RETENTION MANAGEMENT
KAJAL PAWAR
Literature Review
Contrary to separations in the form of discharge, lay-offs and retrenchment, organizations realized that competent human resources need to be retained as they form the strategic distinctive competency. This shift in organisations realization is due to competition consequent upon globalsiation.
Most of us would agree that to-day’s environment is considerably more complex than that which existed in 1980s and 1990s. Consequently, organisations have been introducing change to cope up with the challenges of the environment and competition. This, in turn, led to change in job demands and employee skills. Thus, human skills and talents are in great demand than that of other resources. Organisations started offering attractive and competitive pay packages in order to lure the employees with scarce skills. This, in turn led to increase in external mobility. Therefore, organisations started adapting strategies to retain the employees with scare skills and talents. Retention management, thus, acquired significance.
HOW TO RETAIN THE EMPLOYEES?
HR managers have to analyse the cause of mobility before suggesting measures to reduce it The data and information about external mobility can be collected through exit interviews and questionnaires. The data and informa-tion should include the reasons for voluntary quits like better job elsewhere, problems in the present job and organisation like transportation, working conditions, shifts, unsound relations with superiors, lack of promotional opportunities, lack of facilities to attend family issues etc. They should also cover the jobs, pay scales, working conditions, superiors, departments, plants, regions where the voluntary separations occur. They also cover gender, length of service, functions and place in the organisational hierarchy of employees who leave voluntarily. Data regarding separation due to lay-off and discharge can also be collected on similar lines. HR managers have to analyse the data and suggest measures to control external mobility.
Measures to contain excessive mobility include improving the pay structures and level on part with those of similar organisations, providing the opportunities for self development and promotional avenues, maintaining sound industrial and human relations, adopting effective techniques of recruitment, selection, induction and placement, providing congenial working conditions, creating the facilities and environment to satisfy the employee’s needs for pride, security, recognition, challenging work, autonomy, achievement, appreciation, status, power to control etc.
The management has to forecast the vulnerable areas of external mobility and apply appropriate measures. In other words, the manage-ment need not apply all these measures to all the situations but it has to use the most suitable measures to the situation.
Reduction of excessive employee mobility by identifying the areas and applying measures is the responsibility of line executives at all levels in the organisation. The management at the top level formulates the policies regarding minimisation of mobility with the help of top level personnel managers. Personnel officers help counsel with the line managers at the middle and lower levels in respect of forecasting the mobility, identifying vulnerable areas and in applying measures.
Retention Management at Kraft Foods
Information technology (IT) is one of the most difficult areas for organizations to staff. The short supply of trained, experienced workers coupled with the increasingly strong demand has presented almost limitless career opportunities for IT professionals. Most large organi- zations experience annual turnover in the 20 percent range. Kraft Foods, however, has developed a retention program that has resulted in the reduction of the turnover rate of its nearly 1,000 full-time IT professionals to a staggering 5 percent.
The program Involved Kraft’s chief Information officer (CIO) partnering with human resource (HR) to help HR understand the unique challenges being faced by IT. Kraft’s retention program involves more than just the standard attractive stock options; it involves a holistic and integrated set of HR programs. Many of Kraft’s IT professionals have come directly from its college Internship program. Interns are given early responsibil ity for learning different technologies and are held accountable for rigorous performance outcomes early on. Seventy percent of IT interns who are offered permanent jobs accept.
Once hired on a permanent basis, employees are expected to engage in an objectives- based management system. Managers are specially trained to provide ongoing feedback and conduct developmental performance feedback sessions. Employees are allowed to pursue one of two career tracks within IT: technical or managerial. To assist with development an intranet site provides learning tutorials, links to job postings, formal training courses, and both division and functional area Web sites that discuss competencies required in these
areas. Consequently, employees are allowed to develop a plan for career development within Kraft. IT employees are further encouraged to devote 10 working days per year exclu- sively to career development pursuits. In addition to in-house development opportunities, a tuition reimbursement plan is offered for outside programs of study.
Employees also become part of the IT Leadership Program, where junior employees are paired with an executive mentor. The one-year program involves about 30 days of joint work activities and provides additional exposure to leadership and technology issues. Probably most importantly, IT employees at Kraft note that the top reason they stay is the sense of family they find at work. Ideas are solicited and accepted from every level in the organization, and inclusion is a strong company value. Kraft also understands the
needs of its younger workers who populate the IT division. It offers flexible hours, telecommuting and part-time work options, a casual dress code, and a new campus that includes a company store and an onsite health club.
VOLUNTARY RETIREMENT SCHEME
One of the techniques of trimming the workforce is Voluntary Retirement Scheme (VRS). This is generous, tax-free severance payment to persuade the employees to voluntarily retire from the company. The scheme has its origin during early 1990s in U.S.A. This scheme is also known as ‘Golden Handshake’ as it is the golden route to retrenchment. The voluntary retirement cheme is the most humane technique for downsizing the workforce.
The voluntary retirement scheme was announced by the government to cover the public sector employees. The scheme was later introduced in private sector industries covering L & T,M&M, TELCO etc.
