A study on attrition among employees.

MEANING, CONCEPTS AND FORMULA FOR ATTRITION INTRODUCTION:All organization can expect some degree of absence and attrition. Indeed a certain degree of attrition may be declarable since it creates opportunities to introduce new ideas and expertise to the organization, as well as providing career development opportunities for existing employees. Persistently high levels of attrition, however, are costly both to the individual, organization and the economy as a whole and adversely affects efficiency, productivity, profitability and morale. Over the last decade, a fast growing literature has attempted to assess whether Alternate work Practices (AWPS) improve labour productivity, increase firms profitability, and reduce attrition. The general presumption is that there consists a set of high performance work practices which under certain conditions will improve employees well being and lead them to the more productive causing both an increase in labour productivity and a reduction a attrition. Attrition is a ratio comparis on of the no.of employees a company must replace in a given time period to the average no of total employee. A huge concern to most comparies attrition is a costly expense especially in lower paying job roles, for which attrition of any company and these can stem from both the employer and employees. Wages, company benefits, employee attendance and job performance are all factors that play a significant role in attrition. Employee may resign for many different reasons. Sometimes it is the attraction of a new job or the prospect of a period outside the workforce which pulls them; on other occasions they are pushed due to dissatisfaction in their present jobs to seek alternative employment. sometimes it is a mixture of both pull & push factors. For a fourth group, reasons for leaving are entirely explained by domestic circumstances outside the control of any employer as is the case when someone relocates with their spouse or partner.

Recent research strongly suggests that push factors are a great deal more significant in most resignations. It is relatively rare for people to leave jobs in which they are happy, even when offered higher pay elsewhere. Most staff have a preference for stability. It is important to know that the reasons people give for their resignations are frequently untrue or only partially true. The use of exit interviews is undesired, yet they

are notoriously unreliable, particularly when conducted by someone who may later be asked to write a reference for the departing employee. They are reluctant to voice. Criticism for their managers, colleagues or organization generally, preferring to give some less contentions reason for their departure. There is no set level of attrition above which, effects on the employing organization become damaging. Everything depends on the type of labour markets in which you compete. Where it is relatively easy to find & train new employees quickly and at relatively little cost (ie., where the labour market is loose) it is possible to sustain high quality levels of service provision despite having quality levels of service provision despite having a high attrition rate. By contrast where skills are relatively scarce, where recruitment is costly or where it takes several weeks to fill a vacancy, attrition is likely to be problematic from management point of view. This is especially true of situation in which you are losing staff to direct competitors or where customers have developed relationship with individual employees as is the case in many professional service organizations. Sometimes attrition positively benefits organization this happens wherever a poor performer is replaced by a more effectively employee and can happen when a senior retirement, allows the promotion or acquisition of welcome fresh blood-Moderate levels of attrition can also help to reduce staff costs in orgn where business levels are unpredictable month on month. In such situations where business is slack it is straightforward to hold off filling recently created vacancies for some weeks.

CONCEPT OF ATTRITION:Turnover means change. A change in financial status of an orgn is called the financial turnover. Change in the no of employees of an orgn is called attrition. It is a major problem of economics across globe. Any kind of increased decrease in human resources is known as employee turnover/attrition. Goods orgns prepare a regular report of employees joining or leaving the orgn in a month over a period of time. Attrition refers to the movement of employees in and out of a business. However, the term is commonly used to refer only to wastage or the no.of employees leaving. In every orgn, some employees quit employment, causing vacancies. New persons are recruited to fill such vacancies. Such separatism and additions to labour forces are referred to as attrition. High attrition rate causes problems for business. It is costly, lowers productivity and morale, and tends to get worse if not dealt with. Personnel Mgt:- Arun Monappa, Mirza S. Saiyadain

