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com A Research Project Report On ATTRITION MANAGEMENT Submitted in partial fulfillment for the requirement of the MBA Degree awarded by Bangalore University Submitted by Ponnappa I.S 04XQCM6064 Under the guidance of Praveen Kamat Professor M.P.Birla Institute of Management M.P.Birla Institute of Management Race course road Bangalore-1 INDIA 1 DECLARATION I hereby declare that this dissertation entitled ATTRITON MANAGEMENT underta en is the result of project wor by me under the guidance and supervision of Mr. Praveen Kamat, Professor, M.P.Birla Institute of Management, Bangalore. I also declare that this dissertation has not been submitted to any other University/Institution for the award of any Degree. (Ponnappa I.S) 2 CERTIFICATE I hereby certify that the research wor embodied in this dissertation entitled ATTRITION MANAGEMENT , has been underta en and completed by Mr. Ponnappa I.S under the guidance and supervision of Mr. Praveen Kamat, Professor, MPBIM, Bangalore. ( Dr. N.S. Malavalli ) Principal MPBIM, Bangalore 3 CERTIFICATE I hereby certify that the research wor embodied in this dissertation entitled ATTRITION MANAGEMENT , has been underta en and completed by Mr. Ponnappa I.S under my guidance and supervision ( Mr. Praveen Kamat ) Professor, M.P.B.I.M Bangalore 4 Ac nowledgement

The satisfaction that accompanies the successful completion of any tas would be incomplete without the mention of the people who made it possible, whose constant guidance and encouragement made my efforts a success. My profound than s to my project guide Mr. Praveen amat , Professor, M P Birla Institute of Management, Associate Bharatiya Vidya Bhavan for helping me throughout the project. I ta e this opportunity to than him for his immense support, guidance, specifications and ideas without which the project would not have been a success. I would also li e to than my project guide Srivatsa Ghantae, at Datacraft Asia Ltd, for valuable information provided by him on the current trends in the industry. I wish to than our Principal Dr. N. S. Malavalli for his encouragement and support. Ponnappa I.S 5 CONTENT PAGES EXECUTIVE SUMMARY 1-2 INTRODUCTION 3-6 WHAT IS ATTRITION? 7-14 THE COST OF ATTRITION 15-19 TRACKING ATTRITION CAUSES 20-39 CURBING ATTRITION 40-41 SUGGESTIONS 42-60 IMPORTANCE OF EMPLOYEE ATTRITION 61-65 LOOPHOLES IN ATTRITION MANAGEMENT EFFECTIVE ATTRITION MANAGEMENT 70-78 ANNEXURE 79-82 BIBLIOGRAPHY 83 6

66-69

EXECUTIVE SUMMARY This report see s to utilize primary research in order to offer a greater understanding of the complex issues raised by staff attrition. Specific aims were to: Identify trends in leavers' behaviour and the reasons employees change jobs/organisations Identify the employers' perspective on employees' reasons for leaving Identify retention strategies that have a positive influence on retention, or at least leave current and former staff with a positive view of the organisations When do employees leave? 3/4 of our survey respondents had left their last organisations with less t han three years service. Why do employees leave? A significant difference was established between what employers assumed were ey causes of turnover, and the actual reasons employees gave for leaving. Employers largely failed to ta e into account the importance of providing opportunities for development for their employees. This was three times as important as any other factor in employees !"#$#%&$ '% "()&*! jobs. The top 3 causes were:

Lac of opportunities for personal and career development Issues with the wor ing experience and problems with superiors Salary & benefits 7 What can employers do to minimize the incidence of and impact of employee turnover? Developing an employee retention strategy involves three stages: Identify the level and cost of turnover and benchmar ing it against competitors Understand why employees leave Implement retention strategies Having identified the reasons employees leave, there are a number of specific retention strategies available to employers. Our research has emphasized the importance of adopting a holistic approach to dealing with staff attrition. An effective retention strategy therefore will see to ensure: Attraction and recruitment strategies enable selection of the +#*(' ")& # )'! ,%+ each role/organisations New employee $ #&#'#)- !./!+#!&"!$ %, '(! %+*)&#0)'#%& )+! /%$#'#1! Appropriate development opportunities are available to employees, and that they are ept aware of their li ely career path with the organisations The organization $ +!2)+ $'+)'!*3 +!,-!"'$ '(! !4/-%3!! +#1!+$ The leaving process is managed effectively 8 INTRODUCTION About Datacraft Datacraft is the leading independent IT services and solutions company in Asia Pacific. Specializing in customized business solutions, Datacraft helps clients plan, build and support their IT infrastructures. Datacraft combines an expertise in networ ing, security, operating environments, storage and contact centre technologies, with advanced s ills in consulting, integration and managed services, to craft IT solutions for businesses. A member of the Dimension Data Group, Datacraft is listed on the main board of t he Singapore Exchange, and is a component company of the Straits Times Index. Headquartered in Singapore, Datacraft spans more than 50 major offices and has over 1,200 employees across 13 Asia Pacific mar ets. Area of operation Our Key Differentiators Global delivery: Datacraft, together with parent company Dimension Data, possesses the s ills, resources, technology now-how and global reach to create a 9 worldwide infrastructure that delivers seamless professional solutions and servi ces for international companies. Proven trac record: As Asia $ /#%&!!+ #& $3$'!4$ )& &!'2%+5 #&'!*+)'#%&6 Datacraft has designed, implemented and managed networ infrastructure for many global corporations and leading service providers, as well as the equivalen t of the !7%+'8&! 9:: "%4/)&#!$" #& !1!+3 "%8

ntry throughout Asia Pacific. Strong specialized s ills: Datacraft has over 750 industry-accredited technical personnel region-wide and is the only region-wide Cisco Gold Certified Partner, employing over 70 CCIE s # more than any other firms in Asia Pacific. Best-of-breed technologies: As an independent systems integrator, Datacraft is able to partner the world $ -!) #&* $8//-#!+$ '% /+%1# ! '(! 4%$' ) 1)&"! )& flexible solutions. Area of operation: Global Services Local partnership, global integration This is a suite of professional and managed services that assess, implement, monitor, maintain, and optimize different layers of the IT environment, from the networ to applications. 10 These services are supported by Datacraft $ +!1%-8'#%&)+3 $!+1#"! delivery architecture, Global Services Operating Architecture (GSOA), which gives businesses the immediacy of a local partner and the leverage of a global integra tor. The ey offerings are: Consultancy " An IT and business consulting service to help organizations plan and design their IT strategy for optimal networ performance and greater efficiencies. Surveyor " An assessment service that provides a "snapshot" of a company's entire IT environment, or just components, and reports on how it is functioning. Primer " A turn ey methodology and implementation service that includes consulting, design, site preparation, staging and piloting, logistics, installat ion and project management. Insite " A management service with offerings that range from basic monitoring to extensive predictive analysis and reporting. Uptime " A maintenance service that offers total support, troubleshooting, and resolution solution for mission-critical IT systems, 24-hours a day, every day o f the year. 11 Assure An out-tas ing service that provides best-in-class support services for your networ and security infrastructure. Training " Learning solutions in data communications, project management and vendor-certified technology s ills. Each Global Service is a standalone service and can be delivered independently. They are also available at multiple service levels and can be configured to matc h business requirements and budgets. Datacraft's Global Services can be deployed either within your organization or

through our Global Services Centre in Asia Pacific and Dimension operations located in Australia, North America, Europe and South centers are interconnected through one secure system, our Global , which gives you local access to the nowledge base of our entire organization. WHAT IS ATTRITION? 12

Data's Africa. These Services Portal global

Employee turnover is an enormous problem for any company and creates negative bottom-line impacts. The costs associated with employee turnover show up in such areas as advertising for new employees and the time and money necessary to screen the applicants, training new employees, lost productivity, decreased accuracy and quality of wor among the employees left behind who are upset about their colleague's departure, using expensive contract and temporary employees to do the wor until a permanent employee is hired, and the expenses associated wit h replacing lost business. Employee turnover costs can amount to thousands of dollars, annually. It can also prevent companies from pursuing their growth opportunities and acquiring new business. In the best of worlds, employees would love their jobs, li e their cowor ers, wo r hard for their employers, get paid well for their wor , have ample chances for advancement, and flexible schedules so they could attend to personal or family needs when necessary. And never leave. But in the real world, employees, do leave, either because they want more money, hate the wor ing conditions, hate their cowor ers, want a change, or because their spouse gets a dream job in another state. So, what does that entire turnov er cost? And what employees are li ely to have the highest turnover? Who is li ely to stay the longest? Turnover rates and tendencies 13 A recent survey by the Society of Human Resources Management (SHRM) indicates, not surprisingly, that employee turnover is highly correlated to the state of the economy. With the wea economy and record-high unemployment rates , SHRM found in a survey conducted the wee of July 8-15, 2003, that 41 percent of organizations reported decreased turnover rates since 2001. But the economy isn ' '(! %&-3 '(#&* '(! "%++!-)'!$ '% '8+&%1!+ +)'!$; <& ) +!/%+' %& employee tenure, the Bureau of Labor Statistics found that in January 2002, the median time that wage-and-salary wor ers had been on the job was 3.7 yea rs. The results, as reported in the Occupational Outloo Quarterly, came f rom a supplement to the Current Population Survey, a monthly household survey of the civilian non institutional population aged 16 and older. There were significant variations in tenure, however. Wor ers in the 55 to 64 ag e range had a median tenure that was three and a half times that of wor ers 25 to 34 years old. Other interesting results: public employees had higher tenure r ates than those in the public sector. Officials and administrators in public administ ration had the highest tenure: 11 years. Food service wor ers had the lowest tenure just 1 year.

