Understanding Employee Attrition


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This presentation seeks to understand all possible factors behind Employee Attrition in the Philippine Corporate setting with challenges to HR departments to be innovative in addressing this problem.

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Understanding Employee Attrition

  1. 1. Attrition The reduction in staff and employees in a company through normal means, such as retirement, resignation or death. This is considered natural in any business and industry. Attrition is also called Total Turnover or Wastage Rate
  2. 2. Why worry about Attrition? A high rate of attrition or manpower turnover in an organization leads to increased recruitment, hiring and training costs. Not only is it costly but qualified and competent replacements are hard to find!
  3. 3. Types of Attrition Positive Attrition - Where the company inherits new talent when an employee gets promoted or when the company dismisses an employee due to underperformance. Negative Attrition – When a productive employee resigns causing a loss of talent and skills within the company.
  4. 4. Employer Vs. Employee Initiated Resignation Employer Initiated Usually due to: - Employee Underperformance - Violation of company policy by the employee - Necessary staff reduction - Change of management Employee Initiated Usually due to: - Better offer at a different company - Change of career plans - Disputes within the company - Personal or Family related issues
  5. 5. Attrition is inevitable and usually highest during the 1st quarter of the year
  6. 6. Why do Employees really resign?
  7. 7. Unfair Compensation and Benefits
  8. 8. Inability to cope with the demands of the job
  9. 9. Job becomes boring, routine and monotonous; lacking challenge.
  10. 10. Lack of career growth opportunities “Dead-End Job”
  11. 11. Bad Leadership and Incompetent Management
  12. 12. Issues with Peers in the Office
  13. 13. Health Problems
  14. 14. Change of Career Plans
  15. 15. Important: Lack of Appreciation and Motivation
  16. 16. Other Reasons Personal Issues Family Issues Change of location and preference Immigration abroad To pursue further study
  17. 17. Specific Causes for Attrition Poaching  Use of referral schemes by competitors Growth Opportunities 1/10 is made a consultant 1/100 is made a manager Personal Reasons  Change of place  Getting married  Higher education  Health Salary & benefits  Higher Salary  Better positions Work Environment  Rigid rules  Strict Monitoring  High Stress Levels  Nature of the job  Expectation mismatch
  18. 18. Effects of Attrition Diminished productivity – employees serving their notice of resignation will no longer work as hard as they did before. Loss of Knowledge and Experience – the employee takes this with him or her when leaving. Loss of current clients and business associated with the departing employee. Negative emotional impact of other team members.
  19. 19. Effects of Attrition Excessive burden of workload to those left behind. Loss of revenue and increased cost to company in hiring and training new staff Believe it or not, 30% attrition per month is an accepted as a norm in most BPO companies.
  20. 20. Generally, it is more cost effective to retain employees than to hire new ones!
  21. 21. Is intervention possible?
  22. 22. Intervention Possible Unfair Compensation and Benefits Inability to cope with the demands of the job Job becomes boring, routine and monotonous lacking challenge. Lack of career growth opportunities “Dead-End Job” Bad Leadership and Incompetent Management Issues with Peers and in the Office Lack of Appreciation and Motivation Unavoidable Health Problems* Change of Career Plans* Personal Issues Family Issues Change of location and preference* Immigration abroad To pursue further study*
  23. 23. Addressing Motivation
  24. 24. Motivation Motivation is the result of processes, internal or external to the individual, that arouse enthusiasm & persistence to pursue a certain course of action It represents an unsatisfied need which creates a state of tension, causing the individual to make a goal oriented pattern towards restoring a state of equilibrium by satisfying the need. Satisfier – what is need for workers to be satisfied with the job but will not motivate them to stay. Motivator – something that gives someone a reason for doing something and encouraging conditions of being eager to act or work
  25. 25. NATURE OF MOTIVATION It refers to the set of forces that cause people to behave in certain ways It is the inner feeling which energizes a person to work more The emotions or desires of a person prompt him for doing a particular work
  26. 26. Importance of Motivation High performance Low employee turnover Better organizational image Better industrial relations Acceptability to change Better quality orientation Better productivity
  27. 27. Maslow’s Hierarchy of Needs Theory
  28. 28. Maslow’s Hierarchy of Needs Theory Physiological Motivation: Provide ample breaks for lunch , pay salaries that allow workers to buy life's essentials. Safety Needs: Provide a working environment which is safe, relative job security, and freedom from threats. Social Needs: Generate a feeling of acceptance, belonging by reinforcing team dynamics.
