The Importance of Retaining Employees

The challenge of keeping employees: Its changing face has stumped managers and business owners alike. How do you manage this challenge? How do you build a workplace that employees want to remain with and outsiders want to be hired into? Successful managers and business owners ask themselves these and other questions because simply putemployee retention matters: High turnover often leaves customers and employees in the lurch; departing employees take a great deal of knowledge with them. This lack of continuity makes it hard to meet your organizations goals and serve customers well. Replacing employees costs money. The cost of replacing an employee is estimated as up to twice the individuals annual salary (or higher for some positions, such as middle management), and this doesnt even include the cost of lost knowledge. Recruiting employees consumes a great deal of time and effort, much of it futile. Youre not the only one out there vying for qualified employees, and job searchers make decisions based on more than the sum of salary and benefits. Bringing employees up to speed takes even more time. And when youre short-staffed, you often need to put in extra time to get the work done. The Three Rs of Employee Retention To keep employees and keep satisfaction high, you need to implement each of the three Rs of employee retention: respect, recognition, and rewards.

Respect is esteem, special regard, or particular consideration given to people. As the pyramid shows, respect is the foundation of keeping your employees. Recognition and rewards will have little effect if you dont respect employees. Recognition is defined as special notice or attention and the act of perceiving clearly. Many problems with retention and morale occur because management is not paying attention to peoples needs and reactions. Rewards are the extra perks you offer beyond the basics of respect and recognition that make it worth peoples while to work hard, to care, to go beyond the call of duty. While rewards represent the smallest portion of the retention equation, they are still an important one. You determine the precise methods you choose to implement the three Rs, but in general, respect should be the largest component of your efforts. Without it, recognition and rewards seem hollow and have little effector they have negative effects. The magic truly is in the mix of the three. Rewards Recognition Respect When you implement the three Rs approach, you will reduce turnover andenjoy the following: Increased productivity Reduced absenteeism A more pleasant work environment (for both employees and you!) Improved profits Furthermore, an employer who implements the three Rs will create a hard-toleave workplace, one known as having more to offer employees than other employers. You become a hard-to-leave workplaceone with a waiting list of applicants for any position that becomes available purposefully, one day at a time. ABSTRACT

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 Blog Online And Earn Money.

Scope of the study It is not about managing retention. It is about managing people. If an organization manages people well, employee retention will take care of itself. Organizations should focus on managing the work environment to make better use of the available human assets. People want to work for an organization which provides

Appreciation for the work done Ample opportunities to grow A friendly and cooperative environment A feeling that the organization is second home to the employee

Organization environment includes Culture Values Company reputation Quality of people in the organization Employee development and career growth Risk taking Leading technologies Trust

Types of environment the employee needs in an organization Learning environment: It includes continuous learning and improvement of the individual, certifications and provision for higher studies, etc. Support environment: Organization can provide support in the form of work-life balance. Work life balance includes: Flexible hours Telecommuting Dependent care Alternate work schedules Vacations Wellness Work environment: It includes efficient managers, supportive co-workers, challenging work, involvement in decision-making, 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: Work profile: The work profile on which the employee is working

should be in sync with his capabilities. The profile should not be too low or too high. Personal growth and dreams: Employees responsibilities in the organization should help him achieve his personal goals also. Organizations can not keep aside the individual goals of employees and foster organizations goals. Employees priority is to work for themselves and later on comes the organization. If hes not satisfied with his growth, hell not be able to contribute in organization growth. Training and development: Employees should be trained and given chance to improve and enhance their skills. Many employers fear that if the employees are well rained, theyll leave the organization for better jobs. Organization should not limit the resources on which organizations success depends. These trainings can be given toimprove many skills like: Communications skills Technical skills In-house processes and procedures improvement related skills or customer satisfaction related skills Special project related skills Need for such trainings can be recognized from individual performance reviews, individual meetings, employee satisfaction surveys and by being in constant touch with the employees. Importance of Relationship in Employee Retention Program 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 bitterness could be due to many reasons. 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: Respect for the individual is the must in the organization. Relationship with the immediate manager: A manger plays the role of a mentor and a coach. He designs and plans work for each employee. It is his duty to involve the employee in the processes of the organization. So an organization should hire managers who can make and maintain good relations with their subordinates. Relationship with colleagues: Promote team work, not only among teams but in different departments as well. This will induce competition as well as improve the Relationship among colleagues. Recruit whole heartedly: An employee should be recruited if there is a proper place and duties for him to perform. Otherwise hell feel useless and will be dissatisfied. Employees should know what the organization expects from them and what their expectation from the organization is. Deliver what is promised. Promote an employee based culture: The employee should know that the organization is there to support him at the time of need. Show them that the organization cares and hell show the same for the organization. An employee based culture may include decision making authority, availability of resources, open door policy, etc. Individual development: Taking proper care of employees includes acknowledgement to the employees dreams and personal goals. Create opportunities for their career growth by providing mentorship programs, certifications, educational courses, etc. Induce loyalty: Organizations should be loyal as well as they should promote loyalty in the employees too. Try to make the current employees stay instead of recruiting new ones. 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 should try to focus on its employees and support them not only in their

difficult times at work but also through the times of personal crisis. 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, conseling 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 counseling them By providing emotional support

