On <br />1639128819537“A STUDY ON EMPLOYEE ATTRITION RATE AT EDUCATION INDUSTRY”<br />Submitted for Partial Fulfillment Of<br />“Masters of Business Administration”<br />(MBA -2009-2011)<br />Submitted By:-<br />Abhishek Srivastava<br />Roll No. 0944070001<br />Naraina Vidya Peeth Management Institute<br />Panki, Kanpur-208020<br />INTRODUCTION<br />In the best of worlds, employees would love their jobs, like their coworkers, work hard for their employers, get paid well for their work, have ample chances for advancement, and flexible schedules so they could attend to personal or family needs when necessary. And never leave. <br />But then there's the real world. And in the real world, employees, do leave, either because they want more money, hate the working conditions, hate their coworkers, want a change, or because their spouse gets a dream job in another state. So, what does all that turnover cost? And what employees are likely to have the highest turnover? Who is likely to stay the longest? <br />Defining Attrition: "A reduction in the number of employees through retirement, resignation or death"<br />Defining Attrition rate: "the rate of shrinkage in size or number"<br />Attrition is beginning to significantly affect offshore ROI. Just as businesses faced a scarcity of talented IT resources during the dotcom era, organizations in offshore countries such as India are experiencing similar pains. Skilled employees are hopping from job to job and taking with them the customer knowledge and technical expertise that any company needs. Their salaries are increasing, along with their perks, benefits, and bonuses. <br />Defining the attrition problem<br />Global outsourcing and the astounding amount of foreign direct investment pouring into China, Russia, and India have created tremendous opportunities and competition for talented IT professionals in those countries. The downside of this increased competition is a rising rate of attrition, particularly in India. Fiscal third-quarter 2005 (ended December 2004) results filed by Infosys, Wipro, Satyam, and TCS listed attrition rates between 7.6% and 17.7%. Vendors that we have interviewed place the numbers much higher, at 25%–60%, while an April 2005 BusinessWeek article estimated an attrition rate of 60%, with some India service providers experiencing up to 80% turnover.<br />To put these attrition numbers into perspective, if a company has 100 programmers and an attrition rate of 25%, then 25 of its IT staff will leave each year. Think about the time and money it took to find, interview, hire, train, and coach those 25 people. Now think about losing them and starting the hiring and training processes anew.<br />How do the hiring and training processes break down in terms of total costs in India? The typical time for advertising, interviewing, screening, negotiating, and hiring a new employee is about two weeks. Companies usually allot one week for programmers to become familiar with the new business, two more weeks for technical training, and one last week for customer training. Now imagine a 25% attrition rate and replacing 25 of these programmers each year. Based on a yearly salary of $15,000 for the human resource person and $25,000 for the programmer, it would cost an additional $63,000 annually in acquisition and employee training costs. After considering these figures, it quickly becomes apparent why companies are investing in strategies to prevent attrition.<br />Reasons for attrition<br />It is not easy to find out as to who contributes and who has the control on the attrition of employees. Various studies/survey conducted indicates that every one is contributing to the prevailing attrition. Attrition does not happen for one or two reasons. The way the industry is projected and speed at which the companies are expanding has a major part in attrition. <br />For a moment if we look back, did we plan for the growth of this industry and answer will be no. The readiness in all aspects will ease the problems to some extent. In our country we start the industry and then develop the infrastructure. All the major IT companies have faced these realities. If you look within, the specific reasons for attrition are varied in nature and it is interesting to know why the people change jobs so quickly. Even today, the main reason for changing jobs is for higher salary and better benefits. But in call centers the reasons are many and it is also true that for funny reasons people change jobs. At the same time the attrition cannot be attributed to employees alone.<br />Organizational matters:<br />The employees always assess the management values, work culture, work practices and credibility of the organization. The Indian companies do have difficulties in getting the businesses and retain it for a long time. There are always ups and downs in the business. When there is no focus and in the absence of business plans, non-availability of the campaigns makes people to quickly move out of the organization.<br />Working environment:<br />Working environment is the most important cause of attrition. Employees expect very professional approach and international working environment. They expect very friendly and learning environment. It means bossism; rigid rules and stick approach will not suit the call center. Employees look for freedom, good treatment from the superiors, good encouragement, friendly approach from one and all, and good motivation.<br />RESEARCH METHODOLOGY<br />Research<br /> Research is an academic activity and as such the term should be used in a technical sense. According to Clifford research comprises defining and redefining problem formulating hypothesis or suggested solutions, collecting organizing and evaluating data, making deductions and researching conclusion and at last carefully testing the conclusions to determine whether they fit the formulating hypothesis<br />Need for the study<br /> It is essential to know the impact of recession on the economy to predict the growth of the economy. This study is important to know the level of awareness that people of the society posses on global stimulus. The stimulus efforts taken by the government is also considered for the economic growth, thus its is necessary to conduct this study on global stimulus efforts.<br />Scope of the study<br /> This study has a wide scope in knowing the level of awareness of the people on stimulus and recession. The various efforts taken by the government to overcome the recession period is also studied. This research also elaborates on various effective means or ways of providing stimulus to various sectors.<br />Research design<br /> A descriptive study is undertaken in order to ascertain and be able to describe the characteristics of the variables of interest in a situation.<br /> Descriptive studies are under taken in society to learn about and describe the characteristics of a group of people as for example, the age, education level, general awareness about SIBC etc. Descriptive studies are also undertaken to understand the CSR activity of organization that follow certain common practices.<br />ANALYSIS OF <br />ATTRITION TRENDS<br />4.1 WHAT IS ATTRITION?<br />Attrition has been a major concern for most of the companies in the current competitive scenario. <br />The word Attrition means, a reduction in the number of employees through resignation or separation at the employees will. Retirement, VRS and employee leaving due to end of contract are not considered as attrition.<br /> Attrition rate is the rate of shrinkage in size or number. It is the mathematical representation of the attrition in a particular organization or an institution. <br />Attrition leads to dual loss to an organization:<br />
Firstly, company loses on a talent and thus costs incurred on them are a waste.
