A Project On

Retention to avoid Tension

Submitted to UNIVERSITY OF MUMBAI

Submitted By MANDAR A. BHOIR Roll No. 65

MASTERS IN COMMERCE - MANAGEMENT (Part I)

UNDER THE GUIDANCE OF:

Prof. Fukran Shaikh

RIZVI COLLEGE OF ARTS, SCIENCE, COMMERCE Bandra (West), Mumbai Academic Year 2013-2014

DECLARATION

Myself, Bhoir Mandar Ashok of Rizvi College of Arts, Science & Commerce studying M.COM-I hereby declare that I have completed this project on Retention to

avoid Tension in Academic Year 2013- 2014.

The information submitted in this project is true & original to the best of my knowledge.

DatePlace-MUMBAI (BHOIR MANDAR ASHOK)

CERTIFICATE

This is to certify that MANDAR BHOIR student of M.Com-I class, Roll No. 65 of the academic year 2013-14 studying at Rizvi College of Arts, Science & Commerce, has successful completed the project entitled Retention to avoid Tension

____________________

______________________

Prof. Furan Shaikh

Prof. Qamar Sir (M.Com Co-ordinator)

___________________

______________________

External Examiner

Dr. Farooqui M.Z (Principal)

ACKNOWLEDGMENT

I owe a great many thanks to a great many people who helped and supported me during this project.

My deepest thanks to the Guide of this project Professor Fukran Shaikh, for guiding and correcting various documents of mine with attention and care. She has taken pain to go through the project and make necessary correction as and when needed.

I would also thank my Institution and my faculty members without whom this project would have been a distant reality. I also extend my heartfelt thanks to my family and well-wishers.

Index

Introduction Employee Retention ECP model of employee retention Modern Model for employee retention Join, Stay, Leave Model Employee Retention Best Practices Attrition rate CASE STUDY- Philips Electronics India Limited Company Overview SWOT Analysis Introduction Retention-Big Challenge Retention Strategies at Philips Bibliography

Introduction
Employee Retention

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

A distinction should be drawn between low performing employees and top performers, and efforts to retain employees should be targeted at valuable, contributing employees. Employee turnover is a symptom of a deeper issue that has not been resolved. These deeper issues may include low employee morale, absence of a clear career path, lack of recognition, poor employee-manager relationships or many other issues . A lack of satisfaction and commitment to the organization can also cause an employee to withdraw and begin looking for other opportunities. Pay does not always play as large a role in inducing turnover as is typically believed.

In a business setting, the goal of employers is usually to decrease employee turnover, thereby decreasing training costs, recruitment costs and loss of talent and organizational knowledge. By implementing lessons learned from key organizational behavior concepts employers can improve retention rates and decrease the associated costs of high turnover. However, this isn't always the case. Employers can seek "positive turnover" whereby they aim to maintain only those employees who they consider to be high performers.

Employee Retention

Employee Retention is the tools and policies that are adopted by an organization to encourage employees to remain in the organization for the maximum period of time. Key employee retention is critical to the long term health and success of your business. It is important to retain the talent in the company. Retention is sometimes more important than hiring of employees.

The employee satisfaction has become an important factor for a company as well as employee. Decent salaries, bonuses and allowances are the top expectations of an employee towards the company. Additionally, challenging and interesting roles and responsibilities are also aspirations of employees. If a person is not satisfied with his job, he may leave the organization as in present corporate world, employee has number of options available for more suitable jobs. Managers readily agree that retaining your best employees ensures customer satisfaction, product sales, satisfied coworkers and reporting staff. The basic factors which makes employee retention important are:

If an employee resigns, a good time and resource is required to look for

new employees able to fulfill particular requirements. The expected level of talent and efficiency is difficult to obtain in the new

employee.

Sudden resignation of employee brings current business process to

standstill. Hence new hiring becomes immediate necessity.

The resignation can also trigger a chain reaction in other workforce to look

in the same direction of better opportunities.

At higher hierarchy level, retention is also important not to get shared

some in house information and strategies to other competitive firms.

The cost of losing talent involves the time and resources that are utilized to hire new employees. The costs are both direct and indirect. There are the direct costs to recruit and train new workforce. It is hard to get the same level of talent back, additionally for a new employee; it also takes time to adjust to new working conditions and environment resulting in low level of efficiency in early stage which results in a greater indirect costs and loss of productivity. Less obvious are the costs of maintaining morale when there are change and threats of job cuts. According to the American Management Association, the cost to replace an employee who leaves is, conservatively, 30 percent of their annual salary. For those with skills in high demand, the cost can rise to a frightening 1.5 times the annual salary to replace them.

