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ATTRITION “A reduction in the number of employees through retirement, resignation or death” “Unpredictable and uncontrollable, but normal, reduction of work force due to resignations, retirement, sickness, or death.” ATTRITION RESIGNA- TION RETIRE- MENT SICKNES S DEATH

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Page 1: ATTRITION f1

ATTRITION

“A reduction in the number of employees through

retirement, resignation or death”

“Unpredictable and uncontrollable, but normal,

reduction of work force due to resignations,

retirement, sickness, or death.”

ATTRITION

RESIGNA-TION

RETIRE-MENT

SICKNESS

DEATH

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MEANING

Attrition is loss of a resource through obsolescence or spoilage. Attrition in

various forms at various different places means different things. In general the term

attrition may have the following meanings:

In military it means:

a) Loss of person by withdrawal military.

b) Attrition welfare, the military strategy of wearing down the

enemy by continual losses in personal and material.

In medical terms:

The loss of participants during an experiment.

In terms of Dental Studies it means:

Loss of tooth structure by mechanical forces from opposing teeth.

In terms of weathering as a natural phenomenon:

a) The wearing away of rocks in the sea.

b) A rubbing away or wearing down friction.

In the Catholic Theology it means:

Imperfect contrition also known as attrition, in catholic theology.

In terms of Language it means:

Loss of a first or second language or a portion of that language by

that community or an individual.

Attrition also has a historical significance:

War of attrition, a limited war fought between Egypt and Israel from

1968 to1970.

In corporate terms:

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gradual, natural reduction in membership or personnel, as through

retirement, resignation, or death.

In relation to a customer in business it means:

Customer attrition, a business term used to describe loss of client

and customers.

In various other terms:

a) Repentance for sin motivated by fear of punishment rather than by

love of god.

b) A gradual diminution in number or strength because of constant

stress.

This project deals with attrition in any business organization.

Attrition is one of the biggest issues that any organization faces and in fact the

growing industries are facing presently. In any organization that is employee

centred, attrition means a situation, which an employer faces when any employee

leaves the organization due to any avoidable or unavoidable reason such as job

dissatisfaction, new opportunity in the market, retirement or any natural

causes such as sickness or death. The reasons for attrition may range from

professional to personal.

Attrition is a common phenomenon in any organization. Attrition in any way is not

beneficial for the organization. It is a very negative phenomenon and causes huge

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loss to the company. The loss can be in terms of money as well as in terms of

manpower.

The effects and impacts of attrition are also mostly negative resulting in

various types of losses for the organization like the loss in costs acquired by

the organization due to the processes of hiring; recruitment, training of the

employees.

It also results in various incompetent processes like the inability of the

company to offer services for various technical processes.

ATTRITION: AN INTRODUCTION

Any new employee joining any organization usually has various dreams regarding

his/her job and the nature of the job and work atmosphere. Ideally, any employee

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would expect the organization has a goodwill in the organization, get good

compensation for the service that they would offer to the organization, get ample

chance for their career growth and advancement within the organization, good

working conditions, co-operative coworkers and staff, future stability within the

organization, get ample flexible schedule so that they can attend to their family and

personal needs when necessary. In return the employee is more than happy to offer

his services with full hard work and dedication to the organization.

But then this is just the mind full of dreams and hopes of any person who is yet to

enter the organization and start with his career. This person is a person full of

enthusiasm and youthfulness to give all he can to the organization and considers all

the above said conditions to be just too minimal and minute. But dreams are

dreams. And then there is the real world when the person really enters the

organization and gets to set in the work culture that the harsh realities of the world

come in front of him and cause him to exit the organization. And there are various

reasons for them to leave.

The reasons may be:

Wanting more remuneration.

More benefits.

Do not like the work atmosphere.

Hate their coworkers.

Inflexible and tight work schedules.

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Attrition is one of the biggest nuisances in the organizations today, not only in India

but also all over the world. High attrition rates significantly increase the

investments that are made on the employees. Companies invest a lot of time and

money in training the employees but theses investments do not always get

converted into profits. Though the attrition rates in India is not as high as those in

the US but it is still a great challenge to keep attrition rate under control in India.

A glimpse of attrition rates all over the world

US 42%

AUSTRALIA 29%

EUROPE 24%

INDIA 18%

GLOBAL AVERAGE 24%

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ATTRITION & HR

In any organization, in any sector, in any department the Human Resource manager

has the most important and perhaps the most challenging task to maintain a steady

workforce in the organization. And for this the HR manager has to make sure that

he appoints competent and reliable workforce into the organization. For

maintaining a steady workforce it is important for him to maintain a balance

between the demands and supply of workforce in the organization, which in no

sense, is an easy job. Hence it is very important for the HR manager to find the

right kind of people for the organization who can suit and fit in well in the

organization. Not only this, also it is very important to see that the workforce

appointed is consistent in performance. It is also the duty of the HR personnel to

keep the motivation level of the employees high and see to it that the employees are

performing their tasks with full efficiency. Then it is also the task of the HR to see

that the employees are comfortable in their work atmosphere and have no problems

regarding their job and work security.

Thus it can be said that it is the HR personnel who are responsible to see that

the attrition rates of the organization are well in control. It is a tough concern

for the HR manager to see that the attrition rates are well in control.

The telecom industry is being looked upon as the next big employment-generating

sector in India. It is however no easy task for an HR manager in this sector to

bridge the ever-increasing demand and supply gap of professionals. The telecom

HR manager is not only required to fulfill this responsibility, but also find the right

kind of people who can keep pace with the unique work patterns in this industry. It

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is also his duty to keep the motivation levels high, despite the monotonous work. In

India, the average attrition rate in the telecom sector is approximately 30-35

percent though it is far less than the prevalent attrition rate in the US market, which

is around 70 percent. Keeping low attrition levels is a major challenge in this

industry.

REASONS GIVEN BY HR FOR ATTRITION

The reasons cited by various HR Personnel for attrition in the Telecom Sector are:

1. The salary growth plan for employees is not well defined. This

encourages poaching by other companies who can offer a higher salary to

the employees.

2. Long working hours and monotony of the job causes employees to leave.

3. The toughness of the job and timings is not adequately conveyed. No

effective training programs have been evolved.

4. Motivational training is still to evolve in this industry.

5. This industry sees a high percentage of females in the workforce. Most

women leave their job either after marriage or because of social pressures

caused by irregular working hours in the industry. Thus females also

become one reason for high attrition.

Amongst all these reasons and all so many things happening, the HR manager is

expected to put his best foot forward and straighten all things. The HR manager

believes that for sorting out and handling this situation of attrition, the

responsibility of the manager increases of finding out “the best man” for the job

and creating a “conducive work environment”.

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Thus, most of the HR managers are seen busy putting in all the efforts to develop

their employees, sort out their problems and try all that is possible to maintain all

the competent employees within the organization, build innovative retention and

motivational schemes.

Thus, the HR manager has got a significant role to play in managing

employees within the organization and controlling the attrition rate.

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ATTRITION RATES IN ASIA

In Asia, the attrition rates of various organizations in past few years have been as:

2003 10%

2004 14%

2005 16%

To study the growing rate of attrition in the coming years in Asia a study was

conducted and reasons for attrition were found out.

Hewitt’s Attrition and Retention Study Asia Pacific 2006 has given reasons for

the growing attrition in the organizations.

The reasons given are:

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1. Compensation unfairness. 21% of the organizations who took part in the

survey said that their employee left the organization because they got offers

from other organizations offering better pay packages.

2. Less growth opportunities

3. Role stagnation

The study also revealed the various strategies sought by the companies in Asia to

combat attrition.

The various strategies being used are:

1. Pay above the industry standards.

2. Providing opportunities to employees to learn new

skills.

3. Provide work life balance.

Attrition at various levels within an

organization from employees’ point of view

A survey was conducted where the employees of various organizations were asked

questions on attrition. Employees gave a feedback on the attrition rates at various

levels in the organization. Accordingly,

Professional/supervisor/technical level highest (39%)

Senior/Top management level lowest (1%)

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ATTRITION IN INDIA

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ATTRITION RATES IN VARIOUS

SECTORS IN INDIA (2007)

The attrition rates in different sectors for the year ended 2007 are shown in the

following table: -

Sector Attrition Rate  FMCG 17    Manufacturing 20    Capital Goods 23    Construction 25    Non Voice BPO 25    IT – ITES 27    Telecom 30    Pharmaceuticals 32    Bio Technology 35    Services 40    Financial 44    Aviation 46    Retail 50    Voice - Based BPO 50  

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From the above table it can be concluded that by the end of 2007,attrition rate in

various sectors was quite grim. And on an average the attrition rate in Indian

economy is around 20% whereas the global average is around 24%.

And rate hasn’t decreased since then. Attrition rate is on a continuous rise ever

since showing no signs of slow down.

