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But then there's the real world. And in the real world, employees, do
leave, either because they want more money, hate the working
conditions, hate their coworkers, want a change, or because their
spouse gets a dream job in another state. So, what does all that
turnover cost? And what employees are likely to have the highest
turnover? Who is likely to stay the longest?
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Attrition is beginning to significantly affect offshore ROI. Just as
businesses faced a scarcity of talented IT resources during the dotcom
era, organizations in offshore countries such as India are experiencing
similar pains. Skilled employees are hopping from job to job and taking
with them the customer knowledge and technical expertise that any
company needs. Their salaries are increasing, along with their perks,
benefits, and bonuses.
Defining the attrition problem
How do the hiring and training processes break down in terms of total
costs in India? The typical time for advertising, interviewing, screening,
negotiating, and hiring a new employee is about two weeks.
Companies usually allot one week for programmers to become familiar
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with the new business, two more weeks for technical training, and one
last week for customer training. Now imagine a 25% attrition rate and
replacing 25 of these programmers each year. Based on a yearly salary
of $15,000 for the human resource person and $25,000 for the
programmer, it would cost an additional $63,000 annually in
acquisition and employee training costs. After considering these
figures, it quickly becomes apparent why companies are investing in
strategies to prevent attrition.
Reasons for attrition
It is not easy to find out as to who contributes and who has the control
on the attrition of employees. Various studies/survey conducted
indicates that every one is contributing to the prevailing attrition.
Attrition does not happen for one or two reasons. The way the industry
is projected and speed at which the companies are expanding has a
major part in attrition.
For a moment if we look back, did we plan for the growth of this
industry and answer will be no. The readiness in all aspects will ease
the problems to some extent. In our country we start the industry and
then develop the infrastructure. All the major IT companies have faced
these realities. If you look within, the specific reasons for attrition are
varied in nature and it is interesting to know why the people change
jobs so quickly. Even today, the main reason for changing jobs is for
higher salary and better benefits. But in call centers the reasons are
many and it is also true that for funny reasons people change jobs. At
the same time the attrition cannot be attributed to employees alone.
• Organizational matters:
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The employees always assess the management values, work culture,
work practices and credibility of the organization. The Indian
companies do have difficulties in getting the businesses and retain it
for a long time. There are always ups and downs in the business. When
there is no focus and in the absence of business plans, non-availability
of the campaigns makes people to quickly move out of the
organization.
• Working environment:
• Job matters:
No doubt the jobs today bring lots of pressure and stress is high. The
employees leave the job if there is too much pressure on performance
or any work related pressure. It is quite common that employees are
moved from one process to another. They take time to get adjusted
with the new campaigns and few employees find it difficult to get
adjusted and they leave immediately. Monotony sets in very quickly
and this is one of the main reasons for attrition. Youngsters look jobs
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as being temporary and they quickly change the job once they get in
to their own field. The other option is to move to such other process
work where there is no pressure of sales and meeting service level
agreements (SLA). The employees move out if there are strained
relations with the superiors or with the subordinates or any slightest
discontent.
Moving from one job to another for higher salary, better positions and
better benefits are the most important reasons for attrition. The salary
and offered from MNC companies in Bangalore, Delhi and Mumbai have
gone up very high (Rs 15000 to Rs 18000 per month) and it is highly
impossible for Indian companies to meet the expectation of the
employees. The employees expect salary revision once in 4-6 months
and if not they move to other organizations.
• Personal reasons:
The personal reasons are many and only few are visible to us. The
foremost personal reasons are getting married or falling in love or
change of place. The next important personal reason is going for
higher education. Most of the BE, MCA and others appear for GATE
examination or other examinations and once they get cleared they
quickly move out.
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with the AC hall etc will tend to get various other health problems and
loose interest to work.
• Poaching:
The employees with 4-6 months experience have very good confidence
and dare to walk out and get a better job in a week's time. Most of the
organizations have employee referral schemes and this makes people
to spread message and refer the know candidates from the previous
companies and earn too.
• Employee’s advocate:
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Handling attrition?
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In terms of stated work pressure, only 17% have claimed ‘light
pressure’. This may point to a reasonably high-pressure environment in
conventional terms, not realized as most respondents have no other
industry experience. The atmosphere at the workplace however, was
generally positive. Almost half worked more than 45 hours per week.
Majority of the breaks were for meals and there were no significant
problems faced in taking the breaks.
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Almost 2/3rd employees travel more than 10 kms to work everyday.
This is a huge strain on quality time available with the family and
ostensibly results in stress in numerous ways compared with other
industries. The root cause is that most BPOs are located outside the
city as government lands have been allocated to the MNCs at better
rates there.
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Although taxi / bus services are provided by most employers, as many
as 30% workers travel crammed (more than 5 persons to a taxi).