Secondly it employees a new employee and thus needs to incur costs on them.
Thus the following costs: <br />
The cost to the business when hiring new employees includes the following six factors plus 10 percent for incidentals such as background screening:
Time spent on sourcing replacement<br />Time spent on recruitment and selection<br />Travel expenses, if any <br />Re-location costs, if any n Training/ramp-up time<br />Background/reference screening<br />
Recruitment cost for the new recruit to replace the employee leaving
To estimate the training and development costs, the expenses incurred on training of the employee who is leaving should be taken as well as that to be incurred to train the new employee is also to be considered. To estimate the cost of training and developing new employees, cost of new hires must be taken into consideration. This will mean direct and indirect costs, and can be largely classified under the following heads:<br />Training materials <br />Technology<br />Trainers’ Time <br />
They include:<br />Set up communication systems<br />Add employees to the HR system<br />Set up the new hire’s workspace<br />Set up ID-cards, access cards, etc.<br />Thus it can be clearly evident from the above that loosing an employee causes an organization a large amount of expenses. An organization thus tries to retain its work force. <br />CALCULATING THE ATTRITION RATE:<br />“WHAT CANNOT BE MEASURED CANNOT BE IMPROVED’’ is an old management aphorism. So if we want to improve attrition, we need to bring it to measurable terms. <br />Attrition in any particular organization can be quantified by finding out the attrition rate for that organization. After this it can be analysis can be done as to where is the maximum attrition happening and then finding out reasons for the same to form a retention strategy.<br /> <br />There is no standard formula to calculate the attrition rate of a company. This is because of certain factors as:<br />
The employee base changes each month.
Many firms may not include attrition of fresher’s who leave because of higher studies or within three months of joining.
In some cases, attrition of poor performers may also not be treated as attrition.
Yet, as a generalised formula the following can be used:<br />Attrition = (No. of employees who left in the year / Average employees in the year) x 100<br />
The above percentage is based on the data for the first half of 2008. In order to compare it to that of the previous years, it is important to have the data at par. Thus, finding out the rate of attrition for 2006 and 2007 based on half yearly data.
The trend in attrition rate also shows an increase in the same in the current year.
In order to understand the problem clearly, I have attempted to make various comparisons classifying the number of resignees band wise, month wise and division wise.<br />BIBLIOGRAPHY<br />ACADEMIC BOOKS:<br />K. ASHWATHAPPA - “ HUMAN RESOURCE MANAGEMENT ” <br />ARTICLES:<br />BRUCE FERN AND B. LYNN WARE “THE CHALLENGE OF RETAINING TOP TALENT: THE WORKFORCE ATTRITION CRISIS”<br />
MS. SUMANA BOSE, FACULTY, SINHGAD INSTITUTE OF BUSINESS MANAGEMENT AND RESEARCH, “HR A CAUSE OF ATTRITION”
MARC CARROLL “GIVING ATTENTION TO PREVENT ATTRITION” HTTP://WWW.AUTHORSDEN.COM/VISIT/VIEWARTICLE
SUDIPTA DEV “IS ATTRITION ALWAYS BAD FOR AN ORGANIZATION?”<br />HTTP://WWW.EXPRESSCOMPUTERONLINE.COM/20071029/TECHNOLOGYLIFE01.SHTML<br />WEBSITES:<br />www.clariantindia.com<br />www.clariant.com<br />