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INTRODUCTION

1.1 ABOUT THE STUDY


1.2
III. RELEVANCE OF THE STUDY
Retention of employees is one of the most important ongoing practices of human
resource management. Employees turnover is a major organizational menace. The problem is
being faced by different organizations of almost all the countries. Organizations are trying
different plans to get maximum output from employees without their involvement. Retention is
one of the main factors that could help in achieving the required results.
This study deal with the benefit provided by the employees, the rewards and recognition
of the employees, benefits of individual career plans factor of employees of employee retention.
It highlights the textile mills to maintain the smooth relationship between the workers and the
management which leads to enrichment of organization efforts.This study elaborates the
retention of employees, its benefits and factors that may help to retain the best talent of the
organization. It will help textile organization to find out various factors effecting higher turnover
and to revise their current policies for further improvements.
The study is to evaluate whether amenities provided by the employer, overtime, wages,
financial and non-financial benefits impact the level of satisfaction of the workers. The workers
in the job are not machines but contributors to production.
Employee retention refers to policies and practices companies use to prevent valuable
employees from leaving their jobs. How to retain valuable employees is one of the biggest
problem that plague companies in the competitive marketplace. Not too long ago, companies
accepted the revolving door policy as part of doing business and were quick to fill a vacant job
with another eager candidate. Nowadays, businesses often find that they spend considerable time,
effort, and money to train an employee only to have them develop into a valuable commodity
and leave the company for greener pastures.
In order to create a successful company, employers should consider as many options as
possible when it comes to retaining employees, while at the same time securing their trust and
loyalty so they have less of a desire to leave in the future.

INTERNAL MOBILITY
Internal mobility is defined as the extent to which an organization utilizes a
policy of staffing from within the organization. Although internal mobility policies
may reduce turnover generally, actual promotion rates prove to have stronger effect
on reducing turnover than perceived internal mobility.
To enhance internal mobility, HR professionals should not solely rely on advertising
of internal job vacancies. Talent management systems can match current
employees to open roles across the organization based on skills, aspirations and
performance, thus enabling the employer to proactively offer new roles to
appropriate employees. However, given the substantial
cost and scale, internal mobility should be viewed as long-term solutions rather than
short-term remedies.
HIGH-COMMITMENT HR SYSTEM
High-commitment HR system is defined as HR systems designed to shape
desired employee behaviors and attitudes by forming psychological links between
organizational and employee goals. Researches have shown that employees
commitment to the organization derives from their perceptions of the employers
commitment to and support of them. Implementing high-commitment HR system
requires more than a single practice. An organization must take the steps necessary
to develop the perception of involvement among low and high level employees.
Also,
An organization should also build a more inclusive and less bureaucratic culture,
since the process is likely to be lengthy and even costly until the appropriate culture
is achieved.
STAFFING SELECTIVITY
Staffing selectivity is defined as the extent to which the organization hires a
small proportion of applicants. When designing staffing strategy, HR professionals
should be mindful to the fact that the sophistication of selection system themselves
shared only weak relationships with collective turnover. Faced with turnover
problems and limited resources, managers should increase the quality and size of
applicant pools rather than improve their selection instruments.
RETENTION FACTORS FOR INDIVIDUAL TURNOVER
Gender: Overall, retention is lower for women than for men 6. This arises for a
variety of reasons, such as: low association as in-group members in male-majority
work settings, domestic responsibilities/ obligations that are poorly accommodated

for by the firm, lower pay, sparser developmental opportunities, more career
obstacles6.
Job Level: It is important to analyze retention factors for unique job levels because
each will value different features of the company and will hold a different
psychological contract with the organization. Research demonstrates that hourly
workers are more likely to cite transactional retention factors whereas workers at
higher job levels are more likely to cite relational retention factors .