What’s more, 79% waste more than 30 minutes of their productive
lives everyday waiting for commute. Interestingly, lower salary workers
get no such benefits.
• Good rewards and recognition programmes:
Many companies have canteens though the quality of food is not great.
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• Good pay and benefits:
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• Other practices include:
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another 3-5 persons. Moving for higher education and marriage are the
major reasons for attrition. To tackle these will be impossible with any
type of strategies and approaches. The HR personnel have become
silent spectators and start hunting for new personnel to replace.
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An employee may be highly competent but his or her style may be
different from that of the direct manager. The "Value to a Team"
section of an Insights report provides crucial information to a manager
who tends to evaluate all employees against one set of standards.
Insights can help managers recognize the value and uniqueness of
each person's contributions then reward them accordingly.
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How to save high attrition rates?
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When this same logic is applied to employees, we find the cost of
replacing employees comparable to that of investing in a new
automobile. Recruitment, hiring, benefits and administrative costs put
an organization upside down on the investment.
• Drivers of Turnover
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phenomenon is especially true in light of current economic uncertainty
and following corporate downsizing when the impact of losing critical
employees increases exponentially.
When managers or supervisors are asked why good people leave, most
respond, "It’s about money." Or, they dismiss the departure matter-of-
factly by stating the employee "received a better offer." Contrary to
popular belief, research indicates that money is not even on the list of
top five reasons employees give when asked why they are leaving an
organization.
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loss. Research shows the reasons for employee departures are (in
descending order):
1. Employee/manager relationship
2. Inability to use core skills
3. Not able to impact the organization's goals, mission
4. Frequent reorganizations; lack of control over career
5. Inability to grow and develop
6. Employee/organization values misalignment
7. Lack of resources to do the job
8. Unclear expectations
9. Lack of flexibility; no 'whole life balance'
10. Salary/benefits
It is very important to know that the above factors are often NOT the
ones mentioned in most attrition studies published by individual
organizations. Additionally, this information does not match the data
frequently obtained during an employee's exit interview when asked
about the reasons for departing. The rationale behind this discrepancy
is that exit interviews are frequently conducted by the departing
employee's manager or HR manager, hindering honest responses.
Typically, employees are hesitant to tell these company
representatives the truth for fear of burning bridges or getting a bad
reference.
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How to curb attrition?
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The next level of communication, a crucial part of retention,
starts with acquainting employees with the company’s vision and
objectives. Organizations successful in retaining employees clearly
pass on their goals and achievements. Conducting regular meetings
and updating employees, especially new entrants, about the
company’s status and achievements is a must.” They should
concentrate on leadership and brand building as people prefer to be
associated with a brand. Respect for the job should be created by
BPOs. The youth should feel proud to be a part of the billion-dollar
industry.
Mentoring and handholding new recruits from day one to four months
are important tasks; during this period, they should be familiarized
with the culture of the company. It is at this time that new entrants
experiment with different options. Hence they should be exposed to
the best values the company has.” If they are informed about regular
happenings in the company, employees will be confident about the
future and not try to look for better options.
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Since software professionals have different priorities at different points
of time, organizations need to structure their offer-mix while recruiting
new hires, as well as promoting potential ones. Communication is the
foundation for the entire process of managing attrition. This
communication begins right from recruitment. In cases of peer
pressure, an employee aims to join a well-known company. This could
be achieved by brand building, which attracts the right talent and
helps in retention as well.
• Firing
Sometimes, firing can look like attrition. Looking at firing and attrition
together in a different light, firing can be an excellent tool to contain
attrition. Attrition can simply be defined as employee leaving his
current job due to reasons like, job pressure, health problems, personal
reasons, inefficient boss, lack of job security etc. All the above reasons
are interlinked and can be the reasons for good workers to quit. If the
team has under-performers who despite given sufficient support and
training is unable to perform, but they continue to be part of the team
damage the morale of the team. A performer will not want to be part of
the team, which has non-performers because he will have to
compensate for the non-performer, thereby increasing his job
output/pressure. A continuous job pressure results in health problems.
Having frequent health problems not only reduces his performance,
but also affects him financially. At this juncture, the performer realizes
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that he is working with an inefficient manager who is not capable of
“cleaning up” the team by firing non-performers. With the above, the
performer employee feels insecure and resigns. Firing non-performers
can be an efficient tool to contain attrition.
• Consider feedback
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According to Wipro's web site, its employees even have access to an
agency that will handle such "domestic chores" as paying bills, thereby
giving IT workers more free time.
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teamed with universities to offer their workers management-level
master's courses at a subsidized rate, and watched attrition rates drop
as a result.
• Change Locations
The high prices and resource crunch in top-tier Indian cities such as
Bangalore and Mumbai have led many companies to execute
alternative location strategies. Many vendors are sending work to tier-
two cities (Hyderabad or Chennai) or even tier-three cities (Noida or
Chandigarh), where labor and real estate costs as well as attrition may
be cut in half. Such benefits come at a price: The infrastructure quality
lags that of more advanced cities, and the search to find qualified
people may take longer.
