role of management towards employee retention in present scenario, contributed by: tweena pandey

ROLE OF MANAGEMENT TOWARDS EMPLOYEE RETENTION IN PRESENT SCENARIO 1

[Tweena Pandey, Lecturer & Member of Editorial Board, Deptt. Of Management, Uttaranchal Institute of Management (UIM), Dehradun, Uttrakhand]

“ROLE OF MANAGEMENT TOWARDS EMPLOYEE RETENTION IN PRESENT

SCENARIO

Contributed by:

Mrs. Tweena Pandey

Lecturer, Management, Deptt.

Uttaranchal Institute of Management



Abstract:

The motive of this research is primarily to augment my skills & abilities in the field of Human

Resource that cannot only gain the people employed but can also offer my country including

global economy, a fresh & in-depth vision especially in relation to the upcoming argument of

Employee- Retention trend in modern Indian Organization‟s work culture.

This study will verify whether the existing research works that are especially based on Role &

Significance of Organizational Culture as well as supervisor‟s attitude towards employee-

retention, are still applicable to a remarkable extent according to the present scenario of an

Indian companies. Secondly, it is an attempt to extract & report some more possible corrective

measures as the preventive options especially under ongoing “DEFLATIONARY

PRESSURES”, due to which, not only the economic levels of India are being affected, but the

downsizing is also going on in other countries as well. This research would also be an attempt

upon “Talent- Management”, under such a crisis in relation to the work culture of different

organizations. Besides, it intends to throw light upon the vexed issue of “Employee Attrition”,

which is being managed diplomatically by inducing the employees to voluntarily leave the

organization by alluring them through extra financial benefits allowed to them. It will also be a

positive way of taking an “AFFIRMATIVE” response from employees‟ end.

Key Words:- Deflationary Pressures, Talent Management, Employee Attrition.



“ROLE OF MANAGEMENT TOWARDS EMPLOYEE RETENTION IN PRESENT

SCENARIO:- (A Study Based on Automobile Sector)”

INTRODUCTION

It has generally been observed that majority of human capital involving companies of western or

developed countries have adopted, the effective and updated measures to overcome and resolve

the problems in relation with increasing “Employee Attrition”, specifically originated due to

deficiencies in Organization‟s Work Culture. As well as the lack of the supervisor‟s tendency

and skills to handle and manage their concerned subordinates and employees, which is

noticeably causing “The Employee Turnover” either due to the feeling of dissatisfaction in

regard with their concerned work culture or due to the psychological hammers of frustration and

disillusionment occurred among them in regard with their non- appreciable superior –

subordinate relationship as well as their dissatisfactory recognition status and support.

Thus, the main focus of the study is to examine the existing measures to overcome such a

problem, immensely, and also in support with that, finding out some more possible & effective

options that can, up to a considerable extent, influence the work culture, as well as supervisors,

concerned with the productive organizations of the developing countries, like India to promote

and up- bring the other favorable alternatives such as “Talent/ Employee Retention” or say

“Aptitude Management” of their efficient Employees so that, the probable Two- Way loss, i.e.

the Productivity & Profitability Loss on company‟s part, as well the unavoidable loss i.e. Job &

Motivation Loss on employee‟s part can work out effectively.

AIM & OBJECTIVE OF STUDY (Need for Study):

The motive of this research is:

1. Primarily on verifying whether the existing research works that are especially based on Role &

Significance of Organizational Culture as well as supervisor‟s attitude towards employee-

retention, are still applicable to a remarkable extent according to the present scenario of in Indian

companies.

2. Secondly, it is an attempt to extract & report some more possible corrective measures as the

preventive options especially under ongoing “DEFLATIONARY PRESSURES”, due to which,



not only the economic levels of India are being affected, but the downsizing is also going on in

other countries as well.

3. This study is also an attempt to initiate “Talent- Management”, under such a crisis in relation

to the work culture of different organizations.

4. Besides, it intends to throw light upon the vexed issue of “Employee Attrition”, which can be

managed diplomatically by inducing the employees to voluntarily leave the organization by

alluring them through extra financial benefits allowed to them.

5. It will also be a positive way of taking an “AFFIRMATIVE” response from employees‟ end.

Thus, not only from the Employee‟s perspective, this revision will also lay down the grounds for

possible alternatives from the Employer‟s perspective as well.

These grounds will provide the possible measures to the organizations & employees to deal with

the issues of Retention during Recession.