14 Attrition Graph (Fig: 2.1) Six Truths about Employee Turnover Truth No.1: Turnover Happens Achieving zero percent turnover is not realistic, especially in today $ =%> 4)+5!'; Truth No. 2: Some Turnover Is Desirable Zero percent turnover is not desirable for a couple of reasons. First , if all employees stayed and the organization grew steadily, most employees would be at or near the top of their pay ranges and salary expenses would be extremely high. Secondly, new employees bring new ideas, approaches, abilities, a nd attitudes and eep the organization from becoming stagnant. 15 Truth No. 3: Turnover Is Costly Most managers now that turnover is expensive, but two-thirds of 1,290 managers were unable to quantify the cost of turnover when as ed in a recent poll. The co st of hiring and training a new employee can vary greatly $ from only a few thousand dollars for hourly employees to between $75,000 and $100,000 for top executives. Estimates of turnover costs may range from 25 percent to almost 200 percent of annual compensation. Costs that are more difficult to estimate include custo mer service disruption, emotional costs, loss of morale, burnout/absenteeism among remaining employees, and loss of experience, continuity, and !"%+/%+)'! 4!4%+3;" Truth No. 4: More Money Is Not the #Silver Bullet$ Talented wor ers want to feel they are being paid comparably to what other companies pay for similar wor in the industry. They also care about being paid equitably with others in similar positions ma ing comparable contributions. Whe n these two conditions exist along with interesting and meaningful wor , acceptabl e wor ing conditions and good management practices, the prospect of ma in g a little more money in an another organization where these softer factor s are un nown is usually not enough to pull the employee away. Truth No. 5: Managers Hold Most of the Keys to Keeping the Right Talent One recent study showed that 50 percent of the typical employee $ =%> $)'#$,)"'#%& is determined by the quality of his/her relationship with the manager. Many companies are floundering today in their attempts to improve employee retention because they have placed the responsibility for it in the hands of human resourc es 16 instead of the managers. Many companies have begun to measure managers turnover rates and vary the size of their annual bonuses accordingly.

Truth No. 6: Reducing Turnover Starts with Commitment The organizations that achieve the most dramatic reductions in turnover and maintain those lower levels are usually the ones where the top executive or owne r ma es it a priority. Even when the top executive is not committed, however, on e committed manager can still ma e a difference. Attrition Rate in Software Industry With competition for talent intensifying, the need to retain ey employees has increased manifold. While the average attrition rate in the Indian software indu stry is in the region of 16%-17%, that for the top tier companies is lower. Going for ward, managing a huge employee base will be the ey challenge faced by these companies. Infosys already employs nearly 40,000 professionals, while TCS employs nearly 50,000 and to eep attrition low amid tremendous competition for talent will be a priority. STEPHANIE Moore, Vice-President, IT Services Research Group, Forrester Research is one of the discerning analysts trac ing strategies and trends in the global sourcing arena. Bringing to bear several years of experience and advice on technology and outsourcing strategies, both at Forrester and Giga Information Group (prior to i ts merger with Forrester), Stephanie spea s with authority on the slow attrition tu ssle 17 that is ta ing place between multinational (MNC) and Indian frontline vendors in the off shoring space. At the recently concluded Nasscom 2005 conference at Mumbai, e World had a candid tal with her on vendor turf wars, acquisition of mid-tier companies and consolidation that may change the rules of the game. What is your ta e on the status of the industry and how is the Indian vendor versus MNC (multinational) vendor' attrition shaping up? MNCs did cause a lot of attrition that we have seen. But I thin even though developers went from Indian vendors to MNCs, they realized that the wor that MNCs did is much less interesting than the wor that Indian vendors are doing. Indian vendors want to send as much wor offshore as possible. They try and push the envelope. They send the really interesting projects, whereas MNCs send only that wor which they have to. Only what the client wants to $ only what is low level and grunt wor . Even though they may pay a little more initially, the resource (employee) says: "My goodness, I am not going to spend the rest of my life doing COBOL code" or whatever it is. The other issue is that the career path at the MNCs is not as attractive as that at an Infosys or a Wipro. Indians run those companies whereas in MNCs, it may not be so. Companies such as Accenture loo at their Indian centers as solution centers, so fol s here aren't even on the management trac . Ambitious, talented Indian 18 developers here sometimes thin , "I should go bac . I can't eventually become CEO or practice director or what-have-you." Now, US companies are dealing with attrition. There is terrible attrition and it

has an impact on projects. Some clients may have vendors build in a 10 per cent buffer so that when the project turns over, there is still someone trained that can go rig ht into the project. But the problem is, it is impossible for vendors to provide that buffer because of the demand for their services. So we are seeing a lot of problems with service level s, with clients being dissatisfied with the attrition levels on projects. That is t he ey decision criteria when they select vendors. Drop in Attrition Rate BANGALORE: The quantum jump in the number of multinational technology companies setting up subsidiaries in India and the heavy hiring by both MNC and domestic IT providers, has suddenly stepped the demand for talent. This should logically translate into higher attrition. Strangely enough the reve rse has been the case. First quarter figures disclosed by leading domestic software services firms show that attrition in most cases has actually declined. It loo s as if despite the war for talent; techies wor ing for large software se rvices brand appear to be rather loyal to their employers. Wipro, in fact, has reported significant improvement in its attrition rate. In Q1, the figure stood at 12.2%. 19 Much below the 15.65% it reported in the same period last fiscal and marginally lower than 12.8% in the sequential Q4 FY 05 quarter. The volatility in attrition rate seems to be missing, said a Wipro official. At rival Infosys too, attrition rate has dropped. The rate at 9.8% in Q1 FY 06 is lower to the 11.7% it reported in Q1 la st fiscal. 20 THE COST OF ATTRITION What are the costs of attrition? The estimate that the recruitment and training costs of replacing the average employee is ? @6A::B; C(! '+8! "%$' %, )''+#'#%& '% '(! %+*)&#0)'#%& #$ %,'!& substantially higher, as this figure does not include: Cost of lost productivity (during notice period, time to recruit and induction) Cost of lost nowledge, expertise and business relationships (perhaps pic ed up by a competitor) Comparing employee turnover costs with costs of implementing an employee retention strategy will prioritize the action required. Calculate their employee attrition rate and its associated costs Benchmar their attrition against similar organisations Identify potential causes of their staff turnover Highlight possible solutions to try to improve their staff retention 21 Factors to Consider in the Cost of Attrition Here are some things to consider that demonstrate clear financial cost s. You basic need is to now the cost to the district when a new employee leaves teaching or is not rehired?

What you want to identify are your district's costs for: New employee recruitment, especially for recruiting the ind of diverse staff a great district wants? Administrative time for trips to job fairs & colleges, screening applicati ons time, interviewing, meetings to ma e decisions? Newspaper, journal, internet and other ads Technology specialist time for placing recruitment and job info on the district web site Brochure and flyer printing, folding, addressing, and mailing Personnel staff time processing applications, answering phones, dealing with certifications, and other inquiries, etc. Cost of bac ground chec s New employee initial orientation New employee training during the first year or two? (both that just for new employees and all other district training) Reduced student learning during the year or two that a new employee is learning to teach? 22 Reduced student learning when a new employee leaves with what they have learned from trial and error, and a different new employee is hired without that hard won experience and starts over at the beginning again. Loss of instructional continuity when new employees leave or are not rehired because they are not as successful as required? Administrator time spent orienting, evaluating, coaching, developing, and supporting new employees who are not retained? The correlation of attrition and overall quality can be demonstrated by understanding how attrition relates to several core aspects of any BPO company: service quality, training, cost, and company culture and standards. Service quality Quality of service is built on training and nowledge of the customer. Developin g a staff with deep domain expertise is clearly impossible if 40% of your employees quit every year. This is exacerbated by the cultural barriers most buyers experience when wor ing with offshore BPO companies. A bright young person from Kerala or Madhya Pradesh will require some time to fully understand the mentality of a New Yor investment ban er. It ta es time for an employee to become an expert service provider. Training Strong training programs reduce attrition by giving employees a focused, useful s ill set. Employees that receive valuable training now that future s ill 23 development is worth stic ing around for. Mature companies invest in broader training initiatives, such as communication s ills, time management s ills, and management training. A company that invests little in training is more li ely to face high attrition rates. Without significant and effective training, a service comp any has little chance of long term success. Cost There are many direct monetary costs to attrition: HR costs, lost productivity, and management overhead. Precisely determining the direct costs of attrition is difficult, but a common estimate is 1.5 times the employee's annual salary. Sinc e saving money is a major motivation for BPO buyers, cost increases harm BPO relationships. High attrition is a form of operational inefficiency and waste. Company morale and standards

