This task will delve into the attrition rate of the Indian IT industry in general and for Tech Mahindra in specific. It would analyse the bigger attrition rate for Tech Mahindra when compared with the entire industry average and look for possible reasons for it, analysing with motivation theories, implications on the organisation scheduled to it and recommendations which managers could implement in future to avoid this.
Tech Mahindra was created as a joint venture between British isles Telecom plc. and Mahindra & Mahindra group ($7. 1 billion group) in 1986 under the name of Mahindra English Telecom - MBT, to provide telecom answers to the British isles Telecom group. Down the road it was renamed as Tech Mahindra as the M&M group bought majority shares in the Joint Venture, also to represent the growth of the client platform and diversification in various verticals to increase the breadth of its services, just lately Technology Mahindra has acquired Satyam Computer Services, a respected global business and it services company (Techmahindra. com, 2011)
IT INDUSTRY ATTRITION RATE
The Indian IT industry is majorly predicated on earnings from ITES outsourcing from major industry players around the world. The industry average attrition rate is 18% and the common wage increase of 15% is also creating some margin pressure. The attrition rate for Technology Mahindra for 2009 was 18. 7% and in 2010 2010 it was 20%, relatively higher than the industry average, even more relevant for an company of headcount over 25, 000 (Hindu. com, 2009)
Impact on immediate revenues because of attrition is though a little subtle, yet changing experienced employees with fresh graduates costs 8-10% more. Analysts at CLSA estimate that for each 5% items of attrition reduces 150 bps from gross margin. Its other results also include the recruitment and training cost and may even result in lack of business because of poor delivery against peer organisations in multi-vendor agreements (Indiainfoline. com, 2009)
TYPES OF ATTRITION
Having analysed the impact of attrition, it's important for organisations to minimise it. There are two types of attrition, healthy attrition and unsafe attrition. Healthy attrition is because of reasons of worker advancement like profession change, further education, health and family reasons. Poor attrition is mostly because the worker is forced to give up, reasons like no inspiration to work, no offers, politics in organisation etc. lend to detrimental attrition.
REASONS FOR UNHEALTHY ATTRITION
Various reasons, some because of the changing global IT circumstance and few due to the financial crisis have let to hike in attrition rate. These include people centric industry, prospects opting for branded organizations, a lot of opportunities available - resulting in low retention, Quickly changing technologies, objectivity in analysis of the skills, flexi time, and demand supply difference existent in the IT manpower market etc.
DEMOTIVATION - GROUNDS FOR ATTRITION
Amongst other reasons, the crux behind the high attrition rate of Tech Mahindra is the extreme demotivation of employees. You will find multiple factors that have a tendency to decrease the determination of employees in the company, the majority of them are especially relevant to the IT sector and outsources services in India. You will discover many reasons which lead to demotivation of employees, various theories can provide an empirical judgement as to why these cause attrition and the way to handle them.
Retention is the primary matter of the organisation nowadays as they spend big money and efforts to teach employees and lack of competent employees might have adverse influence on the organisation success (Samuel and Chipunza, 2009). William and Werther (1996) describe that reward is exactly what employees enter exchange for the contribution they provide to the company. If employees understand they are inefficiently rewarded, it is much more likely that they might leave, and swapping them might be costly and not easily available at times. Relating to F W Taylor, Employee gets encouraged when they are paid high salary. This is traditional approach to motivating employees in the business culture, which has been used for extrinsic drive such as pay rises, bonuses, and marketing promotions. This rational financial has been criticised and argued that staff value other things more than money. Kinnear and Sutherland (2001) assert that managers shouldn't be fooled in thinking that money does not matter any longer in retaining the employees.
This theory justifies the attrition due to less salary hikes - Employees expect to get good salary hikes, typically in the range of 15 - 30% on a yearly basis. Due to various factors like recession, understanding of Indian rupee etc. , the organisation cannot continue the usual craze of salary hikes, which is by considerably the most important factor in worker motivation.
