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CHAPTER - I

INTRODUCTION OF THE STUDY

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CHAPTER-1

1.1 INTRODUCTION OF THE STUDY

Employee retention refers to the ability of an organization to retain its employees.

Employee retention can be represented by a simple statistic (for example, a retention rate of
80% usually indicates that an organization kept 80% of its employees in a given period).
However, many consider employee retention as relating to the efforts by which employers
attempt to retain employees in their workforce. In this sense, retention becomes strategies
rather than the outcome.

A distinction should be drawn between low-performing employees and top

performers, and efforts to retain employees should be targeted at valuable, contributing
employees. Employees turnover is a symptom of deeper issues that have not been resolved,
which may include low employee morale, absence of a clear career path, lack of recognition,
poor employee manager relationships or many other issues.

A lack of satisfaction and commitment to the organization can also cause an employee
to withdraw and begin looking for each opportunities Pay does not always play as large a role
in including turnover as is typically believed.

In a business setting, the goal of employers is usually to decrease employee turnover,

thereby decreasing training costs, and loss of talent and organizational knowledge. By
implementing lessons learned from key organizational behavior concepts, employers can
improve retention rates and decrease the associated costs of high turnover.

However, this isn’t always the case. Employers can seek “positive turnover” whereby
they aim to maintain only those employees whom they consider to be high performers.
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HERZBERG’S THEORY :

An alternative motivation theory to Maslow’s Hirarchy of needs is the motivator-

hygiene (Herzberg’s) theory. The theories have overlap, but the fundamental nature of each
model differ. While Maslow’s Hirarchy implies the addition or removal of the same need
stimuli will enhance or detract from the employee’s satisffaction, Herzberg’s findings
indicate that factors garnering job satisfaction are separate from factors leading to poor job
satisfaction and employee turnover.

Herzberg’s system of needs is segmented into motivators and hygiene factors. Like
Maslow’s Hierarchy, motivators are often unexpected bonuses that foster the desire to excel.
Hygiene factors include expected conditions that if missing will create dissatisfaction.
Examples of hygiene factors include bathrooms, lighting and the appropriate tools for a given
job. Employers must utilize positive reinforcement methods while maintaining expected
hygiene factors to maximize employee satisfaction and retention.

WHAT IS EMPLOYEE RETENTION

Employee retention refers to the various policies and practices which let the
employees stick to an organization for a longer period of time

NEED & IMPORTANCE OF EMPLOYEE RETENTION

 Hiring is not an easy process.

 An organization invests time and money in grooming an individual and make him
ready to work and understand the corporate culture.
 The employees working for a longer period of time are more familiar with the
company’s policies, guidelines and thus they adjust better.
 Every individual needs time to adjust with others.
 It has been observed that individuals sticking to an organization for a longer span
of more loyal towards the management and the organization.
 It is essential for the organization to retain the valuable employees showing.
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RETENTION INVOLVES 5 MAJOR THINGS:

 Compensation
 Environment
 Growth
 Relationship
 Support

SOLUTION TO RETAIN EMPLOYEES

DURING HIRING PROCESS

 Use video interviews and social media to hire for fit.

 Look at all aspects of candidates.
 Make cultural fit top experience when hiring.
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1.2 INDUSTRY PROFILE

Switching Technologies Gunther (STGL) was incorporated in Apr.'88 and has been
promoted by M N Kannan. It manufactures and exports hi-tech reed switches which find
wide applications in the aircraft industry, industrial control equipment, automobiles and
power industry, at its unit in the Madras Export Processing Zone (MEPZ). The company is a
100 per cent eou and has a buy-back arrangement with its promoter company W Gunther,
Nurenberg, Germany. Its collaborator, W Gunther, Germany, has a 61.22% stake in the
company.

STG is one of the leading manufacturers and exporters of reed switches and relays in
India. Its products are exported to the European markets and have received good responses
from them. The company has a unit in the Madras Export Processing Zone (MEPZ),
manufacturing reed switches used in the automobile, telecommunication, industrial control
and aircraft industries.

