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VSRD-IJBMR, Vol. 1 (7), 2011, 441-448

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1
Lecturer, MBA Department, Maharana Institute of Professional Studies, Kanpur, Uttar Pradesh, INDIA.
2
HOD, MBA Department, Axis College of Management & Sciences, Kanpur, Uttar Pradesh, INDIA.

*Correspondence : shivangee_singh@yahoo.com
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Employee Retention : The Art of Keeping the People
Who Keep You in Business
1
Shivangee Singh* and
2
Pankaj Kant Dixit
ABSTRACT
Retention of key employees is critical to the long-term health and success of any organization. It is a known fact
that retaining the best employees ensures customer satisfaction, increased sales, satisfied colleagues and
reporting staff, effective succession planning, and deeply embedded organizational knowledge and learning.
Hence, failing to retain a key employee is a costly proposition for an organization. Corporate is facing a lot of
problems in employee retention these days. Hiring knowledgeable people for the job is essential for an
employer, but retaining them 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 an employee is not
satisfied with the job he is doing, he may switch over to some other more suitable job. The top organizations are
on the top because they value their employees and know how to keep them glued to the organization. For gone
are the days when employees would stick to an employer for years to get increment and promotion. 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 one. So in todays dynamic and
competitive environment it becomes very important for organizations to retain their employees. In the present
study an attempt has been made to explore the various aspects of employee retention, why is it needed, basic
practices, myths and strategies etc. This study is based on primary as well as secondary data collected from the
reliable sources and interpretation of the results shows that what employees strive for, is open mindedness and
transparent work culture.
Keywords: Employee Retention, Hiring, Switch Over, Succession Planning, Organizational Knowledge and
Learning, Transparent Work Culture.
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1. INTRODUCTION
Employee Retention involves taking measures to encourage employees to remain in the organization for the
maximum period of time. It 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. Effective employee retention is a systematic effort by employers to create
and foster an environment that encourages current employees to remain employed, by having policies and
practices in place that address their diverse needs. Retention of key employees is critical to the long-term health
and success of any organization. It is a known fact that retaining the best employees ensures customer
satisfaction, increased product sales, satisfied colleagues and reporting staff, effective succession planning, and
deeply embedded organizational knowledge and learning. Employee retention matters, as organizational issues
such as training time and investment, lost knowledge, insecure employees, and a costly candidate search are
involved. Hence, failing to retain a key employee is a costly proposition for an organization. Various estimates
suggest that losing a middle manager in most organizations costs up to five times his salary. 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. Intelligent employers always realize the importance of retaining the best talent. Retaining
talent has never been so important in the Indian scenario; however, things have changed in recent years. In
prominent Indian metros at least, there is no dearth of opportunities for the best in the business, or even for the
second or third best. Retention of key employees and treating attrition troubles has never been so important to
companies. In an intensely competitive environment where HR managers are poaching from each other,
organizations can either hold on to their employees tight or lose them to competition. For gone are the days
when employees would stick to an employer for years for want of a better choice. Now, opportunities are
abound. Employees stay and leave organizations for some reasons. The reason may be personal or professional.
These reasons should be understood by the employer and should be taken care of. The organizations are
becoming aware of these reasons and adopting many strategies for employee retention. A strong retention
strategy, therefore, becomes a powerful recruitment tool.
2. RESEARCH METHODOLOGY
Primary data for the present research study was collected through unstructured interviews of the employees and
observation. Besides, secondary data was collected through various research journals & papers on the same
topic. Information regarding new approaches and strategic development in the field was collected from the
internet and reference was taken from the books of some renowned authors as well in order to get a deeper
insight into philosophy.

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3. INTERPRETATION OF RESULTS
Analysis of the data led to some eye opening facts. During the interviews, most of the employees readily agreed
with the view that they can leave their current organizations if offered with a better package. But, at the same
point of time they also admitted that they would like to stay in the same organizations for long if there is open
mindedness, transparent work culture, quality of work life, fairness of rewards and growth opportunity.
Employees also laid emphasis on job security as a major retention factor.
