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Strategies for Reducing Employee Turnover

High employee turnover is one of the biggest problems facing companies today, especially in manufacturing, services, and marketing where turnover rates can be as high as 7-13%. Reasons for turnover include lack of challenge, responsibility, career growth opportunities, and a poor work environment. While the old goal of HR was to minimize turnover, the new goal is to influence when and who leaves by controlling the direction and speed of employee movement like managing a river. For knowledge-based companies in industries like IT, the average employee stay has dropped to just one year, so retention strategies must ensure realistic expectations, emphasize soft skills, build a good company culture, share profits, provide training and mobility opportunities to reduce turnover.

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Gunjan Nigam
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83 views20 pages

Strategies for Reducing Employee Turnover

High employee turnover is one of the biggest problems facing companies today, especially in manufacturing, services, and marketing where turnover rates can be as high as 7-13%. Reasons for turnover include lack of challenge, responsibility, career growth opportunities, and a poor work environment. While the old goal of HR was to minimize turnover, the new goal is to influence when and who leaves by controlling the direction and speed of employee movement like managing a river. For knowledge-based companies in industries like IT, the average employee stay has dropped to just one year, so retention strategies must ensure realistic expectations, emphasize soft skills, build a good company culture, share profits, provide training and mobility opportunities to reduce turnover.

Uploaded by

Gunjan Nigam
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

WHY HRM?

NO MATTER WHAT PROFESSION

PEOPLE NEED TO GET TRAINED AND MOTIVATED

TO ACHIEVE.

TARGETS

FOR ALL THESE TO HAPPEN WE NEED TO PROPERLY MANAGE PEOPLE AND TO ACHIEVE ALL THIS WE NEED

One of the biggest problems faced by today's companies is

High turnover

FACTS TO THINK ABOUT


90% COMPANIES HAVE RETENTION PROBLEMS 50% OF THESE ARE MANUFACTURING, SERVICES AND MARKETING COMPANIES THE SMALL-SIZED AND MEDIUM-SIZED COMPANIES LOSE MORE PEOPLE TURNOVER RATES ARE AS HIGH AS 7% IN MANUFACTURING AND 13% IN THE HI-TECH INDUSTRY EMPLOYEES GO TO - SMALL COMPANIES-FOR EXCITING OPPORTUNITIES AND GREATER IDENTITY / LARGE COMPANIES-FOR DEFINED ROLES, CLEARER CAREER PATHS AND BETTER HR SYSTEMS ---- AIMA - BT Survey, July 1999.

Monotony (repetitiveness) and lack of challenge Lack of responsibility More money Lack of value-addition to career Lack of good developmental projects Idle(inactive) time 'sitting on the bench' Lack of transparency 'Promises not kept' and ill-treatment Organization culture Lack of quality consciousness

The old goal of HR Management - to


minimize

overall

employee turnover -

needs to be replaced by a new goal: to influence

who leaves and when he leaves

If managing employee retention in the past was like tending to a dam that keeps a reservoir in place, today it is more like managing a river.

The objective is not to prevent water from flowing out but to control its direction and speed.

Today, IT companies are facing a shortage of knowledge workers because the rate at which they lose employees is almost double the rate at which they hire.

The average stay of a software consultant of IT Company has dropped to one year.

Ensure realistic expectations among applicants and avoid hype

(i.e., do not promise a paradise) Emphasize and test soft-skills in selection Build good work environment, good house-keeping, open and informal culture, concierge (caretaker) services and so on Share the wealth through profit-sharing etc. Train in soft-skills regularly and intensively Train in business skills and team-working

Get top management involved in training

Insist on sensible schedules, give breaks


Move up the value chain - from body shopping to programming

to business solutions to product development to technology development

Keep structures open, flexible, non-bureaucratic through small

teams in large setups Ensure first rate projects in joint ventures Encourage entrepreneurship in comparison with idea generators, venture capital Certifications and encouraging mastery in applications Inter-project, technical mobility and flexibility

Ideas for compensation structure : 1. Up to 50% as Base pay per region, skill-set and

experience 2. 10% of Base pay as annual increment 3. Tax-free benefits like HRA, lunch etc [Link] up gradation reimbursements [Link] for performance - project-based profit sharing, early completion bonus etc. [Link]-based rewards [Link] directly for facilities offered - insurance premium and not cash and so on

In some cases, companies have found that high turnover isn't as

big a problem as it appears. If there's a large pool of talented employees available, it might want to focus on recruitment rather than retention. since new hires have lower salaries than long-term employees, the company is able to keep a lid on compensation levels. Cooperating with competitors is another way of dealing with retention.

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