Drivers of Employee Satisfaction and Attrition

“Our assets walk out of the door each evening. We have to make sure that they come back the next morning”.

– Narayana Murthy, Chief Mentor of Infosys^[1]

Introduction

We are living in the world of globalization where managing an organization has become more difficult than even before. Employee retention has now become a devoted focus of employers, human capital management consultants and HR outsourcing providers. This is for the reason that, since the past few years, organizations have been taking an increased interest in aligning their HR practices to attain their business goals. Attrition is a phenomenon affecting business organizations of any industry. Though there is an adequate supply of qualified staff at entry level, there are huge gaps in the middle and senior level management in the industry. Further, the salary growth plan for each employee is not well defined. This situation has resulted in increased levels of poaching and attrition between organizations. The industry average attrition rate is 30–35 per cent and could range up to 60 per cent.

In today’s competitive marketplace, businesses aiming for greater business success feel the importance of rethinking their functioning strategies to maximize the success potential. Employee satisfaction is given more importance in the rethinking process. Employee satisfaction is a very important ingredient for financial success of any business organization. By understanding the level of employee satisfaction, the company can have a better chance of delivering positive customer experiences, producing innovative products and services, and attaining a good bottom line.

Job satisfaction refers to a person’s feeling of satisfaction on the job, which acts as a motivation to work. It is not self – satisfaction happiness or self contentment but satisfaction on the job. The term relates to the total relationship between an individual and the employer for which he is paid. Satisfaction does means the simple feeling-state accompanying the attaining of any goal, the end- states is feeling accompanying the attaining by an impulse of its objectives. Job dissatisfaction as any combination of psychological, physiological, and environment circumstances that causes any person truthfully to say that I am satisfied with my job.

Job satisfaction is defined as the pleasurable emotional state resulting from the appraisal one’s job as the un-pleasurable emotional state resulting from the appraisal of one’s job value or as entitling disvalue.

Attrition is a situation a company faces when employees start leaving the organization due to varied reasons. Employee attrition is very dynamic and it influences the company in many ways. Attrition is part of the natural life cycle of any organization. The timely departure of an employee who has contributed years of fruitful service is a time for celebration. Conversely, the premature departure of a productive and contributing member of the organization can foster an atmosphere of fear and doubt that makes more attrition likely.

Employee attrition is a very big problem and is increasing not only in India but outside India too. Why an Employee leaves a company is the question asked by most of the employers. Companies even hire Private HR professionals to study the company's work and find out why an employee is dissatisfied. Each and every company faces employee turn over problem whether big or small. An employee leaves his present job for another job to get better pay package and good working conditions. Every Company calculates Employee attrition rate and takes measures to reduce it. The facts and figures are not made public as it may tarnish the image of the company in front of its own employees and its loyal customers.

Many researches showed that nearly half of the employees feel that their supervisors do not provide them with recognition for their good work. This is one of the important reasons for employee attrition. When the employees are given positive feedback and recognition for their achievements, they feel more satisfied and the loyalty to company increases.

The attrition rates are very high in the current scenario, but only very few HR managers were able to know the exact reason for the attrition. Inequity in Compensation, Limited Career Growth, Role Stagnation, Mismatch between Job Profile and Individual Personality, Work Stress, Lack of Authority and Responsibility, Monotony of the Job, etc. The attrition rate cannot be nullified but it can be minimized by following certain strategies like opportunity for growth, reduced wok stress, and job security, good compensation etc. Conducting exit interviews for the employees who are leaving would be beneficial to the organization to know the reason for their exiting. This will be quite helpful to retain the present employees and prevent further attrition from the organization.

This study is aimed to understand importance of various factors that motivates employees to either continue with the existing employer or to look for a new position with another employer.

NEED FOR THE STUDY:

Employee satisfaction is very important for every organization to survive in the present competitive scenario. A satisfied employee can help the organization improve its productivity and profits. Out of all the resources of the organization human resources are the most valuable ones. Many organizations involving knowledge workers are also focusing on employee satisfaction. They come up with different strategies to improve employee satisfaction and motivate them for giving their best at work hence improving their productivity.

These days many organizations are facing the problem of employee attrition. Even the scientific and defense organizations are also facing the attrition problem. Due to the attrition, organization looses its key employees. This may be due to many reasons like quality of work life, pay inequity, lack of growth, etc. Many employees from these organizations generally shift to educational organizations. These organizations focus on retaining the employees by offering many benefits like attractive compensation packages, provide efficient training, flexible work options etc.

Employee satisfaction and attrition are closely related to each other. A satisfied employee has a lesser scope of leaving the organization, as the satisfaction levels influence the loyalty of the employee. They try to put in greater effort to increase their productivity, thereby creating profits for the organization. There is a very little probability that a satisfied and loyal employee will leave the organization. An organization with satisfied employees shows greater customer satisfaction, which is very important for any organization. By knowing the levels of employee satisfaction the organization can come to know the aspects where the organization lags behind. Knowing the reasons for attrition helps the organization to understand why the employees leave the organization and how they can decrease the attrition levels in organization and improve the satisfaction levels. Hence, it a need of hour for an organization to know the drivers of employee satisfaction and reasons for attrition.

OBJECTIVES OF THE STUDY:

Literature has revealed inverse relationship between employee satisfaction and attrition. The basic objective of this study is to understand explicit as well as implicit aspect of employee satisfaction and to explore the reasons of employee attrition.

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^[1] Source: http://www.jimpinto.com/writings/infosys.html