LITERATURE REVIEW:

Up till now, there are numerous research works & studies, have been made by the respective

researchers, that influence my research motive to this stage, such as Margaret A. Deery & Robin

N. Shaw (1999) reported that much of the research has focused on isolating the causes of

employee turnover and devising strategies for employee retention. Little attention, however, has

been given to the impact of high turnover rates on the culture of an organization. In context with

case of Indian Organizational Structure, Prof. Lichia Yiu, Ed.D. & Prof. Raymond Saner, Ph.D.

(2008) examined that Employee turnover increased over the last years due to the strong growth

of the Indian Economy. The impact of this economic buoyancy has affected all economic sectors,

including the traditional sectors. However, the low skilled employees show lower turnover rates

and the same accounts for employees with more years of service in the same company. “Before

one attempts to seek a comprehensive solution to the problem of retention, it may perhaps be

proper to analyze the causative factors that result in heavy migration of scarce Human

Resources”(Prof. (Ms) Meenakshi Gupta- 2003). The study of Role of Organizational Culture

towards Employee Retention is also influenced by the observation of Robin N. Shaw (1999),

according to whom, “Much of the research has focused on isolating the causes of employee

turnover and devising strategies for employee retention. Little attention, however, has been given

to the impact of high turnover rates on the culture of an organization.” In relation with



“Employee or Job Turover”, Prof. Lichia Yiu, Ed.D (2008) reported that an important distinction

needs to be made between “employee turnover” versus “job turnover”. Employee (worker)

turnover reflects employees' transitions from one job to another. For instance, when an employee

stops working at one company to either leave the labor market or takes a job at a different

company. Job turnover, in contrast, reflects job creation and job destruction such as by a new

software company opening up a new office in Silicon Valley and hiring ten employees.

According to Shachi Kant Sharma (2009), “Retention is not merely a scheme but a strategy and

should address the functional turnover.” Stressing upon the seriousness of Employee- Retention,

Jack J. Phillips & Adele O. Connell, in their voluntary edition “Managing Employee Retention-

A Strategic Approach” quoted that During the past decade, employee turnover has become a

very serious problem for organizations. Managing retention and keeping the turnover rate below

target and industry norms is one of the most challenging issues facing business. In his article

“The Key to Managing Attrition, Abhay Valsangkar visioned that “The last few years‟ have

witnessed alarming rates of employee churn and the modern world has termed this employee

turnover as „Attrition‟. The decision of ending association lies solely with employees but the

organization plays a major role in decision-making. Location preference, work environment,

monetary dissatisfaction or personal priorities are some of the various reasons for employee

turnover.

Attrition becomes a serious concern for organizations when it starts adversely impacting day-to-

day efficiency and business continuity. Undoubtedly it is a threat to productivity, knowledge,

expertise and business relationships, resulting in significant loss of investment incurred in

recruitment and training of employees.” Sheridan, John E. (1992), in his publication, “Academy

of Management Journal” reported that the variation in cultural values had a significant effect on

the rates at which the newly hired employees voluntarily terminated employment. The

relationship between the employees' job performance and their retention also varied significantly

with organizational culture values.

RETENTION:- THE TERMINOLOGY

What is Retention exactly?

After the process of recruitment, a major challenge that managers of the concerned organizations

are facing is “TALENT- RETENTION”.



Derek Stockley (1996-2010), in his article “Talent Management concept- definition &

explanation”, has defined the term Talent Management as “A conscious, deliberate approach

undertaken to attract, develop and retain people with the aptitude and abilities to meet current

and future organisational needs”. According to him talent management involves individual and

organisational development in response to a changing and complex operating environment. It

includes the creation and maintenance of a supportive, people oriented organization culture.

As during the last decade, since the job hopping has become a frequent & common phenomenon

opted by the efficient or average performers and work force, either by will or by enforcement of

their respective employers, thus, the subsequent “efficiency gap” is being witnessed these days,

especially in relation to the pre- estimated and actual work standards availed by the employers

via their respective staff members.

The main reason analyzed behind this situation is that too much concentration of employers

towards the accomplishment of their own targets & mutual interests, is generating a pessimistic

sense of self centered approach among them, due to which they are ignoring the interest of their

employees in regard with their fiscal status nurture, their skill enhancement, morale boosting,

knowledge management & settlement of their common disputes. This attitude of employers

towards their employees, subsequently waiving- off the productive “Talent Retention” tool, out

of the corporate concepts, giving rise to day by day increase in rate of “Employee Attrition due

to Irritation” .

