Chapter 1 INTRODUCTION
In the 21st century every child or adult have their own personal computers and ways of communication have been made easier with the help of email, mobile phones and faxes. These are adopted from Information Technology (IT) industries. The main concern of IT industries is to make life easy for the people. Information Technology can be defined as “the branch of engineering that deals with the use of computers and telecommunications to retrieve and store transit information.” (Wisegeek, N.D.)
Call centres are a part of the IT industries, which is the most blooming sector and the role of these call centres is to make life easy to customers. Call centres are the upcoming field of employment for youngsters in Information Technology. Recruitment to get into a BPO (Business Process Organization) is done on the basis of qualification and good communication skills. BPO’s are the fastest growing segments in Information Technology Enabled Services (ITES). These BPO’s are striving out a new exposure of the westernized working environment that could lead to a few problems in other countries. Although it has a good side by providing a good pay and a better life style for the individuals, on the other side there are still some diplomatic problems that could be identified. Most researches are done on stress, physical and psychological problems that are faced by the employees. An article in the journal, An Exploration of Occupational Hazards in BPO industry, states, “Majority of employees were found to have physical health, socialization and stress related problems due to their job.” (Vashistha, 2008)
Competition is more in today’s world and organizations are trying to build a competitive advantage through more employees who are often challenged. These individuals try to be the best in their respected fields and give their best for the organization. As the competition between organizations increases the competition for the individuals also increase. The IT industry is one of the leading industries in the world and every company needs an IT section that plays a vital role as it controls most of the organization. As it is this is the most wanted sector in every organization, the pay for employees is also expected to be high. In an IT sector, there are a number of employees who although start as freshers and will expect to get a better income as the years of experience increase (Employee Engagement Report 2008 Published May 2008).
India has become the hub to start IT industries in the world. India is one of the developing countries and allows foreigners to commence large MNC’s as it will reduce the unemployment level and would help the educated to get immediate jobs after education. Most global organizations have always preferred outsourcing Call centres in India. The reason to it would be that India has the second most ‘English speaking population’ after the USA. There are various other reasons such as skilled labour, educated workforce, etc. India’s large number of educated workforce will not reduce, as there is always been an increasing number of students graduating every year.
It is difficult to take the analysis of the entire country as is too broad and vast to cover. There are many IT companies in India; Chennai is a part of Southern India that consists of many call centres. New IT companies emerge every week and a few get closed too. E.g. Call centres in Chennai have become very popular within students and graduates, who have just completed their course. They are given a reasonable pay as fresh employees, in course of time only a few employees stick to the organization and most employees take it as ‘a fill in job’ or they shift to another company because they are paid higher than its previous employer.
The following section will outline how the dissertation will be structured. This will include the following: the research question, research objectives, scope, methodology, benefits and justification. A good dissertation will attempt to answer the research question and will provide a conclusion based on both secondary and primary information.
This dissertation will help us to find out the retention of employees in IT industry (Call centres) by considering a MNC in Chennai (India), (Sutherland). This large MNC (Multi National Companies) would be used as a case in this research. Below are a few key issues that will be addressed in the dissertation process:
- To find out ways to improve strategies in retaining employees in call centres.
- To study the various reasons and the need for jumping to different organisation—is it only money or…
- Is Hierarchal Phenomenon the cause of employees to shift?
The purpose of doing a research is to answer the proposed research questions in a dissertation. The research questions will articulate the research problem giving various findings and suggestions. The following are the research questions for this dissertation; these questions will help the researcher to get valid information of the employees and the HR team in the organization. Information from the HR team would give the researcher suggestions and methods based on retention strategies.
- Does the organisation take any steps to retain their staff?
- Why is the retention of an employee, a hectic problem in an IT (Call centre) than any other sector?
The aim of the dissertation is to critically assess and evaluate HR strategies used in Indian call centres, in specific to improve staff retention rates.
The research objectives are subjected to the purpose of the research; these objectives give an outline of a dissertation.
The main objectives in this dissertation are:
- To carry out a critical review of the literature on staff retention
- To identify and assess reasons for poor retention rates in the IT industry.
- To identify and evaluate strategies to improve employee retention rates in the IT industry.
- To provide conclusions based on both secondary and primary evidence
- To make relevant recommendations for improving employee retention rates based on the conclusions arrived at.
