Chapter1 : INTRODUCTION
Attrition is a very big problem not only in India but also outside the India. The
attrition rate in all industries is increasing day by day. The problem of attrition is in all
industries, but it is much higher in IT industry. In today’s cut throat competition, it is
greatest challenge for managers to control attrition or increase retention of employees.
Attrition is the key concern for small as well as large organizations. Companies invest
a huge amount on hiring, training of employees and when employees leave the
organization the companies suffer great losses. When employees leave, whole
investment of company on employees goes in vain. The companies also lose their
talented employees. The employees also take with them the knowledge, information
about the company and relationships with customers. The attrition of employees hurts
a lot to a company, because when it is the time to receive the fruit of their investment,
the employee leaves the organization. In most of cases employees leave without pre
intimation and quits organization all of sudden. It is very difficult for managers to find
immediate substitute of employees. The new employees also have to pass through
long and expensive procedure of training. They also require time to adjust in the
atmosphere of company.
Money is not only the reason for which employees leave the organization. The
organizations that are providing high salary package to their employees, are also
suffering with problem of attrition.
An Employee leaves the organization for many different reasons. Employee may leave
the organization for better job opportunity, career growth, and better working
conditions. He may also leave to have more authority, responsibility and challenging
work. Work –life imbalance, ambiguous role, stress from the work and unfair
treatment may also lead an employee to leave the organization. Competitors are also
very eager to get experienced employees and make attractive offers to them.
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In this way competitors save the cost and time on the training of employees. Whatever
the reasons of attrition may be, the consequences of attrition are not good. “Attrition
results in decreased productivity. Attrition means increase in cost and decrease in
revenues".
A high attrition rate means organization’s inability to retain the key employees. The
problem of attrition can only be minimized, it cannot be eliminated. All organizations
adopt different strategies in order to control the attrition. Providing employees perks,
bonus, increments and good work environment can help an organization to retain the
employees. The targets given to the employees should be just and achievable. The
attitude of superior towards employees should be good. Providing employees more
authority, responsibility and including employees in decision making can help in
reducing attrition.
Employees are most important assets of an organization. For the success of an
organization, it is very important that how long their employees work with them.
Longer employees serve; there are more chances of the success of the organization.
“Organizations in general are facing difficulties in retaining their best talents in spite
of salary hike, fringe benefits in these days of talent wars in retaining person or star
person in organization is more difficult than getting a person.”(Thomas gare, 2007)
“.”The cost of attrition is not just the loss of that employee but it includes an array of
hidden costs such as recruitment costs, selection costs, training costs, cost of covering
during the period and opportunity costs. So it is very important for organization to
control the attrition for an organization. HR managers make different strategies in
order to control attrition. But attrition can never be zero in any organization”.
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1.1. Defining attrition:
“A gradual, natural reduction in membership or personnel, as through retirement,
resignation, or death”
“Attrition is an unpredictable and uncontrollable, but normal, reduction of work force
due to resignations, retirement, sickness, or death.”
1.2. Defining Attrition rate:
"The rate of shrinkage in size or number"
“Attrition rate also known as ‘Churn rate’ is a measure of employee attrition, and is
defined as the number of employees who leave a company during a specified time
period divided by the average total number of employees over that same time period".
According to a HBR article (2000, issue 78) “while firms go to great lengths to hire
new employees, only 20% of them stay two years. Nearly 70% of the newly hired
seniors leave within two years .There is only a 50% chance that when someone takes
up a new job he will be with the company for more than two years. In a 3 month
period in the year 2000 alone 350 CEOs in the US left their jobs”. According to this
article 80% of a pool of executives changed their jobs within two years.
“Attrition is not a new problem and it has existed earlier and will continue to exist in
any industry. But rate is really alarming in all industries. Attrition means not include
loss of talent, but also includes the cost of training and hiring the new recruits.
Companies invest a lot of time and money in training a candidate for the first four
months. But these investments do not always get converted into actual profits”.
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‘The high percentage of females in the workforce (constituting 30-35 percent of the
total), adds to the high attrition rate. Most women leave their job either after marriage
or because of social pressures caused by irregular working hours in the industry. All
this translates into huge losses for the company, which invests a lot of money in
training them”.
If a person leaves after the training it costs the company about Rs 60,000. For a 300-
seater call centre facing the normal 30 percent attrition, this translates into Rs 60 lakh
per annum. Many experts are of believe that all these challenges can turn out to be a
real dampener in the growth of this industry. This only raises the responsibility of
"finding the right candidate" and building a "conducive work environment", which
will be beneficial for the organization.
Attrition rates
US 42%
Australia 29%
Europe 24%
India 18%
Global Average 24%
* Source-Times News New York
Staff attrition and absenteeism represent significant costs to most organizations. It is
odd, therefore, that many organizations neither measure such costs nor have targets or
plans to reduce them. Many organizations appear to accept them as part of the cost of
doing business - a sign of increasing job mobility and decreasing staff loyalty perhaps,
a matter to be regretted but just 'one of those things.' They add a sum in their budgets
for 'temp staff' and 'recruitment' and forget about it. However, it seems to be one of the
areas in which HR can make a difference - and one that can be measured in
quantifiable, financial terms against targets.
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An attrition rate in call (or contact) centers has become legendary. Indeed, the attrition
rates in some Indian call centers now reach 80%. This is an extreme figure but the
average attrition rates in Indian call centers are up around 30-40%. HR Heads are
worried about employees leaving their organizations. Not only is it costly to lose
trained employees but their replacements are not easy to come by. Hence the HR
strives hard to keep attrition at the minimum.
Greg Weiss, an HR consultant and principal of Human Management, in extensive
interviews with HR directors at 30 companies found that most companies have little
real understanding of why employees leave.
1.3. Cost of Employee Attrition
The cost of employee turnover adds hundred thousand 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.
For example, if the average salary is $20,000/yr the cost of one employee turnover is
$5,000. If you have 30 employees terminating per month, the cost to the organization
equals $150,000/month. Multiply that by 12 months and you have $1,800,000 in
added annual expense.
Surprisingly at present less than 10% of companies calculate employee turnover (costs to be taken into account are
1. Administration costs
2. Recruitment costs
3. Selection costs
4. Induction cost of new employee
5. Cost of covering during period of vacancy
These calculations will easily reach 150% of the employee’s annual compensation
figure. The cost will be significantly higher (200% to 250% of annual compensation)
for managerial and sales positions.
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SHRM, the Society for Human Resource Management, estimated that it costs
$3,500.00 to replace one $8.00 per hour employee when all costs -- recruiting,
interviewing, hiring, training, reduced productivity, et cetera, were considered.
SHRM's estimate was the lowest of 17 nationally respected companies who calculate
this cost!. Other sources provide these estimates: It costs you 30-50% of the annual
salary of entry-level employees, 150% of middle level employees, and up to 400% for
specialized, high level employees!
1.4. CALCULATION OF ATTRITION RATE
There are no standard formulae for calculating attrition. The approach to this
calculation might vary from organization to organization. While a few techniques are
common, there are no proven theories. Some of the most commonly used formulae are
discussed below:
Attrition = (No. of employees who left in the year / average employees in the
year)x100
Thus, if the company had 1,000 employees in April 2004, 2,000 in March 2005, and
300 quit in the year, then the average employee strength is 1,500 and attrition is 100 x
(300/1500) = 20 percent.
