http://www.harrt.ucla.edu/publications/newsletter/spring03.pdf
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Although, GECIS uses scientific methods like Markov’s Analysis to predict employee movement still attrition is the biggest challenge for GECIS. This report will be focused on the internal reasons related to HRM of GECIS responsible for high attrition and some recommendations to resolve them. Some of the factors responsible for the trend are:
- Recruitment and selection phase problems
- Job Motivational factors
Recruitment and Selection phase problems and solutions
Skill-based recruitment: The HRM structure and policies of GECIS is such that it doesn’t support an individual skill-based recruitment and mainly focuses on basic requirements like analytical abilities, English communication, basic computer literacy etc. This policy doesn’t differentiate people on the basis of their individual strengths and the long term suitability with the job, which later leads to attrition as the candidate looses interest after some time.
GECIS has more than 400 different business processes and it is possible to allot jobs to candidates based on their individual strength. This could be well explained with the Competitive bidding model or the opportunity cost method by Hekimian and Jones (details in appendices#3). The model suggests that the potential monetary value of be generated by an employee has to be estimated by allocating the employee to an activity in which he/she best fitted. The bid price is a measure of the employee’s competence and experience, and the value that he would generate for the organization
For e.g. a graduate who has got good communication and very high computer skills will be selected for call centre job as the vacancy he applied for was in that business of GECIS, but the talent of the same person can be better utilized in the software division of the call centre. Compatibility of candidate’s strengths with the kind of job can lead to enhanced interest of employee in their jobs & can reduce the attrition rate.
Psychological strength based recruitment: GECIS mainly operates in the call centre jobs which need high level of emotional strength and patience due to high variety of customer interaction. Most of the candidates usually are not prepared to face such situations due to individual psychological reasons and they tend to give up after some time and leave the company. This is due to the fact that there is a lack of understanding of job by the employees and failure on the part of HRM selection strategies in ignoring such important aspect which eventually raises the employee attrition.
Theory of Practice of Systematic personal by Mike Smith & Ivan I. Robertson best explains this problem and suggests the use of psychological tests to overcome it. It suggests few psychometric tests which are carefully chosen, systematic and standardized for evoking a sample of response from a candidate, which can be used to access one or more psychological characteristics, required by the job. Tests like DATB (Differential Aptitude Test Battery) and projective tests like Rorschasch Ink blot test and TATc thematic appreciation test present the candidate with a vague stimulus and the candidate must use their own ideas and thoughts in order to make any response. Such tests can help in selecting the fittest candidates which can stay longer with the organization, decreasing the employee turnover.
(Source: SMITH, MIKE and ROBERTSON, IVAN (Eds.), Advances in Selection and Assessment)
Transparency of employee future in recruitment: GECIS hires mostly fresh graduates looking for a job. The candidates look forward to a white-collar job in a MNC along with a faster growth. The HRM policies do not update them about the monotony of the job and the slow and minimum time restricted career growth at the time of selection This could be well explained with the help of the Expectancy theory by Porter and Lawler which states that people bring to work various expectations about the likely consequences of various forms of behavior reflected in the work performance and non-fulfillment of those expectations lead to de-motivation. (Source: Porter, L.W and Lawler. E.E (1968) Managerial attitude and performance. Homewood, IL: R.D Irwin)
The theory suggests that people at work are motivated to perform because of expectations as to perceived payoffs or rewards arising from that performance and HRM policies of GECIS fail to inform them about the slow growth in the organization. This leads to demotivation of employees and finally attrition from organization.
(Source: http://www.brunel.ac.uk/~bustcfj/bola/motivation/expectancy.html)
Hence the HRM policies should be designed in such a way that they look for people who are well informed about the job type and career advancement. The HRM should concentrate more on the candidates who wouldn’t mind the monotony of the job and can also stay satisfied for a longer time on the same job. Also, the policies should be made to design new designations within the old structure to give a flavor of success and career advancement for employees.
Motivational factors responsible for high employee turnover
Apart from the recruitment related reasons there are some work related issues which lead to the demotivation and exit from the job in GECIS.
