02-10-2012, 11:10 AM
Retention of Employees in IT Company
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Introduction to the research topic
Today retaining talented people has become one of the major challenges across the globe. A critical person holds crucial position in the organization and has the requisite skill level to perform the job. Most often in organizations, the critical talent is found at the middle level.
The topic ‘Retention of Employees in IT Company’ focuses on segregating the pivotal roles and picking out ways to retain people performing those roles. A satisfaction survey has been conducted during the study to check the contentment and commitment level of employees. This survey can be utilized by the company to do further research. Questionnaire method has been adopted to do the survey, based on various parameters of job satisfaction.
This research has been done to enable IT Companies to stay focused on their employees and eventually satisfy them to whatever extent possible.
Introduction to IT industry and IT sector in India
Over the past decade, the Information Technology (IT) industry has become one of the fastest growing industries in India, propelled by exports (the industry accounted for more than a quarter of India’s services exports in 2004-05). The key segments that have contributed significantly (96 percent of total) to the industry’s exports include – Software and services (IT services) and IT-enabled services (ITES) i.e. business services. Over a period of time, India has established itself as a preferred global sourcing base in these segments and they are expected to continue to fuel growth in the future.
These segments have been evolving over the years into a sophisticated model of operations. Indian IT and ITES companies have created global delivery models (onsite near shore-offshore), entered into long term engagements with customers, expanded their portfolio of services offerings, built scale, extended service propositions beyond cost savings to quality and innovation, evolved their pricing models and have tried to find sustainable solutions to various issues such as risk management, human capital attraction and retention and cost management.
Information Technology is what constitutes the most important sector in the present day trend of carrying out business. It is because you cannot be present everywhere to monitor the work, but with networking and communications, you can always stay in contact with the other business sites of yours.
Background of the research study
This research will be of great importance to IT Companies because it gauges the satisfaction level of employees across all departments in the organization. The average attrition rate in this sector is still 35-40%. Since the IT sector has now gathered momentum, the organization might see an upsurge in their level of attrition.
Problem Statement
In this technological age, where the IT sector is in boom, one has to confront various issues. One of them is attrition. The problem is extremely acute in the IT industry, with employees joining and quitting in short periods. Employee turnover leads to loss of skilled man power, loss in productivity, loss in market share and profitability. Therefore retaining employees has become an issue that needs a lot of focus.
It has become necessary to retain employees and conduct satisfaction survey to check their motivation level. This study facilitates IT Companies to identify reasons for its increased turnover and take corrective action.
RETENTION
INTRODUCTION
Many corporations trumpet the slogan, “People are our most important asset”. This is admirable, but it takes hard, consistent work in policies, statements and actions for those people to believe it. Similarly, many companies post eloquent values statements which mention people, team work, integrity, respect, dignity, etc. Again, these fine items must be backed up in practice to be believed. Otherwise they become jokes when the CEO salts his next speech with them. The nineteenth century belief is that employees need their companies more than a company needs them is dangerously dated. In today's marketplace, it's a seller's market. Motivated, qualified and capable employees are the ones who are selling.
One of the foundation stones of companies which attract, retain and motivate high performing employees is a positive and valuing attitude toward them. In this era of monster mergers and mega corporations, it is all too easy for top management to see employees as expendable resources to be hired and fired at will according to the current short-term business plan. A doubt can creep into a work force which undermines its efforts, and this can cause employees to look for work elsewhere when opportunity arises. The internal and external situations that cause organizational turnover are vast and complex. Organizations can do little to control the country's economy or an employee's preference for mobility. An enterprise can, however, design internal culture, structures, strategies and programs that retain valuable employees.
Employee Turnover
Employee turnover is an enormous problem for any company and creates negative bottom-line impacts. The costs associated with employee turnover show up in areas such as advertising for new employees and the time and money needed to screen the applicants, training new employees, lost productivity, decreased accuracy and quality of work among the employees left behind who are upset about their colleague's departure, using expensive contract and temporary employees to do the work until a permanent employee is hired, and the expenses associated with replacing lost business. It also prevents companies from pursuing their growth opportunities and acquiring new business.
Beginning 1990s, the Indian business environment has undergone remarkable changes. Most organizations viewed the presence of a long serving group of employees as an indication of internal efficiency. However, with economic liberalization opening up new career horizons for professionals in most industries, and thereby tremendously enhancing their prospects for mobility from one organization to another, turnover has come to be understood as a negative ‘spill over’ effect of industrial growth. This phenomenon commonly called turnover had been of secondary interest to most researchers but increasingly more and more attention is beginning to pour in this direction.
As the paradigm of lifetime employment becomes unrealistic, the question ‘who stays with you?’ has assumed great importance in organizations today. Simultaneously, there has been an increasing tendency to ‘buy in’ the talents of professionals with cross-functional skills in order to create a competitive advantage. One visible effect of this has been a consistent rise in the pay packages of most organizations so as to attract and retain the most desirable employees. Such a trend over the last few years has resulted in an unstable labor market, especially for industries such as marketing, advertising, finance and software where the skills are by and large transferable, from one work environment to another.
What causes Employee Turnover?
Mergers, acquisitions, divestitures, and corporate reorganizations have been major factors in increased employee turnover during the past two decades. However, the top reason cited is low compensation and inadequate benefits. Lack of appreciation and feeling that the employer values the employees' contributions also ranks high on the list of reasons for employee turnover.
Surprisingly, most people do not leave their jobs for money. While money usually plays some role in a person's decision to leave a company, it is not normally the deciding factor. Bad management practices are the real reasons employees leave. Management controls the majority of the reasons people leave. Overwhelmingly, it is the day-to-day interaction between management and their employees that create what are often called "dissatisfies."