Terminate of employment on service signifies separation of an employee from an orgn. Separatism is either the action of employer or employee bringing their relationship to an end. Cost Accounting :- R.S.N. Pillai & V. Bhagavathi Labour Trunover may be defined as the rate of change in the labour force ie, it denotes the percentage of change in the labour force of an orgn. It is a term used to describe the movement of shifting in and out of an orgn by employees. An employee leaves an organization for various reasons. Some of the avoidable reasons are low job satisfaction, low pay, risky or monotonous work, low scope for development etc. Some of the unavoidable reasons are death, retirement, accident, poor health etc. Some reasons of increase in no.of employees are merger, acquisition, diversification, replacement of an employee, changes in laws or technology, increase in product facilities etc. Whenever an employee leaves or joins, an orgn, it undergoes a phase of low productivity. Additional expenses are incurred on recruitment of new employee like advertising of job, time taken for interviews etc. Moreover, the new employee has to be trained accordingly. Hence both money and time are wasted in training process. Replacement of an employee creates insecurity among others. DEFINITION:Edwin B. Flippo, Labour Turnover may be defined as the movement into and out of an orgn by the workforce. Dictionary of Human Resources:- Personnel Management, LT is the movement of employees with some leaving their jobs and others joining. Paul Harries, LT refers to movement of employees in and out of orgn, however the term is commonly used to wastage or no.of employees joining. Keith Davics, LT is the no.of workers who leave or the no.of workers who are replaced in a given period, expressed as a percent of average no.of workers employed during the period. Mc. Cormick, LT is shifting or movement of workforce in and out of a business enterprise. It is defined as the no of replacement per hundred workers in the average workforce. Dr.Udaipareek, LT has been defined as the rate of change in the working staff of a concern during a definite period.

Dr.T.N.Bhagolival, It may be defined as the rate of change in the working staff of a concern during, definite period. It this measures the extent to which old employees and new employees enter into services of an orgn is a given period. It is also defined as Economics of labour Industrial Relation. CAUSES:Causes for attrition are (a) Causes for which employees are responsible (b) Causes for which employer is responsible (c) Causes for which economic conditions are responsible (d) Unavoidable Causes (e) Avoidable Causes (a) Incompetence & Insubordination Laziness, Irregularity & back of interest in job Drunkenness & other bad habits Accidents & sickness Personal betterment / better prospects in other industry Marriage & birth or sickness of children of female employees (b) Low wages paid to employees Insecure job Bad working conditions Unfair promotional policy Excessive work without corresponding earning Favoritism Bad attitude of manager Inadequate or absence of medical & housing facilities Inefficiency of management in general

(c) Seasonal industries leading to inevitable heavy living of people during busy season & an equally strong dose of retrenchment during off season Expansion or development programme leading to heavy employment. Business reduction programmes following depression resulting in heavy retrenchment Rationalization programmes leading to replacement of labour by machines (d) Refinement & death Unsuitability for job or gross inefficiency Gross misconduct Departure from city Housing or transport pbm Lack of work Workers instable nature (e) Dissatisfaction with job Dissatisfaction with wages Unsuitable working hours Non- Co-operative attitude Lack of promotions

Inadequate promotions Unsympathetic attitude of mgt Shortage of Raw materials Defective management planning Stained relations with peers & superiors OTHER REASONS:(a) Inadequate compensation system (b) Inequitable salary distribution (c) Inequality of treatment (d) Ineffective role of leader & Dictatorial control (e) Lack of quality of work life (f) Poor career planning & development (g) Higher Education (h) Work / Organizational stress (i) Work overload (j) Lack of opportunity to utilize & display talent (k) Excessive paper work & working on holidays (l) Lack of autonomy CONSEQUENCES:(a) Instability in workforce (b) Reduction in production because of inexperience of new employees (c) Likely damage to equipment and machinery (d) Loss for orgn due to wastage, spoilage & defective work (e) Larger no. of accidents (f) Reduced employee morale (g) Reduction of skill & efficiency on the part of employee (h) Warning to management that something is wrong with the health of the orgn. (i) Ineffectiveness of personnel policies & company policies. MEASUREMENT OF ATTRITION RATE:Accession Rate = No.of employees joining during the period X 100 Avg no.of employees during the period Seperation Rate = No. of employees leaving X 100 Avg no.of employees Flux Method Attrition Rate = Additions + Seperation X 100 Avg no.of employees

Replacement method Attrition Rate =

Accession Seperation X 100 Avg no.of employees

Stability

No.of workers with one years service (or more) now X 100 No.of workers with one years service (or more) one year ago

