SYNOPSIS ON "A STUDY ON EMPLOYEE RETENTION POLICIES IN SMALL AND MEDIUM ENTERPRISES

Submitted to:

Kurukshetra University, Kurukshetra

In the Partial Fulfillment of the Requirement for the Award of the Degree of

"MASTER OF BUSINESS ADMINISTRATION"

Under the Guidance of: Supreet Johal Lecturer of MBA department

Submitted By: Shivani Handa Rollno. 988 MBA Final

SESSION 2010-2012 MAHARAJA AGRASEN INSTITUTE OF MANAGEMET AND TECHNOLOGY

JAGADHRI 135003

(Approved by AICTE and HRD Ministry, affiliated to Kurukshetra University, Kurukshetra)

INTRODUTION TO THE TOPIC

Employee retention refers to the various policies and practices which let the employees stick to an organization for a longer period of time. Every organization invests time and money to groom a new joined, make him a corporate ready material and bring him at par with the existing employees. The organization is completely at loss when the employees leave their job once they are fully trained. Employee retention takes into account the various measures taken so that an individual stays in an organization for the maximum period of time. Any employee retention strategy would necessarily include a plan for redressing employee grievances and ways and means to address employee issues. This would mean that the employees would be enabled to take their issues regarding pay, their work, their role etc. to the HR manager for each division and expect to get a fair hearing in the process. There should be a plan where the HR manager in conjunction with the manager of the employee who has raised the issue works towards resolving the issue.

COMPONENTS OF A RETENTION STRATEGY

Taking each of these strategies in turn, job rotation is the practice of moving the employees around divisions and within divisions with a clear emphasis on making sure that they operate in domains other than the ones assigned to them initially. This would mean that the employees get trained on competencies beyond that of their assigned plant and this would lead to greater motivation to pick up additional skills and motivate them to perform better. The importance of grievance redressed and mitigation cannot be emphasized more. This is the most critical and crucial component of the HRM plan as research has shown that an employee with pending issues awaiting resolution is twice more likely to quit the company than the other employees. Hence, all efforts must be made to redress the grievances of the employees

LOW AND STRATEGIES

MEDIUM

LEVEL

OF

EMPLOYEE

RETENTION

Low Level Employee Retention Strategies

Appreciating and recognizing a well done job Personalized well done and thank-you cards from supervisors Congratulations e-cards or cards sent to spouses/families Voicemails or messages from top management Periodic days off for good performance Rewards (gift, certificates, monetary and non monetary rewards) Recognizing professional as well as personal significant events Wedding gifts Anniversary gifts New born baby gifts Scholarships for employees children

Get well cards/flowers Birthday cards, celebrations and gifts Providing benefits Home insurance plans Legal insurance Travel insurance Disability programs Providing perks: It includes coupons, discounts, rebates, etc Discounts in cinema halls, museums, restaurants, etc. Retail store discounts Computer peripherals purchase discounts Providing workplace conveniences On-site ATM On-site facilities for which cost is paid by employees Laundry facility for bachelors Shipping services Assistance with tax calculations and submission of forms Financial planning assistance Casual dress policies Facilities for expectant mothers Parking Parenting guide Lactation rooms Flexi timings Fun at work Celebrate birthdays, anniversaries, retirements, promotions, etc Holiday parties and holiday gift certificates Occasional parties like diwali, holi, dushera, etc Organize get together for watching football, hockey, cricket matches Organize picnics and trips for movies etc Sports outings like cricket match etc Indoor games Occasional stress relievers Casual dress day Green is the color day Handwriting analysis Tattoo, mehandi, hair braiding stalls on weekends Mini cricket in office Ice cream Fridays Holi-Day breakfast Employee support in tough time or personal crisis Personal loans for emergencies

Childcare and eldercare services Employee Assistance Programs (Counseling sessions etc) Emergency childcare service

MEDIUM LEVEL STRATEGIES FOR EMPLOYEE RETENTION

Appreciating and recognizing a well done job Special bonus for successfully completing firm-sponsored certifications Benefit programs for family support Child adoption benefits Flexible benefits Dependents care assistance Medical care reimbursement Providing conveniences at workplace Gymnasiums Athletic membership program Providing training and development and personal growth opportunities Sabbatical programs Professional skills development Individualized career guidance