In addition to the monetary cost, attrition does insidious, intangible harm to a company's culture and standards. The overstaffing necessitated by a high attriti on rate and the fact that teams are constantly disintegrating and being reformed wi th novices contribute to a sense that individuals don't matter and that standards cannot be achieved. Overstaffed employees learn that waste and inefficiency are built into the operation while productive employees learn that "productivity doesn't pay". All 24 employees become less li ely to internalize the high standards for quality, secu rity and customer service. When people are seen to be highly interchangeable, developing human capital becomes difficult and morale drops. The bottom line Since most costs of attrition are hidden from the customer's immediate experience, managers are tempted to see attrition as an inevitable fact of BPO l ife, or a statistic for HR departments to worry about. But attrition rates deserve cl ose attention from BPO managers and buyers ali e. While rates of up to 40% have been reported by BPOs in India, a reasonably successful company will have a rate no higher than 15%. Attrition is manageable. Leading BPO companies thin strategically about retaining employees. They use professional development programs, stoc option grants, promotions and mentoring. They understand that employee satisfaction and loyalty, at all levels is an essential foundation for a successful business. BPO executives have long understood that attrition management is critical. To ge t an honest measure of a BPO company, chec out the bottom line in BPO quality: attrition. 25 CAUSES OF ATTRITION When do employees leave? Chart showing average length of job tenure (Fig: 4.1) As the graph shows, there is a large pea of employees leaving having wor ed for the organisations for only two years. In our survey, 76% of respondents had left their last organization within 3 years. Burgess and Rees3 define this section of the wor ing population as =%> $(%//!+$ ; C(!3 $8**!$' '()' /!%/-! #& '(!#+ !)+-3 careers treat jobs as commodities. They move from job to job shopping around for their ideal role. Whilst concurring that most job tenures last less than 3 years, their results id entified a second group. Having $(%//! )+%8& #& '(!#+ !)+-3 ")+!!+$6 '(!3 $8**!$' people then find a role and organization in which they feel comfortable, and the n 26 settle down long term. They estimate that 24% of the wor ing populations have wor ed for one employer for at least 30 years. Job Shoc The graph above also shows considerable numbers of respondents who left their previous role shortly after joining. This scenario, referred to as job shoc , ca n be

particularly costly to organisations. The organization spends considerable sums recruiting and training the new employee, who leaves without necessarily achievi ng full productivity. Job shoc is common amongst our respondents as shown in the above graph. Do organizational factors influence job tenure? In this section of the report we consider whether job tenure is arbitrary, or if organizational factors impact on length of job tenure. 27 Average job tenure differs across industry sectors It has been widely reported t hat Chart showing how length of job tenure varies across different industry sectors (Fig: 4.2) Some industries have greater difficulty retaining employees than others. Our sur vey results as shown in the above graph provide further evidence to support this argument. High Churn According to the graph, respondents from the leisure, catering and hotel and ret ail industries stayed with their organisations the shortest length of time. These industries are commonly associated with high attrition rates, as they tend to em ploy 28 large numbers of transient wor ers in jobs with often antisocial wor ing hours a nd limited scope for personal development/progression. War for Talent The finance, IT and professional services have the next lowest average job tenur e. These industries employ large numbers of wor ers with specialist s ills, nowled ge and expertise. With s ills shortages prevalent, these individuals tend to be hig hly sought after. With their s ills so much in demand, it may be easier for these individuals to shop around prospective employers, loo ing for their ideal role. Low Churn The manufacturing, engineering and transport industries conversely have the longest average job tenure. These industries typically employ large numbers of blue-collar wor ers and technical specialists with niche areas of expertise, who are traditionally less transient than other. The Larger the Organization, the Longer Employees Stay Less well documented has been how job tenure varies across different sized organisations. 29 The following graph shows the results for our survey respondents: Chart showing how length of service varies across different sized employers (Fig: 4.3) The graph clearly shows that job tenure within smaller organisations is lower th an in large organisations. Furthermore, this difference is significant. Job tenure in organisations with more than 5,000 employees averages 3 years. This is fully 11 months longer than in the smallest organisations (less than 50 employees). Possible reasons for this could be a lac of development and promotion

opportunities, or the greater impact of personality clashes within smaller organisations. 30 London & Scotland have lowest job tenure Geographic location of the organization also impacts average job tenure. The job tenure of respondents from Scotland was lowest, whilst respondents from Yor shire, the North East and North West stayed with their organisations the longest. Job tenure in London was amongst the lowes t. The variation in job tenure in different locations is perhaps due to the types o f industry prevalent within particular regions. Average job tenure- Changes over time There has been much recent debate centered on how average job tenure has (or hasn 'D "()&*! #& +!"!&' '#4!$; E)&3 "%44!&')'%+$ "-)#4 '()' '(! #&"+!)$! prominence of redundancy programmes over the last 20 years has bro en the psychological contract between employers and their employees. Employees move jobs far more frequently because they no longer feel loyalty to their employer. Though the job tenures of some sections of the wor ing population (particularly males over 50) have fallen, this has been offset by increases in job tenure of o ther groups. The greatest increase has been seen amongst female wor ers. Improved maternity provision and greater accessibility of education to women hav e been particularly influential. 31 Average job tenure " male vs female Whilst length of service for women has increased recently, men do remain with th e same employer longer than women. Our figures suggest that the average female stays in one job for 2 years and one month, but men stay 5 months longer. Why do employees leave? In order to allow an organization to design and implement an effective retention strategy, it is important for both senior and line management to understand the reasons that prompt high performers to leave and find alternative employment. However, research reveals a disparity between the factors that employers assume to be most influential in driving employees to leave, and those factors that hav e actually caused respondents to leave a job. 32 The following chart demonstrates the scale of this disparity: Employees ______ Employers ______ Chart comparing employers perceptions of reasons for leaving and employees actual reasons for leaving (Fig: 4.4) 33 Employers generally believe that employees leave for a variety of reasons. The traditional importance of pay and benefits as a decision-ma ing factor however i s assumed to remain ey. The feedbac received from employees reveals a mar ed difference. The top 3 reasons for employees leaving are: Lac of opportunities for personal and career development

Issues with the wor ing experience and problems with superiors Salary & benefits In the view of employees, it is the lac of opportunity for personal and career development that is clearly the most important factor. This is three times as influential as any other factor in employees !"#$#%&$ '% -!)1!; F)-)+3 )& >!&!,#'$ are rated as only the third most important factor. Respondents who left because of a lac of development opportunities rated the following factors as ey to their decision to leave: The role did not allow me to fully use my s ills and abilities The role provided insufficient training opportunities The role offered only limited opportunities for progression The role was not challenging enough 34 The high importance attributed to issues with the wor ing experience is largely due to the number of respondents who left because the role did not match their expectations. 63% of our respondents said that this was one of their 5 main reas ons for leaving. This factor is li ely to have played a major role in accounting for the pea of respondents who had left their organization within six months. Organizational Factors and Reasons for Leaving We have already seen that organizational factors can influence average job tenur e. Surprisingly, employee $ +!)$%&$ ,%+ -!)1#&* +!4)#& consistent across different industry sectors and different sized organisations. Employees leaving industries with high turnover do so for the same reasons as leavers from other industries, however they leave after shorter periods. This suggests that the high turnover in these industries is due to factors endemic to the industry sector, organization size, location and potentially other industry spec ific factors rather than the actual wor ing environment for example the transferabili ty of industry s ills. The greatest variation in reasons for leaving is shown in the figures for the pu blic sector. Leavers from the public sector are more li ely than leavers from any oth er industry to leave because of a lac of development opportunities. 35 Conversely, they are the least li ely to leave to improve their salary and benef its prospects. It is often argued that public sector employees choose to wor in the public sector because of their social duty rather than for personal gain. Our research supports these assumptions. Retention strategies within the public sect or should focus on providing adequate opportunities for development for their employees rather than relying on financial incentives. Reasons for Leaving " Implications for Retention Strategies The researches into employees +!)$%&$ ,%+ -!)1#&* ()1! +!1!)-! ) &84>!+ %, contributory factors. Many employers were unaware of the real causes of employee attrition. This highlights the importance of employers ensuring they understand and

pro-actively manage the most influential HR practices to reduce employee attriti on. Although not the major cause of turnover, pay and reward does remain an important factor in the retention issue. Organisations that pay employees below the mar et rate are li ely to experience high levels of turnover. Retention strategi es which financially incentivise employees to stay however are unli ely to secure anything more than short term commitment to the organization. A lac of development opportunities was the most important factor in employees decisions to leave their previous organization. Matching development opportuniti es to individual employee $ ")+!!+ )$/#+)'#%&$ #$ -#5!-3 '% ()1! '(! 4%$' /%$#'#1! influence on staff retention. 36 Attrition Trends Among Various companies For the country $ -)+*!$' $%,'2)+! !./%+'!+ CGF6 )''+#'#%& /!+"!&')*! ()$ *%&! 8/6 albeit marginally. In Q1 attrition was 8.2% compared to the 8% in same period la st fiscal. TCS officials said of the 1,223 people who quit the company in Q1, 291 were as ed to go due to low performance. Some HR managers of software firms are of the view that seasonality in attrition seems to have evened out. Earlier some quarters, had more attrition due to fresher quitting to pursue higher studies. Attrition at Infosys, at top 20% of t he company, in the last twelve month (LTM), was 5.3% while it was 46.3% in the bottom 5%. Infosys CFO Mohandas Pai said !C(! *%% /!%/-! '()' 2! 2)&' '% retain in the company stay. The attrition is the lowest in that category. As the category deepens, attrition becomes higher. " HR managers of software firms say that attrition in the 1-3 year experience category is normally the highest. In Infosys, for example, it was around 12.5% t o 13% in this category, while it was 5.8% in the case of people with experience of more than six years. In Q1, 960 people quit Infosys $ 392 of them to join other companies and 250 to pursue higher studies. Among the big brands in the domestic software export space, attrition at Satyam 37 Computers in the highest. In Q1 FY 06 it was 16.68%, though lower than 17.7% in the same period last fiscal. It was 16.5% in the last quarter (Q4) of last fisca l. How call centers can combat attrition Here today, gone tomorrow! Sometimes without any notice. This is an issue that most HR managers in the call centre space face today. Historically, high turnove r amongst call centre staff has been accepted as a universal issue for the industr y. This level of attrition may vary from country to country and city to city. Howev er, irrespective of the level of staff attrition, the profitability, the cost of sal es, the cost of recruitment and training, etc, is always impacted. Corporations invest thousands of dollars in recruiting and training call centre