Costs of attrition:Effect of attrition when expressed in terms of money is called costs of attrition Costs to employer:Hiring Costs Loss of production Overtime cost to meet delivery schedule Qty of work & smooth functioning suffer Transpirit is disturbed Scrap & waste rates increase Increased accident rate Human resources under utilized Costs to employee:Lose benefits of previous service Lose opportunity of promotion on the basis of seniority Special skills developed may become meaningless in another orgn Work environment differ. Two categories = 1. Preventive costs. 2. Replacement cost Preventive cost:Incurred in preventing the workers from leaving by providing: Good working condos High wages Medical & Housing facilities Educational facilities to children Subsidized meals Welfare Replacement Costs:Concerned with loss of production because of delay in recruiting new hands & cost of training, Scrap, wastage, tool breakages, high cost of supervision etc. Measures to reduce attrition:Scientific requirement & selection and adequate training of personnel Fair wages/salaries & attractive incentives Job security Social security measures

Good working conditions Effective supervision Welfare facilities Periodic performance appraisal & its use in reviews of increments, promotions etc. Proper counseling & training for improvement in performance Just treatment of workers by mgt Provision of career development opportunities & execution of a service bond. Introduction of baby creche in the industry can reduce attrition rate among women workers to a great extent Well organized programmes must be chalked out to increase efficiency Cordial relationship between employer & employee An effective grievance procedure is to be adopted Labour participation in mgt must be encouraged. Personnel dept must prepare periodical report relating to causes of attrition & suggest remedies. Work life balance Ongoing leadership development Job enlargement. March & Simon (1958) had conducted a study on attrition (labour turnover). This study is based on indication in their model of determinates of LT that job satisfaction is the principal ever affecting employee perceptions of the desirability of movement we can judge the extent to which their model has been influential by the frequency with which it is cited by contemporary theorists (Hum & Griffeth 1995; Kirschenlaum and Mano Negris 1999). Indeed, Lee & Mitchel (1994) indicated that the success of this model may have hampered research. March & Simons (1958) landmark chapter on the decision to participate may have overly influenced the subsequent conceptual models of employee turnover. Weitz (1952) had conducted a study on LT. This study is based or argument that job dissatisfaction would be more predictive of turnover if it was considered in the light of an individuals predisposition to be satisfied with everyday life event. In the present study it was hypothesized that affective disposition moderates the relationship between job satisfaction and voluntary turnover. Using data collected from a sample of nurses, support was indicated for the hypothesis. Individuals dissatisfied with their job but positively disposed to their life in general were the most likely individuals to quit. Furthermore, the relationship between job dissatisfaction & turnover was moderately strong for those with positive dispositions but negligible for those with empirical work over the years has clearly established that the role of job satisfaction in predicting turnover is significant. Carsten & Spector had conducted a study on labour turnover. This study is based on a meta-analysis of 47 studies, estimated a corrected correlation between job satisfaction & turnover. Although this relationship was significant, authors concluded that

room for significant, moderator effects existed. Infact, Carsten & Spector (1985) found that employment opportunities moderated the relationship between job satisfaction & turnover. Based on Carsten & Spectors finding potential exists that other variables interact with job satisfaction in predicting turnover. Given the importance of turnover decisions of individuals & organizations (Dalton & Todor 1979; Mobley 1982; Staw 1980; Staw & Dldhan 1978; Steers & Mowdey 1981) it is surprising that more research concerning potential moderators of job satisfaction. HRD Newsletter April 2007:Steps to be taken to combat attrition:(a) Recruitment - Effective recruitment strategies, that facilitate recruitment of the right workforce, can help organizations in combating employee attrition. Further another step towards effective recruitment is to build a positive brand image. (b) Providing incentives such as ESOPS to motivate and retain employees. (c) Compensation & rewards (d) Organization culture Acknowledging the employee as the internal customer and aligning the organizational strategy with employee needs and wants (e) Raising employees self esteem and employee contribution can help to reduce attrition. (f) Work life balance A balance between work and the personal goals and wants of an employee contribute positively to the retention of employees. (g) Learning & Growth Another way to retain employees is to help them up date their knowledge from time to time through training programmes. Conclusion:Review of literature revealed that very few studies were conducted in the field of attrition, very few secondary data was available on this topic.