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Comparison of Attrition Rates across Industries in previous few years

Sr. No

Sector 0-3

years 4-7

years 8-12 years

13+ years

% change from

2006 to 2007

Increase in 2008

1 Pharma & Chemicals

25.00% 10.00% 5.00% 2.00% -5.00% 6.00%

2 Manufacturing 8.58% 2.46% 2.46% 3.00% 5.00% -3.50%

3 Financial Services

20.00% 20.00% 20.00% 20.00%    

4 Hospitality 35.00% 25.00% 20.00% 7.50% 13.00% 20.00%

5 Ad & Media 40.00% 35.00% 20.00% 15.00% 17.00% 22.00%

6 BPO 40.00% 30.00% 20.00% 10.00%    

7 Automobile 7.00% 3.00% 2.00% 2.00% No visible

14.00%

8 Auto Component

12.00% 15.00% 20.00% 12.00% 5.00% 6.00%

9 Banking 10.00% 5.00% 2.50% 2.50% 2.00% 2.00%

10 Infrastructure 16.00% 11.00% 7.00% 11.00% 9.00% 20.00%

11 IT & Telecom 32.00% 25.00% 10.00% 5.00% 5.00% 9.00%

In this table it can be clearly seen that except for a few occasion none of the

sectors have shown a decline in attrition rates. Rather a constant and steady

increase in the attrition rates has been noticed.

The highest attrition rate has been seen in the advertisement and media industry

while the manufacturing industry has been lucky enough to show a decrease in

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attrition rate of 3.5%. The telecom industry has also seen an increase of 9% from its

previous years.

ATTRITION IN THE IT SECTOR

IT sector is one of the most flourishing sectors in the present scenario. The number

of jobs is ever increasing and this industry always has space for every new entrant.

But interestingly the attrition rate is also ever increasing in this sector. The reason

for high attrition rate in this sector has been credited to the immense mental

pressure, unconducive work environment and lack of job security amongst the

employees.

Here is a small summary on the attrition rate of the top 4 IT giants of India i.e.

Satyam, TCS, Wipro and Infosys.

ATTRITION RATES OF WIPRO, TCS, INFOSYS

& SATYAM

Despite being IT giants and despite being one of the most flourishing industries in

India, the industry is also facing huge rates of attrition since the past few years.

Infact the workforce in this sector has been stated as one of the unstable workforce.

The biggest problem with this industry is its inability to retain back employees in

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spite of giving really well and commendable salary packages. Infact IT

professionals are one of the most well paid professionals.

On comparison of the 4 giants it has been found that Wipro, TCS & Infosys have a

much higher rate of attrition as compared to Satyam.But during this recent Satyam

fiasco even this company has noted down a considerably high rate of attrition.

WIPRO: Wipro has the highest attrition rate in the industry. During the last

quarter of 2006-2007 the attrition rate of wipro accounted to about 16.2%. Whereas

the attrition rate of Wipro BPO on an annual basis has been around 48%.

INFOSYS: Attrition rate for infosys for the period April-June 2006 was 11.9%.

But later it had increased to 13.7%

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TCS: The attrition rate for TCS was 11.5 % in 2006-2007, up from 10.6% in

2005-2006.

SATYAM: Attrition rate for Satyam for the period January-March 2007 was

15.7%. It has declined to 14.9% during the last quarter of the year.

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ATTRITION IN TELECOM SECTOR IN

INDIA

The telecom industry is one of the most flourishing industries in India today. It is

providing employment opportunities at a very huge scale. At present the telecom

industry over here is growing at a very rapid pace of 40-50% growth rate

annually. It is the 2nd largest telecom market in the world only after China. In

2007,India achieved the distinction of having the lowest call rates in the world and

fastest growth rate in terms of number of subscribers.

But along with the huge employment the industry provides also comes high rates of

attrition as a big deterrent for the industry. This industry at present is facing a

very high rate of attrition of 30-40% annually. One of the most critical problems

being faced by this industry presently is Attrition.

Attrition arises generally when an employee leaves the organization due to any one

of the following reasons:

Death of employee

Retirement

Better opportunities else where

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The telecom industry is facing great challenges in finding quality human resources.

Attrition rates at an average vary between 20-40% while the top telecom companies

vary at least at an average of 15%.

In this organization, the attrition rate averages to about 2.4% per month. But

in this era of recession the attrition rate has reduced a little bit to around 1.9%

per month.

The reasons for high rates of attrition is due to various factors like:

Salary

Work Timings

Other career options.

The rates of attrition also differ according to the level at which the employee is

working. In this organization, the second level employees change their organization

and job at an average of 2 to 2.5 years. While the top-level employees are relatively

more stable in this respect. They change their jobs at an average of 4-5 years.

But attrition is not the only problem creeping in this industry. Along with high

attrition rate is also comes in hand the problem of poaching which is just adding to

high attrition rates. Poaching is taking over of the employees of one organization

by another at a higher salary. This is the world of cutthroat competition. Each

company is on the hunt of competent employees and if they find any employee who

is already experienced and competent enough to be fruitful to the organization, each

organization will try to grab that person.

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Thus attrition coupled with poaching leads to the increase in the costs for the

company. India has always been one of the favourite destinations for telecom

activities. One of the reasons is the cheap labour available over here. However,

it may be quite ironical or interesting to know that the attrition rates in India and

the costs associated with it are so high that they override the benefits of lower

wage costs. It is said that it is just this low wage cost that has caused various

foreign players to move into the Indian market.

High rates of attrition do not cause the people to stay long enough into any

organization to learn their job completely. Thus the labour here no doubt is

cheaper but if they are not able to learn the new job then there is no use of the cheap

labour available and the investment done on them goes for a waste. Thus,

managing attrition in the telecom sector is not just good for industry but

rather important as a means for survival.

Hence, it is an area where the HR manager has to take a lead. Understand the causes

of attrition, see the factors affecting attrition, measuring attrition and set out

targets to curb the growing attrition within the organization.

In the following pages are given the factors, causes, impacts and methods to

curb attrition in the telecom industry with special reference to this

organization.

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WHO IS RESPONSIBLE FOR

ATTRITION?

Before moving on to the causes and various factors related with attrition it is

important to know who is exactly responsible for attrition. For understanding this, a

survey was conducted amongst the entire HR department to find out who the HR

thinks is responsible for attrition. The HR personnel were given three choices and

asked to rank among the 3 choices the one, which they feel, is the most accurate

cause for attrition starting from the most obvious cause ranked at the first spot.

The three choices given were:

1. Employee

2. Supervisor or Line Manager

3. Compensation & Job Profile

RESULTS OF THE SURVEY

The result of the survey was as follows:

REASONS FOR EXIT % OF RESPONDENTS

EMPLOYEE 08.03%SUPERVISOR OR LINE MANAGER 38.15%COMPENSATION & JOB PROFILE 53.82%

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ANALYSIS OF THE RESULTS:

The results of the survey were interesting and were helpful in providing deep

insights into why attrition happens and what can be done to solve it.

1. EMPLOYEE AS A REASON FOR ATTRITION

Only 8% HR professionals felt that employees leave organizations on their

own. Except in a few cases such as personal reasons, family issues, location

preference, company brand and peer relationships, employees are not self-

motivated to leave the company they are working in.

2. SUPERVISORS OR LINE MANAGER AS A CAUSE OF ATTRITION

A majority of HR professionals polled that immediate managers are a bigger

reason for attrition. It confirms the theory that "Employees don't leave their job

or company, they leave their manager".

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Meeting employees' expectations is a difficult task, and most managers cannot do it

effectively and consistently. 'Satisfying employee needs' often gets lower priority in

the eyes of the manager. Further managers do not have appropriate tools to manage

employee related tasks and this leads to further dissatisfaction.

Thus, HR should continually train managers in handling employee expectations and

provide them with tools to manage tasks related to their teams. HR should also be

able to track changes in employee performance rating, gaps between employee and

manager performance, sudden increase in paid-time-off and should be prepared to

act quickly if any visible trends are evident.

3. COMPENSATION AND JOB PROFILE

HR Managers voted unanimously that 'Compensation and Job Profile' are the

primary cause of attrition.

With a war for talent, disparity in the compensation packages is bound to occur and

a mismatched job profile increases the likelihood of an exit.

The responsibility for compensation policy and enriching the job profile lies on the

senior management. However often this is not possible despite the best efforts made

by the managers. Every company wants to become the 'best paying employer', but

market forces, tough competition and a slow economy do not allow them to do so

When all employees work on goals that are aligned to the company objectives and

there is a fair and transparent system to capture employee performance, the

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likelihood of a satisfied and motivated workforce increases and Compensation or

Job Profile become manageable causes.

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CAUSES OF ATTRITION

There are various causes for attrition to occur in any organization. Each employee

working in the organization has his or her different view on why do employees

generally leave organization and their preferences and wants also differ

accordingly.

An employees’ leaving the organization can be looked upon differently by different

organization. While a person’s quitting the job is seen as attrition, loss of

productivity and increase in costs of organization by way of recruitment by the

organization the employee had been working in; it is seen as talent acquisition by

another organization which is in search of employees while for the person himself it

is a career move, economic growth and enhanced quality of life.

There are various reasons why people leave their current job. If these reasons are

controllable-one attempts to control. If these are not within the control of the

organization, the organization should prepare itself for managing attrition.

When a person leaves it causes a lot of disturbances in the organization. If it is a

small organization the disturbance is even greater. Hence it is important to

understand and manage attrition. There can be various reasons for people leaving

their current jobs.

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On analyzing all the reasons given by the employees, various causes of attrition

were found in the organization, which compel employees to leave the company they

have been working in.