Roger Herman, in his classic book on employee retention, has described that Employee retention involves being sensitive to people's needs and demonstrating the various strategies in the five families.

The five families are:

1. 2. 3. 4. 5.

Environmental Relationship Support Growth Compensation

These families are actually various factors that may affect the employee. To retain employees in an organization, it is important to recognize which factor is working significantly to affect employees. When the cause factor is recognized, it is easier to address the factor.

Employee retention approaches also differ at different level of operations. Since the problem differs at different levels, the solutions also differ. It is easier to provide lower

level incentives with limited resources while to provide high level benefits, higher resource and time needs to be utilized.

At lower level, the occasional gifts, scholarships for children, personalized appreciations etc help to motivate workers and employers to remain in the organization. While at higher level, approach for employee retention is various memberships, sabbatical leaves, benefits and insurance schemes etc. The highest level of employee retention strategies involve mentorship workshops, vocational counseling and personalized career guidance by experts.

ECP model of employee retention:

HOWATT consulting provides a simple model to understand the importance of employee retention. In todays economy, the bottom line in business is profits. The model use this underlined concept including employee retention in importance.

E---Employee retention and employee satisfaction. When you have satisfied employees (who are not caught up in the quagmire of bureaucracy and leave), they are more able to help the customer. C Customer retention. The more effective the customer services the greater the customer retention. P Profit.

Employee Satisfaction + Customer Satisfaction = Increased Profits The equation is simple from this point on. When we keep customers that are satisfied, and continue to add more, the corporation has increased the likelihood of increased profits. Modern Model for employee retention (ERCs retention model):

ERC or employee retention connection is the recent mission by James Rolo and Ingrid Bens to work with organizations to attract, develop and retain their most valuable resource: their employees.

It designs three basic drivers of employee retention. The basic drivers with their key attributes are:

1: Stimulating Work
Variety of assignments

Autonomy to make decisions Resources and support provided to do good work Opportunity to learn Feedback on results Understanding the significance of one's personal contributions

2: Motivational Leadership Champion change and are open to new ideas

Inspire a share vision of organization direction

Motivate and recognize contributions Develop the capabilities of others Model behavior that reflects organization values

3: Recognition & Reward

Say "Thank you" for a job well done

Reinforce desired behaviors Create an emphasis and focus on recognition Celebrate successes Build self-esteem Enhance camaraderie and teamwork

There are various reasons for an employee to leave an organization.

the job Employee does not believe that they have been given the tools needed to do

Employees feel unappreciated and there is lack of meaningful feedback

and information as to what they are doing. Many employees know that they need to be responsible for their own career planning, though it is still important for employee sto be acknowledged for what they are doing that is proactive and positive.

Employee is unclear or unmotivated to obtain the company's goals. The

corporate goals are not in line with the employees. It is important that all employees be responsible for their own goals, so that they can build them to be congruent with the company's.

Employees do not see any opportunities to grow and advance in their

positions

Employees will leave due to personality conflicts. The number one reason

employees leave is not money; it is conflict with their direct supervisor. Most personality conflicts are rooted in poor communication and a lack of communication skills focused on achieving agreement.

Employees will not stay if they are not involved in decision making,

especially if it is in their area of expertise. They see themselves as devalued in this case. Ways of retention of employees:

High salaries and incentives is the primary tool for employee retention.

Most of the companies attract the employees by paying them high salaries and other incentives time to time. Monetary packages are able to attract and retain talent, however, in long run it becomes limiting for the organization to pay huge cash.

The best and foremost HR practice to retain employees is proper and

tangible recognition and appreciation to employees for their individual performance. The tools like employeer of the year/month, best performer/trainee of the project etc are those appreciations which not only retain employees but also encourage them for better performance.

For employee satisfaction, the most important aspect to take care by the

organization is that the job profiles offered should match with individual capabilities and aspirations. This makes the employee feel satisfied and glad in his job.

Better work culture is also very important where the relationship between

employee and employer is such that individual problems and conflicts are properly addressed with time.

Excellent career growth should be provided to the employees to move on

the vertical ladder of organizational hierarchy. The most common reason for leaving the job is the expectation of higher level of responsibility and position.

