UNIVERSITY OF MUMBAI A PROJECT ON ATTRITION SUBMITTED BY Ayyangar Nisha Jagannathan TYBMS V th SEMESTER PROJECT GUIDE Mrs Swati Nalawade YEAR (2007-08) S.I.E.S (Nerul) college of Commerce Sri Chandrasekarendra Saraswathy Vidyapuram, Plot 1-C, Sector V, Nerul, Navi Mumbai-400706 1
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UNIVERSITY OF MUMBAI
A PROJECT ONATTRITION
SUBMITTED BYAyyangar Nisha Jagannathan
TYBMS Vth SEMESTER
PROJECT GUIDE Mrs Swati Nalawade
YEAR (2007-08)S.I.E.S (Nerul) college of Commerce
Sri Chandrasekarendra Saraswathy Vidyapuram,Plot 1-C, Sector V, Nerul, Navi Mumbai-400706
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If employees are to be products,
Their shelf lives are getting shorter
“ATTRITION”
ACKNOWLEDGEMENT
The successful completion of this project was a result of the kind co-operation &
guidance I have received from various persons & institution. Though I would like to
acknowledge them individually I mention below only few though the contribution from the
rest was of no less importance.
Firstly I thank the S.I.E.S (Nerul) college of Arts, Science and Commerce, and the staff
of the college for having given me this opportunity to do this project and providing me with
the required advice and guidance.
I specially thank my project guide ____________________ for sparing her valuable
time and effort to give me the necessary information and clearing my concepts regarding my
topic and completing this project successfully.
Finally I am grateful to my friends and many other Call center employees for providing
me with the information by responding to the survey conducted by me.
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CERTIFICATE
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DECLARATION
I, NISHA JAGANNATHAN OF S.I.E.S (NERUL) COLLEGE OF ARTS,
SCIENCE & COMMERCE HEREBY DECLARE THAT I HAVE COMPLETED
THE PROJECT ENTITLED ATTRITION IN PARTIAL FULFILLMENT OF THE
REQUIREMENT FOR THE THIRD YEAR OF THE BACHELOR OF
MANAGEMENT STUDIES COURSE FOR THE ACADEMIC YEAR 2007-2008.
I FURTHER DECLARE THAT THE INFORMATION SUBMITTED BY
ME IS TRUE AND ORIGINAL TO THE BEST OF MY KNOWLEDGE.
DATE: STUDENT NAME:
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Sr. no. CONTENTS Pg.No.
01. EXECUTIVE SUMMARY 08.02. OBJECTIVE OF THE PROJECT 09.03. METHODOLOGY OF STUDY 09.04. DEFINING ATTRITION AND PROBLEM 10.05. REASONS FOR ATTRITION 12.06. HOW TO HANDLE ATTRITION? 16.07. HOW TO SAVE HIGH ATTRITION RATES? 23.08. HOW TO CURB ATTRITION? 27.09. COST OF TURNOVER 36.10. ARTICLE: ‘Attrition at Call Canters’ 47.11. CASE EXAMPLE : 'I'll never work at a call
centre again!'50.
12. WHY PEOPLE ARE LEAVING BPO’s? 53.13. QUESTIONNAIRE ON ATTRITION 63.14. CONCLUSION15. BIBLOGRAPHY
INDEX
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EXECUTIVE SUMMARY
Human Capital is the most crucial resource on which the Information Technology &
Information Technology Enabled Services (IT & ITES) industry in India 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.
In the best of worlds, employees would love their jobs, like their coworkers, work hard
for their employers, get paid well for their work, have ample chances for advancement, and
flexible schedules so they could attend to personal or family needs when necessary. And never
leave.
But then there's the real world. And in the real world, employees, do leave, either
because they want more money, hate the working conditions, hate their coworkers, want a
change, or because their spouse gets a dream job in another state.
So, what does that entire turnover cost? And what employees are likely to have the
highest turnover? Who is likely to stay the longest?