Benefits of the research:
The benefits of the research help in giving the company a better understanding of the employee status. E.g. do employees want to quit the job and shift to other companies? This research would help the organisation to identify key issues faced by employees in terms of retention that will enable them to improve their retention rates. Employee retention is a large cost to some companies and by improving retention rates, it can be argued that costs can be controlled and which in turn will improve the effectiveness of the organisation. India is a developing country and IT is a major source for all MNC’s. The research would consist of a case study on an IT company. The scope in this research is referred only with respect to the place chosen for the research (India). The scope of an organisation is dependable on geographic location and the culture of the people. Scope depends on the people and the location of the organisation, such that the scope in India for Biotechnology is less when compared to U.S. More problems can arise due to the involvement of different cultures in one organisation.
The rationale of my research will provide an analysis for human resource planning on employee retention in the IT industry. This will also help to identify the HR practices and whether these can be improved. This dissertation will consist of a detailed research and analysis on IT Company chosen (Located in Chennai, India).
Background to the company
Sutherland is a BPO that is operating in Chennai (India), it was first established in New York by Rochester in the year 1986. The branch in Chennai was opened in the year 2000 and was the first offshore facility to be opened in India. Many other branches were opened in course of time in different countries such as Canada, Mexico Bulgaria and Philippines. Sutherland employs 24,000 professionals offering rich services from its 24/7 delivery centres globally (Sutherland, 2009).
Sutherland won the award; ‘Employer of the year’ in 2009. They state that their employees are given the best of training to excel in their field, either in terms of business methodologies or technology. Sutherland offers front office and back office services that provide customers a better service.
CHAPTER 2 Review of literature
Carsen, 2005 states that employee retention refers to the possible number of employees that stay around for a given duration of time. In simple words employee retention could be defined as a process in which the employees are encouraged and motivated to stay with the organization. Employee retention is important and beneficial for the organization.
This dissertation deals with call centres, which is a part of the IT industry. Call centres are defined as “specialized organizational units providing telephone-based customer services” (Kleemann & Matuschek, 2002, p.41). Call centres are a part of the IT sector and are of two types and they are outbound and inbound call centres. They usually operate 24/7 a week i.e. 365 days a year. (Marr & Neely, 2004).
IMPORTANCE OF EMPLOYEE RETENTION
Employee retention plays a vital role in every organization. Mobley, 1982 states that employee turnover may be important to some organizations and a few individuals. From the organizational perspective employee turnover can represent a significant cost in terms of recruiting, training, socialization and disruption, as well as a variety of indirect costs.
There are many reasons for an employee to leave an organization and it could be due to age, length of service, organizational sector & size, occupational group and geographic location. The problems that arise of poor retention should be assessed within the norms of a given external labour market. (Evans 2001)
Models and Theories on employee retention:
There is a reason for companies to retain their top most employees. There are several models that are being followed in retaining the top most employees. There are few common hiring models that are being used by organizations for employee retention. Each has its own advantage and all serve the purpose to get hold of maximum employee retention. The following are the models, which are being used commonly.
The classic model- Core employees.
The above model works best with senior management, where one would require a person’s full time work and attention. This is best suitable for core activities within the organization and proprietary activities such as trade secret within the organization. Many organizations do make the mistake by assuming that core employee model is the only retention model and the organization tries to fit in all jobs within it. It is important for an organization to understand and follow the hiring models appropriately.
This type of model usually involves in sharing a job within the family. This model best fits in call centres as in this industry continuity is not mush required. On the whole this model cannot work for short shift works; for example; an advertising team launching a new advertisement cannot offer job sharing-posts, as the continuity of the job is very much required. Job sharing is a success in certain cases such as when there is no much need of individual continuity with customers or with a third party and when the degree of interaction is low between the employee and the consumer. This type of model makes employees feel at home and have very less probability in them leaving the job, as they are comfortable with it and it usually works within families.
Many educated individuals in the IT industry do not like to work full time for a particular organization as these employees enjoy working as part-timers in more than one organization, these type of employees are called free agents. This is the next step to flexible work with respect to job satisfaction. These types of free agents are not given a usual salary but they are paid on their results that they produce. This model is not business orientated but it is project orientated and it attracts the employee to do the job as it a likely interest. These employees usually stay with the organization only if they are recognized for their work.