employees. Retention of employees is an important issue in this highly competitive job mar et. A high churn out in this industry could be caused due to a number of reasons. The problems begin with recruitment practices and end with retention tools adopted by the call /contact centre. At the recruitment stage it self there could be a mismatch between the potential employee and the job specifications. Based on factors such as voice or Web-based activities, inbound or outbound, domain, language, etc, the s ill sets of the potential candidate would differ. By concentrating only on core competencies, often there are situations o f square pegs in round holes. 38 Recruitment stage Recruitment procedures should include an assessment of various s ill sets such as the aptitude and the attitude to wor in a particular industry. Since most ca ll centres cater to international clients, s ills related to spo en English, exposu re to Western culture, willingness to undergo extensive training and wor ing in night shifts become critical criteria. As a result of not evaluating these qualities a t the outset, many of the customer service representatives (CSRs) are unsuited to thei r jobs and move on quic ly. This means the employer has to start the entire process of recruitment and training all over again. This is not only time consum ing but expensive as well. By recruiting candidates with good people s ills, right attitude, good spo en English and willingness to learn, attrition can be handled to a great extent. Involving trainers in the recruitment process would be an excellent idea as they would be in a position to identify candidates who can be trained within the pre-decided time frames. Often CSRs have a very glamorous picture about wor ing in a call centre. A mismatch between what is said and what is done $ in a lot of ways the !(3/!" %, a new job can be deflated rather rapidly by the !+!)-#'3" %, '(! +%-! %&"! $')+'! ; Given that this industry provides an excellent wor culture and benefits, it is important to present to the potential candidate a true picture of the wor invol ved. It is also a good idea to conduct training sessions at night. This gears up candidates for night shifts before they are put on the job. The churn out that t a es 39 place soon after training, mainly due to the stress of wor ing in the night or d ue to a misconception about the job, can be avoided. Call centres that constantly articulate their strategic vision and solicit emplo yee ideas on how to meet the vision also experience a high level of retention. The parameters for performance appraisals and growth within the organization should be clearly defined and communicated to the candidates. This will go a long way i n

professionalizing this industry. Map career path Mapping out a career path for CSRs would provide an added incentive for them to hang on and improve efficiency. It is often good to now that there is a career path within an organization into which an individual can map his or her own personal and career development. Separate training programmes can be designed for experienced and inexperienced recruits. This would give a head start to the experienced recruits while recognizing and valuing their previous efforts. It also sets a good exampl e for fresher who can learn from their peers !./!+#!&"!; H&$8+#&* '()' /!%/-! !&=%3 their wor , or at worst do not feel particularly negative towards the tas s they underta e on a daily basis, and respect from supervisors/managers will ma e them feel valued. A good training programme, comparable to international standards with the option of obtaining an international certificate, can ensure that the CSRs don ' I8#' because they lac the s ills or abilities to perform the job. 40 Monitoring the performance of CSRs and the quality of the calls is very crucial in a call centre environment. A CSR who does not li e to be closely monitored, or cannot consistently be thorough and detail-oriented, is li ely to become frustra ted and begin to see other opportunities for employment. However, monitoring can be used as an unbiased tool for performance appraisals and motivation, as it is based on available facts. The remuneration factor Whether we would li e to admit it or not, money still remains a prime motivator. We all need it and so examining the rates offered by other call/contact centres in your geographical area and also within the industry is worthwhile. You do not need to pay more than the going rate, but aim to be perceived as an employer who values the employee. Last but not the least, call centre employees need to be recognized as the ey front line contact with the customer. They need to now that their contribution to the organisations is the most important as they project the image of the company . Supervisors and managers need to be available not only to listen to ideas, but also to than staff for their commitment and contributions to the company. It is not any one factor but the whole pac age, a synergy between money, environment, acquiring the right s ills through training, convenience, security, challenge and a whole melting pot of other factors. Job satisfaction is a diffic ult recipe to get correct. However, with the right training, the team leaders, 41 supervisors and managers can ensure that they get this recipe correct. Training programmes developed and certified by AT&T College of Call Centre Excellence and Coaching Mentor from Ulysses Learning equip the team leaders and managers with the necessary s ills for monitoring, staffing, scheduling, motivat ion and team building, leadership and customer satisfaction. Why Do They Leave? Most employees leave their wor for reasons other than money - and your organization can correct these reasons. Most leaving employees see

opportunities that allow them to use and develop their s ills. Leaving employees want more meaning in their wor . They often indicate that they want to use their qualities and s ills in challenging teamwor led by capable leaders. Managerial staffs cite "career growth" and "leadership" as the major factors tha t influence attrition and retention, together with "opportunities for management" "ability of top management" "use of s ills and abilities" and "wor /family balan ce" Professional employees cite concerns about "supervisory coaching and counseling," "company direction" and "interesting wor " Clerical employees voice concerns such as "type of wor ," "use of s ills and abilities" and "opportunity to learn" Hourly employees notice whether they are treated with respect, their "management ability" and "interesting wor " Orientation 42 New employees who attend a positive orientation program are 70% more li ely to be with the company three years later (Corning Glass). Exit interviews provide an excellent source of information of internal problems, employees' perceptions of the organization, underlying wor place issues, and managers' leadership abilities. Ineffective Managers High employee turnover can be recognized and properly attributed to poor managerial performance, emotional intelligence and ineffective leadership. Poorl y selected or improperly trained managers can be very expensive . A Wor force Magazine article, "Knowing how to eep your best and brightest," reported the results of interviews with 20,000 departing wor ers. The main reaso n that employees chose to leave was poor management. HR magazine found that 95 percent of exiting employees attributed their search for a new position to an ineffective manager. Hire attitude; Train s ills Systemic Solutions can help you hire and inspire appropriate employees. Build positive, friendly, teamwor attitudes and commitment to customer services Help new employees feel comfortable as they participate as valued team members Provide periodic refresher courses to maintain team purpose and functionality Apply Expert Modeling to rapidly transfer expert s ills within a wor force 43 Reduce Attrition: Managers and Professional Employees Systemic Solutions can help you adjust your company vision and manager's performance reviews to reflect employee turnover, and provide mentoring and interpersonal training to inexperienced managers. Develop and communicate a strong strategic vision Provide relationship coaching and help people develop to their potential Reward managers for their relationship s ills - not only on technical now-how a nd financial results People don ' -!)1! =%>$6 '(!3 -!)1! 4)&)*!+$J K!/-)"! 4)&)*!+$ 2(% 2#-- &% t develop relationship s ills Reduce Attrition: Clerical and Hourly Employees Systemic Solutions can help you communicate. Most employees want to now more about their wor . We can explain each process and help employees understand the importance of their wor . Your employees will become more nowledgeable about their effectiveness. Here are a few ways.

Compliments and than s cost little and can bring great benefits Let employees now that their opinions are valuable 44 Keep employees informed - don't let them hear important news through rumors Update employees on technical information Address staff by their first names Praise publicly what the employee has accomplished and say why it was important Criticize privately about what the employee can do better and explain how to do it better Create community with activities such as informal meals or events outside wor Involve employees in organizational planning Titles cost little, and inform people that your employees are valuable 45 CURBING ATTRITION Measures to cut attrition rate Arguably the biggest bane to organisations today is attrition. This is more pronounced between the MNC $ )& $%,'2)+! 4)=%+$; F% ()$ (#+#&* ,+%4 ")4/8$ had a positive affect on attrition? !C(! )''+#'#%& -!1!s for campus hires are much less than that of lateral hires, " $)3$ Mr.Srininvasan. !L#+!$ ,+%4 ")4/8$!$ '!& '% ()1! ) -%2!+ )''+#'#%& #&#'#)--3 >8' around the two year mar is a crucial time - where the integration into IBM and its culture and values has been strong students have over the long haul a lower attrition rate, " $)3$ E+; M//!- %& $#4#-)+ -#&!$; Given Accenture $ *+%2#&* !4)& ,%+ '!"(&%-%*3 /+%,!$$#%&)-$ )& '(! $8""!$$ from hiring from colleges, the company has decided to increase the inta e from campus significantly. Employee attrition management more effectively Employee attrition study enables a call center to manage employee attrition more effectively Solution: Analytics based study should be conducted to understand employee behavior and to predict employee behavior. As a first step we collected internal data 46 on the past behavior of the call center's employees. W e then overlaid that information with profile information of these employees that the organization ha d collected prior to recruitment as well as during the course of their employment. Finally, we also appended data on the employees' performances, their performance evaluations and their raises and bonuses. Then create segmentation models that were able to segment the employees by their profile information and attrition history. This gave us a starting point t o understand what segments of employees had a higher inherent propensity to attrite. We also built segmentation models around employee performance to understand if there were certain profiles of agents that were consistently perfo rming better than others.

