EMPLOYEE ATTRITION &RETENTION ANALYSIS

:COMPARATIVE
STUDY OF BPO & TELECOM SECTOR
SUBMITTED TO
SINGHANIA UNIVERSITY
Rajasthan
Synopsis of the thesis to be submitted in fulfillment of the
requirement
FOR THE DEGREE OF DOCTOR OF PHILOSOPHY
IN THE FACULTY OF MANAGEMENT
2011-12
SUPERVISOR INVESTIGATOR
Dr.Vinay Mohan Smriti Tiwari
Student ID-2011050397
Declaration
I hereby declare that this report submitted in partial fulfillment of the
requirement of the award
for the Doctorate Degree in Management to Singhania University is my original
work and not
submitted for award of any degree or diploma fellowship or for similar titles or
prizes.
. Index/Chapters Topic
Chapter-1 Background of the proposed Topic
Need of the research
Aim of the research
Objectives of the study
Significance of the study
Scope of the Study
Chapter-2 Literature Review
BPO: An overview
TELECOM :An overview
Marketsize of BPO & Telecom in India
Growth Of BPO & Telecom in India
Chapter-3 Research Methodology
Chapter-4 Attrition in BPO & Telecom Sector
Types of Attrition
Reasons To Resign
Cost Involved In Attrition
Chapter-5 Inculcating the retention Culture &Developing
Retention Strategy
Chapter-6 Findings
Contributions
Limitations
Conclusions
Suggestions for further research
Chapter-1-An Overview
Background of the proposed Topic
PEOPLE is the most important and valuable resource every organization has
in
the form of its employees. Dynamic people can make dynamic organizations.
Effective employees can contribute to the effectiveness of the organization
Competent and motivated people can make things happen and enable an
organization to achieve its goals.
Organizations have now started realizing that the systematic attention to human
resources is the only way to increase organizational efficiency in terms
productivity, quality, profits and better customer orientation.
HR can help deliver organizational excellence by focusing on learning,
quality,teamwork, and through various employee friendly strategies.
Today with a lot of MNCs coming in India, the amount of competition has
increased to such an extent that organizations have further aggrieved their stress
on
proper man management. Along with being competitive, the MNCs have
brought
in a systematic approach to HR with the help of technology utilization.
One of the toughest problems that confront HR managers these days is
Employee
Attrition. It is a sporadic occurrence of depletion of HR resources, caused not
only due to resignation, death, retirement or disability, but also by the
burgeoning
mobility of the Human Capital.
This mobility, on its part, assumes, very often, endemic traits and, on occasions,
even epidemic dimensions beginning as a trickle and swelling into a cascade.
Studies by HR experts have also revealed that the so-called Globalization and
Innovation in business processes, services and products for competitive
survival
by corporate giants and business houses, have resulted in the birth of novel
concepts and fresh styles of management as a part of the relentless exploration
of
new surviving possibilities.
As a result of this lateral and vertical growth, skilled and even semi-skilled
workers find a matrix of possible avenues for selfdevelopment. Hence,
employees,
driven by ambition and desire, shift their respective corporates, industries, states
and countries to others in search of greener pastures...
Employee attrition is caused not only by natural inevitabilities like disability
and
death or workplace phenomena such as retirement and resignation, but also by
the
burgeoning mobility of HR Resources or the Human Capital. This mobility on
its
part assumes, very often, endemic traits and on occasions even epidemic
dimensions. Efforts for survival of corporate amidst the competitive
environment
have thrown up new avenues that aided attrition. Also, ergonomic discomfort,
functional incompatibility and inadequate pay package have accelerated
attrition.
Hence, the policies aimed at controlling attrition should be fully oriented
towards
assuring that the needs and welfare of the employees would be taken full care of
and in addition should project the right employer brand or an agreeable
organizational behavior towards the employees so that it instills confidence and
trust in their minds and motivates them to stay on.
Do not hire a man who does your work for money, but hire him who does it for
love of it.
Henry David Thoreau (1817-1862)
(American Essayist and Poet and a contemporary of Ralph Waldo Emerson
Need of the Research
Staff attrition (or turnover) represents significant costs to technology and
business
process outsourcing (BPO) companies. High attrition rates drive up training
costs,
and increase human resources, recruiting, and productivity costs. They also
increase the prospect of customer service complaints or quality problems, and
create substantial continuity problems for longer-lived projects.