Work-life balance initiatives are important. Innovative and practical

employee policies pertaining to flexible working hours and schemes, granting compassionate and urgency leave, providing healthcare for self, family and dependants, etc. are important for most people. Work-life balance policies would have a positive impact on retaining skilled employees, as well as on attracting high-calibre recruits.

Organised training, counselling and development programmes for

employees also used to motivate them for their work. Best performers ahould be encourage to share their experiences with others and guide others. The emphasis is to create the desire to learn, enjoy and be passionate about the work they do.

On the cases of talent leaving the organization, fundamental reasons for

the same need to be seeked upon. It provides the organization an opportunity to learn from possible loopholes in its own HR strategy.

Sometimes employee actually leaves its supervisor or employer rather the

organization. Reasons may be individual conflicts or miscommunication in a team. Hence The employee should be made independent to address his problems and complaints freely. Mentorship programs are employed to provide freedon to employees regarding individual contentions.

In any circumstance, the employee should never be threatened about his

job or income. Whatever be the issue, it should be shared in a mature manner and underperformance should be addressed in fruitful manner.

Employee retention and employee engagement:

Willian A kahn has given a concept of employee engagement which now a days in present competitive corporate have replaced the employee retention policy and brought it to higher level. It was termed as harnessing of organizational members. In

engagement, people employ and express themselves physically, cognitively, and emotionally during role performances. It brings high level of employee satisfaction in organization culture. When people are emotionally attached to their work, team and organization, the target of employee retention becomes easier. Additionally, it also brings high level of effectiveness in the work.

Retention Programs It is important to first pinpoint the root cause of the retention issue before implementing a program to address it. Once identified, a program can be tailored to meet the unique needs of the organization. A variety of programs exist to help increase employee retention. Career Development It is important for employees to understand their career path within an organization to motivate them to remain in the organization to achieve their personal career goals. Through surveys, discussion and classroom instruction, employees can better understand their goals for personal development. With these developmental goals in mind, organizations can offer tailored career development opportunities to their employees. Executive Coaching Executive coaching can be used to build competencies in leaders within an organization. Coaching can be useful in times of organizational change, to increase a leaders effectiveness or to encourage managers to implement coaching techniques with peers and direct reports. The coaching process begins with an assessment of the individuals strengths and opportunities for improvement. The issues are then prioritized and interventions are delivered to target key weaknesses. Assistance is then provided to encourage repeated use of newly acquired skills. Motivating Across Generations - Todays workforce includes a diverse population of employees from multiple generations. As each generation holds different expectations for the workplace, it is important to understand the differences between these generations regarding motivation and engagement. Managers, especially, must understand how to handle the differences among their direct reports.

Orientation and On Boarding An employees perception of an organization takes shape during the first several days on the job. It is in the best interest of both the employee and the organization to impart knowledge about the company quickly and effectively to integrate the new employee into the workforce. By implementing an effective on boarding process, short-term turnover rates will decrease and productivity will increase. Womens Retention Programs Programs such as mentoring, leadership development and networking that are geared specifically toward women can help retain top talent and decrease turnover costs. By implementing programs to improve work/life balance, employees can be more engaged and productive while at work.

Join, Stay, Leave Model For organizations and employers, understanding the environment is the first step to developing a long-term retention strategy. Organizations should understand why employees join, why they stay and why they leave an organization. This join, stay, leave model is akin to a three-legged stool, meaning that without data on all three, organizations will be unsuccessful in implementing a proper retention strategy.

Why employees join- The attractiveness of the position is usually what entices employees to join an organization. However, recruiting candidates only half the problem while retaining employees is another. High performing employees are more likely to retain when they are given a realistic job previews. Organizations that attempt to oversell the position or company are only contributing to their own detriment when employees experience a discord between the position and what they were initially told. To assess and maintain retention, employers should mitigate any immediate conflicts of misunderstanding in order to prolong the employees longevity with the organization. New-hire surveys can help to identify the breakdowns in trust that occur early on when employees decide that the job was not necessarily what they envisioned.

Why employees stay- Understanding why employees stay with an organization is equally as important to understanding why employees choose to leave. Recent studies have suggested that as employees participate in their professional and community life, they develop a web of connections and relationships. These relationships prompt employees to become more embedded in their jobs and by leaving a job; this would severe or rearrange these social networks. The more embedded employees are in an organization, the more they are likely to stay. Additionally, the extent to which employees experience fit between themselves at their job, the lesser chance they will search elsewhere. Organizations can ascertain why employees stay by conducting stay interviews with top performers. A stay survey can help to take the pulse of an organizations current work environment and its impact on their high performing employees. Employers that are concerned with over-using stay interviews can achieve the same result by favoring an ongoing dialogue with employees and asking them critical questions pertaining to why they stay and what their goals are.

