how we can calculate attrition rate

hello I am Santanu Mukherjee student of MBA HR, according to my opinion one of the best method of employee retention is creating a work culture which motivates the employees to come to work on a daily basis. The same can be achieved by the following steps: Providing the employees with ample opportunities to put forward their individual views and making them a part of the decision making process. Supporting the employees with various relational rewards as per the employee demographics such as age, sex, marital status, etc. Recognizing the employees whenever they do some work which deserve the same. Creating a healthy competition among all and keeping competitions such as "Employee of the month", etc. Providing a feeling to the employees which reflects a feeling of ownership, keeping into considerations different aspects of the employees` professional as well as personal life. Thus above mentioned are few initiatives towards employee retention, hope they might be useful.

Hi,

Pls find appended article on Attracting & Retaining talent by B.D. Pande, Executive Advisor (HR, IR & Admn), Century Cement

ATTRACTING AND RETAINING TALENT

INTRODUCTION
Attracting, keeping and motivating talent has become one of the main activities of organizations. Globalization, M & A and expansions of organizations world over have provided great scope for deployment of talented people. Boundaryless company, worldwide labour markets, better communication system and agile new organizations have contributed to this increasingly complex environment. Earlier, this challenge was faced by advanced economies like the United States, Japan and Europe. Globalization and growth in economy in other developed countries has exposed challenge of attracting and retaining talent in emerging economies as well. Creation of work environments that provide meaningful challenge to employees has become a priority.
ORC worldwide (wwworcworldwide.com), an HR consulting and data services company has recently conducted HR priorities survey. Almost 62% of respondents to the survey opined that talent management will be the single most strategic issue which the HR managers will have to face in future. Talent management programmes like workforce acquisition, assessment, development, and retention will remain the focus areas for HR managers in 2007.
Aditya Birla Group has been adjudged as the best employer in 2007 as per the Hewitt and the Economic Times survey (The Economic Times, April 16, 2007). The group has taken many OD interventions to retain talent. Apart from providing better work environment, comparatively high compensation package, training and development opportunities and delegation of responsibility with authority, career opportunities have been provided for the spouses. Children get best school education. Cultural, community development and welfare activities are done extensively. These steps cultivate family bond and become an important factor for employees to remain in the organization.
High attrition rate to the tune of 13% has prompted Larsen & Toubro (L & T), India’s largest engineering company to re-structure its divisions into independent verticals. The move is aimed at creating a leaner structure with several verticals that will execute projects in different sectors and address employee-turnover by creating leadership opportunities.
L & T has its own programme to mould its people to face the challenges of working in today’s dynamic environment. Employees undergo management development and competency enhancement programmes to enhance their skills. This is a far better option than trying to retro-fit them into a new job.
Companies like Tata Steel have in-depth and across the board re-skilling programmes for their employees. They strongly believe in enhancing people capabilities through learning and development. This is one of their key initiatives to retain talent. Programmes are designed to enhance managerial, functional and cross-cultural capability to deliver effectively in the globalised business environment.
Earlier, role of HR centred around recruitment, induction & training, pay rolls & welfare of employees. Now, it is all about focusing on a range of complete issues – organization, design and structure, outsourced and contingency workforce, training and retention, and differentiated management of high performers. Today, HR is far more closely linked to business – the directors and the boards – than it ever was in the past. The department has to envision the future – like any other function – factoring in the business and future forecasts.
Today, we are dealing with knowledge workers, and not the blue-collar variety. So the tools and techniques one would need to measure their performance and reward them, and to motivate and retain them would be different. For large companies, what is important in dealing with such issues is a willingness to look at the workforce in a segmented way. Different people have different needs and priorities. An R & D man does not necessarily care for a vertical career or impressive designation like general manager or Vice President and frequent promotion. His needs are somewhat different. Are we in a position to recognize those needs, retain such employees and meet their aspirations? For that, HR manager has to be proactive and innovative to accept the fact that individuals, on the basis of their needs, should be treated differently. It is, however, not a comfortable situation to handle.
Retention is proving to be a major problem. Companies are expanding and talented people are in great demand. People are able to leave jobs very easily because opportunities are available in galore. Employee attrition and retention is likely to remain a burning issue for years. India has become preferred destination for the multinational companies. Despite India’s large pool of graduates, most of them need to be trained to put to work. So, the actual shortage is even bigger. However, if we build an employment model that attracts employees, it makes employer-employee relationship more friendly.
India has reached a point where people have accepted that Indian companies are better employers with very good prospects. As companies, by and large, have become more process driven, there is better ways to perform and follow rules, processes and so on.
Empowerment, good performance by the company and trust in management are some of the factors employee would like to have in a company. There should be transparency and consistent communication cascade. Extensive sharing of financial, performance and other informations throughout the organization is essential.