Hertzberg (1959) constructed a two-dimensional paradigm of factors affecting people's attitudes about work. He concluded that such factors as company policy, supervision, interpersonal relations, working conditions, and salary are hygiene factors rather than motivators. According to the theory, the absence of hygiene factors can create job dissatisfaction, but their presence does not motivate or create satisfaction. GECIS has maintained a good level of hygiene factors but still the employee motivation goes down due to the absence of long term satisfiers which are strong determinant of job satisfaction. Herzberg explains those satisfiers in the form of five strong factors that are strong determiners of job satisfaction
I) achievement II) recognition III) the work itself IV) responsibility V) advancement.
These motivators (satisfiers) are associated with long-term positive effects in job performance while the hygiene factors consistently produced only short-term changes in job attitudes and performance, which stays for a shorter time but absence of long term satisfiers, paves way for dissatisfaction and then attrition.
The policy structure of GECIS is such that the work environment gives a short term satisfaction of handling responsibilities and getting recognition for that, but it leads to dissatisfaction in the long term due to lack of vertical career growth as GECIS has expanded rapidly in the last few years and promotions were happening faster but lately it has been consolidating its processes and moving towards saturation. GECIS does majority of its leadership recruitment from different external sources like management institutions, other industries etc. This results in the stagnation in the vertical growth of the present employees as the top positions are filled from outside and there is no in-house growth, resulting in demotivation and resignations. Hence achievement with advancement can only motivate the employees. If you do not have an open position to which to promote a valuable employee, consider a new title that reflects the level of work the employee has achieved and gives a sense of career advancement.
Reward Structure: “Reward refers to all of the monetary, non-monetary and psychological payments that organizations provide for its employees in exchange for the work they perform” (Bratton & Gold, 2003 p, 278)
The old adage "you get what you pay for" tends to be true when it comes to staff members. Pay as an important component of a system of rewards has been signaled out by Thierry (1992).
Salary as having psychological and social significance because it sends a number of messages to employees, quite apart from its status as a desired material reward, pay says something about the appropriateness of the employee’s motivation behavior. It conveys what the organization thinks of the person, money as a main motivation factor was endorsed by Taylor (1947)
GECIS follows a PRP (Performance Related Pay) reward structure, (Source: Handbook of GECIS HRM) which measures Individual performance is measured based on the forced ranking (refer appendices #4) where the poor performers are punished as the competition is on a flat basis, ignoring the experience factor in the employee performance. This leads to dissatisfaction due to the salary difference and recognition attached with the PRP. It is in GECIS’s interest to motivate the low performers and help them cope up with the experienced competition. HRM has designed policies like mentoring by experienced staff in this regard. According to Applebaum & Shapiro, 1991Certain conditions are necessary for the effectiveness of a PRP structure
- The pay range must be of sufficient width to accommodate significant difference in the basis pay of employees.
- The measurement of performance must be a valid and reliable exercise and must be possible to relate to the outcome of measurement process.
Since the PRP based salary structure is creating dissatisfaction and attrition it should be accompanied by some flexible remuneration schemes like discretionary incentives by management which should be based on the improvement shown by the low performers as compared to their past performance. GECIS is one of the pioneers in the business and has already achieved economies of scale and it works on the principal of “best services at the highest profit margins” hence it is possible to take care of this factor by increasing the salaries of the staff and including more incentive based motivation.
Stress: It is the non-specific response of the body to any demand made upon it."
(Dr. Hans Selye - Father of stress theory)
GECIS work on the 24*7 working hour concept and majority of work is during the night. A call center job at night becomes very stressful and gives birth to many negative psychological effects and health related problems (refer appendices #5) resulting in a lower self esteem, increased depression, anxiety and hostile behavior and decreased efficiency at the work place. Employees loose flexibility and creativity at work and develop negative attitude towards supervisors and co-workers. These symptoms of work related stress result in increased staff turnover
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GECIS (India) is finally waking up to the fact that a lot of human potential is being drained away because of stress and burnout and emotional fatigue. As stress is the person’s reaction to a situation, not the situation itself hence HRM policies do not support enough reduction of stress and pressure at job. More constructive policies should be designed to reduce the stress as much as possible like using ant-glare computer screens, more ergonomically designed workstations, soothing music. The organisation can’t change the core work but can reduce its negative effects on employees by giving them short vacations to rebuild employee survival capabilities, and return later to the same environment. Employee counselling and therapeutic techniques should be incorporated along with more flexible working hours and job sharing i.e. splitting a career position between two people sot that they experience less time based stress and can spend enough time with their personal life as well.