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Another option to combat the rising attrition rates in India is to locate
in other countries. Sykes Enterprises, for example, disclosed that it is
relocating the customer contact management work at its Bangalore,
India, facility because the center delivered an inadequate return and a
limited competitive advantage. The Tampa-based company thinks the
work is better suited for the other Asia-Pacific offshore centers in its
portfolio, such as China. Sykes expected to incur total charges of
approximately $0.8–$1.5 million for its plan to relocate work.
• Rotate Employees
Offshore employees are asking for a clear career path with increased
responsibility and frequent recognition of achievement. Established
U.S. and European multinational companies have long had learning
programs that set expectations for performance goals such as learning
a particular tool or proprietary software. Companies practicing off
shoring need to provide new challenges and opportunities for skills
development through training or job rotation. It may become the only
reason your best employees stay with you.
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Rather than going through a prolonged posting process and screening
a deluge of résumés, some companies poach employees directly from
their competitors and offer to double salaries or buy out contracts on
the spot to scale up quickly. Poaching is generally a bad idea, as it
drives up salaries and discourages employee loyalty.
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what constitutes a good incentive. For example, a company might
reward a father with three young children a monetary bonus as thanks
for working overtime for five months straight. To the father, however,
days off might have been more attractive, since they would have
allowed him to spend time with his family.
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is can be calculated using some basic organizational parameters. The
purpose of this document is to provide talent cost of turnover
calculator with insight into how costs are calculated and the reasons
why certain costs were include or excluded form the calculator. The
calculator should only be used as a guide in understanding the impact
of turnover on a company. If the desire is to understand the true cost
of turnover then it is suggested that a greater degree of analytical
work is undertaken.
• Lost productivity
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The hidden costs associated with lost productivity of employees prior
to leaving the organization and new less skilled employees are one the
largest components of the total cost associated with turnover.
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turnovers affects on production - that is costs for incomplete or
disrupted work, loss of quality, etc.
1. Process Administration:
Resignation Administration -
The time taken to administer a resignation will include activities
such as: conducting exit interviews & processing of administrative
tasks. The time taken to perform these activities is ideally measured
as a result of analyzing the processes involved.
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Recruitment Administration -
A large amount of time is often spent in administering the
recruitment process. Writing the job ad, posting it onto job boards,
organizing agencies and reference checking all require the use of
organizational resources, whether internal staff or outsourced. The
hours spent involved in these activities does need to be factored
into the cost of turnover.
2. Sourcing Costs:
Agency expenses -
The cost of sourcing a successful applicant from an agency may be
one of the largest single direct costs associated with recruitment.
Advertising costs -
The cost associated with posting job ads to job boards or traditional
media such as newspapers can be significant. The average cost per
vacancies is used within the calculation.
3. Interview Costs:
Interview -
A core component of recruitment administration is the cost
associated with interviewing applicants. Interviews make use
internal resources. The more interviews held and the greater the
number of candidates interviewed the larger the costs associated
with these activities.
Testing -
Companies are making greater use of psychometric and aptitude
testing in their recruitment processes. These tests can be costly to
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administer and as such need to be factored into the overall attrition
costs.
Travel -
Companies may pay the costs associated with bringing an applicant
to the interview location. Although this may not be done for every
candidate an average is used in the I4 calculator.
The two costs measured in this area are the administrative tasks
associated with inducting a new hire into the organization and the
associated induction training. When measuring the cost of attrition
sometimes the total cost of training that an individual has received
whilst in the employment of an organization is included. However, as
all learning undertaken by employees will be used back on the job an
add value to the business it is inappropriate to count it as a cost of
attrition. Also, where particular jobs have high training, often there is a
corresponding lower rate of pay which acknowledges the investment
that the organization is making in the individual, eg. Youth wages. One
aspect of training directly associated with turnover, however, is the
induction of new staff to the organization. High staff turnover will
necessitate greater levels of resources being made available to induct
new employees. It is the opportunity costs of these resources that
must also be calculated.
1. Induction Administration
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The process of induction into an organization can involve a substantial
amount of time. The activities included here would include the
processing of new hires into organization systems (HR) and
introductions to fellow employees.
Induction Training -
Any initial training received by an employee on joining the
company. This includes the costs of the materials, presenters
and the opportunity costs associated with the new employee
taking time off work to participate.
Relocation Expenses -
Similar to travel these cost are incurred by companies in an
effort to source the best talent for alternate locations. An
average cost needs to be captured as part of the calculation
process.
• Productivity Losses
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Turnover is commonly viewed as belonging to a family of withdrawal
behaviors that physically distance employees from unpleasant work
settings. Serving a common psychology function, withdrawal actions
reduce the time spent in an adverse environment and thus reduce job
dissatisfaction.