Total Terminations in a month
------------------------------------------------------------------------------------
(Total Head Count at the beginning of the month) + (Total New Hires)
Total number of employee who the organization in a given year\ avg. no of staff
employed in that period
“Today there is problem in measuring turnover rate due to contractors. They are
employed till their contract is void and legal. Because they; eave on completion of
their contract, but does it have to be counted in turnover. Turnover can be reduced or
stopped using retention strategies so they are just like two sides of a coin”.
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1.5. CONSEQUENCES OF ATTRITION
Attrition normally brings decreased productivity. People leave causing others to work
harder. This contributes to more attrition, which contributes to increasing costs, lower
revenue. This often forces additional cost reductions and austerity measures on an
organization. This in turn makes working more difficult, causing the best performer
with the most external opportunities, to leave. Attrition causes bleeding to everyone.
Small firms are the real Sufferers, losing good people to larger firms even before the
employees can settle down in the company. In fact losing people has become routine
in small firms, so that if nobody leaves on a day, it is celebration time. The big players
poach on the employees of smaller companies and the smaller ones poach on yet
smaller firms and start-ups.
A company is not hurt because a certain person has left. The company is hurt because
he/she takes away certain knowledge, and there is no ready replacement in the market.
High the attrition rate the more the company goes in losses in terms of finance and
manpower.
1) The company invests a huge amount of money in advertising for the vacant
positions.
2) The company in some cases also has to pay the consultancies for getting the right
candidates
3) The company after getting the right candidate then goes for training of the
candidate. Also the company has to bear the cost of the employees who undergoes
training.
4) The problem of the attrition rate in BPOs and in normal big industries and
organizations varies a lot. In fact in short the high the attrition rate the worst the
company creates its image in market
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Attrition is not always bad, it also has some positive aspects. It allows the
underperformers to go out of the organization and also allows a good talent with
creative and innovative ideas to come in the organization. “The Brighter Side of
Attrition: Attrition is not bad always if it happens in a controlled manner. Some
attrition is always desirable and necessary for organizational growth and development.
The term “healthy attrition” or “good attrition” signifies the importance of less
productive employees voluntarily leaving the organization”.
1.6. FACTORS AFFECTING ATTRITION
The key drivers of employee turnover can be divided into two categories: push factors
and pull factors. While some perfectly satisfied employees may be tempted away by
the pull of an offer so fantastic that they just have to accept, the large majority of
departures do involve an element of push.
For some, it's simply a matter of money, and they'll move on after a year or two if they
find better salaries and benefits elsewhere. But there are usually other factors that
influence an employee's decision to leave.
The various factors that affect an individual’s decision to leave a job are.
1.6.1. Individual Factors
1. Ambitions or Career Aspirations
2. Comparisons and Equity Considerations
3. Parental and family mobility
4. Personality factors
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1.6.2. Job related factors
The job related factors that cause the decision to leave are many these include the
following:
1. Inability to use ones’ competencies
2. Lack of challenging work
3. Boss and his styles
4. Low promotional opportunities
5. Role clarity
6. Job Stress or role stress or role stagnation
7. Lack of independence or freedom and autonomy
8. Lack of learning opportunities
9. Lack of excitement and innovation, novelty etc. in the job
10. Better prospects
11. Unfair treatment
12. Ambiguous role
13. Insecurity and Uncertainty in day-to-day working
14. Inadequate non-monetary benefits
1.6.3. Economic Factors
It deals with the aspirations in relation to salary and perks, housing, quality of living,
need for savings etc. In addition to these there could be many other factors that affect
decisions:
Mobility of partner
Fatigue
Family reasons like having to look after old parents
Moving abroad
Closeness to kith and kin ROI in education
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1.7. Importance of curbing attrition
Controlling the attrition is of paramount importance for the HR Managers of any
organization. Finding, attracting, keeping good and talented employees is getting more
and more difficult. “U.S. businesses spend over $200 billion annually recruiting and
replacing employees” (brandau, 2007), as it is of primary importance to stop or reduce
the attrition of employees.
Majority of workforce is dissatisfied with their current employment situation and
could leave for better positions. “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”.
“In order to get competitive advantage and good return on investment it is important
to control attrition. The goodwill of the company is also badly affected when
employees leave after regular intervals. The goodwill of a company is maintained
when the attrition rates are low. Higher retention rates motivate potential employees to
join the organization”.
Attrition also leads to interruption to customer service. When an employee leaves, the
relationships that employee built for the company over long period of time are
damaged, which could lead to potential customer loss. In order to ensure the
customers, managing attrition becomes necessary. 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. By
curbing the attrition rate the following costs can be controlled.
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Separation Costs
1) Exit interview2) Administrative and paperwork costs3) Disbursement of benefits to separating employees4) Diminished productivity of remaining personnel
Replacement Costs
1) Job advertisements2) Recruitment activities3) Administrative processing Entrance interviews So curbing attrition is of
paramount importance in order to minimize turnover cost, which can add hundreds of thousands of money to a company's expenses.
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Industry Profile
Insurance is a federal subject in India. The insurance sector has gone through a number of phases and changes. Since 1999, when the government opened up the insurance sector by allowing private companies to solicit insurance and also allowing FDI up to 26%, the insurance sector has been a booming market. However, the largest life-insurance company in India is still owned by the government.
History
Insurance in India has its history dating back until 1818, when Oriental Life Insurance Company was started by Anita Bhavsar in Kolkata to cater to the needs of European community. The pre-independence era in India saw discrimination between the lives of foreigners (English) and Indians with higher premiums being charged for the latter. In 1870, Bombay Mutual Life Assurance Society became the first Indian insurance company covering Indian lives at normal rates.
At the dawn of the twentieth century, many insurance companies were founded. In the year 1912, the Life Insurance Companies Act and the Provident Fund Act were passed to regulate the insurance business. The Life Insurance Companies Act, 1912 made it necessary that the premium-rate tables and periodical valuations of companies should be certified by an actuary. However, the disparity still existed as discrimination between Indian and foreign companies. The oldest existing insurance company in India is the National Insurance Company Ltd., which was founded in 1906. It is in business. Before that, the industry consisted of only two state insurers: Life Insurers (Life Insurance Corporation of India, LIC) and General Insurers (General Insurance Corporation of India, GIC). GIC had four subsidiary companies.
With effect from December 2000, these subsidiaries have been de-linked from the parent company and were set up as independent insurance companies: Oriental Insurance Company Limited, New India Assurance Company Limited, National Insurance Company Limited and United India Insurance Company Limited.
Industry structure
Currently, a $41 billion industry, India is the world's fifth largest life insurance market and growing at a rapid pace of 32-34% annually as per Life Insurance Council studies.
Currently, in India only two million people (0.2 % of the total population of 1 billion) are covered under Mediclaim, whereas in developed nations like USA about 75 % of the total population are covered under some insurance scheme. With more and more private companies in the sector, the situation may change soon.
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Specialisation
ECGC, ESIC and AIC provide insurance services for niche markets. So, their scope is limited by legislation but enjoy special powers.
Acts
The insurance sector went through a full circle of phases from being unregulated to completely regulated and then currently being partly deregulated. It is governed by a number of acts.
The Insurance Act of 1938 was the first legislation governing all forms of insurance to provide strict state control over insurance business.
