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A study on efficacy of employee retention strategies in IT industries – A lucrative side of Business

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Abstract

Employee turnover is one of the largest though widely unknown costs an Organization faces. Employee retention is a process in which the employees are encouraged to remain with the organization for the maximum period of time. Many of the IT companies are using different retention strategies to retain their potential employees to reduce the cost to the company in recruiting and training new employees. Also it is very important to have a common framework strategy of retention for all the organizations in the same industry, especially it is very much require for the information technology industry which is facing lot of problem in recruitment and training due to poor retention of employees. The objective of this study is to examine the best practices in IT industries to retain employees. The research design adopted for this study is descriptive research. The required data were collected from the employees of the IT companies in Chennai by the help of a questionnaire among a sample of 110 chosen based on Convenience Sampling (Non-Probability). The data collected were analysed and calculated with the help of statistical tools to arrive at a precise finding. It has been found out from the study that employee retention strategy is high and the lengthy process must evaluate and redefined. Key words: Employee Engagement, Employee Retention, IT industry To cite this article: Sundar, K. S. & Kasinathan, S. (2015). A Study on Efficacy of Employee Retention Strategies in IT Industries- A Lucrative Side of Business, International Journal of Business and Administration Research Review, Vol. 3. Issue 12, pp 38-41
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A STUDY ON EFFICACY OF EMPLOYEE RETENTION STRATEGIES IN IT INDUSTRIES A LUCRATIVE
SIDE OF BUSINESS
Dr. K. Shyama Sundar* Mr. S. Kasinathan **
* Research Supervisor, (Bharathiyar University, Coimbatore) & Dean, Department of Management Studies, Mohamed
Sathak College of Arts and Science, (Affiliated to University of Madras) Sholinganallur, .
** Research Scholar, (Bharathiyar University, Coimbatore) & Assistant Professor, Department of Management Studies,
Sikkim Manipal University, DDE, Gangtok, Sikkim .
Abstract
Employee turnover is one of the largest though widely unknown costs an Organization faces. Employee retention is a process
in which the employees are encouraged to remain with the organization for the maximum period of time.Many of the IT
companies are using different retention strategies to retain their potential employees to reduce the cost to the company in
recruiting and training new employees. Also it is very important to have a common framework strategy of retention for all the
organizations in the same industry, especially it is very much require for the information technology industry which is facing
lot of problem in recruitment and training due to poor retention of employees.The objective of this study is to examine the
best practices in IT industries to retain employees. The research design adopted for this study is descriptive research. The
required data were collected from the employees of the IT companies in Chennai by the help of a questionnaire among a
sample of 110 chosen based on Convenience Sampling (Non-Probability). The data collected were analysed and calculated
with the help of statistical tools to arrive at a precise finding. It has been found out from the study that employee retention
strategy is high and the lengthy process must evaluate and redefined.
Key words: Employee Engagement, Employee Retention, IT Industry.
INTRODUCTION
According to Get Les Mckeown's employee retention is define as "effective employee retention is a systematic effort by
employers to create and foster an environment that encourages current employees to remain employed by having policies and
practices in place that address their divers needs. Also of concern are the costs of employee turnover (including hiring cost s.
productivity loss). Replacement costs usually are 2.5 times the salary of the individual. The costs associated with turnover
may include lost customers, business and damaged morale. In addition there are the hard costs of time spent in screening,
verifying credentials, references, interviewing, hiring, and training the new employee just to get back to where you started."
The term “employee retention” first began to appear with regularity on the business scene in the 1970s and early ‘80s. Until
then, during the early and mid-1900s, the essence of the relationship between employer and employee had been (by and
large) a statement of the status quo: you come work for me, do a good job, and, so long as economic conditions allow, I will
continue to employ you. It was not unusual for people who entered the job market as late as the 1950s and ‘60s to remain with
one employer for a very long time, sometimes for the duration of their entire work life. In the 1970s and later, as job mobility
and voluntary job changes began to increase dramatically, the status-quo model began to fray substantially at the edges.