VARIOUS POSSIBLE REASONS FOR ATTRITION

Higher pay

Most of the employees leave the organization when they are not getting a

satisfactory pay for the work they do or when some other company is piping in to

pay them a much better remuneration for the same work that they are presently

doing.

Supervisors

A bad supervisor is ninety percent times the reason for the employee to leave the

organization.If the supervisor is not good,not co-operative,doesnot care for the

employees,doesnot give him ample training and feedback required,doesnot

appreciate his good work then probably he is not a supervisor with whom the

employees will be carry on for much time and will in all probability leave him.

Work timings

Work timings are a major cause for people to leave the job specially for females or

for people working in call centres or any other job that has no fixed work timings.

Career growth / Role Stagnation

Employees will also leave the job if they feel that the company has stagnated their

career graph or if the company doesnot have much to offer to them to satisfy their

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career needs.Since for them it is not just about getting into a job but rather to see

themselves grow both by stature as well as by knowledge.

Job Security

Employees will also leave the organization if they are not sure that the organization

is happy enough with them to restore them as a part of organization.Employees who

are in doubt that organization might at any them ask them to leave,will quit it much

before themselves for sure.

Uninterseting Job

Monotonous,uninteresting job with the same thing to do everyday is also one of the

reasons for the employees to quit their job.

Work Environment

Often the employees are heard complaining of the unfriendly work environment in

which they are liable to work. The supervisor, co-workers, nature of job all is parts

of this work environment. When the environment crosses beyond the tolerance

level of the employee, he is forced to quit.

Work pressure

Mostly the employees are given targets on weekly or monthly basis which they are

supposed to fulfilled in order to be in the job.These weekly and monthly targets

often are more of a headache for the employees and create emmense mental

pressure on them. Such circumstances often lead to taking away the mental peace of

the employees.Such employees are often heard complaining about sleepless nights

and headaches.To avoid such situations,many of them quit.

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Poor performance

Employees often leave even when they are not able to deliver upto the set standards

of performance.They have the fear of being asked to quit the organization.This

causes them to quit themselves.

Women leave the job after marriage to take up their house-hold duties

Females form a larger part of the workforce specially in the telecom sector.But

women are the most uncertain workforce.There are various reasons because of

which females leave the work.It may be the uncertain work timings,other career

options and above them all marriage which causes them to quit and take up new job

of house wife.marriage may also cause them to shift to a new place thus casuing

them to quit.

Verbal abuse

Verbal,physical abuse and sexual harrasment are few things which are much

prevelant in the organization specially the corporate world.This fear causes many to

quit.

Relocation to other places

Transfer to other cities also causes employees to change organizations.If they find

the new place uncompatible or unadjustable they are likely to move over to a new

organization.

Higher education & other personal reasons

Last but not the least employees leave the organization owing to various personal

reasons or for pursuing higher education so that they can give their career a better

direction.

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In short ,the various reasons for attrition can be grouped together under the

following heads:

The reasons for attrition have been grouped under basically three heads:

1. Individual Factors

2. Organizational factors

3. Other Factors.

FACTORS AFFECTING ATTRITIONFACTORS AFFECTING ATTRITION

INDIVIDUAL ORGANIZATIONAL

Role Related

OTHERS

Peer pressure

Environment

Ambitions/Career aspirations

Parental/Family mobility

Personality factors

No challenge

No learning

Style of boss

Role clarity

Role stress

Lack of independence

Culture

Growth and

career paths

Pay packets

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INDIVIDUAL FACTORS

Ambitions or Career Aspirations:

Today each person is much aware of what he wants. It is not just about studying

somehow and getting into a job just for the sake of earning money. It is more about

building up their career and fulfilling all their aspirations and dreams. These can be

economic, professional, family aspirations and ambitions. Either the organization is

too small to fulfill their aspirations or the organization cannot offer them the career

growth, which they are aspiring for. At times other organizations provide the career

opportunity that the individual is seeking for. It is also not possible to provide each

employee the career growth that each one is seeking since each employee seeks to

rise higher in his career and it is almost impossible to give each employee the top

most position in the organization. Thus organizations just have to satisfy

themselves by taking attrition as a natural phenomenon and accepting the fact that

each person here has come to earn money and make career and not to just be loyal

to their organization and that each person has the right and will move around if

given the opportunity. However, if the organization can do something to create new

opportunities, that meet the growing aspirations of competent people, it should

certainly be attempted. However, such attempts require correct diagnosis of the

situation.

Parental and family mobility:

People also move about if their family is at distant places. Staying away from home

causes homesickness and many cannot take up such conditions for long enough.

Hence to be with their family they may leave and move. Need for being close with

the family, spouse, children, parents etc. at different stages of one’s life to fulfill

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different types of affiliation needs prompts a few people to leave their jobs and

move from one city to another.

Personality factors:

Then there is a certain restless lot, which cannot just stick to one place. They have a

continuous urge to do something different, something exciting to keep themselves

going. They always are on a lookout to explore new heights always. Such people

keep on changing their jobs very quickly. They are highly ambitious and restless.

They are highly achievement driven and want to achieve new heights in the shortest

time.

ORGANIZATIONAL FACTORS

Role related factors :

The job related factors that cause the decision to leave include the following:

1. Inability to use ones’ competencies.

2. Lack of challenge.

3. Boss and his styles.

4. Lack of scope for growth in terms of position, salary, status and other

factors.

5. Role clarity.

6. Job Stress or role stress or role stagnation.

7. Lack of independence or freedom and autonomy.

8. Lack of learning opportunities.

9. Lack of excitement and innovation, novelty in the job.

These factors may be intrinsic and job related or extrinsic and job related.

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Intrinsic factors

Factors related to the characteristic of the job. It includes the work conditions

(work at odd hours, the nature of clients, the work load) and all such factors, which

cause difficulties.

Extrinsic factors

Factors like role clarity, independence and autonomy, bad boss, wrong

chemistry of the team, lack of respect shown to the individuals, etc. A large

number of the extrinsic factors can be controlled.

OTHERS

o ECONOMIC FACTORS

This deals with the aspirations in relation to salary and perks, housing, quality of

living, need for savings etc.

Apart from this, the various other factors are:

o Mobility of partner

o Fatigue

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REASONS GIVEN BY EMPLOYEES

Employees themselves have cited various reasons for leaving the organization.

The most obvious reason for employees leaving any organization is higher

pay. Most employees in telecom are approached with two or three jobs

every week, and obviously good offers are hard to resist by anyone.

Another factor is the work timings. In some organizations, work timings

are such that they are making employees leave the organization. The work

timings in telecom industry are very odd. This affects the family life of the

employee.

Another factor is career growth. In many organizations, only 20% of

employees are able to go to senior levels. This means that the remaining

80% of employees look for other organization where they can get

opportunities for growth. Only 2 out of 10 employees on an average go on

to be at the senior level. Mismatch of qualification and the job offered to

them is also a problem. Along with that, some employees see no career

growth in this sector, so they move on to other companies in search of

changing the sector.

One more reason for leaving the organization is higher education. These

days, in many organizations, employees are joining at very young age

because of lucrative salaries being offered. But with time, they apply for

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higher education and try to move on to other organizations or sectors to

occupy top management positions.

The percentage of women workers is also responsible for higher attrition

rate. The percentage of women workers in the telecom sector is around

30%. Generally, women workers leave the organization after marriage to

take up their household duties thus leaving behind their irregular work

hours.

Dislike for the job or place.

Unsatisfactory work conditions leading to strained work relationships with

the employer.

Lack of security of employment has also contributed to higher attrition

rate.

Monotonous job. Many see this space to be a sweatshop where all that the

employees are required to do is just mechanically input numbers into excel

sheets or, worse still, work on the same lines and repeat the same work

many times a day and night.

Instability of the employees themselves. People who join a telecom

usually do so to make a 'quick' buck. They are bound to quit because sooner

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or later they will find something more attractive in terms of the job profile

or pay.

Talent in this space is generally overlooked, which leaves the deserving few

disgruntled with top management and hence fosters attrition.

Other factors include accident making the worker permanently incapable of

doing work.

Mistakes during the hiring process.80% of employee turnover can also be

attributed to the mistakes during hiring process The industry has

concentrated on hiring young, dynamic and these are looking for more than

just a job.

According to the HR manager of this organization, the reasons cited for

employees to leave the organization (in the order of most common to least) are:

Compensation

Job assigned not interesting

Environment not friendly

Personal Reasons

TYPES OF ATTRITION IN TELECOM INDUSTRY

Attrition in this industry is of two types.

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1. One part of the attrition is where the employee leaves the industry

entirely.

2. Second part is where the employee joins another firm in the industry.

Both these are two separate parts which need to be identified.

REASONS FOR EMPLOYEES LEAVING THE INDUSTRY

1. The primary reason for people leaving the industry is due to the cause that

the industry is viewed as a gap filler occupation.

2. Unfriendly working conditions, late night work shifts, high-tension jobs acts

as a deterrent for people to stick to this industry for long time

REASONS FOR EMPLOYEES JOINING ANOTHER FIRM IN THE

SAME INDUSTRY

1. The chief cause is the unavailability of resources in the job market

causing a great demand compared to the supply available. There is no

certified institute providing telecom specific training and education. The

scarce resource in the market leads to wide scale poaching and head hunting

amongst the competitors for the common pool.