Life insurance in India was completely nationalized on January 19, 1956, through the Life Insurance Corporation Act. All 245 insurance companies operating then in the country were merged into one entity, the Life Insurance Corporation of India.
The General Insurance Business Act of 1972 was enacted to nationalise the about 100 general insurance companies then and subsequently merging them into four companies. All the companies were amalgamated into National Insurance, New India Assurance, Oriental Insurance and United India Insurance, which were headquartered in each of the four metropolitan cities.
Until 1999, there were not any private insurance companies in India. The government then introduced the Insurance Regulatory and Development Authority Act in 1999, thereby de-regulating the insurance sector and allowing private companies. Furthermore, foreign investment was also allowed and capped at 26% holding in the Indian insurance companies.
In 2006, the Actuaries Act was passed by parliament to give the profession statutory status on par with Chartered Accountants, Notaries, Cost & Works Accountants, Advocates, Architects and Company Secretaries.
Authorities
The industry recognises examinations conducted by IAI (for actuaries), III (for agents, brokers and third-party administrators) and IIISLA (for surveyors and loss assessors). TAC is the sole data repository for the non-life industry.
IBAI gives voice for brokers while GI Council and LI Council are platforms for insurers.
AIGIEA, AIIEA, AIIEF, AILICEF, AILIEA, FLICOA, GIEAIA, GIEU and NFIFWI cater to the employees of the insurers.
In addition, there are a dozen Ombudsman offices to address client grievances.
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NEED AND OBJECTIVES
Attrition is a serious trend, especially in today’s knowledge-driven marketplace where
people are the most important assets. In this period, on an average, people would have
changed 2-3 jobs. Competitors are very eager to get experienced people and are
willing to make very fancy offers to cut short their training time and investment. Due
to attrition, profitability, cost of sales, cost of recruitment, training etc is always
impacted. Attrition and absenteeism represent significant costs to most organizations;
it is interesting to note that the attrition rates in India – and the costs associated- are so
high that they can override the benefits of lower wage costs. It is simply attrition-
people do not stay long enough to be taught or to learn the job. When it is the time of
companies to receive the fruit of their investment, the employees leave the job.
Employees, leave, either because they want more money, hate the working conditions,
hate their coworkers, want a change, or because their spouse gets a dream job in
another state.
Attrition and absenteeism represent significant costs to most organizations; it is
interesting to note that the attrition rates in India – and the costs associated- are so
high that they can override the benefits of lower wage costs. The issue is not with the
quality or education of the employees and still less with the investment in technology.
It is simply attrition- people do not stay long enough to be taught or to learn the job.
There may be countless reasons of attrition of employees, but it involves very high
cost. The cost of attrition is not just the loss of that employee but it includes an array
of hidden costs such as recruitment costs, selection costs, training costs, cost of
covering during the period and opportunity costs. So it is very important to study the
reasons and consequences of employee attrition and prepare strategies to curb
attrition.
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OBJECTIVES OF STUDY
Primary Objective
The primary objective of the present study is to identify the various
causes and consequences of attrition among employees working in
insurance industry
Secondary Objective
To draw out strategies to curb attrition.
To identify the retention strategies that influences employees’ decision
to stay with the organization.
To identify the cost involved in attrition and retention strategies.
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Chapter 2: REVIEW OF LITERATURE
Campion, 1991: Campion has discounted the use of proxy turnover measures,
particularly the use of tenure. Similar to turnover, tenure is a construct with multiple
operational definitions; for example, one can use tenure in the current position or
tenure in the facility. Thus, some caution is needed when one is using measures of
tenure. However, for use as a proxy measure of turnover, tenure is considered most
problematic because of the "unproven assumption that short-tenure employees are
equivalent to those who leave an organization". A degree of negative duration
dependence exists between turnover and tenure; however, tenure measures are prone
to length-bias sampling that is, cross-sectional studies will likely over represent long-
tenure employees and under represent short-tenure employees. Campion also
concluded in his study on labor turnover that the most important reason for voluntary
turnover is higher wages/career opportunity. The instance of voluntary turnover may
be classified as ‘avoidable’. In other words, it is a case of employee instigated
turnover which could have been prevented.
Lee and Mitchell, 1994: Lee & Mitchell’s ‘unfolding model’ of employee turnover
represented a significant departure from the previous labor market- and psychological-
oriented turnover literature. This model is based on the premise that people leave
organizations in very different ways and it outlines four decision pathways describing
different kinds of decisions to quit. Although the dimension of choice is explicitly
recognized within psychological accounts of turnover, these accounts often assume
that decisions about leaving an organization only include considerations of work
issues. Intuitively this should be seen as problematic as often the reasons people have
for leaving an organization have nothing to do with their life at work. A notable
feature of the unfolding model is its emphasis on an event or ‘shock’ (positive or
negative) that prompts some decisions to quit. It outlines four different ways in which
people may choose to leave organizations In path 1 this leads to Enactment of a pre-
existing plan of behavior or script, which precludes search or evaluation and leads
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directly to leaving. Paths 2 and 3 show how a shock leads to image violations which
cause an employee to consider their attachment to the organization. Path 3 shows how
violation leads to an evaluation of one’s job and Alternatives in the light of low
satisfaction, which leads to termination after positive assessment of the likelihood of a
job offer. In paths 4a and 4b there is no initial shock. In path 4a, over time, lower
levels of job satisfaction cause an employee to quit without considering alternatives.
Path 4b outlines the traditional account of turnover, where job satisfaction low leads to
termination after search and consideration of alternatives. The unfolding model
introduces two constructs which potentially contribute to turnover theory. The
inclusion of script enactment may help to describe how certain decisions to turnover
can bypass a stage of job search or the evaluation of alternatives. The inclusion of an
element of shock as needed to shakes employees from their lethargy.
Kirschenbaum & Mano-Negrin, 1999: Research by Kirschenbaum & Mano-
Negrin on the impact of unemployment rates as a proxy for actual opportunities in
employee turnover revealed that unemployment rates affected the
job-satisfaction/turnover intent relationship but not actual turnover. They concluded
that macro level analysis predicted turnover patterns but perceptions of opportunities
did not. This point was reinforced in their study on medical centers in various
locations used measures of perceived and objective opportunities in internal and
external labor markets. The authors concluded that objectives opportunities were a
better set of explanations of actual turnover behavior than either perceived internal or
external labor market opportunities. Much of the research on perceived opportunities
has been found to be associated with intentions to leave but not actual turnover. One
of the possible reasons is that intentions do not account for impulsive behavior and
also that turnover intentions are not necessarily followed through to lead to actual
turnover. Kirschenbaum & Mano-Negrin also indicated that turnover is affected by
organizational size, with size being the key mediator of an organization’s internal
labor market. They suggest that organizational size impacts on turnover primarily
through wage rates but also through career progression paths. Developed internal
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organizational labor markets produce lower departure rates since promotion
opportunities have a strong negative influence on departures for career-related
reasons.