LITERATURE REVIEW
Srikant and Tyagi(2007) :- The author suggest that the study have placed India at strategic
place in outsourcing market but say that even growing rate of attrition is a hurdle for this sector. As given by them an average Indian call centre employee works with a company for 11 months where as an average UK call centre employee stays in a company for three years one illustration of the industry level study is that of jigesh (2006)which found that retention management is influenced by three important corners namely professional psychological and societical

Nerru choudhary(2009):- This paper examined that the varied and often complex cause of
attrition in the context of the rapidly growing Indian off showing industry and also suggest that how some industry participants are attempting to proactively address this problem that threatens the long term sustainability of Indian as an offshore destination. at the end, innovative strategies are suggested which can be adopted by ITES firms to get better solution to this herculean of retaining employees.

prof(Dr)Harpreet singh Grewal:- This author analyzed that retaining key employees is
one of the leading problems facing resources managers today. A solution to this problem would imply more profitable companies,happier,more productive employees and more satisfied customers, employees not only leads to human recourses related issues but has financial and

business connection as well. study have found that the cost of replacing a lost talent is 70 to 200 percent of that employees annual salary. Thus there is a substantial financial implication that o low retention rate has and this affects the bottom-line of the organizations as well.Organisation realize retention and talent management is integral to sustaining their leadership and growth as per the market place.

Mohsin R.Shaikh March(2005):- The author conclude that according to NASSCOM

McKinney survey IT & ITES would add 7% to India GDP by 2010 along with creation of 8.8 million new jobs, and the number of professionals in IT &ITES sector is estimated at 1,045,000.According to analysts, employee attrition rate in these industries varies between 20 and 40 percent in certain companies, while it is around 15% in top firms. if there are any indications the IT & ITES industry is likely to face a shortage of 2,62,000 professionals by 2012.

Marcus Buckingham and Curt Coffan(2005):- The author studied that the largest
study on employee turnover undertaken by Gallup organization arrived with the conclusion that a manager is the reason why people leave. Over a million employees and another eighty thousand manager were surveyed as a part of the study. The study was acknowledged in this book, First break All The Rules They suggest that the employee should pay more attention to their emotional health if they want to reduce turnover and increase productivity.

Utpal M. Dholakia September 28, 2010:-The author suggested that In a survey-based

study of 150 businesses that ran and completed Group on promotions between June 2009 and August 2010, we find that the promotion was profitable for 66% and unprofitable for 32% of respondents. When compared to businesses with profitable Group on promotions, those with unprofitable promotions reported significantly lower rates of both spending by Group on users beyond its face value (25% vs. 50%) and return rates to purchase from the business again at full prices (13% vs. 31%). There was disillusionment with the extreme price sensitive nature and transactional orientation of consumers using these promotions among many respondents. Surprisingly, rather than features of the promotion or its effects, employee satisfaction is found to be the primary driver of the promotions profitability

Alex Edmans:- This paper analyzes the relationship between employee satisfaction and longrun stock returns. A value-weighted portfolio of the .100 Best Companies to Work For in AmerIca.earned an annual four-factor alpha of 3.5% from 1984-2009, and 2.1% above industry Benchmarks. The results are robust to controls for characteristics, deferent weighting Methodologies and the removal of outliers. The Best Companies also exhibited sign.-Cantly more positive earnings surprises and announcement returns. These endings have three main implications. First, consistent with human capital-centered theories of the, employee satisfaction is positively correlated with shareholder returns and need not Represent managerial slack. Second, the stock market does not fully value intangibles, even when independently varied by a

highly public survey on large .rms. Third, certain socially responsible investing (.SRI.) screens may improve investment returns.