EMPLOYEE RETENTION IN TODAYS CORPORATE SCENARIO

Employee Retention involves captivating measures to support employees to maintain their

association with the organization for the maximum period of time, so that the cost that may

oftenly & pointlessly incurred in the process of recruitment & selection of employees, can be

curtailed and reduced. Corporate Culture is facing a lot of problems in employee retention these

days. Hiring conversant people for the job is essential for an employer. But retention is even

more important than hiring. There is no scarcity of prospects for a talented person. There are

many organizations, which are looking for such employees. If a person is not pleased by his

current job, he may switch over to some other more suitable job, In today‟s environment, it

becomes very important for the organizations to retain their employees rather than waiving- off



the employees from their jobs. The top organizations are on the top only and only since they

value their human resources, their skills, potentials & their aptitude to perform. They also know

how to keep them jelled to the organizations. Employees stay and leave organization for

whatsoever reason, but the main thing is that the employers must appreciate these reasons

properly so that they timely opt & practice the Retention Measures accordingly.

WHY RETENTION??

Stockley had also pointed certain specific importance in regard with the Talent Management

Approach, and that are as follows:

Recruitment - ensuring the right people are attracted to the organisation.

Retention - developing and implementing practices that reward and support employees.

Employee development - ensuring continuous informal and formal learning and

development.

Leadership and "high potential employee" development - specific development

programs for existing and future leaders.

Performance management - specific processes that nurture and support performance,

including feedback/measurement.

Workforce planning - planning for business and general changes, including the older

workforce and current/future skills shortages.

Culture - development of a positive, progressive and high performance "way of

operating".

UPON WHICH ASPECTS A COMPANY SHOULD FOCUS??

Companies should focus upon the following aspects while practicing process of employee

retention:

Preparation Ahead: Where today, when due to any reason, an employee may try to leave the

organization, the HR manager has to be quiet universal & sensitive to such moves and become

conscious of the job requirement. The employees may be advised not to leave as we may

consider not only those who are appearing for employment but also those who are employed and

fit our needs well could be counseled to make a job move.

Transparency in job necessities: Since work analysis & designing provides the base to the job

descriptions & specifications. The format of job description must be quiet clear, simple, specific

and adaptive, so that an employee may easily & effectively understands his responsibilities &

duties within an organization.



Recognize a good Source of Recruitment: Since the level of competition is increasing day by

day, the critical analysis of the selection of the best source of recruitment out of the available

alternatives has became a task of priority these days. The suitable example of sources of

recruitment adopted by the present corporate entities are classified as reference groups, job-

portals (paid/ unpaid), placement consultancies, etc, that is significantly assisting the employees

in the cost curtailing & time saving techniques.

Screening & Interviewing: As we all know that even a single wrong employee selection, can

turn into a long term liability for the employers. Thus if an employer recognize & practice the

justified and thorough screening and interviewing procedure, which starts with the initial stage of

call for vacancy, then for the long term perspective, he can save lot much of time, cost & energy

of his organization. It is obvious that for this attempt, a recruiter must be very peculiar and

foresighted in special context with protecting the long turn interest of hi concerned organization.

Granting Challenging work: As part of rooting the successful staffing patterns, it is the core

responsibility of the top management, to make provision for sustainable but also challenging

work- atmosphere to enhance human competiveness among the intra (department to department)

as well as inter (industry to industry) network of employee staff in such an healthy way, so that

without hindering any individual or organizational interest, it can generate the positive &

productive flow of compatible competition among different hierarchical patterns, full of

enthusiasm.

Focus on Compensation and working condition: To manage the workforce effectively,

employers must focus upon regulating the salary structure of its personnels in a way to justify the

employee‟s skilled or unskilled labour as well as to the cost incurred by an employer over its

human capital management.

On the other hand, high-quality infrastructure, support systems, etc. go a long way in attracting

& retaining an employee.

RETRENCHMENT

Since the main aim of this study is to draw attention and disparage certain vicious features of

retrenchment practice and swap them with the sensible inference of retention process, it is better

to understand the term retrenchment too.