There are many causes for attrition including, retirement and death. However,
most
attrition is due to employee turnover. Employees leave their jobs for a number
of
reasons including: wanting more money, poor working conditions, irregular
working hours, lack of advancement opportunities, lack of job security,
difficulties
with coworkers, desire for change, better opportunities, and family reasons (e.g.
their spouse gets a job in a new location, females leave the workforce after
marriage or childbirth). High wage inflation is another major factor in job
hopping.
Thus the need for this study can be clearly defined in two points:
1. Attrition is a burning problem for the promising industry of BPO, especially
because it fails to tap the full utilization of the human resources and wastes
much
of its time, money and resources due to this.
2. Dearth of motivation among the BPO employees is one of the bitter truths
that is
responsible for the attrition in this sector, and it is time we enhanced it in the
BPO
sector.
Aim of the research
This research aims to produce a model for employee retention conjoining it with
other aspects of perceived attitudes viz. employee motivation, employee
satisfaction, employee involvement and life interest and work compatibility
etc. To attain the aim of the research, the Hackman and Oldhams Job
Characteristics model (1976) was taken as the basic foundation. Hackman &
Oldham (1976) proposed the Job Characteristics Model, which is widely used as
a
framework to study how particular job characteristics impact on job outcomes,
including job satisfaction. The model states that there are five core job
characteristics (skill variety, task identity, task significance, autonomy, and
feedback) which impact three critical psychological states (experienced
meaningfulness, experienced responsibility for outcomes, and knowledge of the
actual results), in turn influencing work outcomes (job satisfaction, absenteeism,
work motivation, etc). The basic hypothesis of this research that employee
motivation, employee satisfaction, employee involvement, and life interest and
work compatibility lead to prolonged sustenance is an extension of this model
with
minor modifications in it. It is proposed that the Job Characteristics model is
modified by redefining job dimensions as growth prospects, accountability,
sense
of accomplishment, self-esteem, job security, interpersonal relationships,
working
conditions, by extending organizational outcomes as satisfied, motivated,
involved
and retained employees. Figure 1 is the modified Hackman and Oldhams Job
Characteristics model which has been taken as the base to study the research
questions pertaining to this research. The new model is also designed to be of
use
as a management tool and must therefore be simple and flexible enough to be of
use to the management of an organization. Typical management questions
would
involve the likely motivational impact of job redesign, such as increasing
employees level of control and responsibility over their work behavior or
introducing a scheme whereby employees participate in certain management
decisions. The model should therefore allow managers to manipulate a host of
job
characteristics and investigate the likely effects upon the motivation,
performance
and sustenance of the workforce. This study aimed at exploring the dimensions
of
attrition and retention.
Objectives of the study
The broad objective of this thesis is to identify the root causes of attrition in
BPOs,
analyzing the level of employee motivation, satisfaction and involvement,
generate
a model for maximizing sustenance of employees in the organization and come
up
with concrete recommendations, which will eventually be valuable to the
organizations to retain their employees for a long term. The specific objectives
of
this thesis are:
1. To identify the factors which is responsible for attrition in BPOs & telecom
based on literature review & data
2. How much is the attrition?
3. Is Exit Interview conducted?
4. If the company has a retention policy or not?
5. To explore,analyze,identify the dimensions of attrition in BPOs based on
primary data collected from field survey.
6. To build up a regression model for rising the stay of employees in BPOs and
give recommendations for the same.
7. To evaluate the existing level of employee motivation and authenticate the
model by studying the impact of recommendations on a small patch.
Significance of the Study
The significance of the study lies in the detonation of the BPO &Telecom
industry
in the recent years. Where on one hand the sector is growing with leaps and
bounds, on the other the employee turnover has been alarmingly high, thus
costing
a lot to the company. The middle level and low level employees are victims of
dearth of motivation and employee satisfaction also seems to be brandishing.
The
study is an attempt to assess the patterns of attrition in BPO and analyze the
relationship among employee motivation, job satisfaction and employee
retention,
so as to utilize employee motivation to retain employees in an organization.
Thus,
not only is it significant for academicians but also for professionals who can
exploit it to control the employee turnover.
Scope of the study
Although the development of motivation model to tackle the problem of
attrition in
the BPO sector has inputs from a variety of sources including primary and
secondary sources, the study is confined to the data collected from the national
capital region of India. Moreover, only selected facets of job characteristics
have
been considered for the study. There are many which can be included in order to
assess employee motivation. Therefore the scope of the study is limited to the
geographical location of the sample size and also to the selected dimensions of
personal characteristics and employee motivation.