A number of factors have been important in explaining the reason why for employees giving Technology Mahindra. These can be labeled into intrinsic and extrinsic motivational factors. Herzberg argued that employees are motivated by inner factors alternatively than factors that are external to work. This theory targets factors responsible for job satisfaction and the ones for job dissatisfaction, and asserts these are different. Herzberg labelled the satisfiers as motivators and dissatisfiers as hygiene factors. Hygiene factors should be tackled to avoid dissatisfaction however they do not themselves provide satisfaction. These factors can't be assumed as opposites of every other. The converse of satisfaction is not dissatisfaction, somewhat it is not a satisfaction. Conversely, the opposite of dissatisfaction is not a dissatisfaction. The 'cleanliness' factors are company plans, supervision, working conditions, peer - supervisor relations, money, position and security. Motivators are accomplishment, responsibility, challenging work, identification for achievements, progress and development (Buchanan & Huczynski, 2010). As per Herzberg employees are only encouraged by motivators or interior factors however employees are also affected by salary, friendly work place, which assists with retention of employees.
This theory just about explains the reasons for employee attrition scheduled to no onsite opportunity. Onsite opportunity is another offshoot of the financial factor, typically in ITES companies where the majority of the jobs are outsources by clients overseas. Typically employees get deputed at client locations e. g. US, UK, Europe, APCA. The earnings throughout the period of deputation has ended 5 times the normal earning in India, so obviously employees look forward to this opportunity. Ultimately an organization should depute its employees over a rotational basis, Tech Mahindra miserably failed in rewarding this, as it didn't totally follow a rotational insurance policy. To make things worse, other organisations were offering careers directly at customer sites, which lured the employees to switchover to other companies. Management should therefore consider both exterior and internal factor for employee retention strategy.
Adams (1965) collateral theory says that employee seek to maintain balance between your effort they put in work and prize they enter return. Equity theory says that staff who perceives themselves as under rewarded will feel distress and may damage the organisation productivity (Prichard et al, 1972). Worker can respond to this example by quitting. Few of the reasons for attrition in Technical Mahindra are less salary hikes, no popularity of work. When confronted with inequity employees tend to make contrast with the employees in another company. If employees stay in company they react by not working effectively and restricting output, which harms the company. This not about only financial aspect, employees feel valued by organisational rewards and recognitions too. An apt exemplory case of this would be No appreciation honors, as it an integral part of employee determination to regularly appreciate them for his or her work. These functions are officially embodied by means of rewards and identification. It is important for the professionals to constantly stimulate employees giving recognition honours to the right performers.
Employees' intention to keep in an organisation and stay focused on the task can be described via the context of Abraham Maslow's hierarchy of needs theory. In Maslow's (1943) theory of drive, there are five group of needs that gratify individual and included in these are physiological, safety, interpersonal, esteem and self-actualisation needs. This model predicts that as employees satisfy their needs on one level, they improve to the needs of next level as desire for their behaviour. Only the unsatisfied needs influence the employee's behavior, not the satisfied needs. Hall and Nougaim (1968) found that higher needs are identified to be the most essential to worker as they improve in career. However, the inability of the Tech Mahindra to satisfy the lower level needs of its employees usually through industry competitive remuneration, friendly working conditions and possibly job security might have combined which resulted in the high rate of attrition.
A practical exemplory case of this might be professional progress opportunities in Tech Mahindra as few employees are found in the incorrect technology, and cannot change assignments due to their dependency on assignments, harming their professional profession growth which boosts demotivation and attrition.
Not supplying salary hike is one of the reason why but this only this reason is not sufficient to justify attrition rate. As others were also not presenting hike anticipated to tough economy. This claim will abide by both Herzberg's and Maslow's ideas of determination, which propose that salary and other relevant financial benefits gratify only the low level needs of a worker, but employees are encouraged and satisfied only when higher needs are achieved. Hay (1999), Dess et al. (2008) state that monetary benefits cannot be ignored, but money shouldn't act as the primary mechanism to entice and retain skill because employees who come only for money will leave to the organisation offering additional money. This also means that money may not motivate certain category of employees like those in managerial level; they might get demotivated credited to other factors.
Internal Politics in organisation is one of such factors. Interior politics of organisation refers to promoting a non-deserving candidate to higher position scheduled to personal associates and vested pursuits, demotivating other deserving candidates. At times deals are hierarchical rather than competency structured, which again creates an ideology of non-performance.
William and Werther (1996) assert that employee attrition is accelerated when employees aren't content with the praise system within an organisation. That is symbolized in the style of the result of compensation dissatisfaction by Lawler (1991) in William and Werther (1996) as shown in Figure 1. The results of unfair rewarding system is dissatisfaction as shown in Amount 1 which affects employee's production and their standard of living. The desire to have excessive rewards may have negative effect on an employee's performance as it can lead to reduced performance which also hampers the company's production goals.
