Employee Retention Strategies in Biscuit Manufacturing Company

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INTERDISCIPLINARYJOURNAL OF CONTEMPORARYRESEARCH IN BUSINESS

AUGUST 2011VOL 3,NO 4

An Empirical Study on Employee Retention Strategies in a Biscuit

Manufacturing Company in India

S. R. Kavitha

Assistant Professor, Depatment of Management StudiesSaranathan College of Engineering,

Tiruchirappalli, Tamilnadu, South India

S. R. Geetha

Depatment of Management Studies

Final year Student, Bharathidasan University,Tiruchirappalli, Tamilnadu, South India,

V.Arunachalam

Manager, Indian Overseas Bank, Madurapuri, Tamilnadu, South India,

Abstract

This paper aims at developing insight on how employee retention is relevant in present

business context. Retention is more important than hiring. There is no dearth ofopportunities for talented person. There are many organizations which are looking for

such employees. This study reveals that, treating employees with respect and dignity is

critical to retaining good workers, especially in a better job market. A managementsfailure to demonstrate respect to employees is the main reason for them to leave their

jobs, and hence recognition of employees achievements, encouraging innovation,handling their complaints fairly rewarding them for jobs well done is some of the ways

for employers to show workers respect and retain them. The researcher carried out the

study with the objectives of finding out various factors influencing the employee

towards retention in a biscuit manufacturing company in India. Primary data wascollected by the researcher with the help of structured questionnaire. Random samplingmethod(lottery method) was absorbed by the researcher and the sample size was 102

middle level employees of that company has been taken for the study. To test the

reliability of the data collected, the researcher used cronbachs Alpha test and the valueis 0.930 which shows that the data has satisfactory reliability and validity. Using

Statistical Package for Social Science (SPSS) some of the relevant tests were carried outlike factor analysis and multiple regression. Based on these analysis some of the

relevant findings were derived, that will be useful, relevant and significant to the present

Indian scenario.Keywords: Employee retention, strategies, career development

IntroductionWith the labour market at its tightest in recent memory, the talk of the town seems to be

attracting top talent to a company. But what a company does to retain that talent, and

the talent it already employs, is arguably more important than attraction. In recent times,employees retention has become one of the leading challenges for organization. Given

today's weak company loyalty, employees are increasingly "jumping ship" for better jobopportunities elsewhere. The issue isn't simply losing a key member of your team; there

is also the hassle-and cost-of replacement. It is obvious that employees retention is oneof the most pressing issues that Human Resource Professionals face today.

Organizations have come to realize the critical strategic implications of losing their bestpeople. Employees turnover is assuming crisis proportions for many employers who

struggle to retain people in the tightest labour markets in recent memory. "Employeeretention is the conscious and deliberate effort to retain quality individuals on the

ll St t d th i it i th ti th d tili d b f l


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organizations to stop the drain of company profits caused by excessive employee

turnover".Among the many reasons organization care about retention, retention are the

direct and indirect costs linked to the loss of talented employees. In a number of studies

human resources managers have estimated the cost of turnover to vary between 50%and 500% of the departing employees annual salary, depending on job level, industry

and geography potentially one of the largest costs of turnover, and perhaps the mostover looked, is the lost future potential of the brightest and best who often are the ones

to leave. Another, more insidious costs of turnover involves the sharing of a companys

method, technology and clients with competitors who may have hired the employeesaway. As a companys success becomes increasingly dependent on the knowledge

skills, abilities, and relationships of its employees. The financial impact of losingtalented employees will continue to rise.