  29. 29. Esteem Motivators: Recognize achievements, assign important projects, and provide status to make employees feel valued and appreciated. Self-Actualization: Offer challenging and meaningful work assignments which enable innovation, creativity, and progress according to long-term goals.
  30. 30. Limitations and Criticism Maslow’s hierarchy makes sense but little evidence supports its strict hierarchy. Research has challenged the order imposed by Maslow’s pyramid. As an example, in some cultures, social needs are regarded higher than any others. Little evidence suggests that people satisfy exclusively one motivating need at a time.
  31. 31. HERZBERG 2 FACTOR THEORY Herzberg conducted a motivational study on 200 accountants and engineers There are certain factors that tend to be consistently related to job satisfaction (Motivational factor) & on the other hand there are certain factors which are consistently related to job dissatisfaction (Hygiene factor).
  32. 32. Hygiene factors They do not motivate people much. If these factors are present they don’t motivate but if absent leads to dissatisfaction.
  33. 33. There are 10 maintenance and hygiene factors: Company policy or administration Technical supervision Interpersonal relationship with supervisor Interpersonal relationship with peers Salary Job security Personal life Working conditions Status
  34. 34. Motivation factors These factors have a positive effect on job satisfaction and often results in increase in output. They enhances morale, satisfaction, efficiency and productivity. If these factors are present they motivate, if absent does not lead to dissatisfaction.
  35. 35. There are 6 factors: Achievement Advancement Growth Recognition Responsibility Work itself
  36. 36. Comparison
  37. 37. McGREGOR’S THEORIES He developed 2 theories : Theory X & Y Theory X workers could be described as: - Individuals who dislike work and avoid it. - Individuals who lack ambition, dislike responsibility - Individual who just desire security Theory Y could be described as: - Consider effort at work as just like rest or play - They don’t dislike work. - Individuals who seek responsibility
  38. 38. The Psychology of Filipino Workers
  39. 39. Light and Dark Sides “Yin-Yang”
  40. 40. The Work Positive Values “Light Side - Yang”
  41. 41. “Masunurin at Magalang” Filipino workers are generally obedient and are bred to recognize authority and seniority. Filipinos are respectful, courteous and hospitable. This makes them excellent customer service professionals.
  42. 42. “Pakikisama” Filipinos are social beings that have the need to identify with a group. They are good team players and exhibit impeccable camaraderie. They engage themselves in mutual cooperation, which is best pictured through the “bayanihan”.
  43. 43. “Masipapag” Filipinos are hard workers with great determination to succeed. They will work overtime if the job requires it without any complaint (apparently).
  44. 44. “Matatag” Filipinos are resilient to adversity and can endure much more than other people can.
  45. 45. “Madiskarte” Filipinos are world renowned for Ingenuity. They always find the best and most effective way to complete tasks. However, this is a “Gray Area” trait which can also prove to be negative. (Panggugulang)
  46. 46. The Work Negative Values “Dark Side – Yin”
  47. 47. “Kulang sa Disiplina” Filipino workers lack discipline and many have no regard for rules. This leads to carelessness and often puts workers in conflict with their companies.
  48. 48. “Mapersonal” Filipino workers are highly emotional and tend to take things too personally. They are unable to separate work from their personal lives. It is difficult to give them feedback and constructive criticism. They may hold grudges against bosses, peers and their company. (Sama ng Loob)
  49. 49. “Chismisan” Filipinos, in general, have a great tendency to gossip at the expense of others. Such gossip is often due to “envy” or “dislike” for a particular co-employee and is damaging overall for company production and morale.
  50. 50. “Utang na Loob” Filipinos are naturally indebted to people that help them and that is generally a good trait. However, in industry indebtedness may lead to unscrupulous acts which go against company ethics or policies. Leads to Nepotism and “Palakasan”
  51. 51. “Ningas kugon” Filipino workers have a tendency to be well motivated at first then fall into procrastination and other bad habits. They tend to give too much at first and are easily burnt out later.
  52. 52. “Bahala Na” Filipino workers tend to neglect quality in favor of quantity and speed as well as ease of work. There is high tolerance for inefficiency, poor service and even violations of one’s basic rights Disregard for quality standards and little pride in work done in favor of compliance.
