Retention Management: A Strategic Dimension of Indian IT Companies

International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 23194421 12 Retention Management: A Strategic Dimension of Indian IT Companies N. Suhasini, Assistant Professor, Dept. of MBA, KSR Memorial College of Engineering, Kadapa, Andhra Pradesh. T. Naresh Babu, Assistant Professor, Dept. of MBA, KSR Memorial College of Engineering, Kadapa, Andhra Pradesh. ABSTRACT The hyper competitive business environment is experiencing a fierce competition for skilled employees. Increase in productivity and quality rests on implementing different ways and means to retain key performers in the organization. The problem is highly persisted in IT industry. The IT industry facing the critical challenges of recruitment and retention of best talent. There are many factors which influence retention and it is required to understand employee expectations, that can made them to stay long back and perform well. Global explosion in business creates more opportunities and people are highly mobile not restricting to particular job. The objective of this paper is to find out the factors which influence employee retention and reasons for employee leaving the organization. Based on analytical study researcher suggest some recommendations for employee retention in IT sector with special reference to study of selected IT companies in Hyderabad, Andhra Pradesh. Keywords Global explosion, Recruitment, Employee Retention, IT Sector. INTRODUCTION The IT sector is playing prime role in generating revenue as well as in providing direct employment to around 2.3 million people in India. According to the industry body NASSCOM, Indian IT sector is estimated to provide direct employment to around 10 million by 2020. In FY 2010 IT sector has contributed around 5.6% to India s GDP. India s human capital advantage has been one of the prime reasons for the rapid growth of the IT sector. Post recession, the IT sector has seen tremendous growth and today the market has become extremely competitive. Talent attraction and talent retention has become a major challenge for the employers. IT sector has been the most attractive sector to work which provides an admirable work environment, attractive compensation and rewards along with good career growth opportunities. The economic downturn shows impact on IT companies in the form of huge salary cuts, downsizing, and reduction of incentives.. The attrition rate for IT companies was in the range of 1425 percent for the fiscal year 20102011. Recruitment and selection of right employees is critical challenge for employers. Motivation and retention of valuable employees leads to the success of business in turbulent environment. The present scenario is quite complex where employers are facing the difficulty of attracting and retaining talent due to availability of more job opportunities. High recruitment costs, loss of expertise, decrease in productivity and lower quality are the results of employee turnover. According to a study conducted by MyHiringClub.com, the IT and ITES sectors saw the highest attrition rate of 23 per cent in the first quarter of 201011. Beside pay packages, career level growth and relationships with supervisors are the other reasons for higher job attrition, MyHiringClub.com Founder and CEO Rajesh Kumar said. The main reason for switching a job is pay packages (21 per cent), followed by career level growth (16 per cent), dissatisfaction with supervisors (15 per cent) and work pressure (14 per cent). Some of the common reasons for attrition in IT industry are as follows: 1. Compensation 2. Role 3. Location Preference 4. On Site (Overseas) ixplore International Research Journal Consortium

International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 23194421 13 5. HR Policies affecting the career (Promotion, probation, performance appraisals, organizational culture, etc) 6. Work related issues (Shifts, overtime, project facilities) 7. Personal (Health, family, etc) LITERATURE REVIEW Ganesh, (1997) identified two types of factors that encourage an employee to leave the present job are push factors and pull factors. Push factors pertain to the dissatisfaction causes are work environment, compensation, low employee benefits, inconsistent HR policies, incorrect work assignments, lack of challenge, lack of career development schemes, fear of being found out and level of competence. Pull factors that lure an employee are higher compensation package and greater technical challenge. Persis Mathias (2001) states that it is hard work engaging Indian software talent by the Software industry, which is spawning ground for I.T professionals. Retention of employees is a major task before HR professional managers. AMR (attract, motivate, retain) is a big concern IT industry. In developed and emerging countries, Attraction and retention of employees is of the most desired practice and competence of the high performance organizations. Search for best talent will be very difficult in coming years. Retention can be possible by many ways but one of the most used in organizations is paying more than they are earning. Lawler III (2005) stated that in these days organizations are competing for talent rather than counting employees loyalty. They are focusing on attracting, hiring and retaining the required talented persons. For this purpose organizations must utilize those practices which are in favor of both employees and employers leading them towards higher performance levels. It is important to recruit strategy driven and shrewd employees because it creates sense of alignment between employee and organizational values and goals. Gentry et al., (2007) argued that employees feel connected with the organization if they get support from their supervisors which lead them to return the favor to the supervisors and organization through retention. B.K. Punia and Priyanka sharma (2008) highlighted that in current economic scenario the variables like induction programme, scientific job analysis and fair & skill based distribution of work assignments are the key factors in influencing the employees retention intentions in industrial organizations in general and the IT sector in particular study highlighted the influence of age on employees position as significant factors in employee retention. The corporate has to strengthen their induction programmes, during scientific job analysis before selecting the employees and resorting to fair and skill based work distribution practices. Srivastava, Vinay k. and Shailesh Rastogi (2008) the reasons of employee attrition are growth, family problems, dissatisfaction. Causes of dissatisfaction are not having objectivity in job allocation, employee recognition and fairness in career advancements. Management control system is fully capable of bringing objectivity in the organization and managing employee dissatisfaction which leads to high employee retention and better productivity and better organizations. Vos & Meganck (2009) indicated that career development plan for the employees play a vital role in the retention of employees. Providing these career development opportunities restrict employees from leaving the organization and increase in loyalty. RESEARCH METHODOLOGY Objectives of the study: To identify and analyze turnover intentions of personnel in IT Industry. To measure the influence of job related and organizational factors towards retention. To suggest measures for effective retention and organizational performance. Methodology and Sample design: For this research, we choose the descriptive research which carried out with specific objective and hence it results in definite conclusions. This research tries to explore the underlying factors which are important for talent retention in the IT sector by conducting survey to the employees. The researcher targeted online survey by administering a structured questionnaire for 100. Each of the attribute in questionnaire was measured on 5 point scale. The data was analyzed with the help of SPSS 17. The tools used to analyze the data included Factor Analysis, Cronbach s Alpha for testing the reliability of scales and Weighted average method. The questionnaire consists of both open ended and closed ended questions. It consists of different parts. Part Demographic information, PartB Reasons for employee leaving the organization, PartC Job and Organizational factors. Convenience sampling method was used to collect the data. ixplore International Research Journal Consortium