Finally, create a scoring model that would ran order employees by their propens ity to attrite from the company. Implementing the segmentation and scoring models were able to accurately distinguish and identify employees that were at a higher ris of attrition. The call center used our profiling models in various different but effective ways. Firstly, they were able to alter their recruitment policy to proactively a ttract profiles that were less li ely to attrite. Also, based on an employee's attritio n score they could decide what ind of mentoring was necessary for the employee. Finally , they were also able to allocate employees strategically to different programs ba sed on their ris of attrition. 47 SUGGESTIONS MEASURES TAKEN BY MAJOR BPO COMPANIES TO CURB ATTRITION RATE EXL Service has ta en up 125 flats in Noida, where for a nominal rent, it houses young staffers Wipro Spectramind has tied up with BITS Pilani and the Symbiosis Institute of Management to provide distance learning programme for employees Software company CSC gives its employees a six-month sabbatical to wor with an NGO of their choice Wipro Spectramind and ICICI OneSource use their powerful parents to provide career diversification opportunities Why AFS employees prefer to stay on High employee attrition that plagues the BPO industry does not trouble AFS. The average tenure of our employees has been six to eight years, far exceeding t he industry norm. Over three-fourths of our people have been with the company for between five and 10 years. 48 Why attrition? Our research shows that 40 per cent of employees leave an organization to pursue higher education, 35 per cent migrate to the west, and 15 per cent leave for personal reasons and 10 per cent for better prospects. AFS has devised an attrition management policy to improve employee retention based on: Timely performance-based rewards Functional job rotation Training for s ills upgradation Regular feedbac and communication Grievance and suggestion management Reduction of stress components Over and above rewards, we emphasize person al development opportunities through: Performance-based incentives A transparent promotion policy Polyvalence through job rotation 49 Career growth opportunities A personal development plan for each employee Soft s ills training Communication

Etiquette Acclimatization to different cultures Training in foreign languages Annual parties, corporate sports Stress management through yoga Recreational facility In addition to vertical progression, in which employees climb up the hierarchica l pyramid as they move up in the organization, AFS has introduced a horizontal progression as well, in which employees move laterally through different wor areas li e business development, training, quality and transition, developing th eir s ills and personalities as well. 50 Increasing Employee Retention or Reducing Attrition? Retention Solutions The most frequent methods for increasing employee retention have been to provide orientation and some level of mentoring support and guidance, at least for novic e educators if not all new employees. This authority $ +!1#!2$ %, $8"( /+%*+)4$ ,#& that they do increase retention to some extent, perhaps 15-20%. However, this bump is not as significant as is often desired, nor as high as a more comprehens ive induction program can provide. A comprehensive induction approach can attain retention rates as high as 96% over five years. (Texas A & M at Corpus Christi, etc.) In fact, it could be argued that one would not even want a higher retention rate , for surely, not everyone who tries teaching should be ept as a teacher. What a comprehensive induction program should provide will be discussed later in this article. Our purpose at this point is to affirm the value of an effective. Clearly, even when a district can not offer the top salary, it can still effectively comp ete for and eep the quality educators by treating them professionally and by expecting and supporting effective employee performance. After all, people become educators to ma e a difference in student $ -#1!$; The more districts can demonstrate to candidates and new employees that the district can help them achieve their original goal for becoming an educator, the more effectively districts can recruit and retain those employees. However, such a 51 statement is easier said then done. Never-the-less, there is now extensive documentation of the power of mentoring and induction programs to increase teacher success and, thereby, to improve the ability of a district to attract an d retain the best new employees. Simply stated, induction program success breeds teacher success, which breeds district success in attracting and retaining successful teachers, which increases the quality of teaching. Funding New Employee Retention Efforts The most typical way to provide a new employee support program has been a common sense approach, which is founded on two assumptions: Since we all were once beginning educators, we all now what is needed to better support our recent new hires. Every one accepts the value of increased support for new, and especially novice employees.

Each of these assumptions contain some element of truth of course. But experience has clearly demonstrated that each contains unexamined fatal flaws. Regarding providing a program based on our own initial year experience ignores the dramatic changes in our profession which have occurred since that time and t he fact that mentors, our very best teachers, do not feel they have all the answers as teachers themselves. This flaw has led to the wide spread discovery that Not eve ry good teacher ma es a good mentor, and induction programs which have eased the stress for new educators and helped a bit with their retention, but not helped u s to improve the quality of teaching or success of students. 52 Finding funding for common sense induction and mentoring incentives has been a challenge too. While induction programs seem so logical to educators, sadly, suc h programs are often perceived as less than essential by the non educators who are decision ma ers at the local school board, state or provincial policy, and legis lative levels. This has led to inadequately supported and abbreviated programs which do not have the capacity to provide the desired results or to stronger programs whi le grant funding endures, but which cannot be sustained when the grants are unavailable. Clearly, the case for common sense approaches to new employee support are not as compelling nor as valued as we need. A more recent approach has been to focus efforts to generate funding for new educator support programs on increasing employee retention. This can be viewed as an attempt to demonstrate one of the major the benefits of effective inductio n, which is increased numbers of effective educators wor ing with students. Many studies in every ind of demographic and geographic setting have shown the abili ty of effective induction programs to increase retention. Some examples of the impa ct of induction on educator retention include: Texas A & M University, Corpus Christi, whose program has delivered a 96% retention rate after five years. The New Teacher Center at the University of California, Santa Clara, which is directed by Ellen Moire and has reported about 95% retention after 3 years. 53 Others include the La Fource, La. School District's Beginning Teacher Program, The Beginning Teacher Support program at Governors State University in Illinois, and the Washoe County School District Induction Program at Reno Nevada. As powerful a demonstration of success as these programs are for educators, many non educators still question the value of induction and even increased retention. This may be because the intended benefits of retention, improved teaching and student learning, are less concrete, although no educator doubts th ey occur. The bigger challenge has been that it $ ()+ !+ '% !4%&$'+)'! '(!$! >!&!,#'$ have occurred as a result of effective induction. Reducing Attrition clearly, we need a different strategy if we are to create and adequately sustain the new employee support programs we now we need. Just as in business and other no educational sectors, in education, we have begun to loo for a clearer connection between our programs and the bottom line. The goal has been to collec

t and present local data which clearly show a monetary value for better support of new employees. This is why the most recent strategy for gaining induction suppor t has been to demonstrate the true cost of employee attrition, which is the negati ve flip side of the more positive retention factor. In other words, rather than try ing to show the less tangible benefits of increased retention, we must show the cost-effectiveness of decreased attrition. 54 Combating high attrition Alarm bells are ringing loudly in corporate corridors as attrition rates in IT organisations average 22 percent as per a study conducted by the Indian Institut e of Technology, Bombay (IIT-B) with a sample of 1,028 IT companies in the country . Another survey done by People $ a Gartner group company specializing in the management of human capital in IT organisations $ has observed that the average tenure of an IT professional is less than three years. Below the surface Being a people-intensive industry, it is characterized by nowledge wor ers w ho are professionals. The HR issues here are quite different from those in other people-intensive industries. We therefore need to understand them in the context of various forces affecting the industry both directly and indirectly. G oing by the opinions of industry analysts, as well as exit interviews conducted by different companies, IT professionals are switching jobs for either money, career satisfaction or the opportunity to wor with newer technologies. However , when attrition is dealt with microscopically, other reasons surface. Says Dr Nand ish ore Rathi, placement officer of IIT-B, !M,'!+ %#&* '(! $8+1!36 2! ,%8& '()' '(! -)"5 %, match between personal requirements and organizational culture was quite prevalent. " M-%&* 2#'( '(! '(+!! 4)#& +!)$%&$ 4!&'#%&! !)+-#!+6 )& !4/-%3!! may be concerned about the environment in the organization, his compat ibility with his supervisors, the attention paid to him, and so on. 55 Money is not everything Although the importance of higher pac ages is slowly diminishing, among fresher or laterals with less than three years of wor experience, money is still consid ered to be the highest priority. Observes Ra esh Ti u, vice-president, deliveries, In finite Computer Solutions, !N#'( '(! %1!+)-- /)"5)*!6 '(! !4)& ,%+ performance-based salaries is going up. Employees want not only wor recognition, but also extra per s.