  53. 53. “Kanya-Kanya” Although Filipino workers may work well in teams, they have a tendency to be selfish and self-centered. Personal interests over everyone else's. They will have little or no reservation to save themselves at the expense of others. (Laglagan) Filipinos have a selfish, self-serving attitude that generates a feeling of envy and competitiveness toward others, particularly one’s peers who seem to have gained some status or prestige. (Talangka Mentality) They may also forget loyalty if it is in their best interest to do so. (Makapili Mentality)
  54. 54. “Mañana Habit” Sometimes, Filipinos would like to put off doing things until it is too late. A generally severe form of procrastination that is detrimental for productivity in most companies.
  55. 55. “Mainipin” Filipino workers sometimes expect too much, too soon. They are impatient and unwilling to wait for the right time for bonuses and promotions. Gratification first before anything else!
  56. 56. “Sip sipan at Palakasan” Related to “Palakasan system” where Filipino workers would go out of their way to win the favor of their manager. This favor is perceived as an advantage in getting more benefits, promotions or lessened work load.
  57. 57. Psychology of Filipino Managers and Employers
  58. 58. Paternalistic Many Filipino managers have a paternalistic approach to leadership. They tend to become too affected and involved even with their employee’s personal and family problems.
  59. 59. Authoritative Most Filipino managers and employers are authoritative in nature and demand utmost respect. They expect to be respected for the position they hold. (Title- oriented) Generally arrogant and unwilling to heed to advice or reason. Seniority is placed over competence and potential.
  60. 60. Micromanagement Most Filipino managers are micromanagers who do not trust the competence and skills of the people they lead. “Tutok na tutok” shows the lack of trust that many employers have in their employees.
  61. 61. Lack of Accountability Many Filipino managers have the tendency to pass on blame to his workers for all failures. They will readily sacrifice workers in order to save themselves from any retribution for failures.
  62. 62. Favoritism “Palakasan system” Many managers tend to favor some employees in favor of others. Some have trouble separating their responsibilities from their social relationships with their employees.
  63. 63. “Namemersonal” Some Filipino managers tend to take employee misgivings too seriously. This leads to deep dislike and disfavor for certain employees leading to their ultimate dismissal from the team or company.
  64. 64. Misplaced Assertiveness Many Filipino Managers (like most workers) tend to be passive when confronted by Upper or Top management. When they need to assert themselves to upper management they fail to do so Instead, they assert themselves very strongly on their employees when it is uncalled for.
  65. 65. Understanding Attrition of Filipino Employees
  66. 66. Timing Many employees if discontented with their salary or the company (or both) will generally wait until January to find a new job. They will pass resignation letters either within the month of December or early January (if they ever do).
  67. 67. Emotional Component There is always an emotional component behind every resignation. The emotional component blocks out most logic and reason when deciding to resign. May lead to AWOL (Absence With Out Leave)
  68. 68. Signs of Disengagement  Rarely do Filipino employees leave a company without showing signs of disengagement.  Progression of Withdrawal Theory - dissatisfied individuals enact a set of behaviors in succession to avoid their work situation.  3 categories:  behavior change  physical job withdraw  psychological job withdraw  Withdrawal behaviors are related to one another, and partially caused by job dissatisfaction.
  69. 69. These are some signs of disengagement: Frequent tardiness or absenteeism Diminishing productivity or quality of work Slacking off at work and taking long breaks Sudden changes of mood at work Sudden disrespect for superiors and the company Change of attitude towards teammates and co-workers Gossiping and Rumor mongering
  70. 70. Job Dissatisfaction- Job Withdrawal Process Causes - Job dissatisfaction - Personal disposition - Tasks&roles - Supervisors& coworkers - Pay&benefits Manifestations - job withdrawal - Behavioral change - Physical job withdrawal - Psychological job withdrawal Job Dissatisfaction Job Withdrawal 10-76
  71. 71. Little Thought of Consequences As emotions may block out reasoning and increases rationalization to leave, for many there is little thought about consequences for doing so. Some do not think about being unemployed and how difficult it is to find another job. Projects and clients are left hanging with little or no proper turnover
  72. 72. Why do employees make such rash and impulsive decisions to leave a company and risk unemployment?
