Education
Year of edition: 2010

WEBLIOGRAPHY
http://humanresources.about.com/od/glossaryh/f/hr_management.htm
http://www.hcamag.com/hr-resources/hr-strategy/a-look-inside-the-googletalent-machine-112999.aspx
www.google.com

40