FACTORS AFFECTING RETENTION AND ATTRITION
Attrition is a natural phenomenon. It is but natural for an employee to aspire for better prospect and career. If the organization is not able to meet employee’s aspirations, they will hop. However, when the rate of attrition goes alarmingly high, that is the time organizations should re-look at their man-management practices, systems, processes, organizational culture and employer-employees relationships. The reasons for high attrition may be related to job, organization, profession, relationships with boss, peers and subordinates, society, economic considerations, inflated ego and ambitions etc.
Studies such as Organizational Climate (OC) and Employee Satisfaction Survey (ESS) may be conducted to ascertain factors responsible for attrition.
Identification of such factors will enable organization to take corrective action including changes in personnel policies, if required.
Identified below are some of the factors which individually or collectively contribute for retention of employees if practiced faithfully. However, their absence in the organization rings alarm and cause attrition.

�� Respect for employee’s individuality
In modern large scale industries, individual employee loses his identity. He becomes a mere cog in a machine. He is treated as a resource, a material. His individuality is suppressed and with this loss of self-respect, he becomes morose. It is necessary to treat each employee as a human being with a distinct personality capable of growth and responsible behaviour. He will then respond creatively, take initiative and strive to improve his performance.
Employees basically expect two things, (a) better material conditions such as higher wages, promotional opportunities, and welfare facilities. (b) Status, prestige and self respect individually and collectively. They want to assert their independence and to be recognized as important partners in industry.
Mc Gregor’s XY theory explains how people can self-motivate given the right environment and culture – empowerment, creativity, a sense of purpose and growth. The key leverages for motivation lies in the factors which are most important to us at work : achievement, recognition, the work itself, responsibility, advancement and growth.

�� Recognition of industry as a human organization
Industry is primarily a human organization. The efficiency of any organization depends on the human element. Unless this fact is clearly recognized, it is not possible to run an industry efficiently. The best of the systems, structures, processes, concepts, resources could become meaningless, if people are not adept at handling them. It is people’s abilities or inabilities that determine the effectiveness of an organization. The aeroplane is no doubt a technological marvel, but the air journey is safe only when the crew functions efficiently and the maintenance engineers keep the plane absolutely airworthy.

�� Communication
The communication of information, ideas and decisions is a basic necessity for management. It is a tool of supervision which is in constant use and must always be in good condition. It is an essential ingredient in management-employee relations. It is impossible to have human relations without effective communication.

�� Interesting work profile
Industrial work is often dehumanizing. The employees are generally treated as a pair of hands and brain. This leads to frustration, apathy and unrest. Provision of interesting work according to the individual’s education, aptitude and ability is a matter of great importance and as essential as good food. Confucius said, “Choose a job you love and you will never have to work a day in your life”. When you enjoy work, it really is not work.

�� Quality of work life
Money can buy a house, but not a home, a bed, but not a good night’s sleep, a companion, but not a friend, a good time, but not a peace of mind. Everyone can not be a multimillionaire, but can be healthier, more prosperous, more secure, more friends, more peace of mind, better family relationships, and more hope. Unless there is better quality of work life, no one would like to work.

�� Excess regulations, red tape and paper work
Rules and procedures are not an end in themselves, but a means to dynamic and effective action. Excessive paper work and the resulting red tapism can easily strangle administrative machinery. It is better to forbid all communications in writing which can easily be replaced by verbal ones.
Some organizations are highly centralized. Their policy demands strict compliance with rules, regulations and procedures. There is little scope for individual initiative and consequently for development. In a decentralized organization, on the other hand, people are encouraged to take their own decisions. They learn to take responsibility and thereby develop and grow.

�� Inadequate Leisure
Employees should have adequate leisure and the working hours should not be unduly long. There should be adequate provision for holidays as leisure is creative and excessive working hours are harmful. They destroy interest in work. Adequate rest is essential to good health and the maintenance of physical vigour and enthusiasm.

�� Ethical and social considerations
Management in its decisions must not be guided purely on economic and technical considerations. Ethical and social considerations are equally relevant. Mechanisation / technological upgradation should be judiciously introduced keeping the interest of employees in view.

�� Freedom to take initiative
Organizations work efficiently and develop rapidly, only when people are encouraged to take initiative to shoulder responsibility. The freedom to take initiative is a source of job satisfaction. Employees should be allowed maximum share of activity consistent with their position and capability even at the cost of errors and mistakes.

�� Organizational vision and objective
For management of modern industrial organizations, technical efficiency is not enough. Organizations demand a new vision and statesmanship of the highest order to energise people and harness their knowledge, skills, imagination and energise them to fulfill the organization’s objectives.