  73. 73. “Amygdala Hijack”
  74. 74. Amygdala Hijack Amygdala hijack is a term coined by Daniel Goleman in his 1996 book Emotional Intelligence: Why It Can Matter More Than IQ. Goleman uses the term to describe emotional responses from people which are immediate and overwhelming, and out of measure with the actual stimulus because it has triggered a much more significant emotional threat.
  75. 75. Concepts A situation seen is sent through to the Thalamus then to the Occipital cortex for processing. At the same time, memories from the Hippocampus are “matched” with the stimulus to see if it a a “Fight or Flight” situation. If perceived to be so, the amygdala blocks out reasoning from the frontal lobe. The emotional brain (amygdala) activity processes information milliseconds earlier than the rational brain (frontal lobe)
  76. 76. Concepts When the amygdala perceives a threat, it can lead that person to react irrationally and destructively. Loss of self-control. An amygdala hijack exhibits three signs: strong emotional reaction, sudden onset, and post-episode realization if the reaction was inappropriate. Usually this realization comes too late.
  77. 77. “Amygdala Hijack” is an important consideration in the emotions of employees who suddenly resign or go AWOL.
  78. 78. Lessons from the Far East
  79. 79. Japanese Employees Highly productive and motivated High degree of discipline Superior attention to quality as evident in their products Usually stays with one company from cradle to grave Japanese companies have the lowest employee attrition rates in the world. (0% to 4%)
  80. 80. Theory Z A “Japanese Management Style” popularized by Dr. William Ouchi. Theory Z focused on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job.
  81. 81. Theory Z According to Dr. Ouchi, Theory Z management tends to promote: Stable Employment High Productivity High employee morale and satisfaction
  82. 82. Characteristics of Theory z Long-term employment and job security Collective responsibility Implicit, informal control with explicit, formalized measures Collective decision-making Slow evaluation and promotion Moderately specialized careers Concern for a total person, including their family (Holistic Concern)
  83. 83. Managing Attrition “Employee Retention”
  84. 84. What is Employee Retention?  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.
  85. 85. Importance of Employee Retention. Reduced cost of turnover Reduced loss of company knowledge Reduced interruption of Customer Service Intervention as turnover leads to more turnover Goodwill of the company Regaining efficiency
  86. 86. Key Areas in Employee Retention Compensation Environment Growth Relationship Support
  87. 87. Retention Strategies used by some companies  IBM Business Services –  cash incentives  GE –  management diplomas and MBA courses  HCL Tech BPO Services –  career counseling and planning career paths
  88. 88. Recommended Strategies Compensation – Check current rates and see if your employees are receiving the “Going Rate” for their position. Incentives - Discuss Performance based incentive systems with Top Management Create Trust – Many employees see HR as being oppressive and “loyal dogs” of their employers. Change this image! Periodic Follow up Interviews – Set periods where key people are constantly evaluated for job satisfaction. Career Planning – Ascertain employee goals and develop career plans for them with milestones for achievement. Awards and Recognition – Create such programs with unique incentives to encourage both retention and peak performance.
  89. 89. Recommended Strategies Training – Initiate Career Skills and Leadership Development training programs that are “tailor-fit” to the company’s needs and objectives. Resources - Ensure that Management provides sufficient resources for employees to do their work effectively. Relationships – Schedule team-building activities and encourage Management to take part. Open Door Policy – Encourage employees to report grievances in the office to HR. “Employee Welfare Program” Exit Interviews – Ensure that your company has this and record/review all reasons for employee resignation. Identify patterns and intervene!
  90. 90. Human Resources plays a very crucial role in addressing and preventing Employee Attrition!
  91. 91. In Summary Employee motivation is an important factor in Employee Attrition. Satisfiers do NOT prevent attrition, motivators do! There is a dire need for Excellent Leadership and Competent Management in order to prevent mass attrition. Understanding the Psychology of Filipino Managers and Workers enables the creation of effective solutions to address attrition. Human Resources plays a crucial role in addressing the problem of attrition.
  92. 92. One More Thing…
  93. 93. Never be content with being a Mediator, BE AN INNOVATOR!
  94. 94. www.callcenterdoc.com
  95. 95. This Presentation will be available for Download at: www.facebook.com/proffrancemd
  96. 96. Any Questions?
  97. 97. Thank You. God bless you all 