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OBJECTIVE:
The objective of this project is to understand the retention strategies adopted by
various Indian BPO companies (especially the call centers) and propose innovative strategies
that these companies can adopt to get a better solution to this Herculean problem that the BPO
industry is facing. Though the issues and options analyzed are with respect to Indian service
providers, the same may be applied to service providers across the globe as the issues and
options remain the same irrespective of place of operation.
METHODOLOGY OF STUDY:
To know about retention strategies adopted by various Indian BPO companies
(Especially the call centers) the Internet and print medium like magazine and newspaper were
used in which the interviews of HR managers were published. The reason behind choosing
call center segment of BPO is, Customer care based call center activities constitute for more
than one third of the total employment and revenue in BPO segment.
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DEFINING ATTRITION:
"A reduction in the number of employees through retirement, resignation or
death"
DEFINING THE ATTRITION PROBLEM:
Attrition is beginning to significantly affect offshore return on investment(ROI.) Just
as businesses faced a scarcity of talented IT resources during the dotcom era, organizations in
offshore countries such as India are experiencing similar pains. Skilled employees are hopping
from job to job and taking with them the customer knowledge and technical expertise that any
company needs. Their salaries are increasing, along with their perks, benefits, and bonuses.
Global outsourcing and the astounding amount of foreign direct
investment pouring into China, Russia, and India have created tremendous
opportunities and competition for talented IT professionals in those
countries. The downside of this increased competition is a rising rate of
attrition, particularly in India. Fiscal third-quarter 2005 (ended December
2004) results filed by Infosys, Wipro, Satyam, and TCS listed attrition rates
between 7.6% and 17.7%. while an April 2005 BusinessWeek article estimated an attrition
rate of 60%, with some Indian service providers experiencing up to 80% turnover.
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To put these attrition numbers into perspective, if a company has 100 programmers and
an attrition rate of 25%, then 25 of its IT staff will leave each year. Think about the time and
money it took to find, interview, hire, train, and coach those 25 people. Now think about
losing them and starting the hiring and training processes anew.
How do the hiring and training processes break down in terms of total costs in India?
The typical time for advertising, interviewing, screening, negotiating, and hiring a new
employee is about two weeks. Companies usually allot one week for programmers to become
familiar with the new business, two more weeks for technical training, and one last week for
customer training. Now imagine a 25% attrition rate and replacing 25 of these programmers
each year. Based on a yearly salary of $15,000 for the human resource person and $25,000 for
the programmer, it would cost an additional $63,000 annually in acquisition and employee
training costs. After considering these figures, it quickly becomes apparent why companies are
investing in strategies to prevent attrition.
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REASONS FOR ATTRITION:
It is not easy to find out as to who contributes and who has the
control on the attrition of employees. Various studies/survey conducted
indicates that every one is contributing to the prevailing attrition. Attrition
does not happen for one or two reasons. The way the industry is projected
and speed at which the companies are expanding has a major part in
attrition.
For a moment if we look back, did we plan for the growth of this
industry and answer will be “NO”. The readiness in all aspects will ease the
problems to some extent. In our country we start the industry and then
develop the infrastructure. All the major IT companies have faced these
realities. If you look within, the specific reasons for attrition are varied in
nature and it is interesting to know why the people change jobs so quickly.
Even today, the main reason for changing jobs is for higher salary and
better benefits. But in call centers the reasons are many and it is also true
that for funny reasons people change jobs. At the same time the attrition
cannot be attributed to employees alone.
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Organizational matters:
The employees always assess the management values, work culture,
work
practices and credibility of the organization. The Indian companies do have
difficulties in getting the businesses and retain it for a long time. There are
always ups and downs in the business. When there is no focus and in the
absence of business plans, non-availability of the campaigns makes people
to quickly move out of the organization.
Working environment:
Working environment is the most important cause of attrition.
Employees expect
very professional approach and international working environment. They
expect very friendly and learning environment. It means bossism; rigid
rules and stick approach will not suit the call center. Employees look for
freedom, good treatment from the superiors, good encouragement,
friendly approach from one and all, and good motivation.