Conclusion
According to the modern perception of some HRM specialist the employee turnover rate for
RECOMMENDATIONS
GECIS should adopt a, soft HRM approach which places an emphasis on "human" and is associated with the human relations school of Herzberg and McGregor (Storey, 1987). Legge refers to this as "Developmental Humanism" (Legge, 1995, p.66-67). The soft version is seen as a method of releasing untapped reserves of human resourcefulness by increasing employee commitment, participation and involvement. Employee commitment is sought with the expectation that effectiveness will follow. Whilst emphasising the importance of integrating HR policies with employee welfare, the soft model focuses on treating employees as valued assets and a source of competitive advantage through their commitment, adaptability and high quality skill and performance.
The HRM policies should be designed to share more profits in terms of higher incentives and growth of employees in terms of more in-house recruitment and personal development along with professional development. Although GECIS has a mixture of X and Y style leadership (McGregor- Theory X & Theory Y) it should try to focus more on the Y leadership style to see the results. Employees are proactive rather than passive inputs into productive processes, capable of development, worthy of trust and collaboration which is achieved through participation (Legge, 1995, pp 66-67). Some of the recommendations for HRM of GECIS are:
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Recruitment process changes: Recruitment process should include equal focus on the emotional psychology of the candidate and their ability to cope with the pressure at job. There should be enhanced psychological contract between employees and the organization and promotion of “organizational citizenship”.
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Personal Development: Professional development should be accompanied by personal development (Architect model of personal development by Tyson and Clark). Policies should be made to have a 360 degree employee development to enhance their loyalty for GECIS.
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Training need should also consider individual requirement and not just on the basis of surveys.
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Pay structure changes: Changes in the PRP structure like rewards based on individual work improvement i.e. comparison of individual past performance to motivate the bottom performers.
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Employee feedback: More feedback surveys to ensure that employee voice is heard and de-motivation is reduced.
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Job Rotations: It is quite common in GECIS within the departments and processes but majority of vacancies are filled from outside the organization. Employees who are de-motivated in their present profile due to monotony or any other reason should be preferred over outsiders.
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Stress Management: GECIS employs 12,000 people but it has negligible recreation centers like gymnasiums or swimming pools to relieve stress. It should have professional trainers to run stress relieving camps and trainings.
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Family Involvement: HRM should provide opportunities for the development of the families of employees and the level of the help should not be based on the hierarchy of the employee.
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“We care for you”: Employees' birthdays and anniversaries in company newsletters. Such tactics not only keep employees happy and productive, but they also motivate them.
Bibliography
Literature
Herzberg, F., Mausner, B., & Snyderman, B.B. (1959). The Motivation to Work (2nd ed.). New York: John Wiley & Sons.
Applebaum, S. & Shapiro, B. (1991) ‘Pay for Performance: Implementation of individual and group plans’ Journal of Management Development, 10, 30-
Legge, K. (1995) Human Resource Management: Rhetorics and Realities,
Basingstoke: Macmillan.
Thierry, H (1992) Pay and Payment System in Employee relations
Taylor, F.W (1947) Scientific Management, New York: Harper & Row)
Handbook of GE HRM.