Chang, 1999: Chang examined the relationship between career commitment,
organizational commitment and turnover intention among Korean researchers and
found that the role of career commitment was stronger in predicting turnover
intentions. When individuals are committed to the organization they are less willing to
leave the company. This was found to be stronger for those highly committed to their
careers. The author also found that employees with low career and organizational
commitment had the highest turnover intentions because they did not care either about
the company or their current careers. Individuals with high career commitment and
low organizational commitment also tend to leave because they do not believe that
organization can satisfy their need or goals. This is consistent with previous research
that high career committers consider leaving the company if development
opportunities are not provided by the organization. However, this group is not apt to
leave and is likely to contribute to the company if their organizational commitment is
increased. chang found that individuals become affectively committed to the
organization when they perceive that the organization is pursuing internal promotion
opportunities , providing proper training and supervisors do a good job in providing
information and advice about careers.
Griffeth et al, 2000: Griffeth noted that pay and pay-related variables have a
modest effect on turnover. Their analysis also included studies that examined the
relationship between pay, a person’s performance and turnover. They concluded that
when high performers are insufficiently rewarded, they quit. If jobs provide adequate
financial incentives the more likely employees remain with organization and vice
versa Griffeth et al. (2000) noted pay and pay-related variables have a great effect on
employee turnover. Management must compensate employees adequately. They
should pay employees based on their performance and in addition they should given
employees incentives like individual bonus, lump sum bonus, sharing of profits and
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other benefits. Hence, if these are put in place they would minimize employee
turnover. A meta analysis of some 800 turnover studies was conducted by Hom and
Griffeth. Their analysis confirmed some well-established findings on the causes of
turnover. These include: job satisfaction, organizational commitment, comparison of
alternatives and intention to quit. Again, there is a substantial body of research that
has found that organizational commitment is negatively related to intention to quit.
Meta-analysis by griffeth re- examined various personal characteristics that may be
linked to turnover. Age is found to be negatively related to turnover (i.e. the older a
person, the less likely they are to leave an organization). They concluded that there
were no differences between the quit rates of men and women. They also cited
evidence that gender moderates the age-turnover relationship (i.e. women are more
likely to remain in their job the older they get, than do men). They also found no link
between intelligence and turnover, and none between race and turnover. There is a
substantial body of literature that has reported that job satisfaction is negatively
related to turnover intention.
Tang et al, 2000: Tang examined the relationship between attitudes towards money,
intrinsic job satisfaction and voluntary turnover. One of the main findings of this study
is that voluntary turnover is high among employees who value money (high money
ethic endorsement), regardless of their intrinsic job satisfaction. However, those who
do not value money highly but who have also have low intrinsic job satisfaction
tended to have the lowest actual turnover. Furthermore, employees with high intrinsic
job satisfaction and who put a low value on money also had significantly higher
turnover than this second group. The researchers also found that placing a high value
of money predicted actual turnover but that withdrawal cognitions (i.e. thinking about
leaving) did not.
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Boxall et al, 2003: A recent study of turnover by Boxall in New Zealand confirmed
the view that motivation for job change is multidimensional and that no one factor will
explain it. In study of the British clothing industry, employer initiatives to reduce
turnover included a range of measures. Improving remuneration packages was the
single most common initiative with changes to the payments systems made so that
workers could increase their earnings. Also important were more rigorous screening
procedures for new hires, and improved training programs designed to bring new
workers up to speed so that they could maximize their piece rate earnings potential.
Various quality of working life initiatives were introduced, such as flexible working
hours and forms of employee participation (e.g. works councils).
Martin, 2003: Martin (2003) detected a complex relationship between turnover and
training. He suggested that establishments that enhance the skills of existing workers
have lower turnover rates. However, turnover is higher when workers are trained to be
multi-skilled, which may imply that this type of training enhances the prospects of
workers to find work elsewhere. The literature on the link between lower turnover and
training has found that off-the-job training is associated with higher turnover
presumably because this type of training imparts more general skills. Martin also
indicated that there is an inverse relationship between relative wages and turnover, i.e.
establishments with higher relative pay had lower turnover. Martin looked at the effect
of unions on labour turnover and found clear evidence that unionism is associated
with lower turnover. He suggested that lower turnover is a result of the ability of
unions to secure better working conditions thus increasing the attractiveness for
workers of staying in their current job. According to Martin, the relationship between
lower turnover and unionization has been well established by researchers using both
industry-level and individual data.
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Employment Policy Foundation 2004: The Employment Policy Foundation
highlights that “for the twelve months ending August 2004, average employee
turnover costs reached $13, 355, up 6.8 percent from its December 2002 level”. The
voluntary employee turnover rates released by the U. S. Department of Labor in
November, 2004 paint a similar picture. The EPF believes average turnover costs to
be 25 percent of an employee’s annual salary (2004). The cost of replacing lost talent
is even higher, as much as 70 to 200 percent of that employee’s annual salary.
Expanding on these thoughts, the EPF (2004) stated that “for a firm with 40,000 full-
time employees, the difference between a 15- percent turnover rate and a 25-percent
turnover rate is over $50 million annually. The difference between a 15-percent
turnover rate and a 40-percent turnover rate is over $130 million annually”.
Employment policy foundation noted that a number of organizations have high
employee turnover in operations such as customer contact centers, back-office
processing and inventory management positions. Health care, communications,
banking, and insurance are more prone to these high turnover characteristics than
other industries. The reasons are multifold, but in general, the environment in which
these organizations perform forces them into these employee patterns.
David pollitt, 2007: Pollitt examined the reasons high rate of attrition at the call
centre of Scottish and southern energy, a major UK energy provider. It was found that
the major reasons for attrition were: boring style of induction training, the quantity of
information they were expected to remember, the desire to become more productive
quickly, the difficulties they faced when they joined their teams and lack of interest
and support from team manager.
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Cipd survey, 2008: A survey on turnover of uk 2008, in its report stated, labor
turnover, for all employees stands at 17.3%, which was 18.1% in 2007. The hotel,
catering and leisure industry remains the sector with the highest level of labor
turnover, with the ‘all leavers’ finding in this category being 41%. This reflects an
8.4% increase in turnover rate as compared to 2007. Almost all respondents (94%) use
exit interviews to explore the reasons why people leave the organization voluntarily. a
change of career was the most commonly cited cause (55%).Whereas 45% employees
left due to promotion outside organization. 39% employees left due to level of pay and
27% left to look after their children’s. there is a high proportion of new starters
leaving the organization within the first six months (22%).This emphasizes the
importance of the induction process, to ensure people joining the organization are able
to integrate effectively into the workplace early on. Overall, organizations reported
having the same level of employee retention difficulties as last year: 80% versus 78%
in the 2006 survey.
Sherm study, (2008): According to the SHERM study (2008) “A better career
opportunity” is the primary reason cited by 78 percent of exit interview respondents.
Money is the second most cited reason, as 65 percent of employees leave because they
were “dissatisfied with salary and benefits.” “Poor management” was a distant third
(at 21 percent), followed by “moving to follow a relocating spouse” (18 percent).
SHERM study concluded that fair and competitive salaries and benefits were very
important. They also cited many examples of “improving workplace quality” as being
important, including employee recognition plans, fun events and contests at work, and
comprehensive communication strategies with their employees to make sure that
employees felt valued and appreciated. Comprehensive training, both for new
collectors and ongoing training for all employees, was also suggested as a powerful
retention tool. Interestingly, one of the most effective employee retention plans
suggested was to improve the initial hiring and interviewing process.
22
Chapter3: RESEARCH METHODOLOGY
Every research’s success is based on the methodology adopted by the researcher.