Chapter-2 Literature Review
With the boat of success steaming ahead in the global markets, India has already
become the most privileged destination for Business Process Outsourcing. The
word which one would simply lisp in the beginning of this century has become
the
most pronounced and sought after term. Generating revenues, fostering
employments, elevating the living standards, an eternal inventory of
opportunities
simply showcase a phenomenon which is no less than the renaissance for our
Indian markets. Many researchers have talked about BPOs in their works,
highlighted its capability as money making sector, showcased its doom of high
employee turnover, sketched out its strengths, weaknesses, opportunities and
threats, and also chalked out its dynamics of HR. Other researchers have
extensively worked on various perceived attitudes of employees like their
satisfaction, motivation, its influence on their tenure, their loyalty, commitment
etc.
Communication has always been an integral part of our lives. Family relations,
education, government, business and other organizational activities are all
totally
dependent on communications. It is such a commonplace activity that we take it
for granted. Yet,without communications most modern human activity would
come
to a stop and ceaseto exist. To a great extent, the success of almost every human
activity is highly dependent on how available communications methods and
techniques are effectively utilized. The word telecommunication has its roots in
two words: Tele in Greek meaning distant and communicatio in Latin meaning
connection. Telecommunication is the distant transfer of meaningful
information
from one location (the sender, transmitter, or source) to a second location (the
receiver, or destination). Today, the term telecommunicationis usedin a very
broad
sense to imply transfer of information over cable (copper or fiber) or wireless
media and includes all of the hardware and software necessary for its
transmissionand reception. This chapter unfolds all the relevant literature about
the
BPO &Telecom industry in India, theories and research works of employee
motivation and satisfaction, and collaborates the findings to tackle the problem
of
attrition in this sector.
Attrition-Corporate Scourage
A reduction in the number of employees through retirement, resignation or
death
Defining Attrition rate: the rate of shrinkage in size or number It is
separation
of employee from an organization, due to resignation, retirement etc. A process
where by employees leave their jobs for reasons such as retirement, resignation,
transfer etc and that job remain constant. The organization has no direct role to
play in natural attrition.
Mention it in any sphere of corporate life and reactions are usually strong and
possibly adverse. Most people face this word in everyday life and yet never
realise
what they are facing. Quite a shame, to be honest.
Attrition devolves from the Medieval Latin word, attricioun or attritio which
originally meant sorrow for ones sins that arises from a motive other than love
of
God. This definition also included the meaning of the act of wearing down or
grinding down by friction and further the act of weakening or exhausting by
constant harassment, abuse of attack also known as a war of attrition.
In modern usage and connotation, the word indicates the reduction of staff and
employees in an organization through normal or abnormal means, such as
retirements or resignations. Attrition could also mean the gradual reduction of a
workforce by employees leaving and not being replaced rather than by their
being
laid off.
Under any circumstances, within the harsh strictures of corporate terminology,
growth indicating success is an undeniable fact. Any organization losing people
or
assets is considered to be in trouble and hence the strong reactions to this
word.
Regardless of the size, dimension or even profile of the company, in todays
world,
it is becoming harder each day to retain the top performers the best and the
brightest for the duration of their productive lives. This is never more in sharper
clarity than on the corporate battlefields of modern-day India. As a microsm of
global business, the Indian corporate scenario makes some rather pertinent
points,
which should be considered by global market leaders or any entrepreneur worth
their salt.
BPO- An overview
Grossman and Helpmans (2005: 135) statement, We live in an age of
outsourcing, clearly designates that outsourcing has now become an
acknowledged, accepted and established business strategy. One of the most
familiar forms of outsourcing is business process outsourcing (BPO), i.e.,
transferring the operational ownership of one or more of the firms business
processes to an external supplier that, in turn, administers the processes
according
to some predefined metrics (Ghosh and Scott, 2005; Stone, 2004). BPO or
Business Process Outsourcing thus refers to the rearrangement of entire
business
functions to some other service providers, primarily in low cost locations. The
service provider may be either self-owned or a third party. This relocation or
transferring of business processes to an external provider is essentially to
accomplish increased shareholder value.
Some of the general services provided by the BPOs are Receivables and
Payables,
Inventory Management, Order Processing, Cash flow Analysis, Reconciliation,
Data Entry, Payroll Processing, QuickBooks Accounting, Financial Statement
Preparation and Accounting Services. Some of the web based services include
live
online sales and order entry, E-commerce transaction support, Live online
enquiry
handling, Web Design/Development.