Employee Retention Strategies The basic practices which should be kept in mind in the employee retention strategies are: 1. Hire the right people in the first place. 2. Empower the employees: Give the employees the authority to get things done. 3. Make employees realize that they are the most valuable asset of the organization. 4. Have faith in them, trust and respect them 5. Provide them information and knowledge. 6. Keep providing them feedback on their performance. 7. Recognize and appreciate their achievements. 8. Keep their morale high. 9. Create an environment where the employees want to work and have fun.

These practices can be categorized in 3 levels: Low, medium and high level. 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 Tatoo, 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 services 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 High Level Strategies

Promoting Work/Life Effectiveness Develop flexible schedules Part-time schedules Extended leaves of absence Develop Support Services On-site day care facility etc.

Understand employee needs: This can be done through proper management style and culture

Listen to the employee and show interest in ideas Appreciate new ideas and reward risk-taking Show support for individual initiative Encourage creativity Encouraging professional training and development and/or personal growth opportunities: It can be done through: Mentoring programs Performance feedback programs Provide necessary tools to the employees to achieve their professional and personal goals Getting the most out of employee interests and talents Higher study opportunities for employees Vocational counselling Offer personalized career guidance to employees Provide an environment of trust: Communication is the most important and effective way to develop trust. Suggestion committees can be created Open door communication policy can be followed Regular feedbacks on organizations goals and activities should be taken from the employees by: Management communications Intranet and internet can be used as they provide 24X7 access to the information Newsletters, notice boards, etc. Hire the right people from the beginning: employee retention is not a process that begins at the end. The process of retention begins right from the start of the recruitment process.

The new joinees should fit with the organizations culture. The personality, leadership characteristics of the candidate should be in sync with the culture of the hiring organization. Referral bonus should be given to the employees for successful hires. They are the best source of networking. Proper training should be given to the managers on interview and management techniques. An internship program can be followed to recruit the fresh graduates. Retention Success Mantra Transparent Work Culture

In todays fast paced business environments where employees are constantly striving to achieve business goals under time restrictions; open minded and transparent work culture plays a vital role in employee retention. Companies invest very many hours and monies in training and educating employees. These companies are severely affected when employees check out, especially in the middle of some big company project or venture. Although employees most often prefer to stay with the same company and use their time and experience for personal growth and development, they leave mainly because of work related stress and dissatisfactions .More and more companies have now realized the importance of a healthy work culture and have a gamut of people management good practices for employees to have that ideal fresh work-life. Closed doors work culture can serve as a deterrent to communication and trust within employees which are potential causes for work- Related apathy and frenzy.

A transparent work environment can serve as one of the primary triggers to facilitate accountability, trust, communication, responsibility, pride and so on. It is believed that in a transparent work culture employees rigorously communicate with their peers and exchange ideas and thoughts before they are finally matured in to full-blown concepts. It induces responsibility among employees and accountability towards other peers, which gradually builds

up trust and pride. More importantly, transparency in work environment discourages workpolitics which often hinders company goals as employees start to advance their personal objectives at the expense of development of The company as a single entity. . Importance Of Employee Retention The process of employee retention will benefit an organization in the following ways: 1. 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. 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.

Regaining efficiency: If an employee resigns, then good amount of time is lost in hiring a new employee and then training him/her and this goes to the loss of the company directly which many a times goes unnoticed. And even after this you cannot assure us of the same efficiency from the new employee What Makes Employee Leave? 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 demotivated and loses interest in job. Lack of trust and support in co workers, 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. Managing Employee Retention: The task of managing employees can be understood as a three stage process: 1. Identify cost of employee turnover. 2.Understand why employee leave. 3.Implement retention strategies The organizations should start with identifying the employee turnover rates within a particular time period and benchmark it with the competitor organizations. This will help in assessing the whether the employee retention rates are healthy in the company. Secondly, the cost of employee turnover can be calculated. According to a survey, on an average, attrition costs companies 18 months salary for each manager or professional who leaves, and 6 months pay for each hourly employee who leaves. This amounts to major organizational and financial stress, considering that one out of every three employees plans to leave his or her job in the next two years. How to Improve Employee Retention? People want to enjoy their work so make work fun and enjoyable. Understand that employees need to balance life and work so offer flexible starting times and core hours. Provide 360 feedback surveys and other questionnaires to foster open communication. Consider allowing anonymous surveys occasionally so employees will be more honest and candid with their opinions. Provide opportunities within the company for career progression and cross-training. Offer attractive, competitive benefits .