Right methodology gives the right direction to the research to reach at the destination
and analyze the things properly. The present study is an Endeavour to identify various
factors affecting attrition of employees and factors that contribute in the retention of
employees in the insurance sector. Insurance sector have been chosen due to the
reason that there is more job insecurity, more competition to attract talented
employees, more work load and more job stress due to various factor which causes
them to quit their job at any time.
Research Instrument: For the purpose of the study, primary data collection was
done by means of a pre-tested questionnaire which was administered to all the
respondents personally. The questionnaire is divided into two main sections.
Section A (i): This section Contains 20 statements based on likert scale, where
respondents were asked to mark their degree of agreement or disagreement
ranging from strongly agree to strongly disagree. Statements in these sections
were related to explore various factors that influence employee’s decision to
leave the job and also concerned with various factors that motivate to stick with
particular organization.
Section A (ii): This section Contains 15 statements based on likert scale,
where respondents were asked to mark their degree of agreement or
disagreement in range from strongly agree to strongly disagree. Statements in
these sections were directed to explore the effect of retention strategies on
attrition i.e. these statements assess the perception of respondents regarding
retention strategies. These statements describe which factor related to retention
is more valued to employees.
23
Section B: Covered the demographical information of the respondents,
including sex, age, marital status, working experience, etc.
Sampling Plan: Sampling plan is divided into following sub-parts:
Universe of the Study: Male and female employees working in insurance sector in
Amritsar city. The Insurance players which have been included in the study are:
1. ICICI Prudential Life Insurance 2.Future Generalii Life Insurance
3. HDFC Standard Life Insurance 4.Kotak Mahindra Life Insurance
5. Tata Aig Life Insurance 6.Birla Sun Life Insurance
7. Aviva Life Insurance 8. Metlife Insurance
9. Reliance Life Insurance 10. Bharti Axa Life Insurance
11. DLF Pramerica Life Insurance 12. Aegon Religare Life Insurance
13. Max Newyork Life Insurance 14. Bajaj Allianz Life Insurance
15. Ing Vyasya Life Insurance 16. IDBI Fortis Life Insurance
Sample size: The sample size is 100 employees, who are working in above
selected insurance companies. The data is collected through a self-designed
questionnaire.
Sampling procedure: The selection of the sampling has been done on the
basis of convenience sampling technique.
24
Statistical Tools: For structural analysis of the section A(i), A(ii) a statistical
technique called Factor Analysis has been used.
Factor Analysis: It is used primarily for data reduction and summarization. Relationships among sets of many interrelated variables are examined and represented in terms of a few underlying factors.
Software used
SPSS 7.5 software has been used in the present study.
25
Chapter 4: ANALYSIS AND INTERPRETATION
The study under consideration is divided into 2 sections. In section A there are
questions related to attrition of employees and retention strategies. So, Section A is
concerned with various factors that influence employee’s decision to leave the job and
also concerned with various factors that motivate to stick with particular organization.
Section B is concerned with demographics of the respondents.
SECTION A
This part is divided into two parts.
Section A (i)
This section is related to multiple choice questions where respondents are of the view
that which factors are more important and which are less important for the
organization. In this section questions are designed in such a way, so that respondents
can answer these questions without much cognition and can get ready of further
questions.
Section A (ii) Contains 20 statements based on likert scale which respondents mark
their preferences the various factors that influence employee’s decision to leave the job
and also various motivated factors to retain the employees in the organization.
26
SECTION B
This part contains demographical information of the respondents.
DEMOGRAPHICS:
Sex
72
28
malefemale
AGE
44
46
10
years
below 2526-3536-45above 45
27
Martial status
43
51
42
marriedunmarrieddivorcedmarried but living separetely
Education
10
68
22metricundergraduategraduatepost graduate
28
Rotated Component Matrix A1 Component 1 2 3 4 5 6
VAR00001 .287 .663 .407 -.027 .162 -.114
VAR00002
.301 .302 .346 -.400 .434 .336
VAR00003 .091 .298 .753 .094 -.115 .071
VAR00004 -.055 .459 .050 .002 .704 .318
VAR00005 .783 -.017 .157 -.140 .147 .027
VAR00006 .808 .325 -.035 .049 .058 -.009
VAR00007 -.101 .602 .016 .498 .040 .388
VAR00008 -.075 .695 -.033 .405 .143 .316
VAR00009 .002 .147 .243 .753 .195 -.044
VAR00010 .007 .124 .073 .063 .035 .892
VAR00011 -.193 -.073 .062 -.173 -.771 .088
VAR00012 .634 -.021 .067 .197 .206 .444
VAR00013 -.174 -.126 -.199 -.791 -.067 -.148
VAR00014 -.180 .020 -.413 -.300 -.446 .111
VAR00015 -.604 -.045 -.466 -.132 -.038 .268
VAR00016 .594 .170 .491 .248 .115 -.018
VAR00017 .026 -.110 .597 .420 .468 .044
VAR00018 .171 -.256 .802 .174 .103 .175
VAR00019 -.338 -.367 -.186 -.072 -.557 -.310
VAR00020 .348 .786 -.132 .036 .186 -.003
Rotation converged in47 iterations
29
Total variable explained
Table 2
Factor Eigen Values Variance % Cumulative %
Factor 1 (F1) 2.952 14.759 14.759
Factor 2 (F2) 2.703 13.513 28.272
Factor 3 (F3) 2.675 13.376 41.648
Factor 4 (F4) 2.252 11.260 52.908
Factor 5 (F5) 2.239 11.193 64.101
Factor 6 (F6) 1.720 8.600 72.700
The factor with largest Eigen values explains the highest variance and so on down to
the factors with small Eigen values. All the 6 factors extracted have been given
appropriate names on the basis of variables represented in each care. The factor F1 to
F6 has been named as:
30
F1. Clarity of current job expectation with authority, compensation and career
opportunities
F2. Work culture
F3. Feedback and communication from top leadership
F4. Training and development
F5. Career development and career
F6. Atmosphere of the organization
F1: Clarity of current job expectation with authority, compensation and career
opportunities.
Label Statements Loadings
S6 Clear sense of career plan and future .808
S5 Expectation from employees by employer .783
S12 Authority to make decisions .634
S16 Compensation for the work .594
S15 Imbalance of personal and professional life .-604
This factor has come out as the most important factor that influences decision of
employees to leave the job with Eigen value of 2.952. This table reveals that variable
“clear sense of career plan and future” has the highest loading of .808. This is
followed by “expectation from employees by employees” with loading .783. The next
variable in the table is “authority to make decisions” with the loading of .664. The
next variable in this table is “compensation for the work”, with the loading of .594.
31
The last variable in this table is “imbalance of personal and professional life” with the
loading of.-604. If the employees have clear sense of their career plans and they know
what is expected from them as an employee with appropriate authority and
Compensation, then it will help to reduce attrition. Above table shows, employees
value a lot to these variables. Proper balance between personal and professional life is
also of great importance for employees.
F2: work culture
Label Statements Loading
S20 Referring a person to apply in the organization .786
S8 Cooperation among staff .695
S1 Likeliness for coworkers .663
S7 Management of conflict .602
The factor has come out as the second most important factor that influence decision of
employees to leave the job with Eigen value of 2.703. A total of four statements were
loaded in this factor. This table reveals that variable “Referring a person to apply” has
the highest loading of .786. This is followed by “cooperation among staff” with
loading .695. The next variable in the table is likeliness of coworkers with the loading
of .663. The last variable in this table is “management of conflicts”, with the loading
of .602.