Job matters:
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No doubt the jobs today bring lots of pressure and stress is high. The
employees
leave the job if there is too much pressure on performance or any work
related pressure. It is quite common that employees are moved from one
process to another. They take time to get adjusted with the new
campaigns and few employees find it difficult to get adjusted and they
leave immediately. Monotony sets in very quickly and this is one of the
main reasons for attrition. Youngsters look jobs as being temporary and
they quickly change the job once they get in to their own field. The other
option is to move to such other process work where there is no pressure of
sales and meeting service level agreements (SLA). The employees move
out if there are strained relations with the superiors or with the
subordinates or any slightest discontent.
Salary and other benefits:
Moving from one job to another for higher salary, better positions
and better
benefits are the most important reasons for attrition. The salary and
offered from MNC companies in Bangalore, Delhi and Mumbai have gone
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up very high (Rs 15000 to Rs 18000 per month) and it is highly impossible
for Indian companies to meet the expectation of the employees. The
employees expect salary revision once in 4-6 months and if not they move
to other organizations.
Personal reasons:
The personal reasons are many and only few are visible to us. The
foremost
personal reasons are getting married or falling in love or change of place.
The next important personal reason is going for higher education. Most of
the BE, MCA and others appear for GATE examination or other
examinations and once they get cleared they quickly move out.
Health is another aspect, which contributes for attrition. Employees do get
affected with health problems like sleep disturbances, indigestion,
headache, throat infection and gynecological dysfunction for lady
employees. Employees who have allergic problems and unable to cope
with the AC hall etc will tend to get various other health problems and
loose interest to work.
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Poaching:
The demand for trained and competent manpower is very high.
Poaching has become very common. The big companies target employees
of small companies. The placement agencies have good days for doing
more business.
The employees with 4-6 months experience have very good confidence
and dare to walk out and get a better job in a week's time. Most of the
organizations have employee referral schemes and this makes people to
spread message and refer the know candidates from the previous
companies and earn too.
Employee’s advocate:
One of the main reasons why employees leave companies is because
of problems with their managers. An HR professional can be termed an
employee’s advocate and a bridge between top management and
employees at all levels. There is a huge gap between HR professionals and
employees in terms of understanding challenges and delivering
requirements. HR has not really understood the problems associated with
employees’ careers and jobs. The company’s overall plans and strategies
also depend on HR professionals as they voice employees’ problems and
requirements. The HR department should have genuine interest in the
employees’ welfare…it is responsible for making sure that their
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expectations are met. By doing this it is easier to meet the company’s
business targets.
HOW TO HANDLE ATTRITION?
Earlier the retention was the sole responsibility of HR Department
and at the most the department heads will be accountable for the
retention of talent. In companies the wheels have changed and multi
dimensional approach needs to be adopted. More of concerted efforts only
would help to retain the talent. Everyone has to contribute to hold the
employees little longer period. All the leading companies are trying several
methods to retain the talent and few of those innovative HR
practices(based on a survey) are:
Providing stimulating work environment:
In terms of stated work pressure, only 17% have claimed ‘light pressure’.
This may point to a reasonably high-pressure environment in conventional
terms, not realized as most respondents have no other industry
experience. The atmosphere at the workplace however, was generally
positive. Almost half worked more than 45 hours per week.
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BASE 100
Heavy pressure 17%
Moderate pressure 66%
Light pressure 17%
BASE 100
Happy 57%
Neutral 39%
Unhappy 4%
Free transport and free food:
Majority of the breaks were for meals and there were no significant
problems faced in taking the breaks.
Almost 2/3rd employees travel more than 10 kms to work everyday. This is
a huge strain on quality time available with the family and ostensibly
results in stress in numerous ways compared with other industries. The
root cause is that most BPOs are located outside the city as government
lands have been allocated to the MNCs at better rates there.
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BASE 100
Tea/Coffee/Refreshment break 69%
Lunch Break 76%
Break fast 7%
Dinner 15%
All other break reasons 3%
Not specified 9%
BASE 100
Yes- Problem to break 8%
No - Problem to take break 88%
Refused 4%
BASE 100
Up to 10 km. 68%
11-19 km. 12%
> 20 km. 17%
Can’t say 3%
Although taxi / bus services are provided by most employers, as many as
30% workers travel crammed (more than 5 persons to a taxi). What’s
more, 79% waste more than 30 minutes of their productive lives everyday
waiting for commute. Interestingly, lower salary workers get no such
benefits.