Job Performance: It is important to understand how companies can best retain high
performers because High performers are most likely to possess the knowledge,
skills and experience necessary to contribute to the overall success of the
organization. High performers are more likely to stay due to organization prestige
and advancement opportunities whereas low performers place higher value on
extrinsic rewards.
EMPLOYEE RETENTION
Employee retention issues are emerging as the most critical workforce management challenges of
the immediate future. Researches have shown that in the future, successful organizations will be those
which adapt their organizational behavior to the realities of the current work environment where longevity
and success depend upon innovation, creativity and flexibility. In fact, the dynamics of the work
environment will have to reflect a diverse population comprised of individuals whose motivations, beliefs
and value structures differ vastly from the past and from one another. This phenomenon is especially true
in light of current economic uncertainty and following corporate downsizings when the impact of losing
critical employees increases exponentially (Caplan and Teese, 1997).
Critical analysis of workforce trends points to an impending shortage of highly-skilled employees
who possess the requisite knowledge and ability to perform at high levels, meaning that organizations
failing to retain high performers will be left with an understaffed, less qualified workforce that ultimately
hinders their ability to remain competitive (Rappaport, Bancroft, & Okum, 2003) with managers facing a
difficult challenge of motivating and retaining the employees in an environment of increased uncertainties
(Mitchell, 2002).
Retention rates generally falls as employees become distracted, confused and preoccupied with
potential outcomes immediately following an organizational transition (Bridges, 1991). However, despite
the vast literature on employee turnover, which is aimed at identifying factors that cause employees to
quit (Griffeth, Hom, & Gaertner, 2000), much less is known about the factors that compel employees to
stay. For example, Maertz & Campion (1998) noted relatively less turnover research has focused
specifically on how an employee decides to remain with an organization and what determines this
attachmentretention processes should be studied along with quitting processes.

GOVERNMENT AND RETENTION:


Before the ecoomic liberalisation policy of the Congress Government (1991) in India, the
scenario in Organizations were completely different from that which exists now in terms of stability of
workforce as opportunities were very few at that time comparatively. In the early 50s and 60s more
Government Organizations/semi-government Organizations and very few private players existed. People
preferred working in government or semi-government Organizations, as it provided job security and
quality of work life. People who entered the job market remained with one employer for a very long time,
sometimes for the duration of their working life. If they change jobs it was usually a major career and life
decision and someone who made many and frequent job changes was looked at as an incompetent person
not able to survive anywhere, struggling to make both ends meet. In the 70s and later, external mobility
increased dramatically posing a great threat to the Organizations. The Personnel/HR Managers of the
Organizations found themselves with a new phenomenon to consider, the employee turnover. Moreover
voluntary turnover has now increased drastically, as the Indian market is opened to foreign players as
well.
Besides this, the government is also encouraging entrepreneurship, so there are many domestic
players also entering the Indian market. This situation has resulted in stiff competition for competent
workforce. Poaching and job-hopping has become the order of the day. As the Organization began to feel
the impact of the rise of voluntary employee turnover, employee retention strategies emerged. IT the
sunshine industry of India that contributed a major share towards the GDP (6.4% in 2011) of our country
is faced with the challenge of retaining people as the attrition rate is high. In FY12, IT industry has
witnessed an average attrition rate of 17-25% as compared to other sectors in India like manufacturing,
banking and others, which is about 8%. It was also observed that the attrition has dipped down in FY12
from FY11 (55-60%)according to a recent industry specific survey carried out by the Associated
Chambers Of Commerce and industry of India (ASSOCHAM).
From the survey it was found that the dip in attrition rate is due to the rise in retention and
employee satisfaction programs undertaken by IT firms, but this has to be reduced further. Earlier studies
on retention mostly focused on analyzing the causes for employees leaving the Organization, aiming at
controlling attrition, and it was found that the causes varied from one Organization to the other. Later
studies on employee retention focused on factors that influenced the employees to stay back in the
Organization, to concentrate on those factors that hold back the employees. Last decade witnessed studies
on attitude/behavioral changes of employees towards work and work relationships, as it was believed to
predict turnover. Last but the least employees expectations from the Organization on priority basis cannot
be ignored.