2. There is a lot of immaturity in the industry. Industry has not witnessed

mature HR processes such as Work force planning being implemented by

the firms. The lack of preplanned recruitment causes the firms to fulfill their

immediate requirement by poaching resources working on similar projects

in other firms.

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ANALYZING CAUSES OF ATTRITION: MASLOWS THEORY APPROACH

The best method to understand the causes of employee attrition is through the

Maslow’s Hierarchical Model of Needs.

Maslow’s Model helps in analyzing the causes of attrition and also a better

understanding on how to motivate employees. It gives an insight on what are the

expectations of the employees, the gap between reality and expectations and how

this gap can be filled up.

MASLOW’S HIERARCHY OF HUMAN NEEDS

Maslow’s Hierarchy of Needs is a theory in psychology. It was proposed by

Abraham Maslow.It is a model which identifies the needs which act as factors of

motivation for the human behaviour. This approach basically shows that there is

certain basic human needs which if fulfilled lead to the motivation of people

and help them to perform better at work. This model has been applied over here

in reference to the employees to see what it takes to motivate the employees. Thus it

helps in understanding the needs of the employees, motivating them, which further

helps in retention of the employees and lowering in the attrition in organization.

According to him, the needs are present in the form of a hierarchy and are

present in form of 5 levels. The needs need to be fulfilled in this hierarchical

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order. Fulfillment of the basic level of need leads to the arousal of next higher level

of need. Next higher level of needs cannot arise if the lower level of needs are not

fulfilled.It is only when all the 5 levels are satisfied is the employee satisfied and

motivated to perform.

These levels have been presented in the form of a pyramid. The pyramid shows the

following 5 needs:

1. Physiological needs

These are the basic human needs or the biological needs of food, water, shelter,

sleep, and oxygen. These are the strongest needs because until all these needs are

not fulfilled the person cannot think of any other needs. Man first needs to get these

basic amenities, which are necessary to support life.

2. Safety Needs

After the physiological needs have been fulfilled comes the need for safety and

security. It is the need for Security of body, of employment, of resources, of

morality, of the family, of health, of property.

3. Needs of Love, Affection and Belongingness

After the above two needs have been satisfied arises this need. This is the need for

feeling of love, affection and belongingness. People seek to overcome feelings of

loneliness and alienation. They always want to be loved, to be cared of. This

involves both giving and receiving love, affection and the sense of belonging.

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4. Self- Esteem Needs

This involves the respect of others as well as the respect by others. Each person

wants to be respected by others and would in turn respect others. Humans have a

need for a stable, firmly based, high level of self-respect, and respect from others.

When these needs are satisfied, the person feels self-confident and valuable as a

person in the world. When these needs are frustrated, the person feels inferior,

weak, helpless and worthless.

5. Self-Actualization Needs

When all of the foregoing needs are satisfied, then and only then are the needs for

self-actualization activated. Self-actualization is a person's need to be and do that

which the person was "born to do." The need that a person is himself worth of

doing various things. His thirst for creativity, problem solving, seeking personal

growth, self-fulfillment etc.

If a person is hungry, unsafe, not loved or accepted, or lacking self- esteem, it is

very easy to know what the person is restless about. It is not always clear what a

person wants when there is a need for self-actualization.

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MASLOW’S HIERARCHICAL MODEL OF NEEDS

According to the Model, once the human being moves up the pyramid, the lower

level needs have been fulfilled and are of no more importance to the person. If a

person having moved up the pyramid feels an urge of any unsatisfied lower level

need, he will focus himself to the fulfillment of that lower level need but will not

permanently move down to the lower level.

Maslow's Hierarchy of Needs states that each need must be satisfied in turn, starting

with the first, which deals with the most obvious needs for survival itself. Only

when the lower order needs of physical and emotional well being are satisfied the

person is concerned with the higher order needs of influence and personal

development. Conversely, if the things that satisfy the lower order needs are swept

away, maintenance of our higher order needs is no more important.

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THE MODEL IN RELATION TO THE TELECOM

INDUSTRY

1. Physiological Needs

These are the biological needs. These are the most basic needs and the strongest

because these are the most important for a person’s satisfaction.

Any person, who takes up the first job, takes it to fulfill its bare minimum

“Physiological Need”. Each person keeps his dreams aside and takes up a career,

which will fetch him “money” so that he can fulfill his basic needs. The first

factor, which any person seeks while taking up his or her first job, is “money”.

Same is in the telecom industry. The basic need is the compensation. The person

expects this need to be updated continuously with time so that it fulfills all the

physiological needs. This need should be continuously updated with time so that it

fulfills his needs at every stage of his life.

Presently the industry is providing better salary at entry level but the industry does

not provide an adequate proportionate rise in salary with experience.

The Gap Between the Expectations and Reality

Though the salary in this industry is quite high and also may look satisfying enough

for people, but people working in this industry still look forward to opportunities

for making more money, which leads to dissatisfaction of these needs.

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If for instance a person is satisfied with his salary, is comfortable with his work for

the starting few years of his job; then the person starts craving for the next level of

needs.

2. Safety Needs

Once the physiological needs of the person is satisfied and the person becomes

comfortable with his work, the next need arises in him. This is the need of job

security or security at workplace.

There are two aspects of security, which the people in telecom sector are mostly

concerned about. First, is the physical security of the person and his family. This

is specifically a prime concern for the female employees. Second, is the

psychological fear of job security.

The Gap Between The Expectations And Reality

As far as physical security is concerned, the company provides the best of security

but with the industry growing rapidly there is need to maintain same standards of

security. Quality of Work Life is an important factor in creating a “sense of

security” among employees. Asurity of being with the organization and retaining

their jobs and position is very important for the people. And with the recession

going on, job security is the prime concern for the employees.

People, who believe that their job is secure enough, still have some itch. Next arises

the urge for love, affection and belongingness.

3. Need of Love, Affection and Belongingness

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People working in any organization want to feel closely attached to the

organization, teams and to the people they work with. They want to be

appreciated for the work that they do. They want to know how their contribution is

important to the company and is helping the company to grow. They want to bond

with their colleagues. They want to participate in Cafeteria discussions. In short

they want to have a family like feeling. But generally people in the industry are

not satisfied. They often feel that they are not credited for the work that they

do and their seniors often do not give them enough space to grow and do not

allow their colleagues to bond with them well. Also the employees are troubled that

they do not have a proper time leaving time from the office, which in turn

disturbs their family lives. They believe organization kills most of their time and

spares no time to live their private life. The company tries to compensate for this

loss by providing fun filled atmosphere and congenial supervisors and working staff

but still a large gap has been found between expectations and reality.

The Gap Between The Expectations And Reality

“Immediate Supervisor” plays a big role in filling this gap. It is up to him to

appreciate the employees’ work or not. Often seniors take away the credit of the

good work from the employees. Supervisor may also encourage the person to

mingle with the colleagues. At times the supervisor is good enough to pay attention

to personal problems of the employees and try to help him out by giving him some

leniency when it is required. But at times he might even give such hard tasks to

employees so that they have sleepless nights. Like for example in this organization

itself the employees are given just 4 days off even for an occasion like the marriage

of the employee. Thus the lack of family and social life along with a friendly and

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appreciating work atmosphere is one of the major concerns for the employees

which needs to be dealt by the telecom companies.

4. Self-Esteem Needs

Having discovered all the love and affection, what employees next look in any

organization is the Self-Esteem needs. These involve needs for both self-esteem and

for the esteem a person gets from others. Each person always seeks high level of

respect from others as well as self-respect. Each person enjoys the respect, which

he gets from others at work place. And each person feels a natural inclination to

praise others, to appreciate their efforts, to praise their skills. And they expect the

same in return.

When these needs are satisfied the person feels self-confident and valuable.

When these needs are left unfulfilled, the person feels inferior, weak, helpless and

worthless.

Telecom industry is one industry, which requires highly qualified personnel at

every level. But at the same there are also posts and job requirements over here,

which do not require much qualification, or much qualified person. These are the

jobs, which are looked down by the society in the sense that people do not take such

posts in high esteem. For example the job of the sales person over here who is

required to do the sales. People do not appreciate such jobs so much. This attitude

has developed in general. Then how people develop a high self-esteem and get

respect from others depend a lot on themselves also as to how they themselves feel

about their jobs and how much they themselves value their jobs.

The Gap Between The Expectations And Reality

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People working in this industry have an unsatisfied esteem need because of the

general perception of people about their own job. The industry needs to work

upon changing the image of such posts in the society and in the organization

itself since most of the times it is the people in the organization itself who look

down upon these posts and the employees in this posts. Thus the employees of the

organization themselves resort to such types of discrepancies. And this needs to be

seriously looked down upon and removed.

5. Self - Actualization Needs

When all of the foregoing needs are satisfied, then the need for self-actualization

gets activated. It is all about realizing our true selves and achieving it. People

who are successful in achieving it whether in work life or in normal life, are willing

to help others on or off record. They are ready to solve all the queries, ready to

listen with the same enthusiasm. They do not get irritated; do take care of the needs

of the younger ones. Such people are the greatest and the most selfless people in

any organization.

