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ORGANIZATION BEHAVIOR
CASE STUDY – 1
How a UPS Manager
Reduced Turnover
ASSIGNMENT I
This document contains an analysis on the
Akanksha Bhalla
Importance of Controlling & Reducing
403
Employee Turnover. It discusses the impact of
a high turnover on the running of the
Telecom organization, monetary expenditure incurred
and the influence on the company’s image.
UPS’s operations in Chennai that Jessica took over heavily relied on its workforce.
It involved an enormous workforce of 2300 workers who were responsible for
processing of about 45000 packages an hour, which generated a revenue worth of
INR 250 million for the organization.
However in such cases where the magnitude of work force is large & the
organization is unable to keep employee turnover in control, as in this case where
the turnover went up to almost 50%; the monetary losses incurred are massive. The
money losses may be categorized as follows:
RECRUITMENT COST
COST OF NEW HIRING
TRAINING COST
COST DUE TO PERSON LEAVING
LOW PRODUCTIVITY COST
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Cost of training the person who has left
In the attempt to do the same she offered training programs; gave preference to
applicants who were keen to take up part time jobs, trained supervisors to tackle
difficult management situations etc; these endeavors proved successful as the
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attrition rate dropped from 50% to 6%, an annual saving estimated at INR 1
million was recorded due to reduced turnover & 20% reduction is lost work days
was seen.
These initiatives taken by Jessica also positively affected the intangible costs and
social capital which play a role in organizations success, as reduced turnover
enhanced companies’ reputation and performance (e.g. fall in delivery errors from
4% to 1%; a more stable workforce ).
EFFECT OF TURNOVER ON PRODUCTIVITY/COST
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is essential to maintain a healthy flow of employees entering/leaving the
organization.
TURNOVER RATE VERSUS FINANCIAL PERFORMANCE
Motivating part time employees is exceedingly important & at the same time a
major challenge for managers as these employees do most of the Manual Labor,
are Paid wages on an hourly/daily basis, have little career choices, focus on other
goals outside the organization (e.g. college, hobbies etc) and sometimes treated as
outsiders by fulltime employees.
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Hence to establish good communication between part time employees and the
management & for effectively motivating them to ensure reasonable levels of
turnover, certain specific motivational tools must be deployed.
From this case one can classify the following 7 motivation techniques that can
successfully motivate part-time employees:
MOTIVATING PART-
TIME EMPLOYEES
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ESTABLISH COMMUNICATION
Sometime part-timers are looked at as an unnecessary evil. It may be great to have
the extra hands, but not so great to deal with them. Managers must know that it is
their job to develop part timers & to establish a positive communicating channel
with them. Communication is essential to help part-timers overcome their
inhibitions, to be aware about their apprehension and to letting the part-timers feel
motivated to be there.
ASSIGN A MENTOR
Assigning a mentor who is patient, has good communication skills, is trained, is
motivated to do the task, and has the time to answer questions is necessary. This
makes the part-time worker feel a part of the team, helps avoid any
conflict/ambiguity at time of work and most importantly the mentor can help
analyze factors that cause employee discomfort & identify signals from employees
of dissatisfaction or tendency to leave the organization which impacts the turnover.
MIX UP THE WORKLOAD
Avoid overloading part-time workers with only low-level work as it can
demoralize the employee. Assign them a variety of tasks and mix up assignments
to build up their morale and make them feel that their abilities in all spheres are not
going unnoticed.
FLEXIBLE HOURS
Mostly part-time employees are working part-time to meet special situations
(College, family health situations, childcare issues, transportation issues, etc). By
allowing flexible work hours the organization retains part-time workers longer,
eliminating the need for costly retraining.
OFFER INCENTIVES
Promotions, bonuses, and long-term incentives provide positive motivation to
improve performance. Provide bonuses or incentive for Perfect on time attendance,
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working well with others, Taking initiative to solve problems etc. Recognize the
part-time worker and praise publicly. These improve relationship between part
timers & the management and increases job satisfaction.