Good rewards and recognition programmes:
As many as 56% admitted to being asked to work overtime. 44%
refused the question implying that conditions are created such that all
probably are coerced into working overtime. The oppressive part was
further that as high as 41% claimed to not having been paid for overtime.
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BASE 100
1-2 hrs. 29%
>2 hrs. 27%
Refused 44%
BASE 100
Paid 59%
Not Paid 41%
Recreation clubs, Canteens, Entertain programmes , fun
activities with in the work area:
Many companies have canteens though the quality of food is not great.
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BASE 100
Yes – Health affected 16%
No – Health not affected 80%
Can’t say 4%
BASE 100
Good – Canteen quality 41%
Average 51%
Poor 4%
Can’t say 4%
BASE 100
Yes – canteen at work place 87%
No – No canteen 13%
Other practices include:
- Promotions and salary increase on a regular basis.
- Better learning opportunities, Encourage enroll for distance learning
programmes.
- Regular holiday packages, gifts, outings etc.
All the above activities are being undertaken to a greater extent or
little more in all large Companies. Surprisingly the attrition rate is not
coming down in any of the companies, but it is going up and it may
increase in the coming days. This is a time to introspect as to what is
lacking in the approach. One thing is missing is attention to individual
needs. Employees have varied expectations and it is becoming difficult to
understand them and by the time you make an attempt to understand the
expectation changes and it is still becoming difficult to meet the
customized demands or expectations. To quote an example, if a friend
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leaves, another close friend will also leave and he will lure another 3-5
persons. Moving for higher education and marriage are the major reasons
for attrition. To tackle these will be impossible with any type of strategies
and approaches. The HR personnel have become silent spectators and
start hunting for new personnel to replace.
The broader approach is to bring sanctity in the recruitment process
like demand the relieving letter from the previous company, have non-hire
agreements with the companies in the particular area. It is not easy to
bring the entire company under a forum. Nasscom has attempted to bring
out certain guidelines on the matter and the impact is not felt yet. The
MNC culture, high salary level and benefits offered by them are the only
two major aspect of attrition and no one can halt them doing so.
How Insights Can Help Build Strong Manager/Employee
Relationships:
The Insights Discovery System is based on perspectives and
attitudes relevant to understanding organizational and cultural
requirements and needs of people in relation to motivation and leadership.
The understanding of individual differences that Insights provides is
fundamental to improving communication, co-operation and building
effective and high morale teams. This understanding is what bridges the
gap between manager and employee.
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The Insights Discovery System generates reports that reveal
personal preferences or triggers of each individual - including issues that
cause stress. In essence, Insights can bring about a closer relationship
between employee and manager to enable both parties to better adapt,
connect and understand one another.
An employee may be highly competent but his or her style may be
different from that of the direct manager. The "Value to a Team" section of
an Insights report provides crucial information to a manager who tends to
evaluate all employees against one set of standards. Insights can help
managers recognize the value and uniqueness of each person's
contributions then reward them accordingly.
Insights also serve as a communication vehicle for discussions about
an employee's current and future interests. Insights help managers and
employees better identify what values (needs) are most important to each
individual and how these values impact the person's attitude towards
work. Values can range from an employee feeling stable and secure to
someone enjoying challenge.
The Insights Discovery System is a powerful workforce enhancement tool.
It can:
- Enhance the effectiveness, commitment and retention of an incumbent
workforce though increased understanding of human behavior
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- Motivate and retain employees whose basic monetary and material needs
may have been satisfied, but who are seeking their internal drives
- Improve HR planning and development
- Identify motivational and managerial issues related to interpersonal
style
- Reduce the impact of turbulence and organizational transition on
employee commitment and productivity.
HOW TO SAVE HIGH ATTRITION RATES?
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How much would you invest to keep your employees focused
and happy?
