Managing Human Resource is challenging job


By

Poonam
MBA (HR& IB), CIC
Faculty HR/OB
ICFAI National College
Panipat
 


Abstract

Human resources are the backbone of every organization. As it is well said that money and material is useless if we don't have power of men.  People come to work with certain specific motives to earn money, to have better prospects in future. In today's scenario the organizations have to compete on large scale. That's why the management of men is a very important challenging job. Because of the dynamic nature of the people. Dynamic and growth-oriented organization does require effective management of people in fast changing environment. Organizations flourish only through the efforts and competences of the human resources.

Now days, due to the dynamic nature and competitive edge, it is tough to retain the employees.  So, many sectors are facing big problem –Attrition. This paper is about attrition, retention aspect

Introduction

"Man alone, of all the resources available to man, can grow and develop. The resources capable of enlargement can only be human resources ".                                                      Peter. F. Drucker

Today we are living in fast-paced changes. Where, every thing depends on mergers and acquisition which leads to cut-throat competition with every organization, but again all of this is depend on human resource-A key element of the organization and the real army of the organization . Human Resources (HR) constitute the most valuable asset in the context of development. Relative performances of nations, of regions of economy, of sectors of industry as well as of corporate enterprises are critically linked to quality of human contribution. Even the gains from the intervention of superior technology in any field are closely related to its interface with human factor with corresponding skills as well as attitude. Now days it is though to retain the talented employees in the organization.

The one single word attrition which is the biggest problem. In broad terms: - Attrition is a situation which employer face when employee left the organization in due to job dissatisfaction, new opportunity in the market. It is the question in front of Human Resource Managers that why the attrition rate is higher? HR Professionals after making lots of strategies for retaining the employees. They fail again and the question mark is in front of them.

That's why the companies are having new system in HR Department like:

a) attrition management department,
b) Interaction feedback system,
c) Exit interviews

Some Facts

1) Attrition   rate
    US          42%
    Australia  29%
    Europe    24%
    India       20%

Source-Times News New York

2)  Attrition rate in India's Business process outsourcing (BPO) industry are about 7.8% points higher than in other industries according to repot released by Hay Group-A global management consulting firm The findings comes from report, BPO special sector survey 2008 .it showed that in general, staff turnover in India is 15.7%but at BPO companies attrition in country highest at 23.5 followed by communication 22%and retail 18%

3) A recent survey by Associated Chambers of Commerce and Industry of India (ASSOCHAM) threw up some interesting figures regarding the attrition rates in India Inc. The survey focused on the Attrition Problem in growing Economy and said that the maximum attrition is taking place in the age group of 26 to 30 years.

4)  Indian managers may be high performers in their area of expertise but the performances of the people who manage them leave much to be desired for. That in short is the synopsis of a recent survey conducted by global management consultancy firm.

5) Attrition in the hospitality industry is up by 15-20 per cent and it is expected that by the year 2010, it will increase by another 50 per cent. As of now, attrition rate is 10 per cent per annum and this in not only in the senior positions but also across various verticals of the industry.

6) Pharmaceutical industry, has seen major attrition in to medical sales representative level, which has an attrition rate of 35 per cent

The question arises why employee quit? Is only salary is one factor of job satisfaction-Those days are gone when salary was only motivator factor for an employees to leave and organization. Now every body wants their growth, working environment etc

The attrition rate is high generally in IT Sectors and BPO.

In BPO, the reasons of leaving the organization are

1) No career path.
2) Poor supervision
3)  internal movement
4)  stress
5)  location/comminuting problem
6)  psychological satisfaction

In IT Sectors the reasons are different

1) More career opportunities
2) Stress
3) Inequity in compensation

Bangalore based Global Talent Metrics formally unveiled key findings of comprehensive research and survey on factors impacting employee attrition among white collar workers across industries, at a press conference. The research was developed and survey was conducted over the last 12 months and includes responses from 5000 employees of companies across industries.  The survey for the first time probes the role of demographic, psychographic and sociological factors in predicting attrition and organizational factors that attract individuals or cause them to leave a company. 

By Hewitt   "Attrition and retention survey show one of the top reasons for attrition to be "external inequity in compensation". They also show that 27% of the employees in their exit interview mentioned compensation as the primary reason.  So there are several factors that interfere an employee to leave the organization

Now days, employees consider multiple comfort level while working in an office because the world is open there are many opportunity lying ahead of them due to the impact of globalization. Human beings are complex personalities. Nature of human begin were differ from person to persons so it is difficult to predict a behavior of the employees.  This shows the employer and the managers do understand there employees well. The technique to be used by managers to understand the employees

a) Observation
b) Frequent interaction
c) Encourage them to talk freely
d) Feedback

Mr. Srinivas, CEO- SATYAM COMPUTER views. "Attrition as big issue that as to be deals with immediately". As attrition rate is a sensitive issue for all organization and in every sector.  Calculating employee turnover rate is not that simple as it seems to be and even no common formula can be used by all the organization. It is different as it needs keeping view of the business nature.