RETRENCHMENT DEFINED:

Under Section 2 (00) of the Act, the term retrenchment is defined as follows:

“Retrenchment means the termination by the employer of the services a workman for any reason

whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not

include:

1. voluntary retirement of the workman; or

2. retirement of the workman or reaching the age of superannuation if the contract of

employment between the employer and the workman concerned contains a stipulation in that

behalf; or

3. termination of the service of the workman as the result of the non- renewal of the contract of

employment between the employer and the workman concerned on its expiry or of such contract

being terminated under a stipulation in that behalf contained therein; or

4. termination of the services of a workman on the ground of continued ill- health”.

WHY RETRENCHMENT??

Retrenchment is of special importance to small firms during recession (Pearce and Robbins

1994; Robbins and Pearce 1993). The business press advises firms in industries where profits

rise and fall with the general business cycle (hereafter called procyclical) to use retrenchment as

a response to poor macroeconomic conditions (McLaughlin 1990). The alternative

recommendation from the business press is to alter the scope of the firm (Altany 1991a; 1991b),

but a small firm faces a higher level of undiversified risk; its success and survival are tied to its

core business (Heany 1985; Ang 1991). Other strategies such as divesting a strategic business

unit, diversifying into a more stable business, or smoothing operating distress with short-run

financing from a parent company are not generally available to the small firm. Also, the potential

confluence of personal and firm income and the weakening of limited liability makes recession

survival very important to small businesses and their owners (Ang 1992). Therefore, it would

seem that small firms need to understand retrenchment as a possible response to poor

macroeconomic conditions (Robbins, D. Keith (1998);”Retrenchment among small

manufacturing firms during recession”; “Journal of Small Business Management”).



The following are the essential ingredients of retrenchments defined in Section 2 (oo) of the Act:

1. There must be termination of services of a workman by the employer.

2. The termination of services must be on the ground of surplus labor.

3. The service, which is terminated, must have been capable of being continued.

4. The termination of service may be for any reason whatsoever but it should not be

actuated by any motive of victimization or any unfair labor practice.

5. The termination of service must be of surplus labor or staff in a continuing industry. Thus

termination of service of workman on the closure of the business is not retrenchment.

6. The termination of service of the workman must be for proper reasons such as for

economy, rationalization in industry, installation of new labor saving machinery or any

other industrial or trade reasons.

7. The termination of service must not fall within the exclusion clause of the definition,

such as voluntary retirement, retirement on reaching the age of superannuation and

termination on the ground of continued ill health etc.

A RELEVANT CASE STUDY OF RETRENCHMENT DURING RECESSION

PERTAINING IN MUL:

“The 1995 incentive scheme in MUL was operational for a period of four years with effect from

1st April, 1995. The management of MUL was keen to keep the employee costs in check to retain

the competitiveness of MUL in a highly competitive market while making the new incentive

scheme. MUEU, on the other hand, has been opposing the new method of calculating the

incentive. The Union representatives and the MUL management held a meeting on 23rd

September, 2000 to consider the management's proposal for the new incentive scheme but no

agreement could be reached. As the matter could not be resolved and the production in the

factory was getting affected, the management on 11th

October, 2000 decided to notify the new

incentive scheme to bring normalcy in the operations. Management has also sought a Good

Conduct Undertaking from workmen before entering the factory with effect from 12th

October,

2000. MUEU had sought ad-interim injunction from the Civil Court against Good Conduct

Undertaking, but the Court dismissed the request. MUL has dismissed and terminated the

services of 44 workmen and 21 trainees and suspended another 10 workmen since the start of the

agitation. There had been two unfortunate incidents of death involving MUL personnel on 17th

and 18th

October, 2000. The MUEU had alleged that high-handedness on the part of the

management resulted in these two incidents. The management of MUL has claimed that they

have nothing to do with it.” “Situation arising out of labour unrest in Maruti Udyog Limited and



steps taken by the Government in regard thereto- Calling Attention- Synopsis of Debates- Lok

Sabha (http://parliamentofindia.nic.in/lsdeb/ls13/ses5/29112k.htm).

RETRENCHMENT DRAWBACKS:

“Retrenchment may create demoralization, dampen organizational productivity and

increase voluntary retrenchment, discourage the organizations‟ most talented and productive

members who will end up leaving the organizations (Behn, 1980) and Standing and

Tolkman (1991) warn that the introduction of voluntary retrenchment arrangements may

impose considerable financial burdens on the organisation. Wilburn and Worman (1980)

say that retrenchment threatens one‟s faith in the value of his contribution to the

organisation and sense of control over the future.