32
The work culture of organization must be supportive in order to minimize the attrition
in any organization. If there is cooperation among the coworkers and the conflicts
among employees are managed effectively then employees must have sense of
likeliness for their coworkers and they would also like to refer other persons to apply
for the job in their organization. The conflict among employees should be managed
effectively and employees in the organization should be cooperative in order to make
the work culture of organization healthier. If the work culture is healthy then
employees will be gladly ready to give their 100 percent.
F3: Feedback and communication from top leadership
Label Statements Loading
S18 Understanding of measurement of performance .802
S3 Feedback about quality of work .753
S17 Communication among staff and upper leadership .597
Factor analysis reveals that factor i.e. “feedback and communication from top
leadership” with an Eigen value of 2.675 is an important factor. This table reveals that
variable “understanding of measurement of performance” has the highest loading
of .802. This is Followed by “feedback about quality of work” with loading .753. The
last variable is “communication among staff and upper leadership” with loading
of .597.
This table shows that if employees receive feedback of their performance and they are
also aware of how their performance is measured, then communication between staff
and upper leadership is bound to be effective. This table reveals majority of the
employees receive feedback for their performance. They are in favor of continuous
performance feedback so that they can come to know about their weak points and try
to overcome those. The employees are also aware of how their performance is
measured. The communication among staff and top leadership is also there.
33
This helps in clear understanding of goals and employee will give their whole hearted
effort to the organization.
F4: workload and training
Label Statements Loading
S13 Unequal distribution of workload -.791
S9 Training and development activities .753
Factor analysis reveals that the factor “workload and training” with Eigen value of
2.252 is a significant factor. The factor “Unequal distribution of work” has highest
loading of-.791. This is followed by “training and development” with the
loading .753. The loading pattern on this table reveals that unequal distribution of
workload is not acceptable to employees and is one of the de-motivational factors for
them. It shows that they are not satisfied with their job. The high loading upon
unequal distribution of workload reveals unfair treatment to employees by the
organization, which may be the reason of attrition of the employees. High loading on
the variable training and development shows its importance to keep the employees in
the organization. With the help of training they will come to know about the recent
trends in business world, how they can improve their skills, how they can provide
better customer service and how they can make a customer a loyal customer of the
company.
F5: Career development
Label Statements Loading
S11 Lack of growth opportunities -.771
S4 Employees are valued part .704
S19 Unwillingness of employees to continue job -5.57
34
Career development has been identified an important factor with Eigen value of 2.239.
The table indicates that the variable “lack of growth opportunities” has got the highest
loading of .771. This is followed by “employees are valued part” with loading of .704.
The last variable in this table is “unwillingness of employees to continue the job” with
the loading of 5.57.
The loading pattern of above table shows the factors that influence the decision of
employee to leave the job. The table shows if there is lack of growth opportunities the
employee would not wish to continue his job in the coming time. The factor “career
development” is related to opportunities for growth and advancement and recognition
of employees as a valued part in the organization. Means if the growth opportunities
are lacking it would lead to the attrition of employees. This table also shows that
employees give the high priority to their recognition as a valued part of organization.
F6: work environment
Label Statements Loading
S10 Friendly work environment .892
“Work environment” has been identified an important factor with as Eigen value of
1.720. The table reveals only one factor that has a loading of .892. The high loading
for “friendly work environment” shows that for majority of employees, there is a high
priority for friendly working environment. If the environment of organization is
friendly, the employees are automatically motivated to give their best.
35
ROTATED COMPONENT ANALYSIS A2
1 2 3 4 5
VAR00001 .178 .314 .080 -.088 .855
VAR00002 .209 .101 .743 .135 .156
VAR00003 -.107 .823 .033 -.028 .230
VAR00004 .176 -.029 .096 .711 .002
VAR00005 -.085 -.014 .772 .010 .067
VAR00006 -.061 .801 .152 .196 .032
VAR00007 .237 .091 .625 .203 -.416
VAR00008 -.449 .285 .115 .681 -.019
VAR00009 -.023 .132 .449 .628 -.197
VAR00010 .221 .435 .452 .229 -.213
VAR00011 .842 .115 .107 -.085 .041
VAR00012 .629 -.398 .072 .345 .386
VAR00013 .741 -.158 .073 .071 .078
VAR00014 .288 .502 -.092 .531 -.108
VAR00015 .631 .245 .126 .132 -.450
36
Total Variance Explained
The factor with largest Eigen values explains the highest variance and so on down to
the factors with small Eigen values. All the 5 factors extracted have been given
appropriate names on the basis of variables represented in each care. The factor F1 to
F5 has been named as:
F1: Appropriate job with required authority and feedback
F2: Work Environment and Benefits
F3: Relationship with superior and growth
F4: Working conditions and opportunity
F5: High salary
37
Factor Eigen Values Variance % Cumulative %
Factor 1 (F1) 2.570 17.136 17.136
Factor 2 (F2) 2.234 14.892 32.028
Factor 3 (F3) 2.043 13.617 45.645
Factor 4 (F4) 1.952 13.013 58.657
Factor 5 (F5) 1.443 9.618 68.276
F1: Appropriate job with required authority and feedback
Label Statements Loading
S11 Match between job and skills .842
S13 Authority to make decisions .741
S15 Feedback .631
S12 Balance between work and personal life .629
“Appropriate job with required authority and feedback” has been identified as very
important factor with the Eigen value of 2.570. This table shows that the variable
“match between job and skills” has the highest loading with .842. , followed by
“authority to make decisions” loading with .741. The next variable in this table is
“feedback” with the loading of .631. The last variable in table is “balance between
work and personal life” with the loading of .629. This factor shows appropriate job
according to skills of employee with appropriate authority, feedback and balance
between work and professional life plays a major role in retention of employees. The
loading pattern of table reveals that employees value a lot to work and personal life
balance, feedback and authority to make decisions. A match between job and skills of
employees is most valued variable in this table.
F2: work environment and benefits
Label Statements Loading
S3 Good work environment .823
S6 Hike in compensation and fringe benefits .801
S14 Promotion .502
38
“Work environment and growth” has been identified as very important factor with the
Eigen value of 2.234.this table shows that the variable “good work environment” has
the highest loading with .823 followed by “Hike in Salary and fringe Benefits”
loading with .801. The Last variable in this table is “promotion” with the loading
of .502.The loading pattern of table reveals that employees value a lot to good work
environment and opportunity for growth. The variable Hike in compensation and
fringe benefits is also given due consideration by employees. If employees are getting
the promotions, there is hike in their salary and perks it shall conduct a good work
environment with the possibility of growth for employees. So it shall lead to retention
of employees.
F3: Relationship with superiors and Growth
Label Statements Loading
S5 Healthy superior subordinate relationship .772
S2 Job security .743
S7 Training and development .625
The factor analysis has revealed that factor F3 “relationship with superiors and
growth” is most important with an Eigen value 2.043. The table shows that variable
“Healthy superior subordinate relationship” has the highest loading of .772 that shows
this is one of the most important variables to retain the employees. This is followed by
variable “job security” with Loading .743. The last variable in this table is “training
and development” with loading .625.The loading pattern of above table reveals that
the employees value a lot to healthy superior subordinate relationship. If there is good
superior subordinate relationship then the employees have a sense of job security.