4. LITERATURE REVIEW
4.1 DOES EMPLOYEE RETENTION REALLY MATTER?
The changing face of workplace & corporate has stumped managers and business owners alike. How do you
manage this challenge? How do you build a workplace that employees want to remain with and outsiders
want to be hired into? Successful managers and business owners ask themselves these and like questions
because putting it simplyemployee retention matters:
High turnover often leaves customers and employees in the lurch; departing employees take a great
deal of knowledge with them. This lack of continuity makes it hard to meet your organizations goals
and serve customers well.
Replacing the employees costs much expense. The cost of replacing an employee is estimated as up to
twice the individuals annual salary (or higher for some positions, such as middle management), and
this doesnt even include the cost of lost knowledge.
Recruiting employees consume a great deal of time and effort, while sometimes much of this results in
wild goose chase. Youre not the only one out there vying for qualified employees, and job searchers
make decisions based on more than the sum of salary and benefits.
Bringing employees up to the speed takes even more time. And when you are short-staffed; you often
need to put in extra time to get the work done.
In almost all cases, it is senseless to allow good people to leave your organization. When they leave,
they take with them intellectual property, relationships, investments (in both time and money), an
occasional employee or two, and a chunk of your future.
4.2 WHAT MAKES EMPLOYEES LEAVE?
Employees do not leave an organization without one particular 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.
Job and person mismatch: A candidate may be fit to do a certain type of job which matches his personality. If
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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.
No growth opportunities: No or less learning and growth opportunities in the current job will make candidates
job and career stagnant.
Lack of appreciation: If the work is not appreciated by the supervisor, the employee feels de-motivated and
loses interest in job.
Lack of trust and support in coworkers, seniors and management: Trust is the most important factor that is
required for an individual to stay in the job. Non-supportive coworkers, seniors and management can make
office environment unfriendly and difficult to work in.
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.
Compensation: Better compensation packages being offered by other company may attract employees towards
themselves.
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.
All these factors including some contingent ones lead to the attrition by the employees. Actually some people
may think that money is the only cause, but it is not always true. Psychological and social maladjustment is
equally responsible for the employees to leave the organization which is a response to his physical environment.
Despite years of research that point to far different solutions, many companies use the wrong tactics when trying
to improve employee morale, satisfaction and retention. These myths prevail, in part, because businesses have
used these methods, however wrong, for a very long time and have become used to trying the same ideas. A few
of such myths are:
People most often leave a company for more pay.
Incentive programs produce long-term profits and improve productivity and morale.
People dont want more responsibility.
Loyalty is dead.
Improving employee satisfaction is expensive.
Employee satisfaction is fluff.
My company/industry/people are different!
Though, all these myths being very popular dont hold true completely. Exit interviews, conducted to learn why
people leave an organization; contain some of Americas greatest fiction. People frequently say theyre leaving
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for more money because its the easiest reason to give. Typical issues that cause dissatisfaction are company
policies and procedures, quality of supervision, working conditions, relationship with the immediate supervisor
and salary. Incentive programs are said to be essential for retention, but can anybody explain who doesnt like
free stuff? Incentives have been over-used particularly in the past decade, as management books touted the
importance of improving recognition of excellent work. Yet, studies show that carrot-and-stick motivation
actually does not pay off in long-term company profitability or employee satisfaction or retention. To the
contrary, incentives can harm quality when employees aim for speed or other goals rather than quality. One
more general notion is there that people dont want more responsibility. Actually they dont want more work if
theyre already overloaded due to lean staffing; but people indeed want the opportunity to grow and develop
their skills, advance their careers and have the opportunity for greater variety. Keep in mind what the research
confirms: People do want to try new things, to feel skillful and to experience the personal satisfaction of higher
levels of achievement.
One more myth prevails in the minds of the employers that loyalty is dead in the employees. Bt this again
doesnt hold true. Though it is ailing in many organizations, people are seeking greater work-life balance than in
the past, and employers have made great strides in providing more flexible hours and dress codes. Still, people
seek to make a contribution, and organizations that provide healthy doses of the main satisfiers enjoy
significantly lower turnover and higher morale. Profits are higher, too, according to recent research studies.
Considering all these factors, the following barriers to employee retention come into focus:
Lack of support from management.
Company culture does not support change.
Back lash only from workers.
Managers do not view work/life initiatives as business tools that impact employee retention.