International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 23194421 14 Age Gender Job Title DATA ANALYSIS AND RESULTS: Variable % 2130 54 3040 25 40 Above 21 Male 70 Female 30 Software Engineer s 40 Senior Software Engineers 35 Technical Leads 25 Table 1: Demographic Profile of the respondents The sample size was 100 employees from selected IT companies. Out of this 40 percent were software engineers; 35 percent were senior software engineers; 25 percent were technical leaders. 70 percent of respondents were males and 30 percent were females. Around 54 percent of employees belonged to the age group of 21 to 30 years and 25 percent of employees belonged to the age group of 3040 and 21 percent belonged to the age group of 40 above. RELIABILITY OF SCALES The reliability for each of the scales was assessed by computing the coefficient of alpha (a). All coefficient of alpha (a) were found to be greater than 0.5 and therefore, were considered reliable and accepted (Nunnally.J, 1978).Table 2 gives a summarized view of a value for each of the scale. Table 2: Cronbach s Alpha Values for Reliability Analysis Parameters Cronbach s Alpha Reasons for employee leaving 0.715 Influence of job and 0.783 organizational factors FACTOR ANALYSIS Reasons for Employee Leaving Table 3: KMO and Factor Loading Parameters KMO Factor loading Reasons for employee leaving.651 63.025 The total variance shown in table.3 accounted for by all of the 6 components explains nearly 63 percent of the variability in the original 15 variables. Varimax rotation was applied for these 15 variables. The variables were clubbed into 6 factors. Mismatch between job and person recognition Limited career advanceme nt Unfair compensati on training and development opportunities Poor interperson al relationship s Inadequate flexible work practices work life balance Dysfunctio nal work culture Poor manageme nt practices High job demands challenging job environme nt Stress at work place Ineffective leadership Insufficient rewards Table 4: Rotated Component Matrix Component 1 2 3 4 5 6.332.363.346.177.007.408.017.068.675.349.198.048.054.111.789.141.810.067.034.252.050.155.030.853.050.156.061.045.108.120.719.021.088.026.212.022.289.289.232.333.338.264.694.180.409.010.195.002.669.238.310.013.017.091.123.083.115.010.490.517.188.722.041.203.177.025.267.088.095.402.125.607.012.246.161.038.109.036.061.146.002.042.045.077.543.292.800.015.005.833 ixplore International Research Journal Consortium