Why employees leave- By understanding the reasons behind why employees leave, organizations can better cater to their existing workforce and influence these decisions in the future. Often times, it is low satisfaction and commitment that initiates the withdrawal process, which includes thoughts of quitting in search of more attractive alternatives. If administered correctly, exit interviews can provide a great resource to why employees leave. Typically, employees are stock in their responses because they fear being reprimanded or jeopardizing any potential future reference. The most common reasons for why employees leave are better pay, better hours and better opportunity. These typical answers for leaving, often signal a much deeper issue that employers should investigate further into. By asking relevant questions and perhaps utilizing a neutral third party

provider to conduct the interview, employers can obtain more accurate and quantifiable data. Contrary to what most organizations believe, employees often leave due to relationships with manager and/or treatment of employees and not compensation, as this is often a response that employees are uncomfortable expressing to their organization directly.[9] Retention Diagnostic is a rapid benchmarking process that identifies the costs and can help uncover what affects employee loyalty, performance and engagement.

Employee Retention Best Practices

By focusing on the fundamentals, organizations can go a long way towards building a high-retention workplace. Organizations can start by defining their culture and identifying the types of individuals that would thrive in that environment. Organizations should adhere to the fundamental new hire orientation and on boarding plans. Attracting and recruiting top talent requires time, resources and capital. However, these are all wasted if employees are not positioned to succeed within the company. Research has shown that an employees first 10 days are critical because the employee is still adjusting and getting acclimated to the organization. Companies retain good employees by being employers of choice.

Recruitment- Presenting applicants with realistic job previews during the recruitment process have a positive effect on retaining new hires. Employers that are transparent about the positive and negative aspects of the job, as well as the challenges and expectations are positioning themselves to recruit and retain stronger candidates.

Selection- There are plethora of selection tools that can help predict job performance and subsequently retention. These include both subjective and objective methods and while organizations are accustomed to using more subjective tools such as interviews, application and resume evaluations, objective methods are increasing in popularity. For example, utilizing biographical data during selection can be an effective technique. Biodata empirically identifies life experiences that differentiate those who stay with an organization and those who quit. Life experiences associated with employees may include tenure on previous jobs, education experiences, and involvement and leadership in related work experiences.

Socialization- Socialization practices delivered via a strategic onboarding and assimilation program can help new employees become embedded in the company and thus more likely to stay. Research has shown that socialization practices can help new hires become embedded in the company and thus more likely to stay. These practices include shared and individualized learning experiences, activities that allow people to get to know one another. Such practices may include providing employees with a role model, mentor or trainer or providing timely and adequate feedback.

Training and development- Providing ample training and development opportunities can discourage turnover by keeping employees satisfied and well-positioned for future growth opportunities. In fact, dissatisfaction with potential career development is one of the top three reasons employees (35%) often feel inclined to look elsewhere. if employees are not given opportunities to continually update their skills, they are more likely to leave. Those who receive more training are less likely to quite than those who receive little or no training. Employers that fear providing training will make their employees more marketable and thus increase turnover can offer job specific training, which is less transferable to other contexts. Additionally, employers can increase retention through development opportunities such as allowing employees to further their education and reimbursing tuition for employees who remain with the company for a specified amount of time.

Compensation and rewards- Pay levels and satisfaction are only modest predictors of an employees decision to leave the organization; however organizations can lead the market with a strong compensation and reward package as 53% of employees often look elsewhere because of poor compensation and benefits. Organizations can explicitly link rewards to retention (i.e. vacation hours to seniority, offer retention Bonus

payments or Employee stock options, or define benefit plan payouts to years of services) Research has shown that defined compensation and rewards as associated with longer tenure. Additionally, organizations can also look to intrinsic rewards such as increased decision-making autonomy. Though this is important, employers should not An employees relationship with his/her immediately

Effective

Leaders-

ranking supervisor or manager is equally important to keeping to making an employee feel embedded and valued within the organization. Supervisors need to know how to motivate their employees and reduce cost while building loyalty in their key people. Managers need to reinforce employee productivity and open communication, to coach employees and provide meaningful feedback and inspire employees to work as an effective team. In order to achieve this, organizations need to prepare managers and supervisors to lead and develop effective relationships with their subordinates. Executive Coaching can help increase an individuals effectiveness as a leader as well as boast a climate of learning, trust and teamwork in an organization. to encourage supervisors to focus on retention among their teams, organizations can incorporate a retention metric into their organizations evaluation.