" A number of IT professionals are loo ing at more challenging jobs, expo sure to newer technologies, expansion of their domain capability, and movement from offshore to onsite. Adds V Bharathwaj, vice-president, global mar eting, 24/7 Customer, !<& $!1!+)- ")$!$6 ,)"! 2#'( ) "(%#"! >!'2!!& 4%+! 4%&!3 )& ) challenging job, employees have opted for the latter as it allows them to learn new technology and increase domain expertise. " O!%/-! )&)-30! '(! '+)#&#&* programmes of prospective companies with those of their current organiz ation, which means that how an organization grooms an employee is weighed to a greater extent. This is because they now that developing next-level s ills will eep them ahead in the job mar et, and finally result in better compensation. Th ey also loo for a job with higher levels of responsibility. Hence, the reason for an employee leaving a company could be nothing other than his growth $ both vertical and horizontal. If companies ta e proper steps and adopt methods to serve their employees &!! $6 '(! "()--!&*! %, 4)&)*#&* attrition will remain low. 56

Treat employees li e customers Even while companies strive to understand which organizational, job, and reward factors will contribute to holding bac employees, industry experts hav e found several loopholes at the top management and HR management level. Says Bijay Sahoo, vice-president, talent engagement and development, Wipro Technologies, !G%4/)&#!$ $(%8- ()1! ) $#4#-)+ )//+%)"( '% !4/-%3!!$ )& "8$'%4!+$; <, ) company strives to retain an employee in the same way it tries to r etain a customer, him leaving the organization could be out of question. " Since software professionals have different priorities at different poin ts of time, organisations need to structure their offer-mix while recruiting new hires, as well as promoting potential ones. Communication is the foundation for the e ntire process of managing attrition. This communication begins right from recruitme nt. In cases of peer pressure, an employee aims to join a well- nown company. This could be achieved by brand building, which attracts the right talent and hel ps in retention as well. The next level of communication, a crucial part of retention, starts with acquai nting employees with the company $ 1#$#%& )& %>=!"'#1!$; M$ K)'(# /8'$ #'6 organisations successful in retaining employees clearly pass on their goa

ls and achievements. Adds Rajeev Mali , director, HR, McAfee Software (India), !G%& 8"'#&* +!*8-)+ 4!!'#&*$ )& 8/ )'#&* !4/-%3!!$6 !$/!"#)--3 &!2 !&'+)&'$6 about the company $ $')'8$ )& )"(#!1!4!&'$ #$ ) 48$';" 57 Vision and objectives Observes R Natarajan, vice-president, finance and HR, Tavant Technologies India, !E!&'%+#&* )& ()& (%- #&* &!2 +!"+8#'$ ,+%4 )3 %&! '% ,%8+ 4%&'($ )+! important tas s; during this period, they should be familiarized with the cultur e of the company. It is at this time that new entrants experiment with different opti ons. Hence they should be exposed to the best values the company has. " <, '(!3 )+! informed about regular happenings in the company, employees will be confide nt about the future and not try to loo for better options. Notes Satish Ven atacha liah, head of HR at SAP Labs India, !N! "%448&#")'! FMO $ *%)-$ )& 4#$$#%& '% employees at all levels on a regular basis %'(#$ ()$ >+%8*(' %2& '(! )''+#'#%& level. " Understanding an employee $ &!! $ )' 1)+#%8$ -!1!-$ #$ ) +!"%44!& ! LK practice. The Meet Your People Programme carried out at Wipro aims to increase the effectiveness of supervisors. Under this initiative, all team leade rs meet regularly to exchange information about the challenges and successes of their respective teams. !C(+%8*( '(#$6 we are able to adopt best HR practices and tac le attrition to a great extent, " !./-)#&$ F)(%%; Exposure to newer technologies and well-managed succession plans cannot be ruled out in managing attrition. Training in the employee $ )+!) %, $/!"#)-#0)'#%& can glue him to the company. The training and development should invo lve domain-specific, technology-specific and behavioural s ills. Identifying t he right training for the right person is very important. !F%4! !4/-%3!!$ /+!,!+ 58 development to being in a support and maintenance job. To hold bac these people, we give first preference to training them, " ) $ K)5!$(; Further, the use of new technologies, the support of learning and training, and a challenging environment ran higher than competitive pay structures as effect ive retention practices. Consider feedbac Offering medical insurance, ta ing care of employees

,)4#-#!$6 )& ) *%% %1!+)-pac age should ma e sure these processes are not derailed. Going to o nsite locations matters a lot to IT wor ers, so organisations should allow all employe es to avail of this chance on a rotational basis. It is important to ta e feedbac from employees through different means and wor with the HR department to iron out differences. As industry experts p oint out, feedbac can be got in two ways $ during the employee $ '!&8+!6 )& '(+%8*( !.#' interviews. Inputs can be secured from existing employees through vario us employee relationship management tools. The Wipro Listens and Responds initiative at Wipro aims to capture the concerns and grievances of its employees . !C(! ,!! >)"5 2! *!' '(+%8*( '(#$ '%%- 2#-- >! )&)-30! 6 )& )"'#%& 2#-- >! ')5! & on it. Our employees are very excited that their feedbac is being ta en serious ly, " says Sahoo. Exit interviews help management learn the reasons why employees leave the company; based on their revelations, the organization can address t he problems of existing employees, thereby curb attrition. 59 Employee s advocate One of the main reasons why employees leave IT companies is because of problems with their managers. An HR professional can be termed an employee $ advocate and a bridge between top management and employees at all levels. There is a huge gap between HR professionals and IT professionals in terms of understanding challenges and delivering requirements. !LK ()$ &%' +!)--3 understood the problems associated with employees ")+!!+$ )& =%>$6" %/#&!$ Rathi. The company $ %1!+)-- /-)&$ )& $'+)'!*#!$ )-$% !/!& %& LK professionals as they voice employees /+%>-!4$ )& +!I8#+!4 ents. Says Dr Solomon Suresh, vice-president of HR at HTMT, !C(! LK !/)+'4!&' $(%8- ()1! genuine interest in the employees 2!-,)+!%#' #$ +!$/%&$#>-! ,%+ 4)5#&* $8+! '()' their expectations are met. By doing this it is easier to meet the company $ >8$#&! ss targets. " Why young techies need able mentors Indian IT companies should try to reduce the annual attrition rate among young engineers by providing them with good career counseling, advises Sudha ar P Goparaju The IT industry is maturing day by day in India. The country has a significant number of software engineers in the global IT wor force. Many IT companies

recruit fresh graduates from reputed engineering colleges and universities. Thes e young engineers are enthusiastic and have a good learning curve. Most of them are fast learners and hard wor ers. These engineers want challenging 60 assignments to get professional satisfaction. Only 25% of these engineers remain with their first company after 5 years. Almost 75% of them leave their first company in less than 5 years time. There may be several reasons to this. W hy can ' 2! '+3 '% $'%/ '(!4P C(#$ #$ &%' happening in the old economy companies. Can infotech companies help these engineers by providing good mentors for them? Young engineers change companies just for overseas assignments, designation, good technical wor , or simply for salary hi es. They thin that it is the right way to progress fast. M ost of them don ' '(#&5 %, -%&* -term when they are changing companies. One should remember that stability also leads to growth. Some engineers change jobs because of lac of maturity and aggressiveness. How many are ta ing advice from senior people when they are changing companies? This is the time actually when senior mentors within the organization should help them. They should give good career advice to these young engineers. There will be one company who can pay more than the present company all the time. So, young software professionals should not change jobs just for salary hi es. There are so many factors, which you should ta e into consideration li e company reputation, cultu re, your growth prospects, infrastructure, and many more. Indian infotech companies also should thin in terms of the long term. Majority of the software companies recruit people when they get a new project. These engineers should not be ignored once the project is over. They should retain the se people. These employees should be given both technical and managerial training so that they are useful for future assignments. 61 Trends in old economy companies People wor in manufacturing and old economy companies such as TELCO, SAIL, L&T, BHEL and HLL, etc. for their entire life. Why it is not happening in infotech companies? IT companies such as Infosys, Wipro, etc are among the most admired companies in India. Even in these companies attrition rate is high, may be 1 or 2 percent less compared with the industry average. Is it happening i n the western countries? Global giants li e IBM, HP, Sun and Microsoft are able to retain their employees for two to three decades. Is this because we have very fe w product development companies or because the Indian IT industry is concentrating only on the software services sector? Indian IT companies should try to reduce the annual attrition rate among young engineers by providing them with good career counseling. Usually young software professionals get plenty of opportunities once they have 3-5 years of experience. This is the time they should ta e control and ma e the right move. As they get more and more experience, opportunities may not be there in their s ill set because technology changes very fast. It is better that they should update their s ills all the time. Young IT professionals should not worry after they get 6-8 years of experience and by changing 5/6 companies. Most Indian software services companies

>8$#&!$$ )& %/!+)'#%&$ 4% !- #$ $#4#-)+; The process of product development and the solutions delivery is similar in all most all software solutions companies. All are going for quality standards li e ISO 9001, SEI-CMM, ISO 14000 EMS (Environment Management System). 62 How to stop BPO attrition? First, the good news; the business process outsourcing industry in India is growing at a phenomenal pace. Exports were worth $ 5.2 billion in 2004-05, growing at 44.5 per cent and industry body Nasscom has projected a 41 per cent growth in 2005-06 to $ 7.3 billion. The employee base has grown at a compounded annual growth rate of 52.6 per cent, from 42,000 in 2001-2002 to 3,48,000 in 2004-2005. Also, a Nasscom-Hewitt Associates survey says that the cost of attrition in the industry is 1.5 times the annual salary. For a fresh college graduate, a call centre job pays about 2.5 times as much as other job openings. And the boom shows all signs of continuing considering that the cost per transaction in India are estimated to be the lowest at 29 cents compared to 52 cents in China. Now, the bad news; Already grappling with a 30 per cent attrition rate (the high est in the Asia-Pacific region, compared to China at 10-15 per cent), the industry i s expected to have a manpower shortage of 2,62,000 in 2008. In a country where 3 million graduate every year, the tas is daunting. HR consultants say one of the ey gaps being faced by the industry is the low level of expertise at frontline (lower-middle) management, in managing and sustaining an ITES-BPO operation. 63 The inexperienced middle and frontline management is one of the ey causes of attrition. Another disturbing data is that nearly 50 per cent of those who quit leave the industry. So what's the way out? First, the industry has to get out of its image of an Int ernet sweatshop where an employee is resigned to his fate of being in office at ungodl y hours for a dead-end job. Companies which have not been able to tac le this image could ta e a cue from ICICI OneSource, which gives employees who have been with the company for more than 18 months an option to switch to positions in other ICICI group companies. The system wor s as a big assurance for BPO employees that the s ills they have learnt such as customer friendliness and rapid response to customer problems have wider applications and mar et demand. This is important considering the fact that the cost of attrition in the industr y is 1.5 times the annual salary. BPOs have also started moving up the value chain -- a primary reason why the industry needs to put its act together to meet the coming crisis for trained manpower. For example, the expectation is that by 2007, the industry demand for Java professionals alone will touch three million. 64 On its part, Nasscom is doing what it can by exploring the concept of a national s ills registry of IT employees, which will operate on a shared services model a nd

