Managing Employee Turnover

People come and people go. But when a software engineer
leaves, he leaves behind considerable heartache. For products can be copied, technology
can be duplicated, but no one can match highly charged, motivated people.

In a 1996 study by the Conference Board, 43% of companies
reported that
they had problems recruiting and keeping high quality workers. However, it must be
recognized that turnover is here to stay and one has to learn how to manage it.

Employees leave for a number of reasons like better job
prospects, higher education, job transfer of spouse or relocation necessitated by family
illness, most of which are largely beyond the control of the manager.

Effectively managing turnover requires a consideration of
both the negative and positive consequences of turnover. Only after weighing the pros and
cons of turnover can managers effectively manage their human resources.

Negative consequences
Negative consequences generally receive the most attention while considering the
effects of turnover.

MAJOR PROJECT DISRUPTION: The loss of key personnel during
software development can seriously delay or even permanently impair important projects. It
may result in significant losses of vital undocumented information, overburden other
project members, cause the project to fall behind schedule and lead to schedule and cost
overruns.

LOSS OF STRATEGIC OPPORTUNITIES: Turnover of critical
personnel can sometimes cause organizations to postpone or cancel projects which can
enhance their position relative to competitors and/or increase profits.

DECLINE IN MORALE: Personnel leaving an organization can
frequently cause morale problems, particularly if the person is perceived as leaving due
to poor conditions. The remaining employees may view the person leaving as getting ahead
professionally and they themselves may be induced to think about leaving.

Positive consequences
There are several potentially positive consequences of turnover that are
increasingly being studied.

INCREASED PERFORMANCE: One positive possibility is that
relatively poor performers will leave and be replaced by better performers. In this case,
there can be a net gain in productivity in the long run.

INNOVATION AND FRESHNESS: New employees frequently bring with
them technological expertise and experience gained elsewhere. This leads to the creation
of new mind sets and an infusion of new ideas which helps an organization remain
innovative.

INCREASED MORALE: When poor performers who tend to create
conflict leave, the result can be increased morale.

DECREASE IN OTHER WITHDRAWL BEHAVIOR: Certain individuals who
are unhappy with a particular organization may not leave the organization, but may engage
in other forms of withdrawl such as absenteeism, poor quality work, or even sabotage. It
is better if disgruntled employees leave before withdrawl behavior becomes acute.

The goal of the organization is to retain those individuals
who are high quality employees in terms of job skills and particularly those who are
difficult to replace and to retrain.

Retaining the performers
The organization should encourage the performers to stay on by rewarding
them appropriately.

PERFORMANCE INCENTIVES: This method of rewarding the
performers is increasingly becoming common where the employee is given promotion and/or
monetary benefits like bonus in proportion to his perceived net worth according to his
performance evaluation. Increasingly, an imaginative range of perks is being offered like
trips for the family, corporate gifts and educational benefits for their children.

JOB ENRICHMENT: Job enrichment normally includes the
assignment of planning and budgetary control to the individual while focusing on the total
responsibility for a given function. Individuals may also be rotated between jobs to gain
additional cross-functional skills, experience and exposure to other facets of the
organization.

TRAINING: The performers should be trained to the maximum
extent possible, not only in technical areas, but also in the broader aspects of
management when appropriate.

STOCK OPTIONS: This method, introduced by Infosys in India,
is being increasingly taken up by software companies in the country. In this, the eligible
employee is entitled to a certain percentage of stock in the company and since this makes
the employee a part-owner of the company, it encourages them to perform better. It also
encourages the other employees to follow suit to gain the same benefits.

Retraining the performers
All of us have different aptitudes and skills. Thus, it is essential for
organizations to enable the potential performers to find their ability-job fit.

JOB ROTATION: When an activity is no longer challenging, the
employee is rotated to another job, at the same level, that requires similar skill levels.
One such exercise at IBM in 1993 led to the realization that some people had a natural
inclination toward support jobs. Thus, the job rotation program was a major contributor in
cutting employee turnover from 25% to less than 17% that year.

IDENTIFYING UNIQUE SKILLS: By paying a little more attention
to employees’ habits and behavior, organizations can identify certain skills useful in a
particular job. For example, by analyzing feedback from managers, Citicorp was able to
identify individuals who were disposed toward an obsessive level of details and brought
such people together to create a successful ‘Testing and Review Group’ whose job was to
find faults in software.

Alternative work patterns
Currently, with the increase in dual-career nuclear families, new work
patterns and schedules are emerging.

Flexitime: This enables organizational members to work during
the hours that are most convenient to them. Flexitime stipulates a core time when all
members in the organization are expected to be at the workplace and a flexible time chosen
by the individuals when it is most convenient for them to be at work. Flexitime has the
advantage of both full pay and flexibility.

Flexiplace: This type of arrangement allows the employees to
work in any place as long as the work gets done as per required specifications. Flexiplace
allows more flexibility to working mothers and handicapped persons who can not only work
at home but also at the times most convenient for them.

The benefits of flexi-patterns are numerous. They include
reduced absenteeism, increased productivity, reduced overtime expenses, a lessening in
hostility toward management, reduced traffic congestion around work sites, elimination of
tardiness and increased autonomy and responsibility for employees. All this increases job
satisfaction and reduces employee turnover.

Organizations have to recognize that many types of people it
desires don’t plan to stay at one company for their entire career. The company has to
attract talented individuals who are passionately committed to making a difference for the
company. To build that sense of passion and commitment, organizations have to create a
‘fabulous place to work’ by offering exciting opportunities for work and for growth and
development, highly competetive rewards that will build a sense of ownership and an
environment that makes people feel loved and valued while helping them maximize their
potential in their work and personalities.

NIKHIL BIMBRAHW
is with Tata Infotech.

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