The telecom firms nowadays are trying to provide career growth path and higher

educational opportunities for employees as a measure of retaining them. These

steps are strides in fulfilling the discontented self-actualization needs of the

employees. These are one of the few long-term motivations provided by companies.

The Gap Between The Expectations And Reality

Though the companies have been trying to cater to the self-actualization needs of

their employees, this has been one of the major reasons for attrition. Unfulfillment

of such needs is a major reason for employee attrition.

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It is important to cater to the above needs and explanations and pay attention

to them so that a deeper understanding on what employee want can be done so

that they can be retained into the organization for longer period of time and

attrition rate in the organization can be curbed.

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IMPACTS OF ATTRITION

Attrition has various types of impacts on the organization. Attrition not necessarily

always has to be bad. It can also be good at times. Thus its impacts can be

favourable and unfavourable, direct and indirect. Both the favourable and the

unfavourable impacts can be studied differently.

IMPACTS

POSITIVE

IND

IREC

T

NEGATIVE

DIR

EC

T

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POSITIVE IMPACTS

“Good attrition minimizes the adverse impacts on business while

bad attrition accentuates the loss."

Attrition is also good at times. Good attrition reduces the adverse impacts on the

business. It can be said as Desirable attrition or Healthy attrition.

HEALTHY ATTRITION

It signifies the importance of less productive employees voluntarily leaving the

organization. There are some people who have a negative and demoralizing

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

to organizational health. It benefits the organization when these employees leave,

whose continuation of service would have negatively impacted productivity and

profitability of the company.

DESIRABLE ATTRITION

It means getting rid of the employees with whom the organization does not

wish to continue with. This can be done through resignation on part of the

employees or termination of services on part of the employer.

BENEFITS OF ATTRITION

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1. Removes the bottlenecks (in form of unproductive employees) in the

progress of the company.

2. It makes space for the entry of new talent. This new talent can be both from

outside the organization or someone from inside.

3. Entry of new talent also brings into the organization new thoughts, ideas

hence more innovation and creativity.

4. If the recruitment is external it infuses fresh blood into the organization.

5. It is an opportunity for the organization to induce fresh blood into the

organization with fresh skills and competencies at a lower cost.

6. It gives a chance to gather knowledge about any new and better practices

going on in the industry.

7. It assists in evolving high performance teams.

8. It also enhances the ability for execution.

ATTRITION RATE CAN ALSO PROVE TO BE

BENEFICIAL IN THE FOLLOWING WAYS

1. If employees stay in the same organization for a long time, most of them have

maximum chances of being promoted. If it happens they will be at a very high

pay scale, which in turn result will result in excessive manpower costs.

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2. If such employees leave who have been unproductive for the organization and

have been affecting the profitability of the company, the company is surely

benefited.

3. Then there are also a few people who have a negative or detrimental impact on

the organization’s work culture and atmosphere. So it is rather a necessity to get

rid of such people.

4. There are also people who are not able to work up to there performance

expectations, they lack the potential for future growth or the potential to remain

a permanent part of the organization. So such people are also better getting rid

off.

5. It is good to motivate the good performers of any organization by rewarding

them. But budget constraints sometimes do not allow them to do so. But if the

unwanted employees leave the organization, the company can use this budget in

rewarding the good performers, which they deserve also.

Thus, Attrition can said to be a boon in disguise. Desirable attrition not only

motivates the people of the organization right from higher level to the lower

hierarchy but also warns each of them that there is no scope for incompetence in the

organization. Thus each employee sets to do his or her work sincerely since he

knows that any underperformance could show him the doors of the organization.

But then again, there is also a flip side of positive attrition.

1. It points at the flaws existing in the system of the organization. It clearly

points out at the inability of the organization to recruit the right kind of

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employee, groom him, train him and motivate him properly in the

correct direction.

2. Then, productivity and profitability is always impacted.

3. The loss of employee means a new recruitment which means a loss in

terms of new recruitment, time consuming and costly.

Thus, the organization should adopt good retention policies as early as possible and

the companies should be more employee centered to bond with the employees well

so that attrition can be understood well and effective measures can be taken to curb

it.

NEGATIVE IMPACTS

“Wrong attrition means that a wrong choice was made at the

beginning. It leads to a dip in the entire organizational efficiency.”

Attrition in any form is bad for the organization. The negative impacts of attrition

can be studied both in the tangible as well as in the intangible form.

TANGIBLE ASPECTS

These are the aspects, which are under the control of the organization, and if

worked upon, these can be reduced.

The tangible aspects are:

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Loss of knowledge since certain brains leave the organization and take

away with them their share of knowledge.

Delay in execution of projects since many places fall vacant and this may

also include some of the important posts of the organization.

Loss of production since delay in projects will result in delay and hence

loss of production.

Increasing cost of recruitment for hiring new employees for all the vacant

positions. This is a great loss in monetary terms. Hiring costs are

sometimes as high as 2-3 times the salary of the employee.

INTANGIBLE ASPECTS

These are the aspects, which are not under the control of the organization.

The intangible aspects are:

Impact on the brand name. Attrition affects the reputation of any

company badly. Attrition rate does point out at the flaws existing in the

organization. If any company comes to know of the weak points of the

organization it will definitely try its level best to take advantage of that

organization. It gives the company a bad market reputation.

Burden and burn out on existing employees. It increases the burden and

workload on the existing employees till the time new employees are

recruited and trained according to the work that is to be done.

Internal information and knowledge is being shared outside. Once an

employee walks out he takes with him a great deal of knowledge as well

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regarding various matters concerning the organization. This may also

contain some of the very private and delicate issues. And if the employee

gets into any competitive or rival organization, the organization is sure to

exploit the person fully and use the information gained for its own benefit.

Existing team also gets de-motivated for sometime. On seeing any

employee moving out of organization, many of them fear being thrown out

as well thus increasing their fear and de-motivating them. Adding to this it

may also influence some more employees to walk out of the organization.

Poaching. It is a very serious negative impact of attrition. Poaching refers

to one company trying to take away the experienced candidates from

other telecom company to save on the training and other administrative

costs. Most companies are on the hunt of such employees who are on the

look out for a better job or a better remuneration. Companies try their best to

grab such employees.

DIRECT IMPACT

1. A high attrition rate indicates the company’s failure to set effective

HR policies in terms of recruitment, selection and retention policies.

2. The companies’ strengths and weaknesses both are highlighted.

3. New recruitments need to be done adding to more costs of training,

getting them used to the company culture, work environment etc.

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4. Besides, it also affects the clients’ relationship of the organization

and thus the business.

INDIRECT IMPACT

1. It becomes difficult for the company to retain the present workforce.

Even if they are able to retain, up to what time period they will be able

to retain them is definitely not ascertained.

2. Then it is also a problem for the companies to attract a potential

employee.

3. It brings decreased productivity. When some people leave burden on the

remaining workforce increases since they are now expected to finish up

that unfinished part as well thus leading to more attrition.

4. It impacts the companies’ image in the market and also its ability to

manage its business in the competitive market.

IS ATTRITION ALWAYS BAD FOR THE ORGANIZATION?

Attrition has some associated benefits along with low cost of operation, knowledge

sharing amongst the firms, thus benefiting the overall industry in increasing its

competencies. Attrition is actually not detrimental for an organization. It is a

myth that every time an employee walks out of the door, the organization suffers.

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Some attrition is indeed desirable and necessary for organizational growth and

development.

“Typically when you walk out people, you are setting an example.

Certain things cannot be compromised on."

ATTRITION COSTS

The company incurs a number of costs when it hires any new employee. But this is

not just a theoretical concept but all these costs can be calculated in monetary terms

very well. The sum total of attrition cost includes various types of costs. These

costs can be summed up as:

HIRING OR RECRUITMENT COST

It includes cost of advertisement, agency, employee referrals, internet postings etc.

TRAINING COSTS

It includes various costs as induction program cost, lodging costs during that

period, orientation material and cost of the person who conducts orientation.

LOW PRODUCTIVITY COSTS

These costs are incurred as new employee is learning new job, company policies,

etc. they are not fully productive.

LOW SALES COSTS

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It includes all those costs that are incurred in terms of experience and the contacts

that were lost during the time for which the position was vacant and other such

costs that result in either loss of customers or lower sales.

Thus, in general the cost of attrition includes the following:

ATTRITION COST = COST OF HIRING (RECRUITMENT

COST)+COST OF TRAINING + INTANGIBLE

LOSSES

During attrition cost calculation, there may be various direct and indirect costs

included.

COST OF HIRING = Direct cost

It includes 90% of the total costs included during the entire process. The hiring cost

includes the following:

1. COST OF ADVERTISEMENT

It includes the cost incurred by placing advertisements regarding new

recruitments within the company, in the newspapers, on company’s website

etc.

2. SOURCING

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These are the costs incurred while sourcing for candidates, which includes

print ads, online job posting boards and resume banks.

3. SCREENING

It involves:

i. Time and expense spend by the administrative staff to open,

respond and route resumes to the hiring team.

ii. Time the hiring team or the recruiter spends screening

through the resumes.

iii. In case of telephonic interviews, how many of them were

conducted and the time spent by the recruiter to prepare,

conduct, summarize and communicate the results of those

interviewed.

