Methods to reduce attrition

At the invitation of a big IT company and an insurance company which were experiencing high attrition, we undertook research across India and other geographies to decipher the reason.

Published: 09th August 2022 01:28 AM  |   Last Updated: 09th August 2022 01:28 AM   |  A+A-

unemployment, job loss, stress

Representational Image. (File Photo)

Retaining good talent has become a big issue for many companies. Yet, there are global companies with an attrition of less than 4% for many years. 

At the invitation of a big IT company and an insurance company which were experiencing high attrition, we undertook research across India and other geographies to decipher the reason for so many employees wanting to leave and even interviewed the ones who left. 

The first finding was on the type of behaviour demonstrated by leaders towards their team members. Global research claims 81% of employees leave companies because of a bad boss. Gallup’s research portrays that world over, 62% of employees are disengaged in companies. Our research also demonstrated that the Departmental Head and the immediate reporting officer played a vital role in the employees’ well-being. 

We found that transformational leaders get more respect, and see higher productivity, motivation, commitment and less attrition. 

On the other hand, transactional leaders who just extracted work and showed little concern, caring, love, etc., ended up witnessing the worst performance. The simple truth is that human beings have emotions and act best when they are loved, cared for and treated with respect and dignity. 

A large Indian group once ran a training programme called ‘R3’ to train all leaders to demonstrate respect, regard and reward their team members. It had excellent results in terms of improvement of performance. James McGregor Burns spoke about how transformational leaders enable team members to grow in terms of maturity, wisdom, learning, etc. Such a leader also provides on-the-job training. 
In addition, a transformational leader gives clear smart goals, provides informal rewards to team members for achievement of goals, offers challenging assignments, delegates, provides training and inspires people to succeed. They find the team member doing something right rather than doing something wrong. They offer a lot of affection, care and love to their team members. They are also continuously learning and encouraging their team members to learn so that they can prosper in their respective careers. 

Let me illustrate this with an example. A large life insurance company and an IT company which were receiving complaints about the boss group asked us to provide a reasonable solution. Based on seminal research of Harvard Business School and James McGregor Burns, we conducted Transformational Leadership and Effective People Management Workshops for ten days in intervals of one month. During the intervals, we gave them projects to implement what they were taught so far. Our evaluation was done immediately. After three months, we demonstrated that the leaders who underwent our training in Transformational Leadership and Effective People Management exponentially improved, found new respect among their team members and enjoyed their work more. In the months that followed, fewer team members left the company. 
The second area in our research which stuck out like a sore thumb was the area of Performance Management. In 87% of the cases, the employees felt the Performance Appraisal was unscientific, and that the standardisation of performance ratings was not done. As a result, those bosses who gave liberal ratings to their team members benefited when the performance bonus was distributed. Most of them informed us that they did not receive constructive feedback. No training need analysis was done either. They felt the PA was just an annual ritual. 

When we analysed the Performance Appraisal Forms, we found that more than 66% of the appraisal forms did not have the training need analysis column filled up by the appraiser. No career plan was suggested. Performance appraisal is the mother module of all HR systems. Every employee fundamentally comes to an organisation to perform and expects fair appraisals, rewards, and recognition. 

The third area of concern is compensation and benefits. Global research demonstrates that high potential employees are most likely to be retained if the salary is in the 65th to 75th percentile of the market. Companies need to analyse whether they are in that range. Those companies whose salaries are not in this range find it difficult to retain employees. Our research data found that compensation plays an important role in retention, as inflation is rising all over the world and everyone is becoming relatively poorer. 

The fourth area is culture. Research shows that companies governed largely by good values, human resource policies, systems, and SOPs are likely to have a fairer and more equitable culture. Companies in which power is concentrated in the hands of two or three people, such as promoters, are less likely to have an equitable culture. 

The fifth area is employee engagement. Companies that engage people in the company’s growth and seek ideas are likely to see higher retention of people. Employees like to contribute to organisation development and feel worthy. Involvement of employees to generate ideas and reward them proves better than hiring costly consultants. 

There were more findings. However, I have highlighted the main areas of concern which companies can focus on to improve retention.

Ashoke K Maitra
Founder, Sri Ramakrishna International Institute of Management


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