A STRATEGIC APPROACH TO INCREASE EMPLOYEE RETENTION

THE IMPORTANCE OF RETENTION

Retaining good workers is absolutely critical to an organization. Encouraging employees to remain in the organization for a long period of time can be termed as employee retention. It 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.

Zineldin, (2000) has mentioned retention as “a responsibility to continue to do business or exchange with a particular company on an ongoing basis”. Stauss et al., (2001) has defined retention as “customer liking, identification, commitment, trust, readiness to recommend, and repurchase intentions, with the first four being emotional-cognitive retention constructs, and the last two being behavioral intentions” .

Organizations invest significant effort in marketing their products and services. The same type of effort should be applied at attracting and retaining employees as well. To attract the best talent, an organization needs to be viewed as the "best place to work." A high employee-retention rate implies that the organization is the employer of choice.

Employee retention strategy is a process in which the employees are encouraged to remain with the organization for the maximum period of time Shavita Deshwal (2005) and Denton (2000) states that employees who are happy and satisfied with their jobs are more dedicated towards their work and always put their effort to improve their organizational customer’s satisfaction.

Furthermore, Acton et al., (2003) stresses, the human resource department plays an active role in retaining its employees and makes policies for employee betterment and such that the employee would be satisfied with the organization and stay with the firm for longer time. This shows that it is not just retention of employees but also retention of valued skills.

FACTORS AFFECTING EMPLOYEE RETENTION

It is recognized that employee retention is not influenced by a single factor, but there are several factors which affect retaining employees in an organization. Management needs to pay attention to factors such as compensation & rewards, job security, training & developments, supervisor support culture, work environment and organization justice. According to Osteraker (1999), the employee satisfaction and retention are key factors for the success of an organization.

Table 1 shows various factors of employee.

Table 1 – Factors affecting employee retention

Factors	Authors	Research Papers	Year
Compensation	D.Davies, R. Taylor, C. Savery.	The role of appraisal, remuneration and training in improving staff relations in the Western Australian accommodation industry.	2001
	DG Gardner, L Van Dyne, JL Pierce	The effects of pay level on organization-based self-esteem and performance.	2004
Reward and Recognition	J.W. Walker	“Perspectives” Human resource planning	2001
	L.T. Silbert	The effect of Tangible Rewards on Perceived Organizational Support.	2005
Promotion and opportunity for Growth	Meyer, John, Laryssa Topolnytsky, Henryk Krajewski and Ian Gellatly.	Best Practices: Employee Retention	2003
	L. Eyster, R Johnson and E. Toder .	Current strategies to employ & retain older workers.	2008
Participation in Decision Making	P.Hewitt	High Performance Workplaces: The Role of Employee Involvement in a Modern Economy	2002
Work-Life balance	J. Hyman and J. Summers	“Lacking balance? Work-life employment practices in the modern economy”	2004
Work environment	N. Miller, A. Erickson & B. Yust	Sense of place in the workplace: The relationship between personal objects and job satisfaction and motivation.	2001
	S. Ramlall	Managing Employee Retention as a Strategy for Increasing Organizational Competitiveness	2003
Training and development	P. Garg & R. Rastongi	New model of job design motivation employees Performance.	2006
Leadership	Y. Brunetto, R .FarrWharton	Using social identity theory to explain the job satisfaction of public sector employees	2002
Job-Security	J. Davy, A. Kinicki, C. Scheck	Developing and testing a model of survivor responses to layoffs	1991

●     ·         Compensation and employee retention

Competitive compensation packages are imperative. Employers need to have effective remuneration packages in comparison with similar organizations. Davies, Taylor, & Savery (2001) outlines, that compensation to top workers is given by every organization but very few organizations uses it strategically and that salary and benefits policies are not being used strategically, within the organization to improve morale, reduce turnover, and achieve targets within an establishment.

●     ·         Reward and recognition

Recognition from, team members, co-workers is important as Silbert (2005) outlines, that reward is important because it has a lasting impression on employees which, in turn, gives the employees an impression that they are valued in the organization.

●     ·         Promotion and Opportunity for growth

Prince (2005) argues that talented employees are required for competitive advantage, and employees want career growth opportunities to develop and rise in their career paths. Such plans include advancement plans, internal promotion and accurate career previews at the time of hiring.

●     ·         Participation in decision-making

Organizations must make their employees feel valued to earn their loyalty to the organization. Modern businesses always keep its employees well informed about all the important affairs of its business and involve them in decision-making at all levels which can exploit the talents of its employees. Employee involvement in decision-making helps in creating a sense of engagement among the employees, which helps in creating a good friendly working environment and contributes towards building a good employer-employee relationship (Hewitt, 2002).

●     ·         Work environment and employee retention

Wells & Thelen (2002) states in their study that organizations which have generous human resource policies, have a good chance to satisfy and retain employees by providing them an appropriate level of privacy and strong control on work environment which enhances the motivation levels to commit with the organization for the long term.

