22-10-2016, 04:22 PM
A Study on Employee Attrition in Manufacturing Industry with Special Reference to Auto Components
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Abstract
Attrition is a critical issue and pretty high in the industry these days. It’s the major problem which highlights in all the organizations. Though the term ‘ATTRITION’ is common, many would be at a loss to define what actually Attrition is, “Attrition is said to be the gradual reduction in the number of employees through retirement, resignation or death. It can also be said as Employee Turnover or Employee Defection” Whenever a well-trained and well-adapted employee leaves the organization, it creates a vacuum. So, the organization loses key skills, knowledge and business relationships. Modern managers and personnel administrators are greatly interested in reducing Attrition in the organization, in such a way that it will contribute to the maximum effectiveness, growth, and progress of the organization.
Retaining employees is a critical and ongoing effort. One of the biggest challenges in having managers in the place that understands it is their responsibility to create and sustain an environment that fosters retention. Staff requires reinforcement, direction and recognition to grow and remain satisfied in their positions. Managers must recognize this and understand that establishing such fundamentals demonstrates their objectives to support nature and motivate their employees.
Key words: Attrition, Retaining employees, Retention, Managers and organization
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Introduction
Companies in India as well as in other countries face a formidable challenge of recruiting and retaining talents while at the same time having to manage talent loss through attrition be that due to industry downturns or through voluntary individual turnover. Losing talents and employees result in performance losses which can have long term negative effect on companies especially if the departing talent leaves gaps in its execution capability and human resource functioning which not only includes lost productivity but also possibly loss of work team harmony and social goodwill. With attrition rates being a bane of every industry, companies are devising innovative business models for effective retention of talent. There are a lot of factors responsible for attrition and employers are getting increasingly conscious of the factors that can keep an employee committed. Attrition may be defined as gradual reduction in membership or personnel as through retirement, resignation or death. In other words, attrition can be defined as the number of employees leaving the organization which includes both voluntary and involuntary separation.
The employee gradually reduces his/her ties with the company than crib about the underlying factors causing attrition. It is symptomatic of a much deeper malaise that cuts deeper into the innards of organizations. Attrition rates vary from sector and industry to industry. Apart from the unavoidable ones like resignation, retirement, death or disability, the causes are found to be many and varied. They vary according to the nature of business, the level of the employees and the nature of the responsibility shouldered by them. The obvious, common and main reasons are the ‘ergonomic discomfort’ experienced by the employee and the ‘functional incompatibility’ between the corporate management and the employees. Very often an employee finds himself among colleagues and superiors he is unable to cope up with. Or he finds himself totally out of tune in his functions with the employee’s functional requirements, failing to rise to the employer’s expectations.
Another important reason is that the employee’s remuneration is not voluminous enough to bear the brunt and cushion the concussions of his family and social life. Employee retention refers to policies and practices companies use to prevent valuable employees from leaving their jobs. How to retain valuable employees is one of the biggest problem that plague companies in the competitive marketplace. Not too long ago, companies accepted the “revolving door policy” as part of doing business and were quick to fill a vacant job with another eager candidate. Nowadays, businesses often find that they spend considerable time, effort, and money to train an employee only to have them develop into a valuable commodity and leave the company for greener pastures. In order to create a successful company, employers should consider as many options as possible when it comes to retaining employees, while at the same time securing their trust and loyalty so they have less of a desire to leave in the future. Employees need to be retained because good, faithful, trained and hard working employees are required to run business. They have acquired good product knowledge over the long run and a trained employee can handle customers better and also solve problems of peers who are new to the organization. When an employee leaves he takes away with him all company information such as ongoing projects, etc.
Goodwill of the company gets hampered due to more employee turnover rate and the competitors start poking their nose to recruit best talents from them. Efficiency of work is hampered to a large extent. Let me give you an example If an employee leaves in the middle of an ongoing project it’s very difficult to fill that Vacuum and a new employee can never replace an old and talented employee so this leads to delayed completion of projects and less work satisfaction among other team members. In the present context the present paper is ascertain to study on employee attrition and retention in Auto-Components manufacturing industries in and around Bangalore, Karnataka.