Factors like how the organization rewards high performers; helps poor performers
(training etc) or those who fail to perform have a great impact on the employees
hence to enhance their productivity & to keep turnover in control these factors
must be considered by a manager.
Jessica in her endeavor to bring down turnover and motivate part-time employees
follows these steps by:
Organizing training programs for College students thus recognizing their
interests
Understood their apprehensions thus improved work place environment by
improving lighting of the warehouse and introducing break rooms to make it
more user friendly.
Trained supervisors to mentor the part time employees
Made information like Training material & HR guidelines more accessible.
These steps in turn motivated part- time employees, enhanced their productivity
(20% reduction in lost work days, reduction in delivery errors from 4% to 1%) and
decreased turnover (50% to 6%) as the organization began to retain employees.
QUESTION 3: What are the implications from this case for managing
in future years when there will be a severe labor shortage?
It is estimated that 2010 onwards a decline in the available skilled labor will be
seen which will eventually lead to a severe labor shortage by 2020 due to a rapidly
aging population specially in western countries like USA, Europe etc.
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With changing labor market conditions and an emerging need to retain employees
it will become imperative for managers to adapt to a more flexible approach to
managing employees & function in a more turbulent operating environment
thereby discarding their conventional approach to corporate leadership.
Managers will have to analyze and understand the Needs, Behavioral Patterns, Job
Satisfaction Levels etc. of every individual and work towards improving the same
to increase retention in a labor shortage environment. In doing so some of the
following strategies maybe followed:
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TRAIN MANAGERS
Managers must be trained to identify employee behavior, judge their intention to
leave the organization and take necessary steps to figure out ways to retain them.
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MAINTAIN RELATIONSHIPS WITH CONSULTANCIES & DEVELOP AN EMPLOYMENT IMAGE
As hiring new employees will get difficult due to an expected labor shortage in
future it is advisable for organizations to maintain good relationships with HR
agencies, Colleges & schools for talent acquisition. At the same time companies
must gradually develop an employment image/brand so that laborers, professionals
& students are well informed of the organizations culture & operations.
OTHER STRATEGIES
o Advancing the retirement age- as growing older does not equate to lesser
productivity
o Relaxing immigration restrictions- To allow recruitment of people from
different cultural backgrounds.
o Increasing productivity through technology
o Out-sourcing
Similar efforts were seen in the UPS case where in despite benefits like high pay,
flexible working hours, and full benefits etc that the company was offering the
turnover was high, to overcome which Jessica had to develop comprehensive plans
& establish better communication channels to retain employees and reduce the
turnover to acceptable levels.
Jessica also modified her hiring technique by giving preference to candidates who
personally opted for part time jobs, a strategy that proved largely successful.
Trained managers can identify employee behavior, judge their intention to leave
the organization and take necessary steps to figure out ways to retain them.
Training employees to understand the needs & interests of employees not only
helps organizations achieve greater retention to control turnover; it also indirectly
enhances the organizations revenue by decreasing the expenditure on recruitment /
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replacement of employees and at the same time builds the company’s Reputation
& an Employment Image.
It gives the idea that there is no one best way of managing all people in all
situations i.e. a particular way cannot be equally effective or successful in all
situations and that to be effective-planning, organizing, leading & controlling must
be tailor made to particular situations.
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level despite the benefits like high pay, flexible working hours & full benefits that
the organization was already providing.
Jessica classified her employee base in 5 different categories based on age and
stage in their career to identify their needs/interests and modified motivational
techniques accordingly to suit their interests at an individual level thus establishing
a more effective communication channel.
E.g. Jessica realized students retained work as long as they were building their
skills to apply later in their career hence she organized career planning sessions
and training to enhance their Computer Skills .
Jessica realized that apart from salary & incentives- job satisfaction and pleasant
work place environment play a crucial role in retaining employees, hence to
enhance working conditions she improved ware house lighting, installed break
rooms and made the environment more user friendly thus modifying based on the
requirements of the employees.
To deal with the situation of high turnover Jessica also modified the hiring process,
by giving preference to people who opted for part time jobs rather than those
having expectations of a full-time job thus applying the contingency approach
based on situational analysis.
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