Employees found themselves with a new phenomenon to consider: employee turnover. As organizations began to feel the
impact of employee turnover, so a matching management tool began to be developed- employee retention. (McKeown 2002)
Employee retention is a process in which the employees are encouraged to remain with the organization for the maximum
period of time or until the completion of the project. Employee retention is beneficial for the organization as well as the
employee. Employees today are different, they are not the ones who don’t have good opportunities in hand. As soon as they
feel dissatisfied with the current employer or the job, they switch over to the next job. It is the responsibility of the employer
to retain their best employees. If they don’t, they would be left with no good employees.
A good employer should know how to attract and retain its employees. Most employees feel that they are worth more than
they are actually paid. There is a natural disparity between what people think they should be paid and what organizations
spend in compensation. When the difference becomes too great and another opportunity occurs, turnover can result. Pay is
defined as the wages, salary, or compensation given to an employee in exchange for services the employee performs for the
organization.What people are paid has been shown to have a clear, reliable impact on turnover in numerous studies.
Employees comprise the most vital assets of the company. In a work place where employees are not able to use their full
potential and not heard and valued, they are likely to leave because of stress and frustration. In a transparent environment
while employees get a sense of achievement and belongingness from a healthy work environment, the company is benefited
with a stronger, reliable work-force harbouring bright new ideas for its growth.
Research Paper
Impact Factor: 3.072
Peer Reviewed, Listed & Indexed
IJBARR
E- ISSN -2347-856X
ISSN -2348-0653
International Journal of Business and Administration Research Review, Vol. 3, Issue.12, Oct - Dec, 2015. Page 39
Employee turnover is one of the largest though widely unknown costs an Organization faces. While companies routinely
keep track of various costs such as Supplies and payroll, few take into consideration.Once the causes of attrition are found, a
strategy is to be implemented so as to reduce employee turnover.
The most effective strategy is to adopt a holistic approach to dealing with attrition. An effective retention strategy will seek to
ensure: Attraction and recruitment strategies enable selection of the ‘right’ candidate for each role/organization New
employees’ initial experiences of the organization are positive Appropriate development opportunities are av ailable to
employees, and that they are kept aware of their likely career path with the organization The organization’s reward strategy
reflects the employee drivers.
OBJECTIVES OF THE STUDY
To examine the best practices in the organization to retain employees.
To evaluate the effectiveness of the existing best practicesto retain employees.
REVIEW OF LITERATURE
Byrnes (2002) notes that there are five essential steps for a company to develop an effective retention strategy. First, a
corporate values system must be defined based upon the organization’s values and vision. These values must guide the
company and identify those employees desiring to move in the same direction.
Weinberg (1997) Rock Bottom Restaurants is one of such companies, The Boulder, Colorado based restaurant chain allows
employees to participate in the hiring process. In this way, new hires understand the demands and expectations of the work
environment from others directly involved in the work themselves. Rock Bottom also allows employees to help in setting
work schedules. This type of environment contributes to employees who enjoy their work and provide exceptional service as
a result.
Sunil Ramlall (2003)Research indicates that the total cost of employee turnover is about 150% of an employee’s salary.
Because of this high cost of turnover, the organization that is the focus of this article sought to understand their employee’s
turnover intentions and the reasons for the potential turnover. Through a series of surveys, observations, and interviews, it
was determined that the location of the company and its compensation package were the most common factors in remaining
with the company and that compensation and lack of challenge and opportunity were the most common factors in
contemplating leaving the organization.
Watson Wyatt (2006) Strategic Rewards study, none of the employers surveyed believe healthcare coverage is a key reason
why top-performing employees leave. Twenty-two percent of top-performing employees surveyed in the same study,
however, cited healthcare benefits as one of the top three reasons they would leave an employer.
RESEARCH METHODOLOGY
The research design adopted for this study is descriptive research. The required data were collected from the employees of
the IT companies in Chennai by the help of a questionnaire among a sample of 110 chosen based on Convenience Sampling
(Non-Probability). The data collected were analysed and calculated with the help of statistical tools to arrive at a precise
finding.
DATA ANALYSIS AND DISCUSSION
Table No. 1,Gender wise classification of respondents
Gender
Number of respondents
Percentage
Male
77
70
Female
33
30
Total
110
100
Source: primary data Table No. 2,Age wise classification of respondents
Age (in years)
Percentage
18-25
29
26-36
39
>36
32
Total
100
Source: primary data
Research Paper
Impact Factor: 3.072
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ISSN -2348-0653
International Journal of Business and Administration Research Review, Vol. 3, Issue.12, Oct - Dec, 2015. Page 40
Table No. 3,Experience wise classification of respondents.