4. COST OF CONDUCT OF INTERVIEW

i. Any traveling expenses incurred by the hiring team or the

interviewee.

ii. The time spent in scheduling the interviews.

iii. The number of staff members involved in the interview,

number of interviews, duration of the interview and the

average cost of the interviewer’s time used in conducting the

interviews.

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5. COST OF RECRUITMENT

It includes salary package, family shifting expenses , canteen , car expenses,

medical expenses, office setup , training expenses and miscellaneous

expenses depending upon company policies apart from above.

It includes the following six factors:

Time spent on sourcing replacement.

Time spent on recruitment and selection.

Travel expenses, if any.

Re-location costs, if any.

Training time.

Background or reference screening.

Other hiring costs include:

6. Payment of consultants.

7. Man hours of the person lost conducting the interview.

8. Wastage of productivity for a new recruit.

9. Agency and search firm fees.

10. Travel costs incurred by both recruiters and applicants.

11. Referral bonuses paid to the employee.

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COST OF TRAINING = Direct Cost

It includes the following costs:

1. Cost of training material.

2. Number of days when a person is non functional which is an indirect cost.

3. Time that a person takes while adjusting in the office that is an indirect cost.

4. Stipend paid during training.

5. Cost of registration if training is external.

6. Fees of trainee if the trainee is external.

INTANGIBLE LOSSES

It includes:

1. Loss of sales

2. Loss of production

ANALYSIS OF ATTRITION COST:

ANALYZING THE COST PER HIRE

EXTERNAL COST PER HIRE

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Analyzing the cost of each hire is very important for the company and it is more

important for the company to analyze the quality of the hire. A cost benefit analysis

needs to be done to evaluate the recruiting efficiency and effectiveness.

Hiring on so many employees each year consumes a large part of the

companies’ budget.

What methods are being used to appoint the employees is also

equally important: whether traditional methods are being used or

new electronic methods are being used.

Which standard method is being used to analyze the cost per hire?

The Saratoga Institute includes six basic elements to calculate cost per hire:

1.Advertising

2. Agency and search firm fees

3. Referral bonuses paid to employees

5. Travel costs incurred by both recruiters and applicants

6. Relocation costs

7. Company recruiter costs (including salary and benefits prorated if the

recruiter performs duties other than staffing).

INTERNAL COST PER HIRE

The internal cost per hire calculation is also done on the same lines. It includes four

data elements:

1. Any internal advertising costs,

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2. Travel and interview costs,

3. Relocation costs, and

4. Internal recruiter costs.

The combination of both external and internal hiring costs provides a total cost

analysis of the recruiting efforts.

ATTRITION COSTS MAY BE AFFECTED BY THE

FOLLOWING:

Regional Differences

Higher costs of Hire are seen for the pharmaceuticals, medical and manufacturing

industries. Apart from this companies located in the western parts of the world also

have higher costs of hire. This regional difference can be attributed to several

factors like:

The costs of doing business are higher over there.

The costs of living are higher and hence are higher the salary demands.

Same can be said for the difference in the cost per hire in India. In India itself the

cost per hire in the metros like Mumbai, Delhi, Bangalore etc. is much higher than

that in Lucknow.

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Costs By Source

On breaking down the total hiring cost for detailed analysis it has been found that

on an average 18.4 percent of the total hiring cost are spent on advertising, 19.9

percent are paid to agencies and search firms; only 1.8 percent is kept for referral

bonuses, 2.7 percent for travel costs, 32.9 percent is paid for relocation expenses,

and 24.3 percent for recruiter pay and benefits.

The breakdown for external exempt hires shows that close to 50 percent of the costs

are allocated to agencies fees and relocation expenses.

ATTRITION RATE

“The rate of shrinkage in size or number”

Or

“A reduction in the number of employees through

retirement, resignation or death.”

It depicts the overall percentage change in the workforce of an organization. It

calculates in percentage the number of employees leaving the organization due to

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various reasons. Thus, it is understood that high percent of attrition rate anyhow is

not desirable for organization.

FORMULA FOR CALCULATING THE ATTRITION RATE

1.

Total number of resigns per month * 100

Total number of employees at the beginning of the month

+ Total number of new joinees – Total number of

resignations

2.

No. of employees resigned in that month * 100

Available manpower

ATTRITION CALCULATION

A number of methods can be used to calculate attrition. Different companies use

different methods for attrition calculation.

METHODS TO CALCULATE ATTRITION

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There are basically two methods to calculate attrition. The two methods are:

1. ANNUAL CALCULATION

2. COHORT CALCULATION

These methods compare employees who leave the organization with the total

employees or a part of the total number of employees.

ANNUAL CALCULATION

It indicates the broad attrition pattern from year to year. It calculates attrition by

dividing the employees who left the organization in a given year by an average of

employees working in the organization at the beginning and end of the year.

COHORT CALCULATION

It indicates the attrition over a period of time for a specific group at a specific time

or a part of the total employees. This method is calculated by tracking a specific

group of employees hired during a specific timeframe. These hires are tracked for

selected intervals. Different timeframes are used for tracking in this method. It does

not take the average of the total workforce.

There is no one standard formula for the calculation of attrition. This can be

attributed to many factors like:

The types of attrition that may or may not be taken into account:

1. The employee base on which the rate has to be calculated changes every

often. So there is no fixed base.

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2. The firm does not include the employees who are freshers who leave the

organization within 3 months of joining or for further studies.

3. At times the attrition of poor performers is also not treated as attrition.

The types of attrition that are taken into account while calculation:

1. Fresher attrition that tells the number of employees who have left the

organization within one year.

2. Infant mortality attrition. It tells the percentage of the people who left the

organization within one year. It helps in calculating the ease with which

people adapt themselves to the organization.

3. Critical resource attrition. It tells the attrition of the key personnel of any

organization like the senior executives leaving the organization.

4. Low performance attrition. It tells the attrition of those who left the

organization due to poor performance.

CALCULATING ATTRITION RATE

In terms of number:

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Total number of resigns per month (Voluntary or forced) / (total

number of employees at the beginning of the month + total

number of new joinees – number of resignations) * 100

In monetary terms:

COSTS DUE TO A PERSON LEAVING

1. Calculate the cost of the person who fills in while the position is vacant.

Calculate the cost of lost productivity at a minimum of 50% of the person's

compensation and benefits cost for each week the position is vacant, (till the

time the seat 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 an exit interview

It includes 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

This is the manager responsible to understand what work remains, and how

to cover that work until a replacement is found.

4. Calculate the cost of training

The amount invested by the company in training the employee who is

leaving.

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5. Calculate the impact on departmental productivity

Since 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

The person who leaves takes away with him out of the door various

knowledge, contacts.

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 referral costs; internet

posting costs.

2. The cost of the internal recruiter's 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 a candidates' skills, abilities, aptitude, attitude, values and behaviors.

TRAINING COSTS 1. The cost of orientation in terms of the new person's salary and the cost of

the person who conducts the orientation. And the cost of orientation

materials.

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2. The cost of departmental training as the actual development and delivery

cost plus the cost of the salary of the new employee. This cost is

significantly higher for some positions such as sales representatives who

require 4 - 6 weeks or more of classroom training.

3. The cost of the person who conducts the training.

4. 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

1. After training, the employee contributes at a 25% productivity level for the

first 2 - 4 weeks. This cost is therefore 75% of the new employees full

salary during that time period.

2. During weeks 5 - 12, the employee contributes at a 50% productivity level.

The cost is therefore 50% of full salary during that time period.

3. During weeks 13 - 20, the employee contributes at a 75% productivity level.

The cost is therefore 25% of full salary during that time period.

4. The cost of mistakes the new employee makes during this elongated

indoctrination period.

NEW HIRE COSTS 1. The cost of bringing the new person on board including the cost to put the

person on the payroll, establish computer and security passwords and

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identification cards, telephone hookups, cost of establishing email accounts,

or leasing other equipment such as cell phones, automobiles.

2. The cost of a manager's time spent developing trust and building confidence

in the new employee's work.

LOST SALES COSTS

The revenue per employee is calculated 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 defined set of responsibilities that are necessary to the

generation of revenue. Hence, the lost revenue is calculated by multiplying

the number of weeks the position is vacant by the average weekly revenue

per employee.

TURNOVER COST OF THE EMPLOYEE

It helps in calculating the cost per employee. It is defined as the percentage of

annual salary including other cost benefits given to an employee.

The formula used for the calculation of Turnover cost of employee is:

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TURNOVER COST = HIRING COST + TRAINING COST + LEARNING

CURVE LOSS COST + TERMINATION / SEPARATION

COST + VACANCY COST

TACKLING ATTRITION

“ Ninety percent of the world’s woe comes from people not

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knowing themselves, their abilities, their frailties, and even

their real virtues.

Most of us go almost all the way through life as complete

strangers to ourselves.”

Just understanding attrition, its types and causes is not enough. It is more important

to understand how such a thing can be dealt with since it is one of the most critical

things in any organization now a days. Hence understanding how it can be dealt

with and then trying the methods in the organization to curb attrition is equally

important. Since for curing any disease a proper quarantine is required.

