Mini project

Shaik vijay bhaskar

M.B.A
ID:09361E0060

Employee Attrition
Employee stays longer with the same organization the less likely he/she is to resign. Performing employees are
less likely to resign than non-performing employees.

What is Attrition?
A reduction in the number of employees through retirement, resignation or death is called Attrition.Attrition is also
called total turn over or wastage rate.

Why do Employees Leave the Organization?

It is said that people leave their bosses,not organizations. When employees are happy with their superiors they
choose to stay, if not they look for a switch.

So now I see the following reasons to Leave the Boss

 Higher pay
 Work timings
 Career growth
 Higher education
 Relocation to other places
 Women leave the job after marriage to take up their house-hold duties
 Work pressure
 Work Environment
 Poor performance.
 Losing faith on merger/acquisition
 Verbal abuse

Attrition Rate
The rate of shrinkage in size or number of employees is known as Attrition rate. It is usually expressed in
percentage.

Common methodology in calculating Attrition Rate

The approach to this calculation might vary from organization to organization. While a few techniques are common,
there are no proven theories.
The most commonly used formulae are :

Total Number of Resigns per month (Whether voluntary or forced) X 100

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(Total Number of employees at the beginning of the month + total number of new joinees - total number of
resignations)

Total Terminations in a month

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(Total Head Count at the beginning of the month) + (Total New Hires)

Total No.of employee left X 100

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Total No .Of employees present

Number of employee separations-involuntary separations X 100

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*Average employee count
(*Avg. employee count = January month strength + December month strength)

Cost of Attrition's
 Cost of advertising for new positions
 the cost and time involved in interviews and background checks,
 costs associated with search firms or placement agencies,
 relocation costs of new employees
 Training and orientation costs

Consequences of Attrition
Attrition normally brings decreased productivity. People leave causing others to work harder.

The Brighter Side of Attrition

 A poor performer is replaced by a more effective employee
 A senior retirement allows the promotion or acquisition of welcome 'fresh blood'.
 When business is slack it is straight forward to hold off filling recently
created vacancies for some weeks.

Diagnosing Attrition
Commonly Used Techniques in the Industry

1. Surveys : They are commonly used as part of the information gathering process.
They are a reasonable way of obtaining relevant information, though
response rates are often disappointing. Questionnaires need to be designed carefully
to be effective. They should be easy to use, anonymous and fairly brief. Questions
can be open or closed, multiple choice answers, ranking of items or checklist format.
2. Exit Interviews : Exit interviews are used by the majority of companies. They tend
to be conducted just before an employee leaves, though some firms wait until after
the departure. Exit interviews will normally to be done in the form of a questionnaire,
though one to one interviews are also used.
Employee attrition is a very big problem not only in India but outside India too. Attrition rate is increasing
day by day and its especially the software industry which is affected the most. Why an Employee leaves a
company is the question asked by most of the employers. Companies even hire Private HR professionals
to study the company's work and find out why an employee is dissatisfied.
HR department does the recruiting of new employees and then send them for training so that they can
understand work and work culture and become better professionals. Each and every company faces
employee turn over problem whether big or small. An employee leaves his present job for another job to
get better pay package and good working conditions.
Every Company calculates Employee attrition rate and takes measures to reduce it. The facts and figures
are not made public as it may tarnish the image of the company in front of its own employees and its loyal
customers.

A survey has found out that there are various reasons for Employee Attrition -

1.Higher Pay Package in another company

2.Good working Conditions
3.Opportunities for growth in new company
4.Change of Place problem
5.A better Boss in new company
6.Brand Image of the new company
Employee attrition costs a lot to the company. There are various costs which are borne by the company at
the start when the employee is under training period. Costs such as -
1.Conveyance Cost
2.Cost of lodging of the new employee
3.Trainers cost
4.Cost of venue where training will be conducted
5.Materials to be supplied during training process

A company has a training period of 3 to 6 months. During this time an employee is not fruitful for the
company. If an employee leaves the company when he starts working, company suffers a big loss in
terms of money as well as workforce. Every company takes measures to hold the talented workforce by
means of perks, Increments, Bonus and extra facilities. No one wants to lose good brains to their
competitors.

Now the question is how to reduce employee attrition. What should a company do to hold on the talent.
There are various companies like TATA's and Reliance who do a lot to reduce attrition rate. Flexible
working conditions have been given to employees who have problem working 10 – 5. Private hospitals for
employees where they can get their regular health check up done without spending much money. Free
overseas tour once in a year when a target is achieved. Few Companies are getting more and more work
savvy and just want to get their work done by hook or by crook. The mentality needs to be changed.
Target for completion of a work should be there but that should not hamper an employees personal life.
Companies should conduct various seminars on how to balance personal and professional life. A
employee can be productive if and only if his personal life is balanced. Make employees a part of your
work culture family and see the difference.

Attrition rate cannot become completely obsolete but it can surely be minimized.
 Why Employees Leave (Employee Turnover/Attrition)

In an opinion poll, the most popular response was:“employees leave for better job prospects ”. The
next most popular response was:“Not happy in the existing work place. ”
When we analyze both the responses, we find that, employees begin to disengage and think about
leaving when one or more of five fundamental human needs:

1.Need for Sustenance: The most valid reason for the employees from the grass-root level is
the lack of resources, financial or otherwise, that do not provide enough sustenance for the
employee and his/her family to exist.

2.The need for Trust: When the organization does not keep to the promises it makes to theemployees say, in terms of incentives and

compensations, which is also reflected in lack ofopen and rather effective channels of official communication. This finally makes

employeefeel being treated rather unfairly by the organization and eventually questions theorganization’s integrity.

3.The need to have Hope: When an employee realises that he has no scope to grow, develophis skills on the job and through training,

and have the opportunity for career advancementor career progress leading to higher earnings in the organization.

4.The need for real sense of worth: When an organization counts an employee as a cost headand not a revenue earner, the employee

then works work hard, does his best anddemonstrates his commitment to make meaningful contributions in revenue generation;yet,

if he is not recognized and rewarded accordingly. This leads to loss of sense of worthand self respect; which means the organization

does not consider the employeea valuedasset to the organization.

5.The need to feel competent: The axiom:“One gets promoted to the position to prove he isworthy of it” at times does not hold good

when an employee, in spite of meeting all thechallenges and necessary training gets a below par formal performance

assessment feedback.
The ten most frequently mentioned reasons for leaving the employment are:
1. Poor Management
2.Lack of career growth and advancement opportunity
3.Poor Channels of communication

4. Office politics

5. Lack of Recognition

6. Poor Senior Leadership

7.Lack of training and knowledge sharing.
8. Excessive workload/multi-tasking
9.Lack of infrastructure and technology
10.Lack of teamwork.

We also need to keep in mind that, while all employees want trust, hope, worth and competence,they may differ as to which ones

are most important at any given time. This may depend on theirage or tenure with the organization, for example, as with young

employees; career growth in thecompany may be paramount. Older workers may be more concerned about the health-care

benefits.When it comes down to engaging and retaining employees at a time, effective managers will respectthese differences