Chapter-3 Research Methodology
The general intent of this descriptive study was threefold. Therefore a
systematic
and organized methodology will be obtained for the research study. A survey
design to gather the required information. The population for this study
comprised
of employees working in various BPOs& Telecom sector in the National
Capital
Region. Simple random sampling technique will be use to gather data from the
respondents, because of which respondents diverged from every age group,
gender,
organization, marital status etc. but were restricted only to low and middle level
employees, where the attrition is highest. The questionnaire was intricately
designed to tap the demographic variables including age, education, gender,
marital status, and tenure of the respondents. It also gathered information about
the
factors responsible for attrition, the factors that can be employed to retain the
employees in a BPO, their overall level of satisfaction, motivation, involvement
and life interest and work compatibility.
The data will be collected from two methods- questionnaire & personal& exit
interview with each leaving employee.This guarantees more insightful outcome
as
well as honest & open respond from the respondents.
Chapter-4. Attrition in BPO & Telecom Sector
Human Capital is the most crucial resource on which the Information
Technology
& Information Technology Enabled Services (IT & ITES) depends. Next to the
location advantage that India has, the factor for the country's immense success
in
the overseas markets, is its abundant & cost effective human capital which is
one
of the key asset that has kept India sustain its edge in the ITES sector. Human
Resource (HR) professionals all over the world, working in Call-Center or
Contact
Center or BPO industry are leaving no stone unturned to formulate strategies to
retain human capital, but nothing is working in their favor. In spite of all their
trials
the average attrition rate in the BPO this sector is still very high.as well as in
telecom Sector..In this Chapter the discussions will be on the various types of
attrition,causes and what cost will be incurred for recruiting the manpower.
Reasons to resign
The reason for the high rate of attrition in the BPO sector particularly call centre
segment range from lack of comfort of enrichment potential in terms of career
growth. The growth of BPO industry is mainly depending on the cost
effectiveness
and quality of the manpower. Attrition is not a new problem and it has existed
earlier and will continue to exist in any industry.
In spite of the salaries and facilities being high (especially for a graduate who
starts
his / her career with a BPO company) the average attrition rate is very high in
this
industry. There are numerous reasons for the attrition to be high which can be
categorized into two broad classifications.
The first can be coined as Drive Attrition which is caused due to the
employer;
the second one can be termed as Drag Attrition which is caused due to the
employee.
Cost involved in attrition
Costs Due to a Person Leaving
Recruitment Costs
Training Costs
Lost Productivity Costs
New Hire Costs
Lost Sales Cost
Chapter-5 Inculcating the retention culture &Developing
strategies for Retention
The most important aspect of inculcating the retention culture is to
emphasize upon the employees that the organization values them. Culture of
retention should prioritize the I-I-I model i.e. Introduce-Inculcate-Involve.
The details are as follows:
Introduce to the employees that the organization holds high degree of
attachment towards them values them and believes in sustaining them.
Inculcate the culture in the organization communicating to the employees
that retention of employees is not just a segregated task of the H.R, but is the
responsibility of the whole family. Season the work culture that is in sync
with the philosophy of retaining the employees.
Involve employee more in planning retention strategies as coworkers
understand better than supervisors.
Few ways to create a culture of retention should include taking care of the
intrinsic motivation needs of the employees, and involvement factors.
Organizations should have a proactive retention strategy which helps in
reducing
employee turnover. Retention plan strategies should be different for different
level
of employees, because their roles are different; their needs are different; what
motivates them are different and what makes them leave are also different.
Based
on the study it has been seen that dimensions of satisfaction and motivate are
significantly different for employees on the basis of age, gender, marital status
and
education. Then, the regression model revealed that intrinsic motivation and
involvement factors, as well as age and education level contribute to the
sustenance
of employees in the organization. Thus based on the findings, it can be said if
the
employees are motivated and involved in the work they can be retained.
HRD mechanism
HRD is a total system with various sub-system.Various HRD thinkers and
professionals have designed the mechanism of HRD indifferent ways. the
subsystems differ and there is no harmony in the application of the system.The
major subsystems are described below.
Performance Appraisal
Potential appraisal
Career Planning
Trainning & Employee Development
Organizational Development
Rewards
Employee welfare
Quality of work life
Human resource Information Systems
Role Analysis
Learning & Learning organization
Counselling ,Coaching& Monitoring
HR Audit & HR Accounting
Strategic Human Resource Development
Succession Planning
Managing Quality & Productivity
EmployeeInvolvement/Accountability,Responsibility&pee
r
Equality
Literature on employee involvement was also extensively reviewed as one of
the
significant determinants of employee retention came out as involvement factors.