Organizations should target job applications for employees who have characteristics that fit well with the organizational culture. Upon conducting an interview, seek out traits, such as loyalty. Also, ask the potential employee what motivates them on the job. Having more information about the potential employees expectations can help retain them, should they get hired into the company. Rewards and Recognition Employees want to be recognized for a job well done. Rewards and recognition respond to this need by validating performance and motivating employees toward continuous improvement. Rewarding and recognizing people for performance not only affects the person being recognized, but others in the organization as well. Through a rewards program, the entire organization can experience the commitment to excellence. When the reward system is credible, rewards are meaningful; however, if the reward system is broken, the opposite effect will occur. Employees may feel that their performance is unrecognized and not valued, or that others in the organization are rewarded for the wrong behaviours. Unrecognized and no valued performance can contribute to turnover. Recognition for a job well done fills the employees' need to receive positive, honest feedback for their efforts. Need for Rewards and Recognition Recognition should be part of the organization's culture because it contributes to both employee satisfaction and retention. Organizations can avoid employee turnover by rewarding top performers. Rewards are one of the keys to avoiding turnover, especially if they are immediate, appropriate, and personal. A Harvard University study concluded that organizations can avoid the disruption caused by employee turnover by avoiding hiring mistakes and selecting and retaining top performers. One of the keys to avoiding turnover is to make rewards count. Rewards are to be immediate, appropriate, and personal. Organizations may want to evaluate whether getting a bonus at the end

of the year is more or less rewarding than getting smaller, more frequent payouts. Additionally, a personal note may mean more than a generic company award. Employees should be asked for input on their most desirable form of recognition. Use what employees say when it comes time to reward for performance. Designing a Rewards and and Recognition Solution In designing a rewards and recognition program, the following guidelines should be considered. Rewards should be visible to all members of the organization. Rewards should be based on well-defined, credible standards that have been developed using observable achievements. Rewards should have meaning and value for the recipient. Rewards can be based on an event (achieving a designated goal) or based on a time frame (performing well over a specific time period). Rewards that are spontaneous (sometimes called on-the-spot awards) are also highly motivating and should also use a set criteria and standard to maintain credibility and meaning. Rewards should be achievable and not out of reach by employees. Nonmonetary rewards, if used, should be valued by the individual. For example, an avid camper might be given a 10-day pass to a campsite, or, if an individual enjoys physical activity, that employee might be given a spa membership. The nonmonetary rewards are best received when they are thoughtfully prepared and of highest quality. Professionalism in presenting the reward is also interpreted as worthwhile recognition. Rewards should be appropriate to the level of accomplishment received. A cash award of $50 would be inappropriate for someone who just recommended a process that saved the organization a million dollars. Determining the amount of money given is a delicate matter of organizational debate in which organizational history, financial parameters, and desired results are all factors. Recognition for a job well done can be just as valued and appreciated as monetary awards. Formal recognition program can be used with success. First Data Resources, a data

processing services company that employees more than 6,000 individuals in Omaha, Nebraska, uses a formal recognition program (Adams, Mahaffey, and Rick,2002). Rewards are given on a monthly, quarterly, and yearly basis, and range from Nebraska football tickets, gift certificates, pens, plaques, mugs, and other items. One of the most popular awards at First Data is called the "Fat Cat Award" that consists of: $500 gift check Professional portrait of the employee Appreciation letter from the CEO and senior management E-mails, phone calls, and notes from peers

In addition to nonmonetary rewards, employees can be rewarded using money in numerous ways. Cash is a welcome motivator and reward for improving performance, whether at formal meetings or on the spot. Variable bonuses linked to performance are another popular reward strategy. Profit sharing and pay-for-skills are monetary bonus plans that both motivate individuals and improve goal achievement. Small acts of recognition are valuable for employee daily Retention. Sometimes a personal note may mean more than a generic company award. In one survey, employees cited the following as meaningful rewards (Moss, 2000): Employee of the month awards Years of service awards Bonus pay (above and beyond overtime) for weekend work Invitations for technicians to technical shows and other industry events Meaningful and Retention Rewards

What gives meaning to rewards and recognition? What makes them effective? First, rewards and recognition should be based on a clear set of standards, with performance verifiable or observable. The standards for the reward should also be achievable. If the reward is based on an unachievable result, such as a production goal that is beyond employees' power, then those employees will not be motivated. Meaningful rewards and recognition that are achievable have the greatest impact.

Strategies:

1.3 IMPORTANCE OF EMPLOYEE RETENTION: Now that so much is being done by organizations to retain its employees, why is retention so important? Is it just to reduce the turnover costs? Well, the answer is a definite no. 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. The process of employee retention will benefit an organization in the following ways: 1. 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. 2. 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. 3. 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. 4. 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. 5. 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

. 6. Regaining efficiency: If an employee resigns, then good amount of time is lost in hiring a new employee and then training him/her and this goes to the loss of the company directly which many a times goes unnoticed. And even after this you cannot assure us of the same efficiency from the new employee.