Ravindra Tiwari October(1998):-The author conclude that In view of some experts

accounting for intellectual capital is not possible within framework of traditional accounting methods. As long as the accountancy profession seeks to progress accounting for intellectual capital within the confines of prevailing accounting theory, the prospects for a successful outcome appear remote.(Robin Roslender, 2004).Traditional Accounting method is based on Double entries method, but there is always a question that when we hire human resource Asset what is corresponding credit effect at the time of hiring. According to many researchers writing off cost associated with human resources as expenses in one instance in year in which it is incurred is not proper. Steven H. Appelbaum and Jamie Hood says that in conventional accounting, the costs associated with human resources have always been treated as expenses and , as such, have been written off annually in the financial statement, due to this organizations Employees are not properly accounted for on the balance sheet.

Stephen M. Bainbridge:-The author suggested that recent years have seen a number of
efforts to extend the shareholder franchise, principally so as to empower institutional investors. The logic of these proposals is that institutional investors will behave quite differently than dispersed individual investors. Because they own large blocks, and have an incentive to develop specialized expertise in making and monitoring investments, institutional investors could play a far more active role in corporate governance than dispersed individual investors traditionally have done. Institutional investors holding large blocks thus have more power to hold management accountable for actions that do not promote shareholder welfare.

Samuel and Chipunza (2009):- The author concluded that the main purpose of retention is
preventing the loss of competent employees from leaving the organization as this could have adverse effect on productivity and profitability. However, retention practices have become a daunting and highly challenging task for managers and Human Resources (HR) practitioners in a hostile economic environment like the one being witnessed in Zimbabwe. One of the traditional ways of managing employee retention and turnover is through organizational reward system.

INTRODUCTION TO THE INDUSTRY

Small and medium-sized enterprises (SMEs) are driving forces of the economy, crucial to economic well-being, development and growth and the dominant source of Employment. According to the Small Business Administration (SBA), there were Approximately 25 million businesses operating for profit in the United States in 2004, of which 99.9 percent had fewer than 500 employees. Only about 17,000 American businesses have larger payrolls. Other statistics suggest that SMEs tend to be very small, with 75 percent having no employees and more than 50 percent being home-based. A substantial number generate less than $10,000 in annual

revenues. Nevertheless, small businesses provide for approximately 50% of U.S. non-farm private employment and 60-80% of new employment. Small businesses are more difficult to finance than large firms, in part, because their securities are not traded by the public, making exit difficult for providers of capital. Information needed to reduce capital costs is more difficult to obtain for smaller firms.Research and development (R&D) activities are particularly difficult to finance without support of government and other non-profit institutional support. Remarkably, every year, 600,000 new firms open their doors for business The Small and Medium Enterprise (SME) sector is a significant component of the countrys economic backbone. Tremendous amount of resources have been invested by both the government and the private sectors in the past decades to give SMEs critical financial, management training, counseling services as well as policy and legislative support. However, in the area of SME counseling, the bulk of efforts may be attributed to the government organizational infrastructure, notably the Department of Trade and Industry (DTI), Local Government Units (LGUs), and the Department of Agriculture (DA), which focuses on agri/aquatic-based livelihood programs. On the other hand, the private sector has not been as active in SME counseling as it can, largely because SMEs are either unwilling or unable to pay for the services, making business counseling an unviable activity for the business sector. It is no surprise therefore that it is government organizations (GOs), rather than private firms, that have taken it upon themselves to counsel SMEs. However, the quality of manpower associated with these GOs appears to be lagging behind compared with those found in private companies. Financial constraints slow down manpower training and development. Most counseling personnel are deployed in farflung locations. Moreover, many are less than willing to share in the cost of their own training. All these have created a bias towards reasonably-priced training programs delivered by distance mode. It is in this context that the UPISSI as the institution mandated by law to help SMEs accepted the designation as APEC Economy Institute for the Training and Certification Program for Small-Business Counselors in the Philippines.