This is the question on the minds of CEOs and managers worldwide as the
technology boom lifts and the employment market opens.
From the employer's perspective, employees are an investment. You
interview to make sure an individual has good work ethic, motivation, and
drive. Most of the time, employees are considered a financial investment.
Yet there's much more to it than that. There is a significant emotional
investment that is crucial to accelerating business strategies and reaching
organizational goals.
You probably know someone who owns an outdated, overused vehicle but
won't entertain the thought of trading it in even though they can afford to
upgrade. Why, you might ask, do they keep it? Well, the owner has
probably invested substantial time, money and care into keeping it in top
condition, not to mention the dependability that has taken them to
countless doctors appointments, baseball practices and events. It seems
senseless to throw it away. The cost of replacing the vehicle would be
enormous compared to the cost of upkeep on the old one. Even with
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inanimate objects, we become accustomed to personality and quirks and
develop a common trust.
When this same logic is applied to employees, we find the cost of replacing
employees comparable to that of investing in a new automobile.
Recruitment, hiring, benefits and administrative costs put an organization
upside down on the investment.
Thankfully, companies have come to realize that keeping employees is
more cost-effective than replacing them. Retaining valuable employees
has other benefits - retaining the vault of knowledge that's been
accumulated, skills learned and trust and relationships they have built with
customers and co-workers.
People Are Not Easily Replaced
Even though today's pool of unemployed workers is deep,
organizations choose to spend more time and resources on retaining
existing employees than starting from scratch. Yes, there are financial
reasons behind this focus on retention. However, there are many other
contributing factors such as the effect attrition has on customer service,
corporate culture and employee morale and loyalty. All these factors can
and will be effected by turnover. Basically, when good people leave an
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organization they take their training and knowledge and often times,
relationships with them.
Drivers of Turnover
Turnover is often driven by corporate restructuring and tight
competition for key talent. For many firms, surprise employee departures
can have a significant effect on the execution of business plans and may
eventually cause a parallel decline in productivity. This phenomenon is
especially true in light of current economic uncertainty and following
corporate downsizing when the impact of losing critical employees
increases exponentially.
When managers or supervisors are asked why good people leave, most
respond, "It’s about money." Or, they dismiss the departure matter-of-
factly by stating the employee "received a better offer." Contrary to
popular belief, research indicates that money is not even on the list of top
five reasons employees give when asked why they are leaving an
organization.
When viewed from the employees' perspective, a healthy organization is
one in which people are generally satisfied with the quality of their work
life. On most days they feel good about going to work. They feel
empowered to help shape decisions that affect them, they have the
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resources and skills to satisfy customer needs and they are generally
confident in the abilities of the leadership team.
From the organization's perspective, the organization is healthy if it is
viable as measured by profitability, competitive market position and
customer satisfaction. A healthy organization also responds well to the
need for change; it is adaptive and thereby ensures its future - meaning
that following a major upheaval or transition, the healthy organization
rebounds and employees remain committed.
Bottom line, it is the role of the manager, that most influences an
employee's decision to stay or depart from an organization. People will
leave if they don't like their manager - even when they are well paid,
receive recognition and have a chance to learn and grow. In fact, disliking
or not respecting the boss is the primary reason for talent loss. Research
shows the reasons for employee departures are (in descending order):
1. Employee/manager relationship
2. Inability to use core skills
3. Not able to impact the organization's goals, mission
4. Frequent reorganizations; lack of control over career
5. Inability to grow and develop
6. Employee/organization values misalignment
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7. Lack of resources to do the job
8. Unclear expectations
9. Lack of flexibility; no 'whole life balance'
10. Salary/benefits
It is very important to know that the above factors are often NOT the
ones mentioned in most attrition studies published by individual
organizations. Additionally, this information does not match the data
frequently obtained during an employee's exit interview when asked about
the reasons for departing. The rationale behind this discrepancy is that exit
interviews are frequently conducted by the departing employee's manager
or HR manager, hindering honest responses. Typically, employees are
hesitant to tell these company representatives the truth for fear of burning
bridges or getting a bad reference.