Many researchers have worked on employee involvement and participation at
various levels and in various domains. Employee involvement is an important
attribute of job satisfaction, employee motivation and even employee retention.
Employee involvement has a direct correlation with productivity, quality,
efficiency, absenteeism, and even motivation. Employee involvement has
received
much attention in the area of work organization in recent decade.
Delegation is a vast task and an extremely sensitive issue. To delegate work to
someone would mean an engendering of trust, reliance upon another at cost to
self.
If the task is not done properly or not done at all, its your neck on the line
hence
most good resources/assets try to do everything themselves. What they need to
be
taught is not fear of missing deliverables and unbearable deadlines, but the
freedom to mentor and monitor juniors, coordinate with colleagues for
successful
delegation. In this context, specific accountability and responsibility allotment
are
key this is a rock solid answer to fears and a future anchor to successful
retention
of top assets/resources as they dont feel over-worked and respect the trust of
the
organization in them. Avoid trying to tell them how to do their jobs once the
expectations are explained
A top worker or field man or developer will want to work with someone who is
at
least of their calibre if not someone who is better than themselves so that they
can
learn and add to their knowledge/skill base. Top talent are always smart workers
and deliver best when competing with others of the same ilk. There is no sense
in
hiring and retaining people who dont benefit others as well as themselves.
Replacements for top assets should also be with top assets or else, a previously
vigorous and effective team would lose momentum and morale. To keep our
best
& brightest, we need better and brighter people.
Role of training & Supervision
The challenge of how to retain valuable employees is one of the biggest
concerns
plaguing companies in the competitive marketplace. With the economy
beginning
to settle out and more positions opening within in growing companies,
employees
are faced with a decision: Is the grass really greener on the other side? As a
result,
employers must look at what they are doing to attract, and more importantly
retain,
the top talent they had been fortunate enough to preserve during the
recession.One
way many organizations have chosen to hang on to their top talent is by
reinvesting
in their human capital -the specialized knowledge, skills, and abilities of a
companys workforce. After making the initial investment of hiring these
employees, companies are now looking to provide their workforce with the
tools
needed to grow and develop as contributors to the growth of the company.
Motivation in Action
Motivation is a big word and another greatly misused word. Motivation does
not
come from merely sweet talk or pats on the shoulder. Motivation works in deeds
not speech. By definition, corporates are organic bodies and having specific
articulatory parts. Most of the best and brightest of an organization are never
asked
if theyre really interested in what theyre doing everyone is on a deadline and
there are too many deliverables. Top talent is never driven by money and power
completely the compensation is important but not a priority. But the greatest
motivation is genuine interest & passion in what they do on an everyday basis.
Its
the chance to be a part of something BIG, something that would possibly
change
the world (in whatever small way) or even something that they, the top talent,
would feel proud about. Its not enough to just say, well done but needs to be
followed up with more chances to showcase skills, learn more and contribute
positively.
Openness and Vision
The smart workers always have ideas for improvement and a desperate need to
have them listened to! However, the majority of their ideas might go against the
established corporate vision/strategy. This creates a lot of frustration and
feelings
of alienation for all such employees regardless of rank, designation etc. If the
smart
workers feel alienated at every turn and meeting, the organization will be left
with
a staff of Yes Men who agree to whatever is stated without any personal inputs
of
worth. There is a need to acknowledge the fact that others can have good ideas
and
incorporate the best parts of said innovations into over-all strategy. Sometimes
the
boss is not always right although they may be usually right.
Career Development & Priorities
90% of employees have no long term career goals or even mid-term goals, leave
aside personal development or even specific time-bound priorities. This case is
especially so in India where once a student gets a job, the battle is half over.
Less
than 2% of junior employees and under 5% of middle ranking staff could give
you
a detailed plan for what they want to do in the next 5-10 years. But, everyone
wants to know how much their salaries will increase in the same period! Some
of
the best people to work with undertake an annual review of focus for both
employer and employee, which ensures that there is a cohesive and
comprehensive
discussion on succession planning and career development. In essence, if your
people know that there is a path ahead of them, they are more likely to stick
around
and see whats at the end of the suggested road.
Chapter-6 Research Findings & Conclusions
Findings of the research study,
Contributions of the study theoretical as well as practical,
Limitations of the study ,
Conclusions of the study
Suggestions for further research
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