Literature Review

The literature clearly indicated that there are six keys to retaining personnel. They are

recruiting, communications, training, job satisfaction, pay, and benefits.The effort to retain the best personnel begins with recruiting. Attracting and retaining thebest People are not two different things, but is the same thing. Both require creating and

maintaining a positive reputation, internally as well as externally. Employers must be

honest with the recruit about the beliefs, expectations, organizational culture, demands,and opportunities within the organization. By representing the organization realistically,

a department will attract those who will be content working within the culture (Marx,1995). Denton (1992, p.47) follows this up by stating that, the better the match

between recruits and the organization the more likely you are to retain them. Lynn

(1997) believes that you must take time during the hiring process to make wise decisions.The employer must be candid about the working conditions, responsibilities,

opportunities and other details to reduce the chances of making hiring mistakes. Taylorand Cosenza (1997) strengthen this thought by noting that it is imperative that companies

give prospective employees a true picture of the organization, if they hope to match the

personality type with the climate and culture of the organization.Carney (1998) believes that the key to employee retention is quit e simple: communicate,

communicate, and communicate. Communication with the employees must begin earlyon in the relationship. He believes that the imprinting period of a new employee is

probably less than two weeks. Employers must engage the employee early on by sharing

how important the job they do is. Lynn (1997) follows this up by stating that early on anatmosphere of fairness and openness must be created by clearly laying out company

policies. Taylor and Consenza (1997) indicate that it is important to communicate the

values of the organization to its employees in order to increase their level of consent,participation, and motivation. Lynn (1997) echoes this thought by pointing out that the

vision of the organization must be shared with the employee as well as the importancethe employees play in helping fulfil it. Lack of communication may result gaps between

managements perceptions of quality employment and the employees desired andperceived quality of employment (Taylor & Consenza, 1997). There must be a common

purpose and trust among employees. People want to feel as if they are a vital piece ofsomething larger (Carney, 1998). As Denton (1992) points out, managers must make

sure employees know what they should do and why it is important. Lynn (1997) notesthat communications must be a two way street to be effective. Employers must listen to

what employees have to say. An atmosphere must be created in which employees feel

comfortable making suggestions and trying our new ideas..As was noted earlier it is important that the employee feel like a valued member of the


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show you respect them and want them to grow. The department is making an investment

in the employee by offering training (Marx, 1995). Good training can de- emphasizessalaries and benefits, in part by building a positive work environment and by giving

employees advancement opportunities (Lynn, 1997). Lynn goes on to say that training

helps strengthen employee loyalty. Training can help revitalize personnel. For anincreasing number of people, the chance to learn new skills is a significant personal goal

for both the career opportunities education can provide and for the chance to dosomething a little different (Mendonsa, 1998).Training emphasizes to the employee that

they are valued and respected. This in turn to increased loyalty and retention.

While an organization must be competitive in terms of compensation and benefits, it isthe relationship with the supervisor that is often a crucial factor in determining whether a

person stays orgoes (Mendonsa, 1998). Employees want more interaction withmanagement, more self-satisfaction on the job, more responsibility and more control

over decisions affecting them. They want their work to make a difference and want to be

part of something that matters (Taylor, 1997).Departments should encourage innovation

by soliciting the advice and input of their staff members, followed by responses to ideas,complaints or questions (Taylor, 1997). It is difficult to keep people on the job if theyhave no say in how to do it (Spragins, 1992).People need to be recognized for their

accomplishments in the workplace. In most organizations the feeling of under-

recognition is the most pervasive feeling in the workplace (Mendonsa, 1998). Provide agreat deal of personal and team recognition (Carney, 1998). Recognize achievements

with memos, mentions in staff meetings or articles in the newspapers (Lynn, 1997) Toretain employees, departments must offer career advancement opportunities.

Departments failing to offer employees career opportunities, room for advancement and

enhancement of skills and knowledge may find it difficult to retain qualified employees(Taylor, 1997). Marx (1995) concludes this by pointing out that promoting from within

is one of the proven methods of employee retention. Promoting from within shows thatthere is truly room for advancement and growth within the department.

Employee involvement, recognition, importance of work, and career advancement

opportunities are all important, when dealing with employee retention.