Retrenchment causes industrial unrest. Biller (1980) notes that people whose status,

income, and future are dependent on the programs that employ them will inevitably resist

the change. This is further enhanced by trade unions, which resist un-called-for layoffs.

Wilburn and Worman (1980) says that further resistance may come from members of

management who have spent time developing policies and programs and whose end may not

be seen. Innovation might be dampened because of retrenchment (Biller, 1980).

RETENTION DURING RECESSION:

“Employee retention is always important, but it is especially important in a difficult economy.

Obviously, there‟s a lot of attention being given to employees who are leaving organizations due

to layoffs and its connection to the economy. But there are also the individuals who remain (also

known as the “survivors”) and, most importantly, the people who are qualified, high-performers

that a company needs in order to accomplish anything on a day-to-day basis. Many companies

offer knowledge-based services, so it‟s important for these companies to take a closer look at

who their talented people are, what they‟re bringing to the company and make sure they‟re

engaged and performing at a high level. This has been difficult recently, however, due to the

economy. During a difficult economy, employers often forget how important communication

with employees is and start to lack communication. Generally, with respect to each business‟s

situation, failure to involve your employees in business decisions (by communicating to them)

can cause people to feel disconnected. This is especially true for high-performing employees

http://parliamentofindia.nic.in/lsdeb/ls13/ses5/29112k.htm



(Rick Gibbs, 2009, ”Employee Retention is Especially Important During a Recession”, “HR and

the City”)”. Gibbs also plotted the following steps, which an entrepreneur may practice for being

an effective retainer:

Engage all your employees, but specifically engage your high-performing employees.

Tell your employees how important they are to your company‟s success.

Recognize people on a day-to-day basis.

Be creative as a company and think beyond typical advancement or typical rewards for

employees.

JACKS TO SUPPORT RETENTION DECISION

Certain essentials responsible to regulate the Employee Retention decision are enumerated as

follows to support the study:

1. The Employer‟s Image over the employee influence Employee‟s retention decision.

2. The Employee‟s Image over the employer, influence Employer‟s decision of whom to

retain.

3. Supervisor‟s attitude & Organizational culture have direct and optimistic relationship

with employees‟ organizational commitment.

4. Supervisor‟s attitude & Organizational culture have direct and pessimistic relationship

with employees‟ organizational commitment.

5. The cost cutting perception influence the employer‟s decision to retain their employee‟s

especially during recession.

6. There is direct relationship of organizational culture & supervisor‟s behavior with

employee retention.

7. High satisfaction and high commitment of employees influence the employees to retain.

8. High dissatisfaction and stress discourage the employees to retain.

9. The cooperative organizational culture along with capacity & interest of supervisors to

retain their employees, influence the employees to retain.

10. The job insecurity & economic instability influence the employee‟s retention decisions

especially during recession.

11. The liquidity of skilled labour & avoidance of selection & training expenses influence the

employer‟s decision to retain their employee‟s especially during recession.

12. There is interrelationship among organizational culture and supervisor‟s attitude towards

employee retention during recession.



CONCLUSIONS

As the observations & analysis made in the latest study in relation with employee turnover,

decisions, we can state that to gain competitive advantage, even at the time of recession, the firm

needs to retain its existing resources to gain human capital advantage over the competitors, as

human capital is that work force, that can not be cloned but can only be substituted. We can also

state that infrastructure can be created and technology can be purchased, but human capital

neither can be created, nor purchased, it can only be groomed.

-----------------------------------------------------------------------------------------------------------------

REFERENCES:

Shachi Kant Sharma (2009) „Talent Management : Attracting & Retaining Critical Employees

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28-37, April 2006‟

Prof. Lichia Yiu, Ed.D.(2008) „India Employee Turnover Study‟:Research Report

Prof. (Ms.) Meenakshi Gupta (2003) „To Be Or Not To Be? A Study of Employee Turnover‟

Topic Area of Submission: Psychology (Organizational Psychology)

Margaret A. Deery & Robin N. Shaw (1999), „An Investigation of the Relationship between

Employee Turnover and Organizational Culture‟, Journal of Hospitality & Tourism Research,

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Mrs.Tweena Pandey Lecturer, Management Deptt., Uttaranchal Institute of Management, Dehradun.

Ph: 9335730966 / 9335204593

E-mail: [email protected]

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role of management towards employee retention in present scenario, contributed by: tweena pandey

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