The above three models not only explains the different types of employees in an organization but also explains how to retain employees according to the type of sector that is best suitable for the individual, the question arises only when the organization gets an employee from outside to do the job of the organization. These kinds of employees are taken only for a specific duration by different organizations or individuals. This model best works with low value transaction, low-tech uncomplicated activities and non-critical activities. Many organizations have concluded that it is not possible to motivate and train employees for specified jobs, so they agree with outsourcing. (McKeown, 2002)
Svyantek & McChrystal, 2007, p.225, shows in his book, a new model of retention, which is very different from the above models. In this model he states “employees retain the jobs because they are self-concept-job fit and an experienced meaningful work.” Self-concept-job fit is a method in which the human relations professionals input the meaningful work in employees. Horgans & Roberts, 2000 have stated that the future should focus into the concept of self-concept-job fit either in existing or after recruiting employee.
The above models are different from each other and each of them fits best for different kinds of organizations. The best suitable model must be used in order to retain their employees and get high job performance from them. Though we cannot satisfy all individual needs there are certain general factors that we can get rid of so that the employees who are working, feel at home. After one executes a type of model into an organization it is important that the employees are satisfied with the type of job that an individual is doing. Job satisfaction is related to employee retention and for an employee to retain in the organization the individual must be satisfied but the job.
Job satisfaction is very important to all employees and it is defined as “the extent to which a person derives pleasure from a job” (Muchinsky, 1993, p. 290). Locke (1969 as cited in Friday & Friday, 2003, p. 429) defines job satisfaction “as a pleasurable or positive emotional state resulting from the appraisal of one’s job.” Job satisfaction may be one of the most ideal characters for the employees to work in an organization. As job satisfaction is the most vital key for an employee to stay with an organization for a long-term relation. Spector (1997, p.5) comments, “Job satisfaction is the degree to which people like their jobs.” Attitudes towards job satisfaction differ between employees and may change in the course of time. A number of researchers have done research on job satisfaction and each researcher has given a unique definition for job satisfaction. Agho, Muller and Price (1992) stated that job satisfaction is the extent to which an employee likes the job.
Ashp (2008, p. 323) states “Job satisfaction is important to retention; although the relationship may be direct or indirect.” With Employee satisfaction, an organization deals with employee’s opinions and work process such as workload distribution, schedule (work timings) schedule and flexibility and internal communications. But the frequently asked question by everyone; ‘ Are we satisfied with the job that we are doing.’
Most say that Job satisfaction in an organization is not a problem but a symptom within the organization. However one can describe job satisfaction can go up and down by the hour independently of the ones work’s performance. Mullin’s states, ” Job satisfaction is necessary in order to achieve a high level of motivation and job performance”(Mullin 2007, p. 277). It is not possible for low performance employees to get high job satisfaction.
A report published on May 2008 states that there is a clear correlation between employee engagement and employee retention, the writer states that 85% of engaged employees were indicating that they plan to stay with their employer through 2008. The report states that an effective employee retention strategy is based on employee engagement. (Blessing White, 2008)
Theories on job satisfaction:
Job satisfaction can be defined as one’s attitude towards one’s job. Job satisfaction pays much relation with retention as it is the attitude that the person gains with the job attained and this makes the employee decide whether to stay or not (Weiss, 2002). There are several theories on job satisfaction a few of them are listed below.
Locke’s Range of Affect Theory (1976) is the famous theory of job satisfaction in which the theory gives an explanation of what one wants from the job. The theory gives views of the dissatisfaction level and satisfaction level of an employee working. The theory states the facet of work, for e.g. the degree of autonomy of position decides the employee to stay or leave. If an individual were satisfied with the job, then the individual would give his best in the job he is doing in the organization.
This is a basic theory that explains the nature of similar identities such as two twins are alike to think the same but in process they tend to end up with different results. Hence job satisfaction for each employee is quite different. This theory was narrowed down by Judge (1992) by his model called the Core self evaluation model, where in the theory states ‘the higher levels of self esteem and self efficacy would result in high job satisfaction levels.’