In general people think that money and benefits or lack thereof, are the main reasons

people leave their jobs, but this is not the case. While compensation and benefits may bea key factor in the final decision-making process, a money shortage is usually not what

causes people to look in the first place (Mendonsa, 1998).Money may be the reason they

give when they resign, but its like white noise. They are conscious of it for a whilebut if they are bored on the job, money alone is not going to keep them there(Branch,

1998).Although traditional benefits such as vacation and health are still important,

todays workers are also looking for more non-traditional benefits. Benefits such asflexible work ours, availability of child-care tuition assistance programs and discounts on

services now top the list of desired benefits (Denton, 1992).The literature clearlyindicates while still factors, money and benefits are not as important as job satisfaction in

terms of employee retention

The research conducted on the link between dissatisfaction with pay and voluntary

turnover appears to be inconclusive. Mobley et al (1979) concluded that results from

studies on the role of pay in turnover were mixed but that often there was norelationship between pay and turnover. Other studies found no significant relationship.

On the other hand Campion (1991) cited in Tang suggests that the most important

reason for voluntary turnover is higher wages/career opportunity. Martin (2003)investigates the determinants of labour turnover using establishment-level survey data

for the UK Martin indicated that there is an inverse relationship between relative wages


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Griffeth et al (2000) noted pay and pay-related variables have a modest effect on

turnover. Their analysis also included studies that examined the relationship betweenpay, a persons performance and turnover. They concluded that when high performers

are insufficiently rewarded, they leave.

MethodologyObjectives

1.To know the effectiveness of employee retention program in a biscuitmanufacturing company in India

2.To examine the various factors that influence the employees towards retention.

Hypotheses

1) There is relationship among the factors that influences the employee towardsretention.

2) Exit interview and encouragement to higher education can predict the retention

of employees.The present study aims at developing insight on how employee retention is relevant in

present business context. Due to various reasons the companies name was not disclosed

in the study. Primary data was collected by the researcher with the help of structuredquestionnaire. Random sampling method (lottery method) was absorbed by the

researcher and the sample size was 102 middle level employees of that companyconstitute the sample size for the study. To test the reliability of the data collected, the

researcher used cronbachs Alpha test and the value is 0.930which shows that the data

has satisfactory reliability and validity. Using Statistical Package for Social Science(SPSS) some of the relevant tests were carried out like factor analysis and multiple

regression. Table 1: Reliability Statistics

Cronbach's Alpha N of Items

.930 28

The Cronbach's alpha values were calculated to assess the internal consistency of theQuestionnaire. Reliability refers to the confidence we can place on the measuring

instrument to give us the same numeric value when the measuring instrument is

repeated on the same object. For the Employee retention questionnaire, the Cronbach'salpha value of .930 indicated adequate reliability.

FACTOR ANALYSISHypothesis:

There exist relationships among the factors that influence the employee retention.

Table 2 : KMO and Bartlett's TestKaiser-Meyer-Olkin Measure of Sampling Adequacy.

.617

Approx. Chi-Square 1535.574

Df 378

Bartlett's Test of Sphericity

Sig. .000

KMO measure of sampling adequacy is an index to examine the appropriateness offactor analysis. High values 0.5 and 1.0 indicate factor analysis is appropriate. Values


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seen that KaiserMeyerOlkin measure of sampling adequacy index is 0.617 and

hence the factor analysis is appropriate for the given data set. Bartletts Test ofSphericity is used to uncorrelated. It is based on chi-square transformation of the

determinant of correlation matrix. A large value hypothesis in turn this would indicate

that factor analysis is appropriate. Bartletts test of Sphericity Chi-square statistics is1535.574, that shows the 28 statements are correlated and hence as inferred in KMO,

factor analysis is appropriate for the given data set.