An Organisation's work culture is a proper explained example because of this theory as work culture should be friendly rather than extra competitive. A supplementary competitive work place raises the value of recognition and incentive system within an organisation thus nurturing doubts about the unwanted effects of desire to have excessive rewards, creating further attrition
Job satisfaction can be described as the good attitude and feelings towards one's job and work place (Locke, 1978). The positive sense in an employee results from their belief of the degree to which their careers match and support attaining their personal goal. Job dissatisfaction is not only the main reason for employees quitting the work rather even the expectation of computer in a particular company has discouraged others from getting started with the company. Satisfied employees will reduce attrition in an organisation (Pierce et al, 1991). Though job satisfaction of staff is difficult to judge, but administrator can increase inspiration and efficiency is through their control. Maximum performance can be achieved by assigning innovator who are both task and relationship focused (Gratton et al, 2007).
Potential Leadership problems in a team can be a major reason behind attrition, this is due to various reasons like managers are not well trained in controlling team, motivating them and becoming good leaders, which leads to demotivation and further attrition.
Fusilier & Durlabhji (2001) stresses on the importance of a person's beliefs. Employees should be engaged in companies' inner matters. This would make sure they are feel valuable.
Another reason behind upsurge in attrition is HR policies for e. g. companies like Amdocs which have very relaxed HR plans like no dress code, flexible timings, home based, home pick and drop by cab which motivates employees to adhere to the same company. In Technical Mahindra such regulations are missing, so employees don't stay long.
FEEDBACK FROM ONSITE MANAGER OF Technical MAHINDRA
Reflecting after the conclusions of these report on various reasons on high attrition rate of Technical Mahindra, Ashutosh Mishra (Manger, Change Management, Technology Mahindra, Milton Keynes, U. K. ) asserts that there are numerous factors which are responsible for the attrition, which the whole IT industry is facing. He also suggests that the reasons described were adequately handled the firms code of do e. g. the salary hike and offers in every year appraisals are in line with the companies policy of an bell designed curve in which few employees are rated the best and few the most detrimental predicated on their performances. Onsite opportunities are according to requirements and on a fixed rotational basis. Understanding rewards receive quarterly based on employees performance in the last one fourth to the best 1% employees, possibly in a rotational style. Professional growth, according to him, is also possible in the same job, and liberating employees to different is not very easy as it has a great deal of ramifications especially if primary employees having high dependency are released, but they will work towards it. He disagrees with any internal politics and authority issues. Relating to him a competitive work culture is not damaging to the expansion of the worker and organization; rather it is the need of your day. He signs or symptoms off by stating that the "company has been working towards including the attrition rate by continuously buying learning and development programs for associates, competitive compensation, creating a compelling work environment, empowering associates at all levels and a well-structured praise and recognition mechanism" (Ashutosh Mishra, 2011)
PITFALLS THAT MANAGERS SHOULD AVOID
Personal Attention - Managers should give personal focus on each employee in their team and regularly perform one on one meeting to sort out any excellent issues which can hamper employee's growth
Constant Inspiration - managers should appreciate and inspire associates regularly to keep them determined and determined towards the work.
Regular team meetings - Professionals should conduct regular round table team meetings to enquire about any general team issues and brief them about the future plan, this might give a conception that the employees are participating more in the day to day business.
Briefing team pre/post salary hike/awards announcement - professionals should ensure that there are no hard feeling in the team by briefing them about the ways that salary hike/prizes have been determined, this would keep carefully the employee realistically happy and enthusiastic.
Onsite opportunity and work culture - Professionals should consult associates and put into action a tight rotational insurance plan of onsite relocation and ensure that the task environment is not extra competitive keeping equality amidst the team members.
According to Samuel and Chipunza (2009), the main reason for retention is to avoid experienced employees from departing the company as this may have detrimental effects on output and success of the company. However, applying retention policies has become a challenging process for professionals and RECRUITING in a hostile over competitive financial environment.
ITES company with the help of a balance of motivational ideas; leadership principles catalysed with a fresh communication system might be able to achieve these goals. They will see their attrition rate lowering effectively to possibly appropriate level.
Motivation types of procedures play a significant role in retaining staff. However, determination is not achieved with the same procedures and procedures across the world. Each organization has to device its own motivation plan based on a balance between organizational and individual goals. The overall conclusion is that in Indian IT companies the inner motivation factors appear to be far better than the traditional exterior ones.
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