International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 23194421 15 The rotated component matrix reveals 6 factors. The factors were named accordingly. Factor 1: Includes variables like poor interpersonal relationships, lack of worklife balance, Dysfunctional work culture Organizational Culture Factor 2: Includes variables like unfair compensation, High job demands. Compensation Factor 3: Includes variables like lack of recognition, limited career advancements. Motivation Factor 4: training and development opportunities Development Factor 5: Includes variables like Poor management practices, Stress at work place, Ineffective leadership Work environment Factor 6: Includes variables like lack of challenging job environment, insufficient rewards. Challenging job INFLUENCE OF JOB AND ORGANISATIONAL FACTORS ON RETENTION MANAGEMENT To identify the factors influencing retention management, a no of factors have been analyzed on the basis of mean scores. The opinion indicated as strongly influenced has been assigned a weight of 5, the opinion indicated as influenced has been assigned a weight of 4, the opinion indicated as Moderately influenced has been assigned a weight of 3, the opinion indicated as weakly influenced has been assigned a weight of 2, the opinion indicated as Uninfluenced has been assigned a weight of 1. Table 5: Mean Scores regarding influence of job and organizational factors on employee retention PARAMETER WEIGHTED MEAN 1. Effective Performance Appraisal 3.38 3.20 2. Training Opportunities 3.48 3. Skills and abilities are adequately utilized 3.80 4. Career development opportunities 3.24 4.25 5. Autonomy in Job 3.10 6. Environment openness & Trust 4.25 3.62 7. Effective Work life Balance 3.30 8. Rewards & Recognition 9. Fair & Equal treatment 10. Management support to employees FINDINGS AND CONCLUSION Effective Performance appraisal: The respondents stated that performance appraisal influencing retention because it is a key indicator for career growth opportunities in organization with weighted mean of 3.38. Training Opportunities: Most of the respondents feel (Mean 3.20) that training is important for continuous updating of knowledge to withstand in competitive environment. Adequate utilization of skills and abilities: The respondents (Mean 3.48) opined that skills and abilities should adequately utilize to increase job fit leads to employee engagement and effective performance. Career Development opportunities: The respondents stated (Mean 3.80) that provision of career development opportunities enhance employee employability on internal/external labor market which affects employee retention. Autonomy in job: Most of the respondents (Mean 3.24) stated that autonomy and individuality in job makes them to act freely which leads to high involvement and commitment which leads to employee retention. Environment of Openness and trust: The respondents stated that (Mean 4.25) openness and trust in work environment influence employee retention. Effective work life balance: Most of the respondents opined that (Mean 3.7) Work life balance influence job satisfaction, job involvement and quality of work life. Rewards and Recognition: The respondents revealed that (Mean 4.25) rewards and recognition strongly influence motivational aspects which increase employee retention. Fair and Equal Treatment: The respondents feel that fair and equal treatment( Mean 3.62) of superiors creates conducive environment where to discuss job related issues and welcomed suggestions & feedback for effective retention. Management Support systems: The respondents opined that (Mean 3.30) Management policies and practices for recognition of achievements, cooperation and promoted diversity influences employee retention. FINDINGS The major findings of the study are as follows: The most important reasons for employee leaving from organization are dissatisfaction with organizational culture, compensation, motivation, development and challenging work environment. Employees stated that factors influencing employee retention are 1. Career development opportunities. 2. Autonomy, environment of openness and trust, fair & equitable treatment in work environment. 3. Effective utilization of employee skills and abilities. 4. Management policies regarding reward and recognition of employee achievements and developmental aspects in organization. ixplore International Research Journal Consortium

International Journal of Management and Social Sciences Research (IJMSSR) ISSN: 23194421 16 CONCLUSION Hence it is observed that organizations should aim at developing effective employee retention policies and practices which increases employee commitment level, loyalty and engagement. Employee commitment and involvement have impact on employee productivity and retention. Organizational culture and compensation have a significant impact on employee retention. Organization has aim to design integrated approach to employee retention which includes best retention strategies like conducive organizational culture, adequate competitive pay package, nonmonetary motivation and effective employee development programs for attaining competitive advantage in business environment. REFERENCES [1] Employee Retention: Tips and Tools for Employee Retention (2010) viewed on16 June 2010 [2] Gentry, A. William., Kuhnert, W. Karl., Mondore, P. Scott. (2007), The influence of supervisorysupport climate and unemployment rate on parttime employee retention A multilevel analysis, Journal of Management Development, Vol.26, No.10, pp. 10051022 [3] Lawler III E. Edward. (2005), Creating high performance organizations, Asia Pacific Journal of Human Resources, Vol.43, No.10. pp. 1017. [4] N Srivastava, vinay k. and shailesh Rastogi(2008) Employee Retention: By way of management control systems, ACM. Ubiquily, 9.16 pp.2228.. [5] Punia, B.K. and priyanka sharma(2008), Employees perspective on human resource procurement practices as a retention tool in Indian IT sector, Vision the journal of business perspective, Vol.12. pp 5769 [6] Vos, D. Ans., & Meganck, A.(2009), What HR managers do versus what employees value Exploring both parties views on retention management from a psychological contract perspective, Personnel Review, Vol.38, No.1, pp. 4560. [7] http://www.thehindubusinessline.com [8] http://www.valuenotes.com [9] http://www.mckinsey.com/mgi/reports/pdfs/india/soft ware.pdf ixplore International Research Journal Consortium