Table 3: Total Variance Explained

Component Initial EigenvaluesExtraction Sums of Squared

LoadingsRotation Sums of Squared

Loadings

Total% of

Variance Cumulative % Total% of

VarianceCumulati

ve % Total% of

VarianceCumulative

%

1 10.480 37.428 37.428 10.480 37.428 37.428 3.724 13.300 13.30

2 2.454 8.765 46.193 2.454 8.765 46.193 3.625 12.945 26.24

31.788 6.385 52.578 1.788 6.385 52.578 2.894 10.337 36.58

4 1.597 5.704 58.282 1.597 5.704 58.282 2.712 9.684 46.26

5 1.469 5.248 63.529 1.469 5.248 63.529 2.705 9.662 55.92

6 1.327 4.740 68.269 1.327 4.740 68.269 2.205 7.874 63.80

7 1.137 4.060 72.329 1.137 4.060 72.329 1.810 6.464 70.26

8 1.043 3.727 76.056 1.043 3.727 76.056 1.621 5.789 76.05

9 .881 3.148 79.204

10 .783 2.798 82.002

11 .688 2.457 84.459

12 .613 2.188 86.647

13 .578 2.065 88.712

14 .479 1.709 90.421

15 .470 1.678 92.099

16 .418 1.492 93.591

17 .344 1.227 94.818

18 .289 1.032 95.849

19 .242 .865 96.714

20 .240 .857 97.571

21 .179 .639 98.210

22 .158 .564 98.774

23 .118 .421 99.195

24 .080 .287 99.482

25 .060 .213 99.694

26 .044 .159 99.853

27 .022 .077 99.930

28 .020 .070 100.000

Extraction Method: Principal Component Analysis.

Eigen value represents the total variance explained by each factor. Percentage of the

total variance attributed to each factor. One of the popular methods used in Exploratory


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considered to determine the minimum number of factors that will account for maximum

variance of data.

Table 4: Rotated Component Matrix (a)

Component

1 2 3 4 5 6 7 8

Opportunities to learn and dev .757

Potential talents identified .546

Encouragement to higher education .600

Share knowledge through training .622

Responsibilities in career .824

Competitive compensation pattern .541

Fringe benefits par with market .752

Select potential and cultural fit

candidates.534

Superior quality leadership .562

Superiors stand up for critical

situation.835

Superiors providing coaching .598

Helps to strike balance .863

Corporate social responsibilities .625

Appreciation of good work .755

Realists exit interview .848

Merit based recruitment .599

Open and transparent

Administration.602

Organisational values are practiced .583

Part of growing organisation .717

Fair and equitable treatment

Looking for talents and encourage

them.558

Strong corporate governance and

citizenship.690

Secured job .727

Adequate materials, computer, etc.. .529

Safe work environment .550

Opinion and feedback is valid .626

Cross functional team .828

Job enrichment .794

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. ARotation converged in 21 iterations.


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Rotation Method: Varimax with Kaiser Normalization:

Interpretation of factors is facilitated by identifying the statements that have largeloadings in the same factor. The factor can be interpreted in terms of the statement that

loads high on it.

The factors of a study on employee retention programs comprises of 28individual statements. Out of 28 factors, 8 individual factors contribute more towards

employee retention programs1. Company helps to strike balance professional, personal, financial and social

life. In the organization exit interviews are realistic and unbiased.

2. Superiors are standing up for the team when they are facing with criticalsituation.

3. Employees involving cross functional activities to get variety of exposures.4. Employees getting early responsibilities in career.5. Job enrichment.6. Getting opportunities to learn and progress.

7. Appreciated for their good work done.8. Fringe benefits like mediclaim, loan, bonus, gifts, paid holiday, picnics, etc.9. Job is secured in my company10.Getting opportunities to learn and progress.11.Each and every employees involving part of growing organization.

Regression Anaysis

Hypothesis

Exit interview and encouragement to higher education can predict the retention of

employees.