Companies today are forced to function in a world full of change and complexity, and it is more
important than ever to have the right employees in order to survive the surrounding competition.
It is a fact that a too high turnover rate affects companies in a negative way and retention
strategies should therefore be high on the agenda. When looking at this problem area we found
that there may be actions and tools that companies could use to come to terms with this problem.
Research tell us that leadership, remuneration and elements like participation, feedback,

autonomy, fairness, responsibility, development and work-atmosphere is important for job


satisfaction and retention. Hiring knowledgeable people for the job is essential for an employer.
But retention is even more important than hiring. There is no dearth of opportunities for a
talented person. There are many Organizations which are looking for such employees.
Employee retention is a process in which the employees are encouraged to remain with the
organization for the maximum period of time or until the completion of the project. Employee retention is
beneficial for the organization as well as the employee. Employees today are different. They are not the ones
who dont have good opportunities in hand. As soon as they feel dissatisfied with the current employer or the
job, they switch over to the next job. It is the responsibility of the employer to retain their best employees. If
they dont, they would be left with no good employees. A good employer should know how to attract and
retain its employees. Most employees feel that they are worth more than they are actually paid. There is a
natural disparity between what people think they should be paid and what organizations spend in
compensation. When the difference becomes too great and another opportunity occurs, turnover can result. Pay
is defined as the wages, salary, or compensation given to an employee in exchange for services the employee
performs for the organization. Pay is more than "dollars and cents;" it also acknowledges the worth and value
of the human contribution. What people are paid has been shown to have a clear, reliable impact on turnover in
numerous studies. Employees comprise the most vital assets of the company. In a work place where employees
are not able to use their full potential and not heard and valued, they are likely to leave because of stress and
frustration. In a transparent environment while employees get a sense of achievement and belongingness from
a healthy work environment, the company is benefited with a stronger, reliable work-force harbouring bright
new ideas for its growth.

NEED FOR THE STUDY


Employee Retention plays a vital role in any organization. Employee Retention will lead to less
turn over. Committed employees will work for the upliftment of the company. Therefore, the need uses to study
about the Employee Retention in the organization and factors influencing Employee Retention.

RETENTION
Employee retention is a systematic effort by employers to create and foster an environment that
encourages current employees to remain employed, by having policies and practices in place that address their
diverse needs.

IMPORTANCE OF EMPLOYEE RETENTION


THE COST OF TURNOVER: The cost of employee turnover adds hundreds of thousands of money
to a company's expenses. While it is difficult to fully calculate the cost of turnover (including hiring costs, training

costs and productivity loss), industry experts often quote 25% of the average employee salary as a conservative
estimate.
LOSS

OF

COMPANY KNOWLEDGE: When an employee leaves, he takes with him valuable

knowledge about the company, customers, current projects and past history (sometimes to competitors). Often much
time and money has been spent on the employee in expectation of a future return. When the employee leaves, the
investment is not realized.
INTERRUPTION

OF

CUSTOMER SERVICE: Customers and clients do business with a company in

part because of the people. Relationships are developed that encourage continued sponsorship of the business. When
an employee leaves, the relationships that employee built for the company are severed, which could lead to potential
customer loss.
TURNOVER

LEADS TO MORE TURNOVERS :

When an employee terminates, the effect is felt

throughout the organization. Co-workers are often required to pick up the slack. The unspoken negativity often
intensifies for the remaining staff.
REGAINING

EFFICIENCY:

If an employee resigns, the good amount of time is lost in hiring and

training a new employee, this leads to the loss of the company directly which may at times goes unnoticed, and even
after this you cannot assure us of the same efficiency from the new employee would be left with no good
employees. A good employer should know how to attract and retain its employees.
GOODWILL OF THE COMPANY: The goodwill of a company is maintained when the attrition rates
are low. Higher retention rates motivate potential employees to join the organization.

WHY EMPLOYEES LEAVE THE ORGANISATION?


Employees do not leave an organization without any significant reason. There are certain circumstances that lead to
their leaving the organization. The most common reasons can be:
JOB IS NOT WHAT THE EMPLOYEE EXPECTED TO BE: Sometimes the job responsibilities dont come out to be same
as expected by the candidates. Unexpected job responsibilities lead to job dissatisfaction.
JOB AND PERSON MISMATCH: A candidate may be fit to do a certain type of job which matches his personality. If he
is given a job which mismatches his personality, then he wont be able to perform it well and will try to find out
reasons to leave the job.
NO GROWTH OPPORTUNITIES: No or less learning and growth opportunities in the current job will make candidates
job and career stagnant.
LACK

OF APPRECIATION:

If the work is not appreciated by the supervisor, the employee feels de-motivated and

loses interest in job.