Employee Engagement- Employees who are satisfied with their jobs, enjoy their work and the organization, believe their job to be more important, take pride in the company and feel their contributions are impactful are five times less likely to quit than employees who were not engaged. Engaged employees give their companies crucial competitive advantages, including higher productivity and lower employee turnover.

ATTRITION RATE:

Attrition rate/ churn rate is a measure of the number of individuals or items moving into or out of a collection over a specific period of time. It is a reduction in the number of employees through retirement, resignation or death.

Thus we can see that attrition rate and retention rate are very closely related and loosely Speaking attrition rate is inverse of retention rate.

Calculating attrition rate:

Attrition rate has always been a sensitive issue for all organizations. No common formula can be used by all organizations. Formula has to be designed keeoing in view the nature of business and the different job functions. However a general formula used by most organizations is:

Attrition = (No. of employees who left in the year / average employees in the year) x 100 The difference arises while calculating the values of No. of employees who left in the year and average employees in the year. Some firms may not include attrition of freshers who leave because of higher studies or within three months of joining. Various types of Attrition rates used by organizations for performance measurement are:

Fresher attrition that tells the number of freshers who left the organization

within one year. It tells how many are using the company as a springboard or a launch pad.

Infant mortality that is the percentage of people who left the organization

within one year. This indicates the ease with which people adapt to the company.

Critical resource attrition which tell the attrition in terms of key personnel

like senior executives leaving the organization.

Low performance attrition: It tells the attrition of those who left due to

poor performance.

Attrition rates in India:

The below graph shows the attrition rate of employees in different sectors

Certain facts about employee turnover:

(Source: research report on India employee turnover study by CII and CSEND CII-Confederation of Indian industries CSEND-center of socio economic development)

Managerial staff is high in regard to turnover. Executive ranks are perceived as

relatively stable. Clerical and operational workers are reported to have increased turnover as well.

Knowledge workers in todays India exhibited the highest tendency for voluntary

job change across different categories of employees.

Years of employment in the company did make a difference regarding turnover.

The highest turnover occurs between 1-4 years of employment.

Salary, career development and individual relationships are the major reasons for

employee leaving a job. Job content, recognition etc comes later.

CASE STUDY- Philips Electronics India Limited

COMPANY OVERVIEW Koninklijke Philips Electronics N.V. (Royal Philips Electronics, commonly known as Philips) is a Dutch multinational electronics company headquartered in Amsterdam. It was founded in Eindhoven in 1891 by Gerard Philips and his father Frederick. It is one of the largest electronics companies in the world and employs around 122,000 people across more than 60 countries. Philips is organized into three main divisions: Philips Consumer Lifestyle (formerly Philips Consumer Electronics and Philips Domestic Appliances and Personal Care), Philips Healthcare (formerly Philips Medical Systems) and Philips Lighting. As of 2012 Philips is the largest manufacturer of lighting in the world. Philips has a primary listing on the Euronext Amsterdam stock exchange and is a constituent of the AEX index. It has a secondary listing on the New York Stock Exchange.

Philips Electronics India Limited Philips Electronics India Limited, a subsidiary of the Netherlands-based Royal Philips Electronics, is the leading Health and Wellbeing Company. Today, Philips is a simpler and more focused company with global leadership positions in key markets of Healthcare, Lighting and Consumer Lifestyle, addressing peoples Health and wellbeing needs and aspirations as its overarching theme.

As one of the nation's most well-known and well-loved brands, Philips is a part of practically every Indian's life. With recent launch of Philips Respironics product categories in obstructive sleep apnea management and home respiratory care, home decorative lighting range and ALU range, Philips products find use in virtually every aspect of an individuals daily life 24X7 - at home, at work, on the move and at rest. Philips stands as a source of easy to use, trendy and innovative internationally acclaimed products with superior design and technology that enhance the quality of consumers' professional and personal lives.

1.

SWOT ANALYSIS

Strengths Wide range of products and features are present The products are of high quality. Sales are growing every year

Weakness Weaker Distribution network than Competition The inability to get product to market first Poor business level strategy

Opportunities Increasing industrialization of developing countries More electrification Higher demand for (sustainable and energy saving) lightning

Threats Competition Cheaper technology Economic slowdown Exchange rate fluctuations Lower cost competitors or imports

2.