During 1996-97, it has commenced commercial production of new switch types like
Miniature reed switches/Tilt switches/relays, which can also be used as surface mounted
devices and can find application throughout the automation and telecommunication
industries.

STGL has obtained UL/CSA recognition for its switches for the North American
market. It is also awaiting ISO 9002 certification.

During 1998-99, the company's net profit was reduced to 11.28lacs because of the
exchange fluctuation loss of Rs.50.64lacs. Necessary steps are being taken to ensure that such
exchange fluctuation does not affect the company's results in future. The company also has
comprehensive restructuring plans in order to improve the efficiency of the plant.

PRODUCTS
The Company produces miniature reed switches with the technology, supplied by the
collaborator. The product is used in various applications as a control device. The process has
a wide usage in the aircraft industry, power electronics, telecommunications, industrial
control equipment and automobile electronics.
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RAW MATERIALS

The required raw materials like nickel, iron wire, glass tubes, gold, potassium,
cyanide, rhodium replenished, etc., with the exception of certain chemicals and gas for the
manufacture of reed switches are imported. Other raw materials and chemicals are sourced
locally.

UTILITIES

POWER

The company has an existing sanctioned load of 532 KW (maximum demand 400
KVA) sanctioned by Tamil Nadu Electricity Board There is already a standby diesel
generator set of 625 KVA (500+125 KVA capacity) for emergencies, to provide a continuous
power in case of an interruption in the power supply.

WATER

The company has been provided water supply by MEPZ/SEZ authorities to meet the
requirements of production process and non-industrial purposes. In addition there is also an
underground water facility available.

EFFLUENT

The company has the consent of “Tamil Nadu Pollution Control Board” to produce 13
million switches per year.

PROCESS TECHNOLOGY

The manufacturing process involves sealing of two flattened ferromagnetic reeds

inside a glass tube in a neutral atmosphere. The reed blades are plated with rhodium and gold
under a sophisticated process. The reed switches produced in the company are high quality
with high shelf life and quality, conforming to International standards. The company’s
products are widely marketed in Europe, the US and other countries.
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MARKETING & SELLING

Firm 100% of export arrangements already exist with the Comus Group of
companies. The company has demonstrated over these years, its ability to deliver quality
products conforming to the international specification.

WORKING CAPITAL

The required company’s working capital is at present met by the internal accruals and
short term funding by Comus. The company is planning on long-term working capital
requirements of the company.
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1.3 COMPANY PROFILE

DATE OF ESTABLISHMENT : April 27, 1989

REVENUE : Approximately 21, 40, 000(RS. In Million)

CORPORATE ADDRESS : plot B-9 & B-10 C 1, Special Economic Zone

(MEPZ), Kadaperi, Tambaram Chennai-45,

Tamil nadu.

MANAGEMENT DETAILS : President - Robert P Ramano

Vice president - John D Rollo

Managing Director - P . Ramesh

BUSINESS OPERATIOM : Electronic – components

BACKGROUND : Switching Technologies Gunther was

Incorporated On April 27, 1989.

It was proted by W. Gunther Germany.

It engages in manufacture & export of Reed

Switches, proximity sensors, etc.

These electronic components are used in

Automobile industries, Tele communication &

Aircrafts.

In the year 2000 was undertaken by COMUS

Group – U.S.A at present the entire Company

is Controlled by COMUS U.S.A.

COMUS U.S.A is holding & retaining 33% of

Shares is held by Indian market.

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The register office of the company is at

Chennai, Tamil Nadu. And holding a sales

Office widely named as

COMUS ELECTRONICS

TECHNOLOGIES INDIA PVT LTD. At

Chennai – 83.