Auto Components Industry
The automotive industry occupies a significant place in the Indian economy. The industry’s turnover touched USD 40.6 billion in 2012–13 and is expected to reach USD 115 billion by 2020–21. The well developed industry acts as a catalyst and gives impetus to the economic growth of the country. India is emerging as a global hub for auto component sourcing and is set to break into the league of the top five vehicle producing nations worldwide. The country is also emerging as a sourcing hub for engine components. The Indian auto component sector covers a wide range of industries.
Market Structure
The industry is estimated to grow at a compound annual growth rate (CAGR) of 14 per cent during 2013–2021. In addition, the industry recorded exports worth US$ 9.3 billion in 2012–13 and is projected to touch US$ 30 billion by 2020–21, according to data from Automotive Component Manufacturers’ Association (ACMA). The Auto Component Manufacturers Association (ACMA) has significance for global recognition and has an impact on GDP. It has a supporting role in the growth of Indian Automobile Sector and in future as per Automotive Plan 2006-16, Vision 2020:21 and Automotive Sector five year plan (2012 – 17) as projected by Department of Heavy Industry, Ministry of Heavy Industries and Public Enterprises. The growth of this sub sector has a bearing on the developments and growth of Indian Automobile Industry rather it is dependent on Automobile Industry growth – Locally and worldwide expanding and aftermarket.
Review of Literature
The overview of the related literature is enunciated below:
Ms Muskan Khan, (2013): in her article “ A Study On Trends And Issues Of Employee Turnover In Education Sector With Special Reference To Professional And Technical Institutes In Twin Cities Of U.P” recommend that, Create a rotational schedule for roles with sets of tasks that cycle 2 or 3 times a year. Encourage employee pride by offering innovative programs that demonstrate that they are important to the success of the company or organization. Demonstrate respect for employees at all times.
Dr. K. Lavanya Latha(2010):- in her article “A Study on Employee Attrition and Retention in Manufacturing Industries in Nellore District, Andhra Pradesh” suggested that , even though the employees are satisfied with their nature of job, it is identified in the study that many employees prefer to change their job due to lack of growth opportunities in their job. So the companies can look for some innovative technologies to decrease their attrition level by providing growth opportunities. The company should also think of recruiting people who are in the vicinity of the industry, so that the family related problems will not lead to attrition.
Minu Zachariah and Dr. Roopa T.N, (2012): in their article “A Study On Employee Retention Factors Influencing It Professionals Of Indian It Companies And Multinational Companies In India” recommend that , Top Management should view attrition as a serious problem and take measures to control it by involving HR Managers and Business Leaders. Organizations should periodically conduct exit, engagement and culture surveys to understand the changing expectations of the critical workforce from time to time and take all these inputs to have a holistic understanding of the factors influencing retention of employees. Constantly monitoring and bench marking the retention strategies of the competitors and taking a proactive step towards implementing novel and attractive strategies better than them to a large extent prevents poaching of employees.
Ms. Deepti Sinha And Dr. Somesh Kumar Shukla,(2013): In their article “A Study Of Employee Retention In The Pharmaceuticals Sector In Dehradun City” concluded that, No doubt, soaring attrition levels are proving to be a serious problem for organizations. Concerted efforts to keep retention on a tight leash will definitely help. High retention level will lead to fewer operational problems, greater productivity and soaring morale and huge cost-saving to the organization. In this context, employee retention has become the strategic focus and compelling necessity of businesses today. Thus, ignoring the problem of mounting attrition level can have devastating consequences for the business. Organizations can afford to ignore the problem at their own peril.
Naresh Khatri, (2012): In his article “Employee Turnover: Bad Attitude or Poor Management”, Employee turnover is giving sleepless nights to human resource managers in many countries in Asia. A widely-held belief in these countries is that employees have developed bad attitudes due to labor shortage. Employees are believed to job-hop for no reason or even for fun. In this study, we examined three sets of antecedents of turnover intention in companies in Singapore: demographic, controllable, and uncontrollable. Findings of the study suggest that the extent of controllable turnover is much greater than uncontrollable turnover and that poor management practices are the major source of employee turnover.