�� Delegation
Executives must learn to delegate. This is essential in order to ensure that they have enough time and energy to concentrate on the most important tasks in hand. By delegation, the subordinates will get an opportunity to develop their knowledge, skills and confidence by shouldering responsibility. Delegation can lead to a more efficient and speedy execution of work.

�� Responsibility with authority
At all levels, authority and responsibility should be coterminous and co-equal. If an executive is to discharge his responsibilities properly, he must be given the necessary authority to do so. If the Chief Engineer is responsible for the maintenance of plant and machinery, he should have adequate powers to purchase spare-parts.

�� Appreciation for good performance
People look forward to appreciation of their good performance in public. This is a natural human instinct. Such appreciation strengthens self-respect and the determination to excel. Appreciation motivates people to undertake seemingly impossible tasks. It makes them highly creative.

�� Reward & incentive
There are two types of incentives : extrinsic and intrinsic. Extrinsic incentives like promotion, bonus, cash payments or new perquisites are short lived in their efficacy. They soon lose their impetus. On the other hand, intrinsic incentives such as greater freedom in doing one’s work, difficult and challenging work and the joy of work are lasting incentives.

�� Opportunity for self development
Self development is the prime objective of every normal human being. He wants to explore his potentialities. An individual is often unaware of all that he is capable of. When he is given an opportunity to do some important work, and when he finds that he can do it competently, he is very happy. A man works at his best when he is continually learning new things and accomplishing difficult tasks.
In this age of knowledge explosion, today’s knowledge gets obsolete tomorrow. Therefore, constant practice is needed in order to preserve, refine and update one’s skills and knowledge. Technological developments are taking place at a breath-taking pace. These technological changes create complex problems.
Every body wants to develop himself. This is a primary human need. Development means attaining maturity. This is a gradual process and no body acquires perfect maturity. As a person becomes mature, he becomes more active. He thinks and acts independently. His interests become wider and deeper. Every organization must always endeavour to ensure to keep employee’s knowledge up-to-date.

�� Sense of competence
One of the major human needs is the need for a sense of competence. The feeling of competence is energizing. It preserves and strengthens an individual’s self-respect. If an executive finds that he can tackle organizational tasks skilfully, his sense of competence is heightened. He then works with redoubled energy.

�� Compensation package
The well-being of its employees should be the first concern of any management. Employees should be provided compensation package commensurate with qualification, experience and performance. However, of late, to win the war of talent, there has been a high surge in salaries, particularly in IT, and IT – enabled services. India is one of the fastest-growing economies in the world today. Government’s control, such as the ceiling on managerial remuneration was there for years together. With the removal of such constraints, salary structures in higher management level have gone very high. Prime Minister, Manmohan Singh has pointed out this in the CII meeting held in May 2007. He has asked India Inc to trim CEO salaries and keep profit maximization within bounds of decency and greet. This remark has led to conflicting views and discussion at different forums.

�� Job enlargement
There is a vast untapped reservoir of human talent in every organization. Jobs will, therefore, have to be enlarged so that they become meaningful and challenging. Work will have to be so structured that every one has scope to develop himself and attain maturity to the best of his ability and capacity. This is the way to use human energy in the best possible manner.

�� Organizational climate
Organizational climate depends upon several factors such as the flow of communication, decision-making process, concern for the welfare of people, level of technological knowledge and the spirit of performance. In a participative management culture, people can discuss things freely with the higher management. Management should welcome ideas and suggestions from employees for the improvement of the organization. In a good organization, human relations – upwards, downwards and sideways – are based on mutual understanding and respect.

�� Partnership between management and employees
Oliver Sheldon (1894 – 1951) said that the relationship between management and employees should be one of partnership. They should consider themselves jointly responsible for the management, efficiency and development of the organization. This involves a basic change of attitude. Partnership implies that both stand to gain if they cooperate and lose if they fight with each other.

�� Behaviour of boss
Behavior of boss matters very much. Generally, employees do not quit companies. They quit bosses. A recent study has shown that talented employees leave jobs because of their dissatisfaction with boss. Boss can make or mar his subordinate’s career. As such, getting along well with boss is very important factor for career-growth. Since one cannot have boss of his choice, employees prefer to leave organization when there is mismatch.

�� Exit Interview
Exit interview of employees who leave organization arising out of superannuation or resignation is done to get feedback. The feedback provides valuable informations and suggestions which are used for further improvement. Suggested format for the exit interview is annexed (Annexure-A).