FINANANCIALS : The company has set up Total Income

Rs. 165.149751 Million (Year Ending March

2017). Net Profit Rs. 7.770504 Million (Year

Ending March 2017)

BANKERS : HDFC BANK

AUDITORS : ML Srinivasan & Associates

MAJOR COMPETITORS : Bharat electronics, Honeywell

Automation V-guard Indus.

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1.4 NEED FOR THE STUDY

 An organization invests time and money in grooming an individual and make

him ready to work and understand the corporate culture.
 When an individual resigns from his present organization, it is more likely that he
would join the competitors.
 The employees working for a longer period of time are more familiar with the
company’s policies, guidelines and thus they adjust better.
 Every individual needs time to adjust with others.
 It has been observed that individuals sticking to an organization for a longer span
are more loyal towards the management and the organization.
 Reduce the training cost of employee turnover.
 Avoid loss of company knowledge.
 Maintain the goodwill of the company.
 Reduce interruption in consumer service.
 Motivating across generation.
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1.5 SCOPE OF THE STUDY

 This project has been prepared with an intention to make one realize and
understand the significance of employee retention.
 Employee retention has become a major goal of the organization.
 Initially retention was only talked about, but now in today’s corporate world,
recruitment has become just part of HRM. Major importance is attached to
employee retention.
 This project not only aims to present the theoretical aspects, but the practical
aspects as well. A survey has been done to understand the strategies followed by
various organizations to ensure Employee Retention.
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1.6 OBJECTIVES OF THE STUDY

PRIMARY OBJECTIVE

 To study the employee retention of the company.

SECONDARY OBJECTIVES

A project will does not have its objectives clear. If one knows the goal, only then the
right path can be decided and with disciplined work and positive attitude achieving these
objectives will be a catwalk.

Therefore, we also set down the objectives before starting the project, which are as follows:

 To assess the employee retention strategies of the STG LTD.

 To analyze the variance in the employee retention strategies of the STG LTD.
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1.7 LITERATURE REVIEW

Rana Hussain, Aiza (2013), examined the influence of talent management (TM) and
employee turnover intention (ETO) on organizational efficiency (OE) in telecommunication
sector of Pakistan (TSP). It was found that by reducing ETO organizations efficiency can be
enhanced. Research results revealed an interesting dimension of talent management which
reflects negative relationship with organizational efficiency in TSP. This finding
reflected that TM sometime elevates ETO and reduces the OE.TSP needs to reduce
employee turnover rate by managing the talent properly to elevate OE.

Kanwal and Muhammad (2013), focused on the retention of employees in banks

in Pakistan. Research focused on the factors that are in relevance to the bonus and
rewards, satisfaction of employees with the job, training as a career exposure
management team work, are the major contributors towards the employee retention
in an organization. It was found that training and development had a significant
impact on the employee retention. Other factors that have been recognized in the literature
review had a synergic effect on the employees’ performance. Therefore it was suggested that
both the employees and the Manager must work in a team and had an effective collaboration
with each other while performing in the team work.

Balakrishnan and Masthan, D. (2013), identified the drivers of the employee

engagement and also examined the relationship between employee engagement and
employee retention. It was observed that employee engagement leads to
commitment and psychological attachment and reflects in the form of high retention (low
attrition) of employees. The study suggested that the level of engagement in employees can
be enhanced by identifying its drivers (influential factors).

Appiah, A. F. and David A. (2013), focused on human resource management

activities that were frequently used in the mining industry in Ghana and their effect on
employee retention. The main findings of the study were that majority of turnover
intentions within the organization were attributable to human resource
management. Training and development, communication and information sharing,
health, safety and welfare, incentives and compensation and job security factors were
very significant in bringing about turnover intentions within the mining industry. The
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study provides insights into the effects of human resource management practices
on employees’ intension to leave and retention in the mining sector in Ghana.