INTRODUCTION

The purpose of the research is to test the applicability of two strategies, which could solve the problem of employee retention in Philips. Satisfied employees (showing the tendency to stay the company or retention). 4 Indifferent employees (Neither satisfied nor dissatisfied or indifferent). Dissatisfied (showing the tendency to quit the company or attrition)

To find out the applicability of the first retention strategy, the researcher has classified number of employees comes under the above three categories in to two other categories; the employees who prefer position titles when they change the company and employees who prefer all other benefits except position titles. To find out the applicability of the second retention strategy, the same three categories have been classified under the employees who prefer variable benefit structure and employees who do not prefer variable benefit structure. A questionnaire survey has been conducted and classified the respondents in to respective categories. Retention A Big Challenge

Fundamental changes are taking place in the work force and the workplace that promise to radically alter the way companies relate to their employees. Hiring and retaining good employees have become the chief concerns of nearly every company in every industry. Companies that understand what their employees want and need in the workplace and make a strategic decision to proactively fulfill those needs will become the dominant players in their respective markets.

The fierce competition for qualified workers results from a number of workplace trends, including: A robust economy Shift in how people view their careers Changes in the unspoken "contract" between employer and employee Corporate cocooning A new generation of workers Changes in social mores Life balance

Concurrent with these trends, the emerging work force is developing very different attitudes about their role the workplace. Today's employees place a high priority on the following:

Family orientation Quality of life issues Autonomy Social status of the job

To hold onto your people, you have to work counter to prevailing trends causing the job churning. Smart employers make it a strategic initiative to understand what their people want and need -- then give it to them. Division of the organization but it directly affects the Human Resource division as well. The organizations are competing each other to acquire the scarce talent pool. Internal advertisement simply meant to tell the employee that the organization, which they are working, is good and a company favorable comparison should be given to employees to solve the inequity they perceive. The major difference with internal advertisement is that the communication channel is different from that of marketing channels.

Description and Definition of Retention Factors

4. RETENTION STRATEGIES AT PHILIPS

Unique organizational structure strategy Creating a company-specific organization structure and position title is the crux of this theory. This will reduce the employees tendency to compare his position title and benefits with that of same in other companies. Rather than force the employee to confine his talents to structured jobs, set job titles according to the knowledge, skill and ability of the employee.If an organization possess a unique structure with position titles and its responsibilities will keep the employee concentrated in the same company rather than choosing the job in other companies. Following important factors must be present in the unique organizational structure.

a) Set Clear Expectations: When people enter in a company for the first time as an employee, he/she may have many expectation regarding the salary, work environment etc. the primary need for the employee is to yearn a decent salary to live, when this objective is fulfilled the employee will look for social status such as attractive position titles and benefits structure which satisfy the egoistic needs of human being. So the company must manage this expectation by understanding the employees perception. What is the employees attitude to other organization and its benefit structure for What are the employees expectations from employers/team-members? What are

the same position?

the parameters to measure their performance? A good communication channel present in the organization.

What will be the rewards, if the employees exceed the expected level?

If the employees are not having any expectations, how an employer is going to appraise, the employees? This must be based on some standard. The employee must have the feeling that his role is important for the company. Also his position title must be socially acceptable. It should fulfill the egoistic needs of the employee. Setting expectations initiates the process. Managers need to sit down with each employee and clearly define what's expected of them. When expectations are not clear, employees may not be in sync with their job's current demands and priorities. Setting expectations is not a once and done activity. Jobs change. Priorities change. Resources change. Managers need to revise and set new expectations throughout the year. Setting expectations revolves around the following three areas: 8
Key job responsibilities Performance factors and standards Goals

Why is a setting expectation important? Quite simply, this process can be the cornerstone of improving the motivational climate within your sphere of responsibility. If your employees know what is expected of them, it allows them to focus on results and to monitor themselves against the set standards. Environments in which expectations are not clear, or change from week to week, seldom create high-performing work groups. The three principles that should drive expectations are clarity, relevance, and simplicity.

b) Clarity: Expectations should focus on outcomes, not activities. In other words, employee achieves clarity when the employer identifies the expected results rather than the method for achieving them. Managers often make the mistake of attempting to direct the process that an employee will use rather than being clear about results.