Attrition cost

The cost of attrition is not just the loss of that employee but it includes an array of hidden costs such as recruitment costs, selection costs, training costs, cost of covering during the period and opportunity costs.

The organizational costs associated with the turnover in terms of hiring, training and productivity loss costs can add up to more than five per cent of an organization's operating costs, says Cabot Jaffee, Chairman, Global Talent Metrics.

One of the best methods for calculating the cost of turnovers includes

Recruitment cost

The cost to the business when hiring new employees includes the following factors plus 10% for incidental such as background screening:-

* Time spent on recruitment and selection
* Background / reference screening
* Training if any

Training and development Cost

To estimate the cost of training and developing new employees, cost of new hires must be taken into consideration.

* Training material
* Technology
* Employee benefit
* Trainer's time

Administration cost

They include:
Set up communicate system of employee to HR system
Set up the new heir workspace
The certain things like setup ID card, new bank accounts etc.

So it is not an easy task and cost is very high that's why it is a big problem in front of HR Managers. Retention of excellent employees is one of the biggest challenges which most of the organizations are facing today. The general perception is that people leave organization for more money however, in one astonishing statistical comparison it was found that 89 % of employers think their people leave for more money while, its just 12 % of employees who actually do leave for more money .So what is that, which, makes employees to stay or quit their job. If carefully analyzed, the decision regarding staying or leaving the job is guided by the emotions Intelligent employers always realize the importance of retaining the best talent. Retaining talent has never been so important in the Indian scenario; however, things have changed in recent years. In prominent Indian metros at least, there is no dearth of opportunities for the best in the business, or even for the second or the third best. Retention of key employees and treating attrition troubles has never been so important to companies.

In an intensely competitive environment, where HR managers are poaching from each other, organizations can either hold on to their employees tight or lose them to competition. For gone are the days, when employees would stick to an employer for years for want of a better choice. Now, opportunities abound.

It is a fact that, retention of key employees is critical to the long-term health and success of any organization. The performance of employees is often linked directly to quality work, customer satisfaction, and increased product sales and even to the image of a company. Whereas the same is often indirectly linked to, satisfied colleagues and reporting staff, effective succession planning and deeply embedded organizational knowledge and learning.

Framing the retention strategies which are again not an easy task in today's dynamic and ever changing environment- the duties are not limited and they have to break off all its boundaries. Getting with and getting the best from you top talented employees is one of the role of human resource manager .Talented employees –these are the people who will lead the organization to future success and organization cant afford to loose them.Organisation needs to promote the diversity and design strategies to retain them, provide the opportunities for the development make them relies that they are the part of the organization. When work place ignore the performance will destroy the human sprit and that's make the true difference in quality of output. A sense of contribution to the company must be realized the organization needs to let the employees come to know their performance is important for the organization 

In this context   it is important that the managers take the following into consideration.

1. They should understand there basic needs capabilities and their behavior.
2. Identifying the strength and weakness of employees so that proper training should be provided to them and coaching can be provided.
3. They should help them to build up confidence and improve entire creativity.
4. Maintaining the good interpersonal relations and also encouraging the participation of employee in managerial decision so that they should have sensitive of belongings towards the organization.
5. It is very important that there should be trust between supervisor and subordinates of reduce the disputes and increase the team building. 
6. Bring the "WE" culture in the organization.
7. shows the career path way in the organization
8. Guaranteed that there should be no biasness and in equity compensation system
9. No biasness in performance appraisal
10. Use workforce skills and abilities in order to exploit environmental opportunities
11. Employ innovative reward plans that recognize employee contributions and grant enhancements.
12.  Indulge in continuous quality improvement through TQM and HR contributions like training, development, counseling, etc
13. Utilize people with distinctive capabilities to create unsurpassed competence in an area.
14. Decentralize operations and rely on self-managed teams to deliver goods in difficult times e.g. Motorola is famous for short product development cycles.

Conclusion

Any company can compete with anyone provided they have the right value system inculcated in their business model (I am referring to HR practices). Organization irrespective of the size, if it has adopted "System thinking" that organization rarely falters. In any organization if the person contributing to the organization in his/her role effectively, needs to be treated with dignity and respect. If an individual is made accountable for his/her actions and given proper feedback on the performance at work regularly, the individual will love that organization. It is this basic value of treating people with respect and dignity that endears an individual to an organization. 90% of people complain not because the company is bad, it is because they feel they were not treated with dignity.

Managing talented employees is turn out to be goldmine and it will keep supply wealth and value of the organization

References

1) Business standards Dated 3 Dec 2008
2) Global Talent Metrics survey
3) ASSOCHAM survey
4) Challenges for attrition and retention derivative book ICFAI
5) Times News New York
6) Article High Attrition rate in BPO –A Key Check from www. indianmba.com
 


Poonam
MBA (HR& IB), CIC
Faculty HR/OB
ICFAI National College
Panipat
 

Source: E-mail December 19, 2008

          

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