Experience(in years)
Number of respondents
Percentage
0-2 years
28
25
3-4 years
65
60
>4 years
17
15
Total
110
100
Source: primary data
Table No. 4,Rewards and Recognition on your achievements matters
Rewards and Recognition on your achievements matters
Number of respondents
Percentage
Strongly agree
20
18
Agree
24
22
Neutral
16
15
Disagree
38
35
Strongly disagree
12
10
Total
110
100
Source: primary data
Table No. 5,Reward and Recognition as any impact on Retention
Reward and Recognition as any impact on Retention
Number of respondents
Percentage
Strongly agree
37
34
Agree
30
27
Neutral
22
20
Disagree
12
11
Strongly disagree
9
8
Total
110
100
Source: primary data
Table No. 6Correlation between Reward and Recognition as any impact on Retention
Table No. 7,The coefficient of correlation r is given by
N∑ XY – (∑ X) (∑ Y)
r = √N∑X2(∑ X) 2x√N ∑Y2- (∑ Y) 2
5 * 2762 - 110*110
r = √5 * 2946-(110) 2*√5 * 2730 – (110) 2
13810 - 12100
=√2630 * √1550
Options
X
Y
X2
Y2
XY
Excellent
37
33
1369
1089
1221
Very good
30
22
900
484
660
Good
20
26
400
676
520
Poor
14
20
196
400
280
Very poor
9
9
81
81
81
Total
110
110
2946
2730
2762
Factors
Excellent
Very good
Good
Poor
Very poor
Rewards & Recognition
37
30
20
14
9
Retention
33
22
26
20
9
Research Paper
Impact Factor: 3.072
Peer Reviewed, Listed & Indexed
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E- ISSN -2347-856X
ISSN -2348-0653
International Journal of Business and Administration Research Review, Vol. 3, Issue.12, Oct - Dec, 2015. Page 41
1710
=51.28* 39.37
1710
=2018.89
= 0.847 = 0.85.
Interpretation
Here the value is less than 1. There is a positive correlation between Rewards & Recognition and Retention.
General findings
Majority 70% of are male members. Females get minimum level of 30% representations.
Average experience of the respondents [60%] in the company is 3- 4 years.
Nearly half of the respondents [47%] say they will leave the organization for the reason of career opportunity.
Statistical findings
There is a positive correlation between rewards & recognition and retention.
CONCLUSION
Retention is an important concept that has been receiving considerable attention from academicians, researchers and
practicing HR managers. In its essence, Retention comprises important elements such as the need or content, search and
choice of strategies, goal-directed behavior, social comparison of rewards reinforcement, and performance-satisfaction. The
increasing attention paid towards Retention is justified because of several reasons. Motivated employees come out with new
ways of doing jobs.
They are quality oriented. They are more productive. Any technology needs motivated employees to adopt it successfully.
Several approaches to Retention are available. Early theories are too simplistic in their approach towards Retention.The
Human Relations Movement posits that social contacts will motivate workers. Mere knowledge about the theories
of Retention will not help manage their subordinates. They need to have certain techniques that help them change the
behavior of employees. One such technique is reward. Reward, particularly money, is a motivator according to need -based
and process theories of Retention.
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Human Behaviour at work: Organizational Behaviour. 7 th Edition
  • K Davis
  • J W Nestrom
Davis, K. and Nestrom, J.W. (1985). Human Behaviour at work: Organizational Behaviour. 7 th Edition, McGraw Hill, New York, p.109
Managing Industrial and Group Behaviour in Organizations McGraw-Hill
  • D C Feldman
  • H J Arnold
Feldman, D.C., & Arnold, H.J., (1983). Managing Industrial and Group Behaviour in Organizations McGraw-Hill, New York, p. 192.
Multidisciplinary Approaches to Breathing Pattern Disorders
  • Smith
Smith (2001), Multidisciplinary Approaches to Breathing Pattern Disorders, Churchill Livingstone.