Table 5: Model Summary

Model R R Square Adjusted R SquareStd. Error of the

Estimate

1 .921(a) .848 .745 .24203

a Predictors: (Constant), job enrichment, select potential and cultural fit candidates, share

knowledge through training, superiors stand up for critical situation, organisational values are

practiced, competitive compensation pattern, realists exit interview, opportunities to learn and

dev, encouragement to higher education, part of growing organisation, adequate

materials,computer,etc.., fringe benefits par with market, corporate social responsibilities, cross

functional team, superior quality leadership, open and transpent admini, superiors providing

coaching, safe work environment, merit based recruitment, opinion and feedback is valid,

secured job, potential talents identified, responsibilities in career, fair and equitable treatment,strong corporate governance and citizenship, looking for talents and encourage them,

appreciation of good work, helps to strike balance

In the above model summary table shows R-Square for this model is 0.848 this meansthat 84 percentage of the variation in overall retention programs of employees

(dependent variable) can be explained from the 28 independent variables. The table also

shows the adjusted R-square for the model as .481.

Any time another independent variable is added to a multiple regression model,the R-square will increase (even if only slightly). Consequently, it becomes difficult to

determine which models do the best job of explaining variation in the same dependentvariable. The adjusted R-square does just what its name implies. It adjusts the R-squareb h b f di i bl i h d l hi dj ll h


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comparison of the explanatory power of models with different numbers of predictors

variable. It also helps us to decide how many variables to include in our regressionmodel.

Table 6: ANOVA (b)

ModelSum ofSquares df Mean Square F Sig.

Regression 13.441 28 .480 8.195 .000(a)

Residual 2.402 41 .059

1

Total 15.843 69

a Predictors: (Constant), job enrichment, select potential and cultural fit candidates, share knowledgethrough training, superiors stand up for critical situation, organisational values are practiced, competitivecompensation pattern, realists exit interview, opportunities to learn and dev, encouragement to highereducation, part of growing organisation, adequate materials,computer,etc.., fringe benefits par with market,corporate social responsibilities, cross functional team, superior quality leadership, open and transpent

admini, superiors providing coaching, safe work environment, merit based recruitment, opinion andfeedback is valid, secured job, potential talents identified, responsibilities in career, fair and equitabletreatment, strong corporate governance and citizenship, looking for talents and encourage them,appreciation of good work, helps to strike balanceb Dependent Variable: employee satisfaction

The ANOVA table, as displayed in the above table 38 shows the F ratio for theregression model that indicates the statistical significance of the overall regression

model. The larger the F ratio there will be more variance in the dependent variable thatis associated with the independent variable. The F ratio =8.195. The statistical

significance is .000- the sig. So reject the null hypothesis. There is relationship

between independent and dependent variables

Table 7: Coefficients (a)

ModelUnstandardized

CoefficientsStandardizedCoefficients t Sig.

B Std. Error Beta

1 (Constant) .546 .570 .958 .344

Opportunities to learn and dev -.155 .141 -.162 -1.098 .279

Potential talents identified .004 .136 .005 .026 .979

Encouragement to highereducation .228 .115 .294 1.991 .053

Share knowledge throughtraining .226 .136 .275 1.664 .104

Responsibilities in career -.034 .099 -.054 -.340 .736

Competitive compensationpattern .057 .051 .109 1.114 .272

Fringe benefits par with market.023 .100 .028 .227 .822

Select potential and cultural fitcandidates -.035 .102 -.043 -.339 .736

Superior quality leadership.114 .107 .121 1.062 .295

Superiors stand up for criticalsituation -.061 .105 -.076 -.583 .563

Superiors providing coaching .111 .110 .135 1.004 .321

Helps to strike balance 001 129 002 009 993


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Corporate socialresponsibilities .106 .075 .162 1.418 .164