Brijesh Kishore Goswami, Sushmita Jha, (2012), in their article “Attrition Issues and Retention Challenges Of Employees conclude that, Organizations planning for the future should be giving close attention to why attrition is occurring in the preset. To ignore why people are leaving the organization is to ignore the organization’s greatest asset – its people. People are needed to accomplish the task, but people are more than just tasks they perform. They are dreams, hopes, ambitions, creativity and innovation. To recognize and cultivate these valuable assets is one of the surest ways to build an organization that leads rather than follows in domestic and global markets.
Few more studies have been done on the topic related to this article, but there is no evidence that any study been done on the employee attrition in auto component manufacturing industry. Therefore, to fill the gap in this area, this study has been under-taken.
Statement of the Problem
The aim of the present report is to study factors like salary, superior-subordinate relationship, growth opportunities, facilities, policies and procedures, recognition, appreciation, suggestions, co- workers by which it helps to know the Attrition level in the organizations and factors relating to retain them. This study also helps to find out where the organizations are lagging in retaining.
Objectives of the Study
The primary objective of the study is to know the employee attrition in manufacturing industry in general and in auto component industry in particular. In addition to this primary objectives, the following supplementary objectives are set as under;
1. To know the satisfactory level of employees towards their job and working conditions
2. To identify the factors which make employees dissatisfy about company’s policy and norms
3. To know the reasons, why attrition occurs in Auto-component manufacturing industries
4. To find the ways to reduce the attrition in Auto-component manufacturing industries
Scope of the Study
The scope of this study is confined to manufacturing industries, especially Auto-component manufacturing industries which are located in and around Bangalore City only in the state of Karnataka. The study throws light through valuable suggestion to decrease attrition level in the organization.
Research Design
a. Type of the Study: Descriptive Research
b. Sources of Data Collection:
i. Primary Data: The primary data were collected through questionnaire followed by the discussions with management and employees of Auto component manufacturing industries located in and around Bangalore.
ii. Secondary Data: Secondary data for this study has been collected from company literature, books, journals, magazines, newspapers, previous research works and the internet.
c. Sampling Design:
a. Sampling Unit: The target respondents of the study are the employees of Auto-component manufacturing industries located in and around Bangalore city.
b. Sampling Size: 50 Employees
c. Sampling Procedure: Convenient Sample Method
Hypotheses
The following hypotheses are designed to test the assumptions. They are as under;
H1: There is a significant relation between age and attrition factors of the employees.
H2: There is a significant relation between educational qualification and attrition factors of the
Employees.
H3: There is a significant relation between experience and attrition factors of the employees.
H4: There is a significant relation between marital Status and attrition factors of the employees.
Data Analysis and Interpretation
The data so collected in the field work has been analyzed by using the tables and interpreted with percentages, t-test and Analysis of Variance (ANOVA) by using SPSS package.
From the above table it is evident that, 42% of employees have an opinion that the performance bonus they are getting is very high, 22% said as medium and 22% as high. And 28% of employees has an opinion that the standard of increment in the company is very high, 18% said it is low. 38% of employees has an opinion that they are satisfied with the level of salary & increment, 26% said it is low.
Its leads to conclusion that, 42% of employees have an opinion that the performance bonus they are getting is very high, it means employee are being encouraged by providing the bonus in order to increase the performance and the bonus is purely based on performance. 54% of employees have an opinion that the standard of increment in the company is high which means employees are satisfied by the level of increment set by the companies. And in turn it can be concluded that, majority of the employees are satisfied with the level of bonus & increment the provided by companies.
From the above table, it was inferred that 42% of employees have the opinion that their encouragement from superior is high, 24% said it is medium and 6 percent said it is very low. And 30% of employees have an opinion that the superior’s effort to help for job promotion is very high, 14% said it is medium and 32% said it is low. It leads to a conclusion that 42% of employees have the opinion that their encouragement from superior is high, by which it is understood that supervisors motivate the employees to work in teams, and 32% of employees have an opinion that the superior’s effort to help for job promotion is low, means the employees cannot seek any help from their superiors in case of promotion.