Thus for dealing with attrition a proper look at how to tackle it is required so that

proper action can be taken at the right time.

Before going through the methods of attrition, it is important to have a closer look

at the following:

Where and Why?

It is important to identify the various sources of attrition. Where, at what levels

attrition is occurring and then going through the causes to analyze why is it

happening. Any method utilized for retention should be based upon the factors

responsible for attrition in the organization. The factors may at times be very simple

while at times quite complicated.

Understanding the factors of attrition may help in solving some of the questions

like:

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Where is attrition occurring?

At what levels is it occurring?

Is it more in males than in females or vice versa?

Is it restricted to people from a particular department, region or group?

What age group?

Once the source or the causes of attrition have been identified, managing it becomes

relatively easier. Organization can decide upon it that whether any interventions can

help reduce attrition or something else needs to be done.

Following are the tools that help in checking attrition.

TOOLS TO MANAGE ATTRITION

The most important tool to manage attrition is the process of mentoring.

MENTORING

Mentoring is a term that is used to help, advise and guide employees through the

complexities of the business. It is a mutual learning partnership in which

individuals assist each other with personal and career development through

coaching, role modeling counseling, sharing knowledge and providing

emotional support.

It can be called as an offline help from one person to another that helps in making

significant transitions in knowledge, work or thinking. This is a tool used by

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organization to nurture and grow their people. It can be an informal practice or a

formal program.

IMPORTANT ASPECTS OF MENTORING: It is both people and task oriented.

It contributes to the professional development of others.

It involves the presence of a good listener.

It involves the presence of an effective mentor.

The Mentor is expected to have empathy, not sympathy.

The mentor and learner both should be creative enough to bring in new

changes.

The mentor should not injure the learner’s self-esteem.

The mentor should be good at generating alternatives.

Should be held in high esteem by people working with.

The mentor should not develop dependency in the minds of the learner.

Should be a role model to the learner.

WHO IS A MENTOR?

A mentor can be any person who acts as a guide and helps the learner understand

and guides him in the correct path. He grooms the learner in the best possible

manner. He is a person with whom the learner develops a one to one developmental

relationship and develops his own skills and capabilities. The learner often develops

deep personal bonding with the mentor. And it is in the presence of him that the

person identifies having an enabled personal growth and enhancement taking place

in terms of a person as a whole.

A mentor demonstrates, explains and models. He is a

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Friend

Philosopher

Guide

CHARACTERISTICS OF MENTOR

A mentor is any person who has the following skills:

A desire to help others.

Have had positive experiences

Any person who has had positive formal or informal experiences with a

mentor tends to be good mentor himself.

Good reputation for developing others

Experienced people who have a good reputation for helping others develop

their skills.

Time & Energy

People who have the time and mental energy to devote to the relationship.

Up-to-date knowledge

Individuals who have maintained current, up-to-date technological

knowledge and skills.

Learning Attitude

Individuals who are still willing to learn and who see the potential benefits

of a mentoring relationship.

WHO IS A LEARNER?

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A learner is any person who is wanting to listen, succumb himself to another person

who will develop his skills and personality. He is a person who can lay down his

trust on another person and is committed towards the goal of enhancing his

personality.

CHARACTERISTICS OF A LEARNER

Committed to expanding their capabilities.

Open and receptive to new ways of learning and trying new ideas.

Ability to accept feedback whether positive or negative and act upon it.

Willingness to apply whatever learnt on the job.

Focused on achieving the desired results

Ability to communicate and work co-operatively with others.

Is not shy asking for help.

THE MENTORING PROCESS

EXPLORATION

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1. EXPLORATION

It involves the following steps:

Taking the lead

Clarify aims and objectives of mentoring

Listen and ask open questions

Negotiate an agenda

Take lead in creating rapport

Show your commitment to the learner

Help mentee arrive at his / her own answer

2. NEW UNDERSTANDING

It involves:

Support and counsel.

Giving constructive feedback.

Coach and demonstrate skills.

Listen and challenge; ask closed and open questions.

Recognize strengths and weaknesses.

NEW UNDERSTANDING

ACTION PLANNING

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Establish priorities.

Share experiences.

Offer encouragement.

Be supportive and sensitive to the mentee.

3. ACTION PLANNING

It involves:

Examine options for action and their consequences

Negotiate the action plan

Encourage new and creative ways of thinking

Help to make decisions and solve problems

Monitor progress and evaluate outcomes

Give advice whenever required

Celebrate progress

PHASES OF A MENTORING RELATIONSHIP

ORIENTATIONMIDDLE PERIOD

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The mentoring relationship typically has four distinct phases:

1. ORIENTATION - BUILDING THE BASE

During the first three to six months, both the mentor and mentee get to

know each other, and build trust. The interaction, which occurs at this

stage, lays the foundation for a strong and beneficial relationship.

2. THE MIDDLE PERIOD

The middle phase is typically the most rewarding time for both mentor

and mentee. The mutual trust, which has developed between the two,

can give the protégé the confidence to challenge the ideas of the mentor,

just as the mentor will challenge the protégé’s ideas.

3. DISSOLVING THE RELATIONSHIP

The relationship begins to draw apart after a year or two. It is important,

at this stage that the mentor steps back from the formal relationship to

discuss together with the protégé how they wish to continue their

DISSOLVING THE

RELATIONSHIP

REDEFINING THE

RELATIONSHIP

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relationship.

4. REDEFINING THE RELATIONSHIP

The mentor-protégé relationship enters a new phase, where both parties

can regard one another as equals. They continue to have some form of

interaction, although it is now on a more casual basis.

VARIOUS OTHER STEPS TO CURB ATTRITION IN

THE ORGANIZATION

The HR Manager told the various other steps to curb the attrition in the

organization. The steps are:

1. Bench marking of the employees.

2. Looking for work environment, employer-employee relationship.

3. Relevant grievance handling procedures for settling the grievances of the

employees.

Apart from this there are various other methods as well:

1. Hiring well and competent employees that are fit to be placed in the

position and will remain with the company for an extended period of

time.

2. Communicating the employees’ jobs, roles and responsibilities and

new policies to the employees well enough and also communicating it

within the organization.

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3. Participative Decision-making. Including the employees in the

decision making process. This also helps to generate new ideas.

4. Sharing of Knowledge with Others. Sharing of knowledge with others

helps in retention of information within the organization.

5. Shortening the Feedback Loop. This helps employees know the

feedback of their work within a short interval of time. This helps in

keeping the performance levels high and reinforcing positive behaviour

amongst the employees.

6. Pay Packages. Employees should be paid appropriately and fairly for

the work they do.

7. Balancing Work and Personal Life. Company should help maintain a

balance between work and family life. This helps in retaining the

employees.

8. Exit Interview. Interview with the employees leaving the organization

will help employees find out reasons why the employees are leaving

and the drawbacks in the organization.

9. Motivational Training: It surely helps in training the employees. It is

important to make sure that the employees get ample of growth

opportunities within the organization.

10. No Favoritism. Favoritism and preferential treatment towards

employees is one of the surest reasons for employees to leave. Hence it

should be made sure that employees are treated equally and fairly.

EXIT INTERVIEW

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One of the best methods to find the reasons for employees’ leaving the organization

is through conducting the Exit Interviews. It helps in finding out the exact reason

for why the employees leave. Most of the companies are troubled now a days with

the question that …."Why our attrition rate is higher than other company".

Thus it is helpful in finding out the real reason why employees leave which can be

helpful in identifying the departments or areas of the organization that require

improvements.

“Conducting exit interviews in the right manner can be an

invaluable management tool for companies.”

Exit Interviews have now become a routine in the organization. These are the

interview that is conducted with an employee just before he is leaving the

organization. The HR personnel or the immediate supervisor mostly conducts these

interviews. Employees are able to give various valuable information to the

organization that can be used by the organization.

It's easier to fight the enemy if you know where to hit. And

to fight the giant of 'attrition', exit interviews can be used as the

arrow to strike right at its Achilles' heel.

Exit interviews give an inner view to the internal systems and working within the

organization that affect an employees’ career in the company. Many reforms in the

existing appraisal system, leave management, human resource management system

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and many more improvement initiatives can be taken on the basis of the exit

feedback.

These are the cost effective means of not just collecting the data regarding the

recruitment, selection, placement and training practices but also helps in reducing

the employee attrition. These help in identifying poor practices in organization that

can be eliminated.

These interviews can help in creating a positive environment, wherein the

employees if wanting to re-join later can do so without any hesitation. These are

conducted just before the employees’ departure; hence employees can disclose their

feelings about the company without fear of repercussion.

Anyhow the employees while giving the interview may be biased and judgmental

about the company. He may also give wrong information since he is leaving. The

organization should spent equal time gaining feedback from employees throughout

their association with the organization. Besides, these interviews can sometimes

lead to character assassination and may divert from the main goal of conducting

such interviews. Thus, these interviews should be conducted professionally and as

far as possible steer away from personal grievances.

This organization maintains an Employees Support Portal online in the company’s

website. This is a portal provided for the Employees’ Support System where

employees have been given various facilities like the online grievance redressal

mechanism where employees can write in their grievances online. Apart from this,

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for the employees leaving the company also maintains an E-Separation Portal

which contains the employees name, code, designation, date of joining date of

resignation.