��

Conclusion
▪ The strength of an organization depends upon the quality of its human resources. In future organizations, basic organizational values will change. The pyramid structure will give way to effective groups which will function as integrated team. Such groups will be dynamic and creative. Members of such groups will have their own ideas, feelings and values. They will express their views freely, take risks and experiment with new ideas. The basic organizational values will change. Instead of a single boss making all decisions and giving all directives, team will be directing and controlling the affairs of the organization. The people who will constitute such teams will be in a position to satisfy their inner urge for responsible creative work. Organization will satisfy the primary human need for psychological satisfaction. The character of controls and rewards will change.
▪ Organizations will be transformed into an empowered learning organization provided there is a high degree of top management commitment. The HR professional should be more proactive in developing an understanding among the top management in the organization to appreciate and involve in developing an empowered learning organization.
▪ Empowered learning organization provides a greater sense of self-esteem, high degree of involvement and participation, opportunities for personal growth and development as well as greater sense of achievement for employees.
▪ Demand of professionals in some disciplines will outstrip supply as a result there will be employment of people in more than one company in different time interval / shift. Currently, IT professionals and CAs are in short supply as a result, there is very high rate of attrition in them.
▪ Some of the IT companies like TCS, Wipro have started recruiting Science graduates and they are being provided extensive training to meet the requirement. It is high time for organizations who recruit CAs to look for alternatives arising out of very high rate of attrition. People having B.Com / M.Com qualification may be recruited and extensive training may be given to them as a replacement of CAs to avoid attrition. After all, these B. Coms / M. Coms study and prepare on their own to pass CAs exams. With extensive training by companies, they may acquire essential knowledge and skills of CAs and excel in performance without having risk of attrition.
▪ Studies on most successful businessmen and executives have shown that they did not attain success overnight. It takes a lot of hard work, long time and perseverance to get at the top. Whether it is Soichiro Honda, Akio Morita and Konosuke Matsushita from Japan, or Sam Walton, David Packard, Phil Knight, Andy Grove and Jack Welch from the U.S. or JRD Tata, G.D. Birla, Dhirubhai Ambani, Narayan Murthy, Azim Premji from India, they all created wealth by dint of farsight, vision, mission, dynamic leadership and teamwork over decades.
▪ In their desire to become very rich and famous quickly, young generation employees direct their energy and efforts by job hopping to get a meteoric rise in life. This may not be correct way.
▪ Job hopping is not necessarily a sure route to wealth and happiness in the long run. It may work in the short run for some time. But it may gradually even out. Those who grow more within a company rather than by job hopping are often more likely to be both successful and respected in the long run in addition to having a peaceful and contended life.
Annexure - A

EXIT INTERVIEW

1. Name : _______________ 2. Code Number: _________________

3. Date of joining : _____________ 4. Joined as : ____________________

5. Present designation: ________________ 6. Department: __________________

7. Date of Separation _______________ 8. Type of separation ____________
(Superannuation/Resignation)

9. Please rate the following:-
(Rating Scale: (a) Unsatisfactory (b) Poor (c) Fair (d) Good (e) Excellent.

Rating Remarks, if any

A. Organisational Climate
B. Job Satisfaction
C. Performance Appraisal
D. Reward System
E. Communication System
(Upward & Downward)
F. Work Culture
G. Boss-Subordinate-Relation
H. Team Work
I. Leadership
J. Supervision
K. Salary & Perks
L. Housing & Medical Services
M. Training & Development:
a. Behavioural Training
b. Quality Training
c. Technical Training
d. In-house Training
e. External Training
f. On the job training
N. Safety Awareness
O. Quality Awareness
P. Customer Orientation
Q. House-Keeping of Plant & Office
10. Future Plans: Location
(Please tick your option)
A. Joining another Company
B. Own Business
C. Higher Studies
D. Settling down after Superannuation
E. Other (Please specify)

11 Your memorable moments of Career in the Company

12 Your moments of despair during service in the Company


13. Please list three positive features of the Company


14. Please list three negative features of the Company


15. What in your opinion are the good points of the department in which you worked in the company.


16. What in your opinion are the bad points of the department in which you worked in the Company.


17. Why are you leaving ? If not Superannuated/discharged/dismissed.
(Please tick your opinion)
A. Dissatisfied with job
B. Dissatisfied with Wages
C. Dissatisfied with Superior
D. Desire to Change for better prospect
E. Domestic difficulties
F. Any other reason (Please specify)



18. Do you have any suggestion for improvement in the following areas:-

Areas Suggestions

A. Organisation
B. Work Culture
C. Profitability
D. Productivity
E. Morale
19. Any other suggestions ?



Place :
Date : Signature
……………….

Hi Raam, Simple Tip please work on reverse strategy from Exit Interview. Perhaps the reasons mentioned may be strategically interpreted and worked accordingly right from Induction meeting. And try creating a forum to meet and communicate with the people ( Formally and informally)and post the confidence. Be a catalyst in people's growth. Nayagam