Benefits under this Scheme: The minimum benefits under this scheme include: The employee
opts for voluntary retirement entitles for 45 days emoluments for each completed year of service
or monthly emoluments at the time of retirement multiplied by the remaining months of service
before normal date of retirement whichever is less. In addition to these emoluments, the employee will get his Provident fund and gratuity dues. The VRS originally granted tax-exemption for amounts up to 5 lakhs received by a public sector employee as his severance pay-package. Eligibility for VRS: The eligibility criterion for VRS varies from one company to the other. In case of public sector units, employees who have attained 40 years of age or completed 10 years of service are eligible for voluntary retirement under the scheme. Eligibility for VRS at SAIL is as follows:
Junior Secretariat Staff:-43yrs
Unskilled Labour:-40yrs
Skilled Labour:-43yrs
Junior Management:-46yrs
Middle & Senior Management:-50yrs
MERITS OF VRS
(1) It offers the best and humane route to retrenching excess workforce. (ii) Lucrative settlement prevents resentment.
(i) Voluntary nature precludes the need for enforcement.
(iv) It allows specific divisions to be down sized. (v) It allows for lowering the overall wage bills and enables for increase in salaries
Demerits of VRS: Demerits of VRS include
The best employees of the company may accept the deal and leave the company (1) It creates a sense of fear and uncertainty among those employees who stay with the
company.
(ii) Severance costs may outpace productivity gains.
(iii) Trade unions and individual workers may protest the operation of the scheme and these protests may disrupt operations. (iv) Operation of the scheme may create a bad reputation for the company,
Measures to Minimise the Limitations
(1) The organisations may make use of the following measures to reduce the limitations of the scheme.
(ii) The management should involve the trade unions in the process of decision-making, formulating the rules and regulations of the scheme and in implementing the scheme (ii) Increase the benefits to make the severance package more attractive.
(iv) Motivate the managers through counselling.
National Renewal Fund
National renewal fund was established to help the workers affected by industrial restructuring. modernisation or closure of the unit. The objectives of the National
Renewal Fund are:
(1) To provide assistance to firms to cover the cost of retraining and redeployment of employees arising as a result of modernisation and technological up-gradation of existing capacities and from industrial restructuring.
(ii) To provide funds for compensation to employees affected by restructuring or closure of industrial units, both in the public and private sectors. (iii) To provide funds for employment generation schemes in the organised and un-organised sectors in order to provide social safety net for labour. The NRF is administered by the Department of Industrial Development. The NRF was proposed to have a corpus of 2,000 crores which would be contributed from budgetary suppart (200 crores from the 1991-92 budget, 1,000 crores from the disinvestment of the shares held by the government in public sector units and 800 crores from the World Bank).
There are two parts in the NRF. The first part is the Employment Generation Fund. This fund provides resources to approved employment schemes in the organised and unorganised sectors. The second part is the National Renewal Grant Fund. This fund provides funds to meet the compensation and training expenditures of retrenched workers.
The Challenges of Employees Exit
Reducing the excess manpower in an organisation is not an easy task. There are a number of challenges of this task. They include:
(i) Establish the compulsion of manpower reduction. (Manage downsizing without disrupting the organisation.
(ii) Ensure that employees participate in the decision to down size.
(iv) Match of focus of manpower reduction to corporate strategy.
(v) Ensure a transparent system for choosing people to be eased out.
(vi) Manage the psychological and social fallout on exiting employees.
(vii) Maintain contract and relationships with former employees.
(viii) Prevent the company from being branded anti-people.
(ix) Motivate the employees who will stay with the organisation.
(x) Develop a post- downsizing manpower deployment plan.
Conclusion: Thus ,human resource management results in sustainable relationship among employees, employers, trade unions, employers’ associations and government.
Retirement is no longer a process of filing paperwork as employees reach mandatory retirement age. Effective management of employee retirement can provide organizations with an important competitive advantage the means of retaining knowledge, expertise, experience, loyalty, and positive role models while simultaneously allowing an infusion of new ideas and energy. The development of creative, mutually beneficial programs and policies related to retirement will become even more critical as our population ages and baby boomers approach traditional retirement age.
REFERENCESRETENTIO
1. Cascio, W. F. “Corporate Restructuring and the No Layoff Policy. Perspectives On Work. 7. (1), pp. 4-6.
2. Devine, K. Reay, T. Stainton, L. and Collins Nakai, R “The Stress of Downsizing Comparing Survivors and Victims, Human Resource Management, 42, 2003.
3. Ibid.
4. . Jossi, F. “Take the Road Less Traveled,” HR Magazine, July 2001, 46, (7), pp. 46-51.
5. Juczens, 1. “Motivating Survivors, HR Magazine, July2001, 46, (7), pp. 92-99
6. Maertz, Ir. C. P., Wiley, 1. W. LeRouge, C., and Campion, M. A. “Downsizing Effects on Survivor: Layoffs, Offshor ing, and Outsourcing, Industrial Relations A Journal of Economy and Society, 49, (2), 2010, pp. 275-285
7. Melymuka, K. “Kraft’s 5% Solution,” Computerworld. 32, (44), November 2, 1998, pp. 69-71.
8. Neeraj Kaushal and Sekhar Ghosh, “Axing 4 million jobs”, Business To-day, April 22-May 1993.
9. Salchar Ghosh,” Painles Farewell”, Business To-day, April 22-May 6, 1993.