Two-factor theory (Motivator hygiene theory)
This theory has taken two variables (Satisfiers and Dissatisfiers) and the theory states that ‘factors causing these two variables are different and it is these factors that are responsible for an individual’s satisfaction or dissatisfaction of the job.’ Satisfiers or motivators are satisfied with their job in presence or absence of a working condition corresponding to the higher levels of Maslow’s hierarchy of needs. And the dissatisfiers or hygiene factors, which correspond to the lower levels of Maslow’s hierarchy, are not satisfied with the job when they are adequate or in an inadequate working condition. (Ellis, 2005)
Job characteristics model
Hackman and Oldham introduced the Job characteristics model that is used widely to study the job characteristics and job outcomes along with job satisfaction. This model derives and states that there are five characteristics; i.e. skill, task, significance, autonomy, and finally feedback. These characteristics combine to give three physiological states; experienced meaningfulness, experienced responsibility for outcomes and knowledge of the actual results that influence job satisfaction and motivation. This framework of five characteristics can be combined to form Motivation Potential Score (MPS). (Hackman & Oldham 1976)
One’s attitude towards one’s job is defined as job satisfaction. These theories cannot change the attitude of the individual but can help the individual to get settled with the job. Evans (1998, p. 19) states, “Job satisfaction increases with age, job values remain constant with age and job reward increase with age.”
Certain factors usually affect an individual’s job and this will affect the willingness of the individual to carry on working. E.g., in call centres, high stress is a factor that affects employees’ performance; it is because of this factor that most employees may not be satisfied with their jobs. It is important that the organization take necessary steps to solve the problem else many employees would leave the organization.
Factors affecting employee retention:
There are several factors that affect the growth and development of an individual’s carrier. If an employee cannot see his future ahead in the organization, there are a number of reasons for him to leave the organization. As these factors can affect the employees work profile, personal growths and dreams, training and development which consists of communication skills, technical skills, procedure improvement skills and skills from special projects.
As this dissertation deals with Information Technology (IT) let us consider the factors that affect the employees working in Call-centres. An article by Krishnan & Jagadeesan G. on Employee Satisfaction in Knowledge Industry shows the factors that affect employees and the cause of turnover in IT industries (Call centres). He states that surveys have revealed that 42.35% were found working at odd times which were the main causes for high turnover and stress disorders. In terms of job satisfaction and retention rates, while the future of the BPO industry appears bleak unless suitable changes like job rotation and intellectual pursuit in the job content are brought about, the lookout in the manufacturing and the IT sectors are promising.” (Krishnan, 2008)
The most common factors that affects retention of employees is:
- Length of service
- Industry sector
- Organization size
- Occupational group
- Geographic location
A survey done by CIPD (2006) on ‘Employee attitudes and engagement of employees in UK’ shows the factors responsible for employees to leave the organization, such as older employees are engaged more than younger employees, women are equally engaged with men, management of the organization, leadership and communication, job satisfaction, length of service, stress and involvement. In this survey, the results show that a lot of stress is given to the employees and this is due to the absence of employees and the pressure from senior employees. This survey will be done to analyse few of the researcher’s findings.
Employee retention strategy:
Retention strategies are less effective than recruitment and training strategies. Case study agencies have also agreed with the same on an industry survey. The findings of retention activities are consistent with literature and it is identified that retention is a weak link in the employment cycle. “Retention strategies that all organizations include are employee engagement, employee orientation and employee recognition” (Davis, 2002, p.41). Each of these employee strategies helps the employee to connect with a goal in the organization.
Researchers have done research and are doing research on how to retain employees for the company one is working for. The below are the findings from an article on the web which show the ways in retaining the employees.
- 60 years of research have shown that only research-based and theory-supported approaches will help in improving employee engagement, as employee engagement will improve retention strategies, by offering compliments, such as the best employee of the month, giving prizes and suggestion boxed.
- Short-term gifts or prizes such as the above do not help the employee to stay with the organization for long.
- The responsibility taken to create the change and implementing it will assure improved understanding and support from the employees in all aspects.
- Loyalty and commitment are significance to the employees working in an organization. Action oriented approaches will help the organization in order to move forward quickly. As this would bring an organization with best development practices to effectively build a high retention culture (Employee Retention Strategies, N.D.).
Employees play an important role in every organization and are responsible for the growth of the organization; hence it is important that the employers retain their employees. The above findings describe a few strategies on how to retain employees. It is found that Employee Retention is not given much importance when comparing with recruitment and training processes.
The above text states that employee engagement is related with employee retention, change in retention strategy will improve employee engagement. These findings will help the researcher in building a strong questionnaire as the previous researches have already showed good results. Keeping these results aside it would be easier to attain the research goal, as the path would be specific with no variation in between. It is only by research new strategies are found and changes are made in existing strategies to satisfy employees. These findings would give the researcher more space in finding the problems in deep, apart from the regular ones. In this dissertation, Sutherland (a call centre) is taken as the case study to find out and improve the retention strategies that are being followed with reference to the ancestral methods.