Appreciation of good work -.036 .213 -.039 -.169 .866

Realists exit interview .185 .105 .344 1.766 .085

Merit based recruitment .080 .132 .084 .601 .551

Open and transparent admini -.085 .136 -.122 -.629 .533

Organisational values arepracticed .024 .104 .031 .227 .822

Part of growing organisation .086 .133 .093 .645 .522

Fair and equitable treatment .046 .095 .075 .477 .636

Looking for talents andencourage them .233 .177 .268 1.319 .194

Strong corporate governanceand citizenship -.138 .144 -.176 -.956 .345

Secured job .019 .117 .027 .165 .870

Adequatematerials,computer,etc.. -.082 .118 -.133 -.696 .490

Safe work environment -.228 .105 -.306 -2.173 .036

Opinion and feedback is valid .101 .143 .135 .703 .486

Cross functional team .121 .084 .209 1.439 .158

Job enrichment .023 .102 .036 .223 .825

A Dependent Variable:overall employee retention

To determine if one or more of the independent variables are significant predictors ofoverall satisfaction of employee retention programs, we examine the information

provided in the coefficient table. The standardized coefficient beta column reveals thatopportunities to learn and development has a beta coefficient (-162), which is notsignificant (.279). potential talents identified has a beta coefficient( .005), which is not

significant (.979). Encouragement to higher education has a beta coefficient (.294),which is not significant (.053).share knowledge through training has a beta coefficient

(.275), which is not significant (.104). Responsibilities in career has beta significant (-

054), which is not significant (.736). Competitive compensation pattern has betacoefficient (.109), which is not significant (.272). Fringe benefits par with market has a

beta coefficient (028), which is not significant (.822). select potential and cultural fitcandidate has a beta coefficient (.-043), which is not a significant (.736). superior

quality leadership has a beta coefficient (-121), which is not significant (295). Superiors

stand up for critical situation has a beta coefficient (-076), which is not significant(.563). superiors providing coaching have a beta coefficient (.135), which is not

significant (.321). Helps to strike balance has a beta coefficient (-002), which is notsignificant (.993). A corporate social responsibility has a beta coefficient (.162), which

is not significant (.169). Appreciation of good work has a beta coefficient (-.039),

which is not significant (.866). Realists exit interview has a beta coefficient (.344),which is not significant (.085). Merit based recruitment has a beta coefficient (.084),

which is no significant (.551). Open and transparent administration has beta coefficient

(-122), which is no significant (.533). organisational values are practiced has betacoefficient (.031), which is not significant (.822). Part of growing organisation has beta

coefficient (-.093), which is not significant (.522). Fair and equitable treatment has betacoefficient (.075), which is not significant (.636). Looking for talents and encourage

them has beta coefficient (.268), which is no significant (.194). strong corporate


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secured job (.027), which is not significant (.870). adequate materials,computer,etc.. has

beta coefficient (-133), which is not significant (.490). Safe work environment has betacoefficient (.306), which is not significant (.036). Opinion and feedback is valid has

beta coefficient (.135), which is no significant (.486). Cross functional team has beta

coefficient (.209), which is not significant (.158). Job enrichment (.036), which is notsignificant (.825).

In the table shows that encouragement to higher education, share knowledge

through training, realists exit interview, looking for talents and encourage them,

cross functional team these are highly predictor variables in the employee retention

programs.

CONCLUSION

In the present scenario, identification of employee retention has become a crucial

element. In this study, it found that most of the employees are satisfied with the

organization. It is inferred that the predictor variables of overall employee retention

programs is encouraged for higher education, opportunities to share knowledge withvarious methods, looking for talents and encourage them, and Cross functional team arehighly influenced by the employees. Certain factors like compensation pattern,

responsibility in career personal care is not appreciated when compared with other

factors. So the management can strategically design towards the employee needs withregarding to retention programs.


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Griffeth, R.W., & Hom, P.W. (1995). The employee turnover process. Research inPersonnel Human Resource Management, 13, 245-293.Griffeth, R.W., & Hom, P.W. (2001). Retaining valued employees. Thousand Oaks,

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Employee Retention Strategies in Biscuit Manufacturing Company