SMALL AND MEDIUM ENTERPRISES (SMEs) IN INDIA In India,small and medium enterprises (SME) is a generic term used to describe small scale industrial (SSI) units and medium-scale industrial units. Any industrial unit with a total investment in its fixed assets or leased assets or hire-purchase asset upto Rs10 million is considered as a SSI unit and investment upto Rs. 100 million is considered as a medium unit. In addition, an SSI unit should neither be a subsidiary of any other industrial unit nor can it be owned or controlled by any other industrial unit. The SME sector produces a wide range of industrial products such as food products, beverage, tobacco and tobacco products, cotton textiles, wool, silk, synthetic products, jute, hemp & jute

products, wood & wood products, furniture and fixtures, paper & paper products, printing publishing and allied industries, machinery, machines, apparatus, appliances and electrical machinery. SME sector also has a large number of service industries. The small scale sector in India comprises of a diverse range of units from traditional crafts to high-tech industries. The number of SSI working units (registered & unregistered) in India totaled 11.4 million in 2003-0480.5 per cent of which are proprietary concerns and 16.8 per cent are partnership firms and private limited companies.

RESEACH METHDOLOGY Problem Statement To Analysis the retention strategy of Small and medium enterprises. OBJECTIVE OF THE STUDY:

MAIN OBJECTIVE of the study: To study the main retention polices followed by small n medium enterprises. Based on these main objectives, the study follows certain sub-objectives. SUB-OBJECTIVES of the study are: To know satisfaction level of employees regarding retention polices being followed by the small and medium enterprises. To study the common reason of employee voluntary leaving or staying in organization. To study the impact of training programs on retention of employees.

METHODOLOGY OF THE STUDY:

RESEARCH DESIGN
The study is descriptive in nature as the factors are already explored and the variables are not controllable. Various factors affecting the retention strategy is taken into consideration in this study.

SOURCES OF DATA
Present study is mainly based on the primary and secondary data. Primary data is collected with the help of a survey of 60 respondents, from Manufacturing sectors, Yamuna Nagar and secondary data is collected with the help of Internet and Journals.

Primary Data: For the purpose of collecting the Primary data survey method is used
in the study, using the following tools: 1. Questionnaire: For purpose of getting the desired and useful response closed and open ended questions are asked. 2. Interview: Along with the questionnaire unstructured interview are conducted to know the other information that cant be collected by the questionnaire. Secondary Data: Secondary data is collected from various general and specific sources. General sources includes collection of data and information from newspapers like Economic Times, Times of India, Magazines like HRM Review, HRM capital, Journals like Abhigyan, MAIMT Journal of IT and Management and specific sources included the websites of various companies.

SAMPLING FRAMEWORK
Sampling is an essential technique in the field of research, Probably no concept is as fundamental to conduct research and interpretation of its results as is sampling. Determining the size of the sample and its method of selection plays a pivot role in a sample survey. The sample must be the representative of the various strata of the population to yield reliable results. Sampling method Non-probability sampling is used. Sampling Technique For the purpose of selection of respondents, Convenience sampling Technique is used.

Sampling unit
In study Employees of Manufacturing Sector are taken as the sampling unit.

Sampling Area

Yamuna Nagar is the area selected for the purpose of collecting the data from respondents.

Sample Size
For this study a sample of 60 respondents is selected from manufacturing sector of Yamuna Nagar Region.

REFRENCES
Utpal M. Dholakia September (28, 2010), How Effective Are Group on Promotions For Businesses, employee retention policies in small and medium enterprises http://ssrn.com/abstract=1696327. Alex Edmans, Journal of Financial Economics forthcoming, employee retention policies in small and medium enterprises, http://ssrn.com/abstract=985735 Ravindra Tiwari October(1998), employee retention policies in small and medium enterprises http://ssrn.com/abstract=961570 Mohsin R.Shaikh March(2005), jornal-Mangement and labor studies,volume-32 no.3,Augest 2007, employee retention policies in small and medium enterprises

prof(Dr)Harpreet singh Grewal, jornal-vidaang, vol 1 no. 2 july-dec 2010, employee

retention policies in small and medium enterprises, Title- A study on retention through employee engagement.

Nerru choudhary(2009), jornal-delhi business review, vol 10, no 1 (jan-june 2009), employee retention policies in small and medium enterprises, Title Employee retention in ITES-BPO Industry. Sudhakar Reddy K Sireesha D, Journal- knowledge hub, vol 3, no 1, employee retention policies in small and medium enterprises, Title- HRM strategies for employee Retention in Retailing.

Stephen M. Bainbridge, Research Paper No. 05-20, Shareholder Activism

and Institutional Investors, http://ssrn.com/abstract=796227