Helping employees in their growth like providing them training and development
helps organization to retain employees.
39
F4: working conditions and opportunities
Label Statements Loading
S4 Work with latest technology .711
S8 Stock options .681
S9 Recognition .628
S14 Promotion .531
“Working condition and opportunities” has been identified an important factor with an
Eigen value of 1.952. The variables forming this factor with respective labels and
loading are shown in this table. The table indicates that the variable “work with latest
technology” has got the highest loading of .711.this variable is followed by the
variable “stock options” with loading of .681.the next variable in the table is
“Recognition of employees” with the loading of .628. The last variable in this table is
“promotion of employees” with the loading of .531. The loading pattern of this table
shows the working conditions provided to employees has an impact on their retention.
If the employees are given opportunities like work with latest technology, stock
options and promotions; then they will feel recognized part of organization and all this
shall lead to the retention of employees.
F5: High salary
Label Statements Loading
S1 High salary .855
Factor analysis reveals that the Eigen value of f5 “High Salary” is 1.443. In this table
there is only one factor “High salary “with the loading of .855. The high loading on
this factor shows, it is a very important motivator which helps them to work more and
keep them in the organization, it means higher salary than industrial standards is the
important factor to retain the employee in the organization.
40
Q1: The organization provides a creative and challenging job
Response PercentagesStrongly Agree 50%Agree 20%Neutral 10%Disagree 15%Strongly Disagree 5%
41
50%
20%
10%
15%5%
Strongly Agree Agree Neutral Disagree Strongly Disagree
Interpretation: From the above discussion it is clear that majority of the respondents are
strongly agree(50%) that the organization provides a creative and challenging job and only
5% respondents are strongly Disagree.
Q2: I receive feedback about quality of my work
Response PercentagesStrongly Agree 50%Agree 20%Neutral 10%Disagree 15%Strongly Disagree 5%
42
50%
20%
10%
15%5%
Strongly Agree Agree Neutral Disagree Strongly Disagree
Interpretation: From the above discussion it is clear that I am strongly agree (50%) that I receive
feedback about quality of my work and 5% strongly disagree.
Q3: I have a clear sense of development plan and future career prospects
in this organization
Response PercentagesStrongly Agree 60%Agree 30%Neutral 2%Disagree 5%Strongly Disagree 3%
4360%
30%
2% 5% 3%
Strongly Agree Agree Neutral Disagree Strongly Disagree
Interpretation: From the above discussion it is clear that I am strongly agree (60%) that I have
a clear sense of development plan and future career prospects in this organization and 3% strongly
Disagree.
Q4: I feel fairly compensated for the work I do in this organization
Response PercentagesStrongly Agree 70%Agree 25%Neutral 3%Disagree 2%Strongly Disagree 0%
44
60%
30%
2% 5% 3%
Strongly Agree Agree Neutral Disagree Strongly Disagree
Interpretation: From the above discussion it is clear that I am strongly agree (70%) that I
feel fairly compensated for the work I do in this organization and only 2% disagree.
Q5: Conflict among employees is managed effectively
Response PercentagesStrongly Agree 40%Agree 30%Neutral 10%Disagree 10%Strongly Disagree 10%
45
70%
25%
3% 2%
Strongly Agree Agree Neutral Disagree Strongly Disagree
Q6: I have clear understanding of how my job performance is measured
Response PercentagesStrongly Agree 55%Agree 32%Neutral 10%Disagree 3%Strongly Disagree 0%
46
40%
30%
10%
10% 10%
Strongly Agree Agree Neutral Disagree Strongly Disagree
Interpretation: From the above discussion it is clear that majority of the respondents are strongly agree(40%) that the Conflict among employees is managed effectively and only 10% respondents are strongly Disagree.
Interpretation: From the above discussion it is clear that I am strongly agree (55%) that I
have clear understanding of how my job performance is measured and only 3% disagree.
Q7: Increasing the compensation packages and fringe benefits periodically can effectively tackle attrition
Response PercentagesStrongly Agree 75%Agree 20%Neutral 3%Disagree 1%Strongly Disagree 1%
47
55%32%
10% 3%
Strongly Agree Agree Neutral Disagree Strongly Disagree
Interpretation: From the above discussion it is clear that majority of
respondents are strongly agree (75%) that Increasing the compensation packages and fringe benefits periodically can effectively tackle attrition and only 1% are strongly disagree.
Q8: Salary structure which is higher than industrial standards will help to control
attrition
48
75%
20%3% 1% 1%
Strongly Agree Agree Neutral Disagree Strongly Disagree
Response PercentagesStrongly Agree 55%Agree 32%Neutral 8%Disagree 3%Strongly Disagree 2%
Interpretation: From the above discussion it is clear that majority of respondents are
Strongly agree (55%) that Salary structure which is higher than industrial standards will
help to control attrition and only 2% are strongly disagree.
Q9: Healthy superior subordinate relationship can control attrition
Response PercentagesStrongly Agree 70%Agree 20%Neutral 5%Disagree 3%Strongly Disagree 2%
49
55%32%
8% 3% 2%
Strongly Agree Agree Neutral Disagree Strongly Disagree
Interpretation: From the above discussion it is clear that majority of respondents strongly
agree(70%) that healthy superior subordinate relationship can control attrition and only 2% are
strongly disagree.
Q10: Training and development program play an important role in retaining employees
50
70%
20%
5%3% 2%
Strongly Agree Agree Neutral Disagree Strongly Disagree
Response PercentagesStrongly Agree 60%Agree 20%Neutral 10%Disagree 5%Strongly Disagree 5%
Interpretation: From the above discussion it is clear that majority of respondents strongly
agree(60%) that training and development program play an important role in retaining employees
and only 5% are strongly disagree.
Q11: Providing employees proper recognition of their work is an important tool
51
60%20%
10%5%
5%
Strongly Agree Agree Neutral Disagree Strongly Disagree
to reduce attrition
Response PercentagesStrongly Agree 60%Agree 20%Neutral
10%Disagree 5%Strongly Disagree 5%
Interpretation: From the above discussion it is clear that majority of respondents strongly
agree(60%) that providing employees proper recognition of their work is an important tool
to reduce attrition and only 5% are strongly disagree.
Q12: Proper feedback at regular intervals to employees helps in retaining employees
52
60%20%
10%5%
5%
Strongly Agree Agree Neutral Disagree Strongly Disagree
Response PercentagesStrongly Agree 65%Agree 25%Neutral 5% Disagree 3% Strongly Disagree 2%
Interpretation: From the above discussion it is clear that majority of respondents strongly
agree(65%) that proper feedback at regular intervals to employees helps in retaining
employees and only 2% are strongly disagree.