The second effect of loss of productivity occurs when new hires join the
organization. They will not have the networks, understanding of
organizational processes or product/service knowledge to be effective.
Studies have shown that a new hire will generally take between 3- 8
months to become effective in their new role. The longer period is
associated with more senior roles.
• Excluded costs
Not all the costs associated with turnover have been included in the i4
attrition calculator. Costs that cannot be accurately measured or
assumed have been excluded. These costs, although hidden, may be
the most critical in terms of organizational impact. Examples of hidden
costs are included below to highlight the organizational impact of
attrition.
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• Employee Demoralization
Turnover may erode the morale and stability of those who remain
employed. Their morale suffers because they lose friends and may
interpret motives for quitting as social criticisms about the job. A belief
that a leaver has a “better” job elsewhere may change employees’
perceptions of their jobs. As a result stayers may denigrate their
present position in the light of superior alternatives and begin
contemplating other employment. This phenomenon may lead to a
cycle of attrition whereby employees leaving a company prompt other
to do the same.
• Impaired Quality of Service
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correlation between employee turnover and customer turnover.
Therefore, the cost of decreased customer satisfaction and loyalty
should be taken into account when considering staff turnover.
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A meta-analysis conducted by McEvoy and Cascio found that generally
it is the poor performers that will leave their place of work. There are
two possible explanations for this: firstly, terminated staff has on
average a lower tenure than current staff and so have not had the time
or opportunity to develop the skills necessary to perform well; or the
current performance management systems which exist are
encouraging high performers to stay and poor performers to quit.
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Article -
‘Attrition at Call Canters’
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borne and are we collectively contributing directly or indirectly for the
attrition.
Attrition is not a new problem and it has existed earlier and will
continue to exist in any industry. But there is a limit for every thing.
The call center industry is new and every one is in a great hurry to
make some thing or do some thing, become someone in the sun rise
industry. The government, promoters, management team, employees,
consultants, media and so many others play a major role in developing
any new industry and extend helping hand for stabilization and finally
growth of the industry.
What drives young people to quit call centres and data processing
units as fast as they join them? As industry attrition rates (how soon
people quit jobs) climb as high as 80 percent in some companies,
human resource executives in various BPO firms tried to pinpoint the
reasons that make young people between the ages of 22 and 26
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shuffle jobs in months. They were participating in a seminar on key HR
issues for the BPO industry in Bangalore today. This is what they came
up with.
"This industry is still not being accepted for a long term career," said
Mphasis BPO Services' chief human resources officer Manab Bose.
BPO employees have high aspirations. They want to see 'wealth' in this
lifetime and have low respect for authority. This is because most BPO
employees have immense family support.
ICICI OneSource President and CEO Raju Bhatnagar said the pulls of
the market (poaching by competitors) cannot be countered easily. BPO
firms try to pick the best talent, he explained, and good talent is prone
to be poached or to shifting jobs. He suggested that firms should
instead look at the average person, train and retain him/ her for the
longer haul.
Philips Software CEO Bob Hoekstra felt BPO employees are in a piquant
situation, having to handle pressure both from their customers and at
home.
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"There is an enormous conflict in age group [in terms of the fact that]
youngsters are serving mature customers, and they are prone to make
mistakes," he said.
Case Study -
'I'll never work at a call centre again!'
Subhash Mukherjee | November 18, 2004
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But is working for a BPO all that it's made out to be?
One day, I reached breaking point. After taking 156 calls at a stretch,
my throat started to hurt terribly. I paused to take a breath and, in the
process, I missed a call. The calls that are directed to us were
constantly monitored by a machine. Immediately, it alerted my
supervisor to the fact that I had missed a call. My supervisor came and
asked me why I was in the 'wrap mode'.
What this means is that my dialer shows a red bar when the person on
the other end of the line hangs up without getting a response. The red
bar is an indication that I did not take the call -- that the call was not
'live'. At that moment, I just wanted to pick up my bag and leave.
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Permanently. Instead, I stayed calm for the duration of my hours at
work.
I fielded all my calls till 1 am. But I had made up my mind -- I would
quit this job with its inhuman pressures and its lack of empathy for
employees. Workplaces like this have only one goal -- to make money.
This job expects you to work even if you are feeling ill; even if your
throat hurts. You cannot take even a 10-second break; the dialer
throws calls at you continuously and you have to start pitching (taking
them) immediately. If you do not respond to the person at the other
end of the line, s/he might hang up. That shows on your machine. You
have to ask for permission to go to the toilet. Often, your request is
denied by your supervisor.
You repeat the same five sentences 350 times a day. Isn't it pathetic?
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I'll never work at a call centre again. Nothing is worth the ordeal I went
through.
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