LACK

OF TRUST AND SUPPORT IN COWORKERS, SENIORS AND MANAGEMENT:

Trust is the most important factor

that is required for an individual to stay in the job. Non-supportive co-workers, seniors and management can make
office environment unfriendly and difficult to work in.

STRESS

FROM OVERWORK AND WORK LIFE IMBALANCE:

Job stress can lead to work life imbalance which

ultimately many times lead to employee leaving the organization.


COMPENSATION: Better compensation packages being offered by other companies may attract employees towards
themselves.
NEW

JOB OFFER:

An attractive job offer which an employee thinks is good for him with respect to job

responsibility, compensation, growth and learning etc. can lead an employee to leave the organization.

WHY IS RETENTION SO IMPORTANT?


Its not only the cost incurred by a company that emphasizes the need of retaining employees but also the need to
retain talented employees from getting poached.
Retention involves five major things:
1) COMPENSATION
2) ENVIRONMENT
3) GROWTH
4) RELATIONSHIP
5) SUPPORT

COMPENSATION:
Compensation constitutes the largest part of the employee retention process. The employees
always have high expectations regarding their compensation packages. Compensation packages vary from industry
to industry. So an attractive compensation package plays a critical role in retaining the employees. Individual has
time to time increase in the salaries and wages and this increase should be based on the employees performance and
his contribution to the organization.
Bonus: Bonuses are usually given to the employees at the end of the year or on a festival.
Economic Benefits: It includes paid holidays, leave travel concession, etc.
Long-term incentives: Long-term incentives include stock options or stock grants, these incentives help
retain employees in the organizations start up stage.
Health insurance: Health insurance is a great benefit to the employees. It saves employees money as well
as gives them a peace of mind.
After retirement: It includes payments that an Employee gets after he retires like EPF etc.
Miscellaneous compensation: It may include employee assistance programs discounts on company
products, use of a company cars, etc.

WORK ENVIRONMENT:
It includes efficient managers, supportive co-workers, challenging work, involvement in decisionmaking, clarity of work and responsibilities, and recognition. Lack or absence of such environment, pushes

employees to look for new opportunities. The environment should be such that the employee feels connected to the
organization in every respect.

GROWTH AND CAREER


Growth and development are the integral part of every individuals career. If an employee can not
foresee his path of career development in his current organization, there are chances that hell leave the organization
as soon as he gets an opportunity. The important factors in employee growth that an employee looks for himself are:

In-house processes and procedures related skills or customer satisfaction related skill

Work profile

Personal growth and dreams

Training and development

IMPORTANCE OF RELATIONSHIP:
Sometimes the relationship with the management and the peers becomes the reason for an employee to leave the
organization. The management is sometimes not able to provide an employee a supportive work culture and
environment in terms of personal or professional relationships. There are times when an employee starts feeling
bitterness towards the management or peers. This decreases employees interest and he becomes demotivated. It
leads to less satisfaction and eventually attrition. A supportive work culture helps grow employee professionally and
boosts employee satisfaction.
To enhance good professional relationships at work, the management should keep the following points in mind.

Respect for the individual

Relationship with the immediate manager

Relationship with colleagues

Recruit whole heartedly

Promote an employee based culture

Individual development

Induce loyalty

SUPPORT:
Lack of support from management can sometimes serve as a reason for employee retention. Supervisor should
support his subordinates in a way so that each one of them is a success. Management can support employees by
providing them recognition and appreciation. Employers can also provide valuable feedback to employees and make
them feel valued to the organization. The feedback from supervisor helps the employee to feel more responsible,
confident and empowered. Top management can also support its employees in their personal crisis by providing

personal loans during emergencies, childcare services, employee assistance programs, counselling services, etc.,
Employers can also support their employees by creating an environment of trust and inculcating the organizational
values into employees. Thus employers can support their employees in a number of ways as follows:

By providing feedback

By giving recognition and rewards

By counselling them

By providing emotional support