●     ·         Training and Development and Employee Retention

Management development is essential to an effective retention strategy. Management training not only should focus on skills such as coaching, delegating, and communicating, but also should prepare managers to meet and be accountable for specified standards of performance.

Garg & Rastogi (2006), explained that in today’s competitive environment feedback is very essential for organizations from employees and the more knowledge the employee learn, the more he or she will perform and meet the global challenges of the market place. Handy (2008) has mentioned that proper innovation, and assimilation of new knowledge is essential for survival in any work environment. Thus knowledge is the most expensive asset of any firm.

In today’s competitive environment, feedback is very essential for organizations from employees and the more knowledge the employee learn, the more he or she will perform and meet the global challenges of the competitive marketplace.

●     ·         Leadership and Employee Retention

Brunetto and Farr-Wharton (2002) were of the view that supervision of the immediate manager increases the level of job satisfaction in the public sector employees.

How does Job satisfaction affect employee retention?

Job satisfaction is any combination of psychological and environmental circumstances, which cause a person truthfully, satisfied with his/her job. Lane et al., (2010) and Vidal at al., (2007) in their researches/studies found that job satisfaction is a complex phenomenon which is influenced by factors like salary, working environment, autonomy, communication and organizational commitment.

Employee turnover

Many researchers have tried to answer the question as to what determines people's intention to quit by investigating previous incidents of employees’ intentions to quit. Until today, there has been little consistency in findings, which is partly due to the diversity of employed included by the researchers and the lack of consistency in their findings.

Therefore, there are several reasons why people quit from one organization to another or why people leave organization. Testa (2008) in their studies have found that high turnover rates of skilled professionals can pose as a risk to the business or organization, due to human capital (such a skills, training and knowledge) cost. Notably, given the natural specialization of skilled professionals, these employees are likely to be reemployed within the same industry by a competitor.

Figure 1-Employee retention, employee satisfaction and employee turnover framework

(Source: Bidisha Lahkar Das1 , Dr. Mukulesh Baruah - Employee Retention: A Review of Literature)

Figure 1.0 illustrates that employee retention factors have a direct relationship with job satisfaction. If these factors exist in the organization then the tendency to leave the job or switch over to some other job is reduced.

How to reduce employee turnover and increase retention?

To reduce turnover, managers must show a genuine interest in their employees' development and success and employees want to feel that their contributions are important and want employers to demonstrate their commitment to stated corporate values. In addition to their technical skills, employees want to be appreciated for their work ethic, working well with customers and co-workers, and performing high-quality work.

An effective retention strategy relies on a combination of factors. Employees want their personal and practical needs to be met: personal needs such as compensation, benefits, and scheduling; practical needs such as development, resources, tools, and technology. They also want to feel valued by the organization. Therefore, these critical aspects become the foundation of the value proposition, as emphasized by the organization's vision, mission, values, and strategies.

Progressing towards achieving retention goals should be measured. One tool for such measurement is the Gallups 12 questions to measure employee satisfaction, and is as follows

●     Do I know what is expected of me at work?

●     Do I have the materials and equipment I need to do my work right?

●     At work, do I have the opportunity to do what I do best every day?

●     In the last seven days, have I received recognition or praise for doing good work?

●     Does my supervisor, or someone at work, seem to care about me as a person?

●     Is there someone at work who encourages my development?

●     At work, do my opinions seem to count?

●     Does the mission/purpose of my company make me feel my job is important?

●     Are my coworkers committed to doing quality work?

●     Do I have a best friend at work?

●     In the last six months, has someone at work talked to me about my progress?

●     This last year, have I had opportunities at work to learn and grow?

Finally, in conclusion human resources are complex and difficult to understand, but a asset which can contribute to organizational success. Retaining employees will help in the long-term growth of the organization and will add to the organizations employer brand and goodwill.

References:

Zineldin, M. (2000). Total relationship management (TRM) and total quality management (TQM). Managerial Auditing Journal, 15(1/2), pp.20-28.

Stauss, B., Chojnacki, K., Decker, A. and Hoffmann, F. (2001). Retention effects of a customer club. International Journal of Service Industry Management, 12(1), pp.7-19.

Acton, T. and Golden, W. (2003). Training the knowledge worker: a descriptive study of training practices in Irish software companies. Journal of European Industrial Training, 27(2/3/4), pp.137-146.

Osteraker, M. (1999). Measuring motivation in a learning organization. Journal of Workplace Learning, 11(2), pp.73-77.

Davies, D., Taylor, R. and Savery, L. (2001). The role of appraisal, remuneration and training in improving staff relations in the Western Australian accommodation industry: a comparative study. Journal of European Industrial Training, 25(7), pp.366-373.

Prince, J. (2005). Career‐focused employee transfer processes. Career Development International, 10(4), pp.293-309.

Wells, M. and Thelen, L. (2002). What Does Your Workspace Say about You?. Environment and Behavior, 34(3), pp.300-321.

Garg, P. and Rastogi, R. (2006). New model of job design: motivating employees' performance. Journal of Management Development, 25(6), pp.572-587.