53
65%
25%
5%3% 2%
Strongly Agree Agree Neutral Disagree Strongly Disagree
Chapter 5: CONCLUSION
The present study is based on primary data collected from the employees of Insurance Industry in Amritsar city. The study attempts to find out the scope provided by the present jobs of the respondents to use the various work related characteristics like compensation, cooperation, work environment, growth opportunities, authority, recognition, promotion, job security etc. experienced by the employees during their jobs. The data was collected through personal interviews by using a questionnaire containing closed ended questions whose responses were based on 5 point likert scale (1 being strongly agree and 5 being strongly disagree). It contained the factors related to attrition and retention of employees. After the analysis of the survey I have found that there are mainly six factors that influence decision of employees to leave the organization. There are also other five factors helping the employees to a great extent to stay in the organization. According to the analysis lack of growth opportunities, unequal distribution of workload, work life imbalance are most determining factors causing attrition of employees. Work environment, job security, salary, recognition, promotion are valued a lot by the employees for the purpose of retention. The successful organizations realize that employee retention and performance management are integral to sustain their leadership and growth in the marketplace. The organizations are practicing and adopting various techniques and strategies to retain their talent as attrition can deter the performance and profitability of any organization. So the organization should focus intelligently on the employees and their needs and thus try to retain them by providing them with the incentives which are most suitable to them. Today organizations are investing a lot to make employees feel like home, comfortable and happy and thus retained with the organization and minimize attrition. All the reasons for which employees leave, should be removed and the atmosphere of trust be created in organization in order to ensure progress.
54
Limitations Of The Study
The limitations of the study are as follows:
1) The accuracy of the results is limited to the reliability of the tools of
investigation and analysis of the data.
2) The study confines to Amritsar city only. The findings of this study may not be
representative of the entire population.
3) The probability of sampling error can’t be ruled out as the samples are drawn
by convenience sampling.
4) The study is based on a pre-designed questionnaire, so there is a possibility of
error due to gap between the truth and observation.
5) Poor response from some of the respondents also adds to ineffective results.
6) Some questionnaires had to be ignored due to incomplete or invalid
information.
55
SUGGESTIONS/RECOMMENDATION
As per our study employees leaves the job because of personal and professional
life imbalance. So in order to control attrition of the employees, organization
should try to balance their personal and work life.
The study also reveals that another reason for employees to leave the job is
unequal distribution of work. So we recommend that organizations should
divide the work fairly and equally so that the load of work should not be with
only few persons.
The study about factors influencing attrition of employees reveals that the
major reason for employees to leave the job is lack of growth opportunities. So
organizations should provide their employees ample growth opportunities so
that they can reach at higher positions during their careers.
The study about factors that helps organization to retain their employees
reveals that if employees are given job matching their skills with appropriate
authority and feedback, it will help organizations to retain their employees. So
organization should provide their employees appropriate job with proper
authority and feedback.
It is also found that employees value a lot to good relationship with superiors
and growth. So if relationship with superiors is good and ample growth
opportunities are there, employees will feel job security. So good relationship
with superiors, training and development and job security should be provided
to employees to retain them.
Study also reveals that to retain employees working conditions should be good.
So organization should provide their employees recognition, promotion, stock
options and opportunity to work with latest technologies.
It is also recommended that organization should provide salary hike and fringe
benefits to retain the employees.
56
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WEBSITES
http://www.hindu.com/biz/2008/07/14/stories/2008071450111700.htm
http://www.businessdictionary.com/definition/attrition.html
http://wordnetweb.princeton.edu/perl/webwn?s=attrition%20rate)
http://www.wisegeek.com/what-is-an-attrition-rate.htm)
http://www.tvrls.com/research_and_publication2.php?article_id=1
http://www.indianmba.com/Faculty_Column/FC404/fc404.html
http://www.qaiindia.com/news room/dilemmas.htm
http://www.bpoindia.org/research/attrition-rate-big-challenge.shtml
http://www.citehr.com/102931-who-responsible-attrition.html
www.zdnet.com.au
http://retention.naukrihub.com/importance-of-employee-retention.html
http://www.nobscot.com/library/retention.cfm
http://www.chillibreeze.com/articles/AShortWhitePaper.asp
http://www.isquare.com/turnover.cfm
http://www.webpronews.com/expertarticles/2006/07/24/employee-retention-
what-employee-turnover-really-costs-your-company
http://retention.naukrihub.com/attrition-rate.htm
http://www.thehindubusinessline.com/ew/2004/08/23/stories/
2004082300080100.htm
http://www.citehr.com/36131-attrition.html
http://retention.naukrihub.com/benefits-of-attrition.html
http://www.employee-retention-guide.com/Employee-Retention-Plan.pdf
http:)//www.nfib.com/object/3488557.html
http://retention.naukrihub.com/importance-of-employee-retention.html
http://www.pr.com/press-release/43692
www.mintrac.com.au/files/newsletter/research%20turnover%20and%20retention%20.pdf
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Annexure
Dear Respondent, I am Sania Gupta, MBA (HRM) Trainee, Swami Satyanand College of Management And Technology, Amritsar. I am pursuing a survey on “Attrition in Insurance Industry” .The information provided by you will be used for academic purposes only and will be kept fully confidential. Please spare sometime and respond the following questions.
Please tick the appropriate option with respect to your level of agreement
with the statements given below using the scale ranging from Strongly
Agree (SA), Agree (A), Neither agree nor disagree (NAND), Disagree (D),
Strongly Disagree (SD).
Statements SA A NAND
D SD
I like the people I work withThe organization provides a creative and challenging jobI receive feedback about quality of my workI feel a valued part of the organizationI know exactly what is expected from me as an employeeI have a clear sense of development plan and future career prospects in this organizationConflict among employees is managed effectivelyThe spirit of cooperation among staff is highOrganization provides regular training and development activitiesThe atmosphere of organization is generally friendlyOrganization do not provides valuable growth opportunities Organization provides reasonable authority to make necessary decisionsThe workload in the organization is not distributed equitablyI often think about seeking employment elsewhere I am unable to balance my personal and professional life I feel fairly compensated for the work I do in this organizationCommunication among staff and upper leadership is effective in my organizationI have clear understanding of how my job performance is measuredI would not like to continue my job in this organization for next two yearsI would like to refer a friend to apply for a job in this organization
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Please tick the appropriate option for the following questions that deal
with controlling attrition.
Statements SA A NAND
D SD
Salary structure which is higher than industrial standards will help to control attrition
SA A NAND
D SD
Job security is an important factor for retaining employeesGood work environment provided by organization can effectively tackle attritionGiving an opportunity to work with latest technology may facilitate reduction in attritionHealthy superior subordinate relationship can control attritionIncreasing the compensation packages and fringe benefits periodically can effectively tackle attritionTraining and development program play an important role in retaining employeesStock option provided by organization helps in retaining employeesProviding employees proper recognition of their work is an important tool to reduce attrition Providing employees proper authority helps in retention of employeesProviding employees the job that they can do best is an important tool to reduce attritionHarmony between personal and professional life helps in reduction of attrition Including employees in decision making helps in retaining employeesPromoting employees from within company helps in reducing attritionProper feedback at regular intervals to employees helps in retaining employees
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Demographic Profile
Please complete the following information. This information will only be used for statistical
purposes only.
Age ( ) Below 25 Years ( ) 26-35 years ( ) 36-45 years ( ) 46-55 years ( ) above 55
years
Sex ( ) Male ( ) Female
What is your length of service with the organization ________________________
Total family salary per month
( ) less than 15000 ( ) 15001-25000 ( ) 25001-35000 ( ) 35001-45000 ( )
45001-55000 ( ) above 55000
Marital status
( ) married ( ) unmarried ( ) divorced ( ) married but living separately
Educational background
( ) metric ( ) under graduate ( ) graduate ( ) post graduate ( ) doctorate
(I am highly thankful for your cooperation)
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