Findings
• 42% of employees have an opinion that the performance bonus they are getting is very high, it means employee are being encouraged by providing the bonus in order to increase the performance and the bonus is purely based on performance.
• 54% of employees have an opinion that the standard of increment in the company is high which means employees are satisfied by the level of increment set by the companies.
• 42% of employees have the opinion that their encouragement from superior is high, by which it is understood that supervisors motivate the employees to work in teams.
• 32% of employees have an opinion that the superior’s effort to help for job promotion is low, means the employees cannot seek any help from their superiors in case of promotion.
• 42% of employees have the opinion that their opportunities provided by the companies are very high, which tells that the company provides career opportunities and the employees look towards their development.
• 32% of employees have an opinion that the chances of promotion are high, which means the company promotes those employees who are excellent performers.
• 34% of employees have the opinion that the welfare facilities provided to them by the company is very high , which states that the company is indulged in providing support, benefits and also takes care about the health, comfort and happiness of the employees.
• 32% of employees have an opinion that the physical working conditions like ventilation, illumination , furniture and other facilities are very high, which means that majority of the employees are satisfied with the current working conditions.
• 38% of employees have the opinion that the employee policies and procedures of the company are very high, by which we can say that the employees have no issues in relation to the plans and ideas of the company.
• 36% of employees have an opinion that the administrations of the policies are very high, which means that the employees are happy with the range of activities connected with organising and supervising.
• 36% of employees have the opinion that the recognition received by the company for their abilities, efficiency and good work done are medium, which states that employees with skills and capabilities are valued and identified.
• 46% of employees have an opinion that the Cash award/salary increase/promotion getting for outstanding performance are medium, which means the efficient performers are not unnoticed and they are rewarded to improve it further.
• It is the evident by ONE WAY ANOVA test that there is a significant difference (at 0.05 levels) amongst the different categories of age of the respondents with the attrition factors.
• It is the evident by ONE WAY ANOVA test that there is a significant difference (at 0.05 levels) amongst the different categories of educational qualification of the respondents with the attrition factors.
• It is the evident by independent samples t-test that there is a significant difference (at 0.05
Levels) between the factors of attrition and their marital status.
• 42 % of the employees gave the reason for leaving the company is poor compensation package and 26% of the employees gave the \reason as better growth opportunities in the competing companies.
Recommendations/Suggestions
1. Top Management should view attrition as a serious problem and take measures to control it by involving HR Managers and Business Leaders. An online system or a forum should be created wherein the employees can voice out feedback openly and fearlessly on various issues like their expectations from the Organization, shortfalls in the Organization that hamper their performance that influences Organization’s performance.
2. Organizations should periodically conduct exit, engagement and culture surveys to understand the changing expectations of the critical workforce from time to time and take all these inputs to have a holistic understanding of the factors influencing retention of employees.
3. The demographic details of the employees should also be considered while designing the retention strategies as some of these variables have proved to have influence on retention. Also based on the changing economic scenario and supply- demand of human resource, Organizations should adopt new initiatives and review existing retention strategies.
4. Many employees have suggested improvement in working environment and employee motivation in the survey. So the companies should give attention to the factors which it can improve itself internally.
5. The companies may give training like Personality Development and Self-improvement training to the employees, every three or six months once this status has to be reviewed and necessary action can be taken. It is better to have such training in the future.
Conclusion
The primary objective of any organization is to earn profit. But to attain the maximum profit, the Organization should concentrate more on employees and the ways to retain them for their long Run. Attrition is a critical issue and pretty high in the industry these days. It’s the major problem which highlights in all the organizations. The study showed that there is a significant relationship between attrition factors and demographic variables. From the study, it is identified that lack of growth opportunities and salary are the major factors which force employees to change their jobs.
Employees also felt that the efficient performers are not unnoticed and they are rewarded to improve it further and encouragement is given to enhance and upgrade their skills or obtain knowledge through training & cross training.
This study concludes that to reduce attrition industries should create some opportunities for the growth of their employees within the organization by adopting new Innovative Technologies and Effective training programs.