If the practice of employee retention has to bring into reality, these barriers have to be overcome.
5. RETENTION SUCCESS MANTRAS
In todays fast paced business environments where employees are constantly striving to achieve business goals
under time restrictions; open mindedness and transparent work culture plays a vital role in employee retention.
Companies invest lots of time and money 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
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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. Some of the retention success mantras can be summed up
as:
Quality of Work Life- 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
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.
Support- Providing support to the employees acts as a mantra for retraining them. 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 optimizing
employee engagement, coaching & mentoring etc.
Open Communication: A culture of open communication enforces loyalty among employees. Open
communication tends to keep employees informed on key issues. Most importantly, they need to know that their
opinions matter and that management is 100% interested in their input.
Employee Reward Program: A positive recognition for work boosts the motivational levels of employees.
Recognition can be made explicit by providing awards like best employee of the month or punctuality award.
Project based recognition also has great significance. The award can be in terms of gifts or money.
Career Development Program: Every individual is worried about his/her career. He is always keen to know
his career path in the company. Organizations can offer various technical certification courses which will help
employee in enhancing his knowledge.
Performance Based Bonus: A provision of performance linked bonus can be made wherein an employee is
able to relate his performance with the company profits and hence will work hard. This bonus should strictly be
productivity based.
Recreation facilities: Recreational facilities help in keeping employees away from stress factors. Various
recreational programs should be arranged. They may include taking employees to trips annually or bi-annually,
celebrating anniversaries, sports activities etc.
6. SUGGESTIONS TO IMPROVE EMPLOYEE RETENTION
Retaining key personnel is critical to long term success of an organization. A Retention Strategy has become
essential if your organization is to be productive over time and can become an important part of your hiring
strategy by attracting the best candidates. In fact, some companies do not have to recruit because they receive so
many qualified unsolicited submissions due to their history of excellence in employee retention. How do you get
your employees to "fall in Love" with your organization? This is a great question. Some of the suggestions for
this can be summarized as follows:
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Hire the right people in the first place.
Empower the employees: Give the employees the authority to get things done.
Make employees realize that they are the most valuable asset of the organization.
Have faith in them, trust them and respect them.
Provide them information and knowledge.
Keep providing them feedback on their performance.
Recognize and appreciate their achievements.
Keep their morale high.
Create an environment where the employees want to work and have fun.
Treat your employees like you treat your most valuable clients.
Get your employees to "Fall in Love" with your organization.
Retention is much more effective when you put the right person into the right job.
Know the job! Know the employee and their motivations.
Leadership must be deeply invested for retention.
Money is important but it is not the only reason people stay with an organization. Understand this fact
& act accordingly.
Recognition, in various forms, is a powerful retention strategy
Know the trends in benefit packages. Do your best to offer the ones your employees need.
7. CONCLUSION
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. They need
transparent work environment to work in. In a transparent environment where employees get a sense of
achievement and belongingness, where they can best utilize their potential and realize their skills. They love to
be the essential part of such organization and the company is benefited with a stronger, reliable work-force
harboring bright new ideas for its growth.
8. REFERENCE
8.1. Journal & Books
[1] Taylor Stephen (2002), The Employee Retention Handbook, The Cromwell Press.
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[2] Philips J. J, Connell A.O. (2003), Managing Employee Retention- A Strategic Accountability Approach,
Elsevier Butterworth Hethemann Publications.
[3] Phillips J. J, Edward Lisa (2008), Managing Talent Retention, John Willey & Sons Publications.
[4] Dibble S, (1999), Keeping Your Valuable Employees- Retention Strategies for your Organizations most
Important Resources, John Wiley & Sons Publications.
[5] McCooey D et al, (2009), Keeping Good Employees on Board- Employee Retention Strategies to navigate
any Economic Storm, Wordclay Publications.
8.2. Websites
[1] www.google.com
[2] www.scribd.com
[3] www.citehr.com
[4] www.hrmtoday.com
[5] www.slideshare.net
[6] www.wikipedia.com
[7] www.urenio.com
[8] www.jstor.org
[9] www.allbusiness.com
[10] www.upindia.in
[11] www.eianet.org
[12] www.innovation.cc
[13] www.ask.com
[14] www.amazon.com
[15] www.zainbooks.com