E-SEPARATION

To automate the HR processes, E-separation online system has been created for

automating the employees’ resignation process, helps an employee fill the Exit

Interview Report and complete his full and final separation from the organization

online.

It is a portal for entering the resignation request, relieving date, approval and exit

interview.

Its URL is http:// eseparation.relianceada.com

THE WIN WIN MODEL: MODEL TO

REDUCE ATTRITION RATE

This is a model that has been created to satisfy the needs of both the employer and

employee and thus give a better understanding of the attrition processes and

reducing it.

This model encloses the employee by 4 levels of strategies thus reducing the

attrition rate as well as minimizing the impact wherever it occurs.

The 4 stage framework:

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1. Short Term Mitigation Plan

2. Short Term Contingency Plan

3. Long Term Mitigation Plan

4. Long Term Contingency Plan

This model is devised to reduce the impact of attrition by satisfying the needs of

both employer and employee.

Needs of the employer:

To get maximum returns from each employee.

Recover training and development costs.

Minimize cost in terms of time in training new workforce.

Ensure that adequate no. of people are there to carry on the process of

proper manpower planning.

Needs of the employee:

Enriched job profile

Better career path

Challenging work environment

Future prospects of the job

THE WIN-WIN MODEL

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This model is conceptualized on the supposition that the employees need to be

enclosed from the competitive companies by strategies at each level such that the

attrition and its impact can be reduced to the minimum. Plans differentiate on the

basis of tenure into short and long term as well as on the basis of usage into

mitigation and contingency.

1. Short Term Mitigation Plan

Break Even Period

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It involves retaining the employees for a specified period of time called as the

break-even period so as to recover the cost incurred on the employee. For this the

minimum time period to recover the cost of employee should be calculated so that

the employee can be retained for that time period.

Small Tenure Bond

After calculating the time-period measures should be taken to retain employees till

this minimum time period. For this companies adopt various measures. One such

measure is signing the bond between the employer and the employee.

2. Short Term Contingency Plan

It focuses on the work environment that enhances employee motivation for the job.

It involves the maintenance of a conducive, fun filled environment, informal work

culture according to the needs of the young employees. It is necessary for

compensating the loss that happens to the employees in terms of losing their social

life owing to the nature of job in the organization. For this the following can be

done:

Flexible Salary Structure.

Variable pay package based on performance.

‘Working from home' when required for a short term.

Added benefits like sponsored vacations.

Provide job rotation amongst related departments on a periodic basis

3. Long Term Mitigation Plan

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These are the steps taken by the management to minimize the impact of attrition

such that the firm does not face losses on the long-term basis. These steps include:

Defining job roles helps in mitigating the effects of attrition.

Clear documentation of the process and the jobs performed.

Succession planning for the critical positions in the organization for

faster replacement.

An assessment and certification can also be helpful in creating an

employable talent pool.

4. Long Term Contingency Plan

These are the attempts by the telecom industry to reduce the attrition as a whole.

To minimize the training costs, the industry needs to work with the

government to introduce courses at a school and college level, which

are in line with the requirements of the telecom industry.

To reduce poaching of employees within the industry bilateral

agreements between companies should being signed. Basic norms

are being put in place and code of ethics is being stressed upon by

industry.

A Common Database should be maintained by all the players of the

industry to ensure that they are not cannibalizing each other’s

resources.

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Focus should be on higher education and ongoing learning for the

workforce, sponsoring employees on post-graduate programs and

treating applicants and employees in the same way as one treats

customers.

ROLE OF THE HR DEPARTMENT IN

MANAGING ATTRITION

Attrition at a minimum level is good in itself as it will help the organization in

getting rid of unwanted employees, getting in new blood into the organization,

inflow of new ideas, new enthusiasm into the organization also developing a fear

into the minds of the people that any one can be thrown out which compels them to

work properly. But it becomes a problem when the attrition rate is abnormal.

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Therefore, the HR Department has a very crucial role to play in managing attrition

and controlling it as well. Since it is the duty of the HR to bring in the right

candidate in the organization, provide him ample training, a good work atmosphere,

proper appraisal procedure and effective grievance redressal machinery. Thus,

when attrition rate increases it is the duty of the HR personnel to study the reasons

of attrition, explain it to the management and along with it devise steps to reduce it.

THE PRACTICES OF THE HR DEPARTMENT

The HR is the most crucial department in the telecom sector. It has a variety of

important roles to play right from recruitment of the person up to his exit from the

organization. For curbing attrition, the employee needs to start right from hiring.He

needs to do the following:

While conducting the recruitment, it is in the hands of HR to bring the

right kind of people. HR needs to identify the employees who would stick

with the company.

More diversity in the kind of employee hired needs to be brought so there

is a diversified culture within the company.

Keep an eye on good performing employees, reward them and have a

career plan for them in mind.

Discuss career plan with employees on a regular basis and take feedback

from them.

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Quality of Work Life is important. They need to give their employees

personal space to grow and adjust with social life.

In case of employees leaving, a good exit-feedback system should be in

place so as to cover the reason for which the employees leave.

TACKLING ATTRITION HEAD ON

HR has been identified as one of the key departments in the telecom industry. HR

devises different strategies to address short term challenges such as Attrition and

also long term challenges such as ensuring availability of skilled talent pool.

To deal with the attrition rate HR specialist feels that a scientific and analytical

approach needs to be implemented.

According to the HR managers, Pay cheques are not enough to retain employees.

Other aspects like secure career, benefits, perks and communications also need to

be looked upon. One needs to focus on retention, making the work place healthier,

having education and further learning and training for the employees, treating

employees in a friendly manner.

Companies need to go for a more diverse workforce, in terms of gender, age, race,

experience. This results in innovation and success.

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According to statistical analysis, the cost of attrition is 1.5 times the annual salary.

Age should not be a barrier for training employees.

COMBATING HIGH ATTRITION BY HR

The HR has found out various ways to combat attrition.

BELOW THE SURFACE

Going by the various surveys and exit interviews, professionals are switching jobs

either for money, career satisfaction and opportunity to work with newer

technologies. However when attrition was dealt minutely, various other reasons

have come to the forefront. It is found that lack of match between personal

requirements and organizational culture is quite prevalent. The employee is

concerned about the environment in the organization, his compatibility with the

supervisors, attention paid to him etc.

MONEY IS NOT EVERYTHING

Money is a higher priority amongst freshers with less than 3 years of work

experience. Professionals now look for more challenging jobs, exposure to newer

technologies and expansion of their domain capabilities.

“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.” -

V Bharathwaj, vice-president, global marketing, 24/7 Customer.

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Workers generally analyze training programs of prospective companies with those

of their organization in terms that how an organization grooms an employee. They

believe that developing higher skills will keep them ahead in job market and result

in better compensation. They start looking for a job with higher levels of

responsibility.

Thus the employee can also leave the organization for his growth both vertical as

well as horizontal.

COMMUNICATION

“Companies should have a similar approach to employees and customers. A

company should strive to retain an employee in the same way it tries to retain a

customer.” -Bijay Sahoo, Vice-president, Talent Engagement & Development,

Wipro Technologies

Communication is said to be the foundation of the entire process of managing

attrition. The process of communication starts right at the time of recruitment. In

case of peer pressure, employee joins a well-known company. This act is a part of

brand building, which helps in attracting the right talent and retention.

Communication plays a very crucial role in retaining employees. It is said that the

organizations, which are successful in retaining employees, pass on their goals and

achievements very successfully.

VISION AND OBJECTIVES

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When any new entrant comes in organization and is in his probation period, is being

introduced to the office culture, this is the time that he should be exposed to the best

values the company has.

If the employees are informed about the regular happenings in the company,

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

Training the employees in the newest technologies and well-managed succession

plan also help to manage attrition. Thus identifying the right training for the right

person is very important.

CONSIDER FEEDBACK

It is important to take feedback from the employees on various issues and work

with the HR department to sort out the differences. Feedback can be got from the

employees:

1. During the tenure of the employees

2. By the Exit Interview

Inputs can be secured from employees through various employee relationship

management tools.

EMPLOYEES’ ADVOCATE

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One of the important reasons why employees leave companies is because of

problems with their manager. The HR is termed as employees’ advocate and a

bridge between the top management and employees at all levels.

“The HR department should have genuine interest in the

employees’ welfare…it is responsible for making sure that their

expectations are met. By doing this it is easier to meet the

company’s business targets.”

CONCLUSION

Thus in a nutshell it can be said that Attrition whether good or bad can never be

good for any organization. It always shows the inability on part of the organization

to maintain its employees and also brings to the forefront many of the flaws of the

organization, which can prove harmful to the company and its image in the long

run. Various causes of attrition have been found out in the organization. Employees

themselves have stated various reasons for why they leave organization. These

causes have also been analyzed and a SWOT analysis on attrition has also been

conducted which explained in short the strengths and weaknesses of Attrition. Then

various methods for curbing attrition have also been devised and it was finally

found out that curbing attrition is actually not difficult and it is actually in the hands

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of the HR manager who owns the maximum responsibility of managing and

curbing attrition. Thus attrition is bad and so are its consequences and managing

this evil has become more than a necessity for the organizations today.