will be administered by a credible third party. The industry body is also coming out with an assessment and certification programme to create an employable talent pool with benchmar ed-requisite s ills and will shortly unveil an assessment and certification for frontline management . A Nasscom-KPMG study has made detailed recommendations for attracting, training, certifying and deploying resources for the ITES industry. Some of these recommendations, which are worth implementing, immediately are: An ITES/IT awareness fund is created with industry support to generate awareness about employment in these industries, especially in Tier II and III cities through advertisements, wor shops, seminars and counseling sessions. Existing infrastructure in universities/colleges and existing vocation counseling centres be leveraged, especially in Tier II and smaller towns to provide career counseling in ITES/IT opportunities. Some IT companies have of course done pioneering wor to become an employer of choice. TCS, for example, has put in place a comprehensive academic interface programme (AIP), process framewor and proper infrastructure. Under this programme, professors from academia are also sent on sabbatical to TCS. 65 Zenzar Technologies has also done its bit. The company has partnered with Symbiosis International Educational Centre to offer placement guarantees to successful graduates of the institute's management course in information technology. Admissions to this course are on the basis of a national entrance examination: AIMS Test for Management Admission (ATMA). The batch of 90 students in this course includes engineering students from premier institutes as well as non-engineering graduates from relevant streams. Parametric Technology Corporation (PTC) is another company that has made available its specialized CAD/CAM software Pro/Engineer to colleges across the world and is providing training on its platform. The company has entered into a partnership with ITC Infotech to promote technological literacy among secondary school students throughout India and has provided over 200 engineering colleges, including the IITs, BITS, and RECs, with Pro/Engineer software for their classrooms. There are many more such examples. For BPOs, the signal is clear: shape up or ship out. 66 IMPORTANCE OF EMPLOYEE ATTRITION Why is ATTRITION important? Employee attrition costs 12 to 18 months $)-)+3 ,%+ !)"( -!)1#&* 4)&)*!+ %+ professional and 4 to 6 months' pay for each leaving clerical or hourly employee . According to a study by Ipsos-Reid, 30% of employees plan to change jobs in the next two years. Do the math and discover how much your company will pay for attrition. If managers now the real causes of attrition, managers can control attrition an d retain employees. Each retained employee can save money and lead to better opportunities. Though employee turnover can help organizations evolve and change, an American Management Association survey showed that four out of five CEOs view employee retention as a serious issue for organizational success. Employee Turnover Trends Minimizing turnover at the wor place has long been held as conventional wisdom that almost goes without saying.

Lately more companies are ta ing the approach that managing turnover in terms of eeping it low just for the sa e of having a low turnover rate is not necessa rily the most profitable practice. 67 Instead of managing turnover and giving equal value to all employees the notion is that retention efforts should be focused on certain types of employees rather than across the board. For example, at Applebee's their system doesn't reward managers for eeping turnover low, it rewards them for eeping turnover low for top-performing employees. In their case the company divides its employees into three groups: th e top 20 percent, the middle 60 percent, and the bottom 20 percent. (The 20/60/20 approach.) With the retention efforts of their managers focused on the top 80 percent of employees the company doesn't even set retention goals for the bottom 20 percent. Many of those in the bottom percentage will leave and be replaced by a new group of hires, some of whom may turn out to become top-performers. Turnover usually rises during economic expansions and falls during recession, in an inverse proportion to the unemployment rate. Today we are experiencing ongoing soft labor mar ets and unusually low quit rates. In this environment the trend is that many companies are more concerned with the turnover rate being too low rather than too high. With a heightened concern about wrongful termination lawsuits managers can sometimes be reluctant to release poor performers, and this in turn may lead to a loss in competitiveness. 68 Some advantages of higher turnover rates are in introducing new talent, and cost savings through resetting salaries and other measures. In some cases employers must replace old s ill sets with new ones as technology or the customer base changes, or for a different demographic mix or a better distribution of age grou ps. To facilitate this some companies are now moving towards semiannual or even quarterly reviews to speed up the process of terminating low performers or employees who can't step up to meet new requirements of the company. The trend seems to be that wor force management executives are more li ely to thin that unless they are creating "churn" in their turnover they are facing a situation of ongoing inflated labor costs and stagnation. More about Employee Turnover One of the main financial benefits of turnover is that it provides an opportunit y to reset salaries. As employees at the high end of the pay structure leave, cost savings are typica lly seen when a company brings in a replacement at a lower rate, or promotes from within and lowers the rate for that employee's replacement. Turnover can also produce substantial savings in employee benefit programs, especially when younger wor ers replace older wor ers. Most of the higher costs of benefit programs come from health care premiums, which are age-related. 69 Jamie Hale, senior consultant at Watson Wyatt predicts that total benefit costs for older wor ers are generally around 20 percent higher than for younger wor ers. Some other savings that can be seen by turnover are annual bonuses that are not paid, open-position savings, and the value of any performance improvements that might result.

Of course there are costs, as well as savings, involved in any turnover equation . In the past "turnover cost calculators" have provided input for financial costs, but no inputs for financial gain. In ma ing turnover calculations now companies are more often aware that a standard cost/benefit analysis cannot be provided for when the focus is only on the cost side of the equation and does not include the benefit side. When both costs and benefits are considered a more realistic cost/benefit analys is can be reached, and as a result turnover is now often viewed in a different ligh t. By documenting all of the savings produced by turnover as well as the costs, companies now can manage turnover levels so that financial gains outweigh the losses. 70 Summary Too much recruitment and training costs employers money, but so does a wor force stac ed with stale managers and unmotivated employees. At least in this climate of soft labor mar ets and low quit rates turnover is no w more li ely to be seen as an opportunity for bringing in fresh talent into a wor force while at the same time extracting savings by lowering labor costs and adjusting benefits pac ages. But even without current labor mar et conditions, employers are ta ing a new loo at controlling and managing turnover in a more comprehensive way. 71

LOOPHOLES IN ATTRITION MANAGEMENT When baby boomers reach retirement age, the departure of many highly-s illed veteran employees is going to hurt business performance in several ways. It will not only decrease the potential for innovation and growth in some units, but acceler ated attrition will also decrease operational efficiency and increase costs. A few organizations are trying to get the jump on this problem. Companies li e the Tennessee Valley Authority, Northrop-Grumman, and Dominion Resources have begun implementing new wor force development strategies to improve the retention of critical nowledge and reduce the costs of turnover. But in our ong oing research and consulting with many firms, I have found six problems that are crippling organizational efforts to improve wor force capabilities in the face o f baby boomer retirements. How are you going to avoid these challenges? Mista e #1: Assuming leaders will invest in solutions once aging wor force threats are pinpointed. Some companies are becoming good at diagnosing where they are most vulnerable to losing employees with critical nowledge. But, when it comes to implementing specific solutions, such as accelerated mentoring programs, investing in nowledge capture systems, or hiring successors early enough to tra in them, leaders often won ' /+%1# ! '(! /%-#'#")- $8//%+' %+ '(! +!$%8+"!$ &!! ! ; Developing proactive executive champions is an essential part of almost every aging wor force initiative. 72

Mista e #2: Failing to connect aging wor force solutions to management $ strategic objectives. Managers in one large aerospace company undertoo a major nowledge retention initiative when the firm began losing too many engineers wit h special nowledge needed to maintain one type of aircraft they had built. But company executives pulled the plug on the project a year later because it wasn ' producing results that were lin ed clearly enough to business outcomes. Retainin g and developing wor force capabilities must always be tied somehow to objectives that leaders really care about. Building a clear business case for nowledge retention is the only way to overcome the inevitable conflicts that arise when o ther business needs start competing for the same resources. Mista e #3: Pursuing the silver bullet solution. The threat of losing 20 to 50 percent of your employees in the next five years is a sobering problem. But the solution doesn ' -#! #& %&! %+ '2% #&#'#)'#1!$ )//-#! 8&#,%+4-3 )"+%$$ '(! %+*)&#0)'#%&; K%--# &* out a new succession planning process or implementing a flexible phased retirement program won ' >! ) !I8)'! ,%+ "+!)'#&* 3%8+ ,8'8+! 2%+5,%+"! 2(!& $% much experience is leaving. Companies need a portfolio of options that can be customized to meet the requirements of individual units and departments. Responding to the nowledge retention needs of R&D scientists, for example, is different than meeting the requirements for effective senior management succession. Mista e #4: Not ta ing into account employee attitudes towards sharing valuable nowledge. Face it, employees often have a wide range of feelings about sharing 73 nowledge. In organizations li e NASA and the World Ban , where there is a stron g commitment to the organization $ %&*%#&* 4#$$#%&6 1!'!+)& 2%+5!+$ )+! 4 ore li ely to willingly share what they have learned. But in plenty of firms today, employe es, who feel burned out and cynical because of past layoffs and budget cuts, are li ely to be unmotivated to participate in nowledge sharing programs. Find out your employees )"'8)- -!1!- %, "%44#'4!&' 2(!& !$#*&#&* 5&%2-! *! +!'!&'#%& strategies so you can be sure new programs and systems are aligned with peoples willingness to cooperate. Mista e #5: Over investing in technology solutions to !")/'8+!" 5&%2-! *!; Sandia Labs spent millions of dollars videotaping hundreds of employees who were about to retire. Unfortunately, it turned out younger wor ers at the nuclear weapons l ab weren ' #&'!+!$'! #& +!1#!2#&* (%8+$ %, 1# !% ')/! '% ,#& %&! &8**!' ,+%4 )& %codger, no matter now smart he or she was. The business world is already full of unused