Lakshmi Devi, R., Amalraj R. et. Al (2013), aimed to study the employee
turnover ratio in a pharmaceutical industry in India. It was observed that the mean of the
pull factors was higher owing to higher turnover intention of the employees. Under this
study, all factors were divided into two clusters using hierarchical clustering technique
namely push and pull factors. The various push factors identified in case study were:
Health reasons (Personal), family problems, pursuance of higher education, behavior of
boss, conflict of employees, motivation and encouragement of good work, size of
the organization, difficulty of job and social status. Among the pull factors,
expectation of a high salary, expectation of promotion and reputation of the
organization was the most significant reasons for which the employees quit. Among
the push factors, family related problems were the most significant push factor
contributing to employee exit. This study concluded that the most significant factor is pull
factor. The push factor also contributed to the turnover, but not significantly.

Petkar, R. and Suhas, S. (2013), triggered to examine the various functions

and HRM practices adopted at TCS with the main focus on its retention management.
Researcher focused on the balancing of the global trends in human resource
management and the various changes in the policies made accordingly by the company
which affects the people working in the organization. This study found that HRM for
a global firm has become extremely challenging, among all the functions, talent
management and retention appears to be the most significant function of Human
Resource Management. With the help of a brief case study of TCS retention policy
researcher revealed that the dynamic and employee oriented flexible retention policy based
on its own values is a clear ‘X’ factor for the success of TCS in retention. It was also
revealed that the rate of attrition in TCS was only 13.1%.

Narang, Uma (2013), analyzed the impact of HRM practices i.e. career development
opportunities, supervisor support, working environment, rewards and work-life policies on
employee retention in the banks. The retention of human resources has been shown to be
momentous to the development and the accomplishment of the organization’s goals and
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objectives. Increased emphasis has been laid on retention especially with the onset of
revolution of information technology which is human sensitive. The findings of the study
concluded that there was a good relationship between the employee retention and the
HRM practices. The frequencies of career development, allocation of rewards
regarding work and work environment revealed the highest values in relation to their
perceived level of retention with the concern. It was recommended that Organizations
should provide their employees with the best career growth opportunities, working
environment, rewards, supervisor support and work-life balance and should work on them.
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1.8 RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the problem. In it we are

study the various steps that are generally adopted by a researcher in studying the research
problem along with the logic behind them. Research Methodology is the outer cover of the
research design.

MEANING OF RESEARCH

A research is the systematic enquiry and or examination in seeking facts in order to

gain knowledge and find solutions to problems.

RESEARCH DESIGN

In fact, the research is design the conceptual structure within which research is
conducted; it constitutes the blue print of the collection, measurement and analysis of data.
The design is such studies must be rigid and not flexible.

DESCRIPTIVE RESEARCH

The present study is descriptive in nature, as it seeks to discover the current situation.
It is useful in terms of displaying the prevailing facts in the organization and resolving them
in a logical manner by providing relevant solutions

DATA COLLECTION:

For any problem to be analyzed and solved data is of absolute need. Data should be
collected and interpreted for gaining a better understanding of the problem. The first step of
any research design is the collection of data.

METHODS OF DATA COLLECTION

 Primary data
 Secondary data

PRIMARY DATA

Primary data is collected a fresh and for the first time and thus happens to be original
in character. The method for collection of primary data was done through Questionnaire
method.
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SECONDARY DATA

It is that data which has already been collected by an individual and already been
passed through the statistical process. Secondary data may either be published data or
unpublished data.

A. Books, Magazines and Newspapers.

B. Internet

SAMPLING

The sampling method I have chosen is where the samples in the organization were
150 employees who have gone through the process which denotes the population size and
necessary data was collected from them respectively.

SAMPLING TECHNIQUE

Percentage analysis

Correlation

Chi-square
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1.9 LIMITATIONS OF THE STUDY

 Time is very short for research, so this is very difficult to get the knowledge about
everything.
 Since the filling of questionnaire and interviews need special attention so may be the
employees are less interested in entertaining.
 The information was collected through the questionnaire is subject to willingness of
the respondent to respond.