Defining the objective often requires some thought on the part of the manager because it is easy to fall into the "activities trap." While developing a strategic plan for a department or division is a worthy activity, it does not represent an outcome. In the activities trap, developing a plan is the goal, rather than increasing your market share.

c) Relevance: The principle of relevance helps define the "why" of the assignment. If your employees have a full understanding of the project's importance, they can make adjustments as unanticipated factors crop up within the process. They probably also will be more committed to the result because they can see more easily how it fits into the big picture and how their efforts impact the company. This understanding typically is accomplished through dialogue between the manager and subordinate, which allows for a more thorough review of the situation and for feedback and discussion. This process builds good will with the employee and sets the stage for additional responsibilities. 9 d) Simplicity: Simplicity creates a sense of grounding for employees as they endeavor to carry out assignments. If managers identify the work in simple, straightforward terms, employees will find it much easier to follow through on managers' wishes. To accomplish this, a manager must identify the key message in a fashion that the employee can embrace.

e) Talent and skill utilization: Talent and skill utilization is another environmental factor your key employees seek in your workplace. A motivated employee wants to contribute to work areas outside of his specific job description. How many people could contribute far more than they currently do? You just need to know their skills, talent and experience, and take the time to tap into it. As an example, in a small company, a manager pursued a new marketing plan and logo with the help of external consultants. An internal sales rep, with seven years of ad agency and logo development experience, repeatedly offered to help. His offer was ignored and he cited this as one reason why he quit his job. In fact, the recognition that the company didn't want to take advantage of his knowledge and capabilities helped precipitate his job

search. In this case the manager can easily change the position title of the employee and include the relevant job description in the position title.

f) Fairness and equitable treatment: The perception of fairness and equitable treatment is important in employee retention. In one company, a new sales rep was given the most potentially successful, commissionproducing accounts. Current staff viewed these decisions as taking food off their tables. The employer can bet a number of them are looking for their next opportunity. In another instance, a staff person, just a year or two out of college, was given 20,000 in raises over a six month time period. Information of this type never stays secret in companies so the employer must know, beyond any shadow of a doubt; the morale of several other employees will be affected.

g) Career growth: The best employees, whom you want to retain, seek frequent opportunities to learn and grow in their careers, knowledge and skill. Without the opportunity to try new opportunities, sit on challenging committees, attend seminars and read and discuss books, they feel they will stagnate. A career-oriented, valued employee must experience growth opportunities within your organization. Variable benefit strategy

Periodical change in the benefit structure leads to increased awareness and satisfaction with the benefits. One of the purposes of benefit structure is to motivating the employee. Unfortunately continues enjoyment of the benefits leads to reduced satisfaction and motivation. This can be solved by periodical change in benefit structure, i.e. periodically introduce new benefits and remove the old benefits.

Following are the important factors present in the variable benefit structure.

a) Proper Rewarding: Proper rewarding is important for the employee to be motivated during the job.

A research reports says that in today's scenario,

70% of the employees are less motivated today than they used to be

cantly better if they wanted

to

their job. Employee Reward covers how people are rewarded in accordance with their value to an organization. It is about both financial and non-financial rewards and embraces the strategies, policies, structures and processes used to develop and maintain reward systems. The ways in which people are valued can make a considerable impact on the effectiveness of the organization, and is at the heart of the employment relationship.

b) Attracting the employees: The aim of employee reward policies and practices, if any in your organization is to help attract, retain and motivate high-quality people. Getting it wrong can have a significant negative effect on the motivation, commitment and morale of employees. Personnel and development professionals will be involved frequently in reward issues, whether they are generalists or specialize in learning and development or employee relations. Keep following parameters in mind, while designing a reward policy: 11 c) Recognition of the work: Recognition is the most cost-effective motivator. While the high cost of other rewards forces us to give them sparingly, recognition can be given any time, at very little cost. Some very ordinary items and events can be imbued with extraordinary motivational significance, far in excess of their monetary value, motivation of a pizza or movie tickets can be high if it is given with sufficient appreciation. A sincere thank you can be delivered at any place and at any time, costs absolutely nothing and can be more motivationally powerful than a substantial monetary bonus. Organizations can provide innovative recognition in an infinite number of ways. Highly motivating organizations even celebrate small successes. A health-conscious