!-!$$%&$ -!)+&! " )')>)$!$ )& 8$'3 1# !%')/!$ "+!)'! 2#'( !/)+'#&* employees. When it comes to nowledge retention, leading with a technology solution is a recipe for failure. Technology definitely has a role to play in su pporting nowledge retention efforts, but it must be applied only when it is aligned with existing nowledge sharing and learning behaviors. Mista e #6: Failing to integrate aging wor force or nowledge retention solutions. There are a wide range of initiatives needed to support the development of futur e wor force capabilities to compensate for attrition among highly-s illed employee s. But, in my consulting with organizations today, I find most are not coordinating 74 these efforts and the opportunity costs are tremendous. Strengthening your wor force for the future means coordinating and integrating activities in four a reas: (1) human resources policies and processes, such as succession planning and phased retirement practices; (2) the use of a variety of nowledge transfer practices, such as documentation, storytelling, and coaching; (3) leveraging IT applications effectively to support nowledge capture, sharing, and reuse; and ( 4) proactively designing practices to recover nowledge once it has left the organization, either through careful outsourcing or formal programs to bring ret irees bac as consultants or contractors. The challenges posed by an aging wor force and increased mid-career turnover are getting greater management attention these days. That $ ) *%% '(#&* >!")8$! there will be staggering nowledge losses in the years ahead due to the departur e of experienced managers and professionals from organizations throughout the industrialized world. But leaders who have begun addressing this problem are running into new challenges. The potential mista es described here can undermine future wor force development and threaten business performance. Anticipating them will help you minimize their effects. 75 EFFECTIVE ATTRITION MANAGEMENT Managing Employee Attrition The tas of managing employee attrition can be split into three stages: Identify the level and cost of turnover and benchmar ing it against competitors Understand why employees leave Implement retention strategies Identify the level and cost of turnover When does employee turnover become a cause for concern? Labour turnover varies across industry sectors, and different organization sizes . Furthermore, the cost and impact of attrition varies dependent on the geographic location and the labour mar et in which the organization is competing. Identifying your employee turnover rates and benchmar ing this figure against similar organisations is one way to assess significance, however the ey determinant of whether retention is a cause for concern is how difficult and/or costly it is to replace leavers. 76 Understand why employees leave

Exit interviews are an ideal way of recording and analyzing the factors that hav e led staff to leave the organization. They allow an organization to collate quantitat ive and qualitative data regarding reasons for leaving and underlying issues. Survey highlighted a further benefit of conducting exit interviews. Perception of Organization of those who didn t have an Exit Interview (Fig: 9.1) As can be seen above, the employees who received an exit interview as part of their leaving process left with a more positive opinion of the organization than those who did not. Overall, the perception of the former employer was improved by 15.3 % where exit interviews were used. Ensuring leavers retain a positive opinion of t he organization is important to protect your employer brand and is a ey part of retaining your remaining employees. 77 Maximizing the success of staff interviews The success of any staff interview depends on employees 2#--#&*&!$$ '% *#1! ,8-and honest feedbac . Some survey respondents expressed concern about their individual experiences. Common complaints included: I was uncomfortable giving honest feedbac The interview was carried out by a line manager/colleague # I did not feel comfortable discussing our wor ing relationship The interview was carried out by a senior director which was quite intimidating The interview was carried out by the HR department - I was concerned that my feedbac could affect my future references. The process did not allow me to express my true opinions The interview was structured and the questions were phrased in a way which restricted me from revealing my true feelings. No action was ta en following my feedbac 78 Feedbac forms were simply filed away and disregarded HR had little power to implement employees $8**!$'#%&$ The best way to gain staff buy-in is to ensure that: The process is implemented by someone who is seen as impartial The employee is given the opportunity to spea freely about their opinions Employee feedbac is acted upon The organizations should offer a flexible delivery mech anism via either: Face-to-face interview Telephone interview Online or paper-based questionnaire Staff satisfaction surveys can be another excellent way of collecting staff opin ion. Trac ing employee motivation and opinions over time helps the organization address motivation issues before they become retention issues. Implementing a retention strategy As the causes of staff turnover are varied, li ewise, there are a number of pote ntial solutions. The most effective solution is to adopt a holistic approach to dealin g with attrition.

79 An effective retention strategy will see to ensure: Attraction and recruitment strategies enable selection of the +#*(' ")& # )'! ,%+ each role/organization New employees #&#'#)- !./!+#!&"!$ %, '(! %+*)&#0)'#%& )+! /%$#'#1! Appropriate development opportunities are available to employees, and that they are ept aware of their li ely career path with the organization The organization $ +!2)+ $'+)'!*3 +!,-!"'$ '(! !4/-%3!! +#1!+$ The leaving process is managed effectively Specific Retention Strategies The survey research undertoo by experts revealed the reasons why employees leave organisations. These differed from the reasons why employers thought employees left. To ensure you implement the +#*(' +!'!&'#%& $'+)'!*36 "%4/)&#!$ can underta e an independent audit of your new joiners 6 current employees )& leavers 1#!2$; C(#$ 2#-- *#1! "%4/)&#!$ ) +!)- /#"'8+! %, (%2 3%8 $(%8- /+#%+#'#0! your retention interventions. 80 The wor ing lifecycle (Fig: 9.2) Over 77% of employers report retention difficulties Revolutionizing staff retention To develop a tool to identify how we can maximize employee retention calculate organization's staff turnover rates Bench mar your staff turnover against that of similar organizations calculate the financial cost of your organization's staff turnover Demonstrate the cost saving available through improved retention 81 Identifies strategies to improve staff retention The Business Challenge In the call center world one of the largest challenges facing most call centers is the high rate of agent attrition. Agent attrition is costly business as any business manager in a call center will tell you. Not only does it raise the cost of recru itment and training, it also disrupts the programs and reduces the overall quality of the programs being run. Most call centers are facing a situation that is not very unfamiliar in the rapi dly growing but competitive world of Indian call centers. The employee attrition rat e was as high as 80% with close to 50% of the recruits leaving within the first si x months of joining the company. Consequently, the companies are facing severe quality management pressures on some of the programs that had highly involved training programs. The call center needed mechanisms to reduce the attrition and to reduce the adverse impact of attrition. Solution Conducted an analytics based study to understand employee behavior and to

predict employee behavior. As a first step we collected internal data on the pas t 82 behavior of the call center's employees. Then overlaid that information with pro file information of these employees that the organization had collected prior to recruitment as well as during the course of their employment. Finally, also appended data on the employees' performances, their performance evaluations and their raises and bonuses. Create segmentation models that were able to segment the employees by their profile information and attrition history. This gave a starting point to underst and what segments of employees had a higher inherent propensity to attrite. We also built segmentation models around employee performance to understand if there were certain profiles of agents that were consistently performing better than ot hers. Finally, create a scoring model that would ran order employees by their propens ity to attrite from the company. Implementation The segmentation and scoring models were able to accurately distinguish and identify employees that were at a higher ris of attrition. The call center used our profiling models in various different but effective ways. Firstly, they were abl e to alter their recruitment policy to proactively attract profiles that were less li ely to attrite. Also, based on an employee's attrition score they could decide what in d of mentoring was necessary for the employee. Finally, they were also able to 83 allocate employees strategically to different programs based on their ris of attrition. 84

Annexure Attrition Graph (Fig: 2.1) Chart showing average length of job tenure (Fig: 4.1) 85

Chart showing how length of service varies across different sized employers (Fig: 4.2) Chart showing how length of job tenure varies across different industry sectors (Fig: 4.3) 86

Chart comparing employers perceptions of reasons for leaving and employees actual reasons for leaving (Fig: 4.4) Employees ______ Employers ______

Perception of Organization of those who didn t have an Exit Interview (Fig: 9.1) 87 The wor ing lifecycle (Fig: 9.2) 88 Bibliography Websites www.7thwavesolutions.com www.businessworldindia.com www.citehr.com www.datacraft-asia.com www.economictimes.indiatimes.com www.erp.ittoolbox.com www.expressitpeople.com www.humanlin s.com www.peoplefirstsolutions.com www.teachermentors.com Other Information sources Company Manual Datacraft Intranet HR Documents JOURNALS: Business Line (Catalyst) Journal of HRM Review (ICFAI publications) 89