HOW TO CURB ATTRITION?
Money is not everything
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Although the importance of higher packages is slowly diminishing, among
fresher or laterals with less than three years of work experience, money is
still considered to be the highest priority. Employees want not only work
recognition, but also extra perks." A number of professionals are looking at
more challenging jobs. "In several cases, faced with a choice between
more money and a challenging job, employees have opted for the latter as
it allows them to learn new technology and increase domain expertise."
People analyze the training programmes of prospective companies with
those of their current organization, which means that how an organization
grooms an employee is weighed to a greater extent. This is because they
know that developing next-level skills will keep them ahead in the job
market, and finally result in better compensation. They also look for a job
with higher levels of responsibility, better learning opportunities.
Vision and objectives
The next level of communication, a crucial part of retention, starts
with acquainting employees with the company’s vision and objectives.
Organizations successful in retaining employees clearly pass on their goals
and achievements. Conducting regular meetings and updating employees,
especially new entrants, about the company’s status and achievements is
a must.” They should concentrate on leadership and brand building as
people prefer to be associated with a brand. Respect for the job should be
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created by BPOs. The youth should feel proud to be a part of the billion-
dollar industry.
Mentoring and handholding new recruits from day one to four months are
important tasks; during this period, they should be familiarized with the
culture of the company. It is at this time that new entrants experiment with
different options. Hence they should be exposed to the best values the
company has.” If they are informed about regular happenings in the
company, employees will be confident about the future and not try to look
for better options.
Treat employees like Customers
Even while companies strive to understand which organizational, job, and
reward factors will contribute to holding back employees, industry experts
have found several loopholes at the top management and HR management
level. Companies should have a similar approach to employees and
customers. If a company strives to retain an employee in the same way it
tries to retain a customer, him leaving the organization could be out of
question.
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Since software professionals have different priorities at different points of
time, organizations need to structure their offer-mix while recruiting new
hires, as well as promoting potential ones. Communication is the
foundation for the entire process of managing attrition. This
communication begins right from recruitment. In cases of peer pressure,
an employee aims to join a well-known company. This could be achieved
by brand building, which attracts the right talent and helps in retention as
well.
Understanding an employee’s needs at various levels is a recommended
HR practice.
Firing
Sometimes, firing can look like attrition. Looking at firing and attrition
together in a different light, firing can be an excellent tool to contain
attrition. Attrition can simply be defined as employee leaving his current
job due to reasons like, job pressure, health problems, personal reasons,
inefficient boss, lack of job security etc. All the above reasons are
interlinked and can be the reasons for good workers to quit. If the team
has under-performers who despite given sufficient support and training is
unable to perform, but they continue to be part of the team damage the
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morale of the team. A performer will not want to be part of the team, which
has non-performers because he will have to compensate for the non-
performer, thereby increasing his job output/pressure. A continuous job
pressure results in health problems. Having frequent health problems not
only reduces his performance, but also affects him financially. At this
juncture, the performer realizes that he is working with an inefficient
manager who is not capable of “cleaning up” the team by firing non-
performers. With the above, the performer employee feels insecure and
resigns. Firing non-performers can be an efficient tool to contain attrition.
Consider feedback
It is important to take feedback from employees through different means
and work with the HR department to iron out differences. As industry
experts point out, feedback can be got in two ways—during the employee’s
tenure, and through exit interviews. Inputs can be secured from existing
employees through various employee relationship management tools. The
Wipro Listens and Responds initiative at Wipro aims to capture the
concerns and grievances of its employees. “The feedback we get through
this tool will be analyzed, and action will be taken on it. Our employees are
very excited that their feedback is being taken seriously,” says Sahoo. Exit
interviews help management learn the reasons why employees leave the
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company; based on their revelations, the organization can address the
problems of existing employees, thereby curb attrition.
Spend Time Developing and Benchmarking Incentives
Whenever the demand for a professional in a particular field heats up, the
perks associated with the job start to pile up. Standard perks for an India-
based "fresher" (a new entrant in the IT services industry with little work
experience) typically include free transportation, educational assistance,