company distributes fruit bowls to employees' work areas when key personal milestones are attained. Another company uses a more fattening approach: fresh-baked chocolatechip cookies to say thank you. Clearly the traditional "pay for loyalty" systems in most organizations need to be changed. Don't let attendance be your major criterion for rewards. Most employees resent those who only put in their time and yet receive the same reward as those who go the extra mile. Today's employees have higher expectations for what work can and should be, and they want to receive rewards that reflect their personal efforts and contributions. This is why so many companies are moving toward performance-based rewards, including performance bonuses, gain-sharing and nonmonetary recognition. Although not a panacea, companies are finding that these new reward systems do allow them to give substantial rewards to those who really deserve them. Smart organizations are looking for opportunities to reduce across-the-board entitlements, and thereby find more resources for discretionary performance-based rewards, without increasing the total cost of rewards. The Law of Rewards - "What you reward is what you get" - Is extremely powerful. No matter what your orientation materials or job description might say, it is the rewards your organization gives that communicate the real expectations. The most important question to ask in evaluating the reward system in your organization is, do the rewards we are giving elicit the performance we want? Start with the results you want to achieve and then pinpoint the types of behaviors needed to achieve them. For example: Also, don't confuse employees with too many rewards. It is better to focus rewards on the critical few behaviors and results, rather than diluting them by rewarding the trivial many.

d) Timely action: Rewards should be given as soon as possible after the performance has taken place. This is why the most successful gain-sharing programs pay employees monthly, rather than quarterly or annually as in the past. There is a well-accepted law of behavioral psychology, that if you want someone to repeat a behavior, you should positively recognize it immediately. From this law, smart supervisors and managers can learn a vital lesson: Look for any employee doing something right, right now, and recognizes it.

e) Type of reward: Rewards are as different as the people who receive them and it doesn't make sense to give rewards that recipients don't find rewarding. For example, some people prefer more pay, while others prefer more time off. A promotion might be more rewarding to one person, while a job-sharing arrangement might be more rewarding for another. Some people are excited about sports events, others about movies. Some employees would love a dinner in a romantic restaurant, others a book by their favorite author. Food, fun, education, improved work environment, gifts, travel, and family-oriented activities - the options are endless. How do you know what will be rewarding to employees? Ask them. Smart organizations are also letting employees choose their own rewards from reward menus and catalogs. Personalizing rewards shows that a company cares enough to discover what "interests" each employee, rather than just distributing generic items. It also reduces the following danger: In one organization I was visiting, an employee opened a big drawer in his desk and disdainfully showed me all the "worthless trinkets" he had collected over the years.

f) Longevity of the reward: Increase the longevity of rewards can be done in a number of ways: One of the keys to reward longevity is symbolism. The more symbolic an item is of the accomplishment, the more likely it is to continue reminding the employee of why it was given. For instance, a Tshirt of coffee mug with a meaningful inscription will continue rewarding those who wear it, or use it, long after its initial receipt. There are many tokens of appreciation I still keep on or near my desk that remind me of the joy of past accomplishments, while the monetary rewards I have received are long spent and long forgotten. Another way to increase the longevity of rewards in your organization is by using some kind of point system. Rather than rewarding each individual behavior or accomplishment, points can be awarded, which employees can accumulate and eventually trade for items from a reward menu or gift catalog. This keeps the anticipation of rewards fresh for longer periods of time. It also addresses the need for reward individualization. One company that designs motivational systems offers an electronic debit-card system to help larger

clients cope with the complexity of distributing, tracking and redeeming employees' points. Employees can use their points to purchase virtually anything they want, from sports equipment and clothing to automobiles and overseas vacations. They only caveat for such programs is to make sure that the recognition value of the rewards isn't lost because of the impersonal nature of the technology.

g) Decrease the de-motivators: Interestingly, when researchers have investigated the motivational dynamics of these workplace games, they have found that the major motivator is the playing, not the prize. Most de-motivators can be dramatically reduced by soliciting employee involvement in identifying highest-priority de-motivators and by enlisting top-management commitment to support their reduction. It is probably self-evident that considerable sensitivity is needed in the administration of any reward system. One de-motivator that is probably endemic in any reward system modification (especially as an organization moves from entitlements to more performancebased rewards) is a sense that something is being taken away. Employees need to be educated about the reasons that this is being done, understand the ultimate benefits to them and the organization, and should probably have some input into the change process. 14 h) Avoid perception errors: To avoid the perception of unfairness, it is important, first and foremost, that the process for allocating rewards is viewed by employees as being impartial. This requires an objective measurement system that few organizations have. Without such objective measurement, any reward system is probably destined to failure.

Bibliography

http://www.wikipedia.com http://www.strategic-change.com/erc/about.html http://www.retentionconnection.com