Few common strategies on employee retention are
- Retention focused recruitment.
- Retention focused orientation.
- Job sculpting
- Retention focused Managing
- Retention focused Career support
- Work life balance measures
- Retention focused rewards
- Retention focused communication.
The above are few strategies that are commonly used by organizations to retain employees by giving them high level of job satisfaction. As this dissertation is concerned with the IT sector let us see in detail the retention strategies that are used in IT (call centres) for retaining the employees.
As this dissertation consists of a case study of a call centre, the researcher can examine what strategies could be used for retaining employee in this sector. An article published on the Internet shows a few strategies on how to retain the employees in a call centre. The job satisfaction of the employee will result in the performance of the employee which will give the employee a better working environment and henceforth which will result in customer satisfaction and productivity. A few ways of satisfying employees include:
- Recruit people who value work.
- Clarify expectations.
- Provide good and specific job training.
- Reward the employees for high performance.
The above are few key elements that used to satisfy employees in the IT industry. There could be more elements that can satisfy employees and help the organization my retaining the employees. This research would help in finding more ways to satisfy employees so that they do not have to leave the organization. Interviews and questionnaires with the lower level and top-level of the organization will help attaining the research purpose and meet the research objectives. The findings from the questionnaire would be used to frame the structure of the interview. The interview will be taken with an agent, team leader and an HR team member of the organization.
The Review of Literature in this dissertation helps to give an understanding of what is meant by employee retention and the existing models and concepts that being used such as strategies and techniques. Theories on job satisfaction helped the researcher in finding out the importance of job satisfaction with employee retention. Existing research-based theories on retention strategies were included so that the researcher will be able compare the primary findings with it. It would also be useful to find out, whether the existing strategies found by researchers are sufficient to maintain employee retention or changes should be made to the theories. These existing theories on employee retention, job satisfaction and retention strategies would give the researcher abundant satisfaction and confidence in moving towards the research as all the aspects of retention have been covered. Theories and models used in the review of literature gives a brief idea of the strategies that are being used in organizations and could be compared to one of the existing models.
The contents in the review of literature could be compared to the case study companies to find the changes that are necessary and why does it need it. The researcher concludes by stating that the Review of Literature helps to achieve the aim of the dissertation in this research.
CHAPTER 3 Research Methodology
Clough and Nutbrown, 2007, p.5 states “research is the investigation of an idea, subject or topic for a purpose.” Research is used to investigate a topic or a theory in depth to get a better understanding in detail. The term research is a way of describing systematic investigation of a theory or area of activity. Although all research cannot be measured, a few can be scientifically measured or data collected and can be analysed to identify differences.
Approach to the research
Deductive and Inductive approach
There are two types of approaches in doing a research, i.e. deductive and inductive methods. It depends on the researcher whether to choose a deductive approach or inductive approach. In deductive approach, the researcher develops a theory and designs a research strategy that analyses the hypothesis and in inductive approach, the researcher collects data from by various methods of research and end up with the hypothesis based on the data analysis.
Deductive approach involves the improvement or development of a theory that is subjected to tests. Nwokah et al., 2009, p.4, states, “Laws present the basis of explanation, allow the anticipation of phenomena, predict their occurrence and therefore fore permit them to be controlled”.
5 stages in which deductive approach will progress.
- Deducing a hypothesis from a theory.
- Exposing the hypothesis in operational terms, which propose a relationship between two specific concepts or variables.
- Testing this operational hypothesis.
- Examine the outcome obtained from the inquiry.
- If necessary modifying the theory in the light of the findings.”(Saunders et al., 2007, p. 117)
Inductive approach is opposite to deductive approach; inductive approach starts with the collection of data that it is added to form a theory or hypothesis. The following is an inductive approach for analysis for a qualitative evaluation data is described. The reasons to use an inductive approach are (a) it compresses textual data into a summary format (b) provide links within the research objectives and findings that are derived from the data and (c) a framework can be developed of the structure of processes that are evident in the data (Thomas, 2006).
The inductive approach provides an easy systematic set of procedures for analyzing qualitative data that can produce reliable and valid findings. The inductive approach is not as strong as some other analytic strategies for theory or model development, it does provide a simple and straightforward approach for deriving findings in the context of focused evaluation questions. Many evaluators are likely to use the inductive approach, as it is less complicated than using other approaches to qualitative data analysis (Schutt, 2006).
The type of method used in this research