Storey, J. (1987) 'Developments in the management of human resources: an interim
Bratton, J & Gold, J, (2003) “Human Resource Management Second ed”
Porter, L.W and Lawler. E.E (1968) Managerial attitude and performance. Homewood, IL: R.D Irwin)
James W. Walker, “Integrating the Human Resource Function with the Business,” Human Resource Planning 14, no. 2 (1996): 59–77
Websites
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http://www.harrt.ucla.edu/publications/newsletter/spring03.pdf
http://www.gecapitalindia.com/gecapital/default.htm
http://
http://www.brunel.ac.uk/~bustcfj/bola/motivation/expectancy.html)
http://www.businessfaculty.utoledo.edu/ryonker/
Appendices
#1
MARKOV ANALYSIS
The heart of Markov analysis is the transition probability matrix, which describes the probabilities of an incumbent staying in his/her present job for the forecast time period, moving to an other job in the organization, or leaving the organization. It is a fairly simple method of predicting the internal supply of human resource at some future time? When this matrix is multiplied by the number of people beginning the year in each job, the results show how many people are expected to be in each job by the end of the year. To Develop the Transition Probability Matrix, Planners Take the Following Steps Specify a mutually exclusive and exhaustive set of states that include every job between which people can move and an exit state for those who quit, or are fired, Gather data from past, on what transition rates actually occurred between each department Such data could show, for instance, that during the past year 15% of the people who began the year in job A left the organization, 10% where transferred to job B, and 5% were promoted to job C.
(Source: http://www.businessfaculty.utoledo.edu/ryonker/)
#2
Capitalizations of Historical Costs: R.Likert and his associates at R.G.Barry Corporation in Ohio, Columbia [USA] developed this model in 1967. The method involves capitalizing all costs related with making an employee ready for providing service i.e. recruitment, training, development etc. The sum of such costs for all the employees of the enterprise is taken to represent the total value of human resources. The value is amortized annually over the expected length of service of individual employees. The unamortized cost is shown as investment in human assets. If an employee leaves the firm before the expected service life period, the net asset value to that extent is charged to current revenue.
http://www.harrt.ucla.edu/publications/newsletter/spring03.pdf
http://www.successfulmanagers.com/76-85/82issue/theme1_82issue.asp
Replacement Cost Method: (The Flamholtz Model of 1973)
Replacement Cost indicates the value of sacrifice that an enterprise has to make to replace its human resource by an identical one. Flamholtz has referred to two different concepts of replacement cost viz.
(i) individual
replacement cost and
(ii) positional replacement cost.
The individual replacement cost refers to the cost that would have to be incurred to replace an individual by a substitute who can provide the same set of services as that of the individual being replaced. The positional replacement cost however, refers to the cost of replacing the set of services required of any incumbent in a defined position. Thereby, the positioned replacement cost, considers the position in the organization held by an employee, and also future positions expected to be held by him. However, determination of replacement cost of an employee, is highly subjective and often impossible.
#3
Opportunity Cost Method
The bid price was a measure of the employee’s competence and experience, and the value that he would generate for the organization, this model was developed by Hekimian and Jones. It was also known as the competitive bidding model. According to this model, the potential monetary value of be generated by an employee was to be estimated by allocating the employee to an activity in which he/she best fitted. In other words, the opportunity cost of key employees in the organization was assessed in relation to their performance and in accordance with the organizational goals. The investment managers used to bid for the employees and the highest bid for the employees and the highest bid for the employee was considered his price, which was to be reflected in the balance sheet. The bid price was a measure of the employee’s competence and experience, and the value that he would generate for the organization. Critics argued that competitive bidding involved assessing the future contribution of an employee to the organizations difficult for the organization to measure their value. They further argued that the bid price placed on an employee may be based on the perception of the bidder, which may not give a correct estimation of the employee’s true value. The value to be generated by tan employee was relative and hence the measurement could not be effective.
http://www.successfulmanagers.com/76-85/82issue/theme1_82issue.asp
#4Forced Ranking: It is a ranking method based on the employee work performance used for the reward determination. Top 10% performers are called as OS (outstanding performers), later 20% performers are called EE (exceeding expectation), below 30% performers are called as HM (highly met), second last 20% are called as LMs (lowly met) and the last 20% are called as NIs (needs improvement).Hence, there is a hierarchy of cash incentives above the basic salary.
(Source: Employee handbook, GECIS)
#5
Physical and psychological effects of stress