THE INDIAN INSTITUTE OF PLANNING AND MANAGEMENT

NEW DELHI

THESIS

ON

“EFFECT OF DOWNSIZING ON EMPLOYEES’ MORALE”

SUBMITTED TO:
PROF. SUMANTA SHARMA
PROF……………….
IIPM, NEW DELHI

UNDER THE GUIDANCE OF:

SUBMITTED BY:
 CERTIFICATE OF ORGINALITY

This is to certify that the thesis titled “Effect of Downsizing on Employees’ Morale” is

prepared and submitted by me to Indian Institute of Planning & Management, New Delhi

in partial fulfillment for the award of the Master Degree in Business Administration, and

this report has not been submitted elsewhere.

Date:
 CERTIFICATE FROM GUIDE

This is to certify that this thesis titled “Effect of Downsizing on Employees’ Morale” is

prepared and completed successfully by Venisha under my guidance.

The thesis has been completed to my satisfaction and I wish her all the best in her future

Endeavor.
 ACKNOWLEDGEMENT

The present work is an effort to throw some light On “Effect of Downsizing on

Employees’ Morale” The work would not have been possible to come to the

present shape without the able guidance, supervision and help to me by number of

people.

With deep sense of gratitude I acknowledged the encouragement and guidance

received by my Mr. Prof. Sumanta Sharma Associate Dean - IIPM, New Delhi. I

also convey my heartfelt affection to Mr…………... Who helped and supported

me during the course, for completion of my thesis.

ABSTRACT
THESIS APPROVAL LETTER
THESIS SYNOPSIS
 TABLE OF CONTENTS

CHAPTER1 INTRODUCTION
CHAPTER2. LITERATURE REVIEW
 Conceptual approach to employee downsizing
Downsizing and employee attitude
 Employee morale during downsizing
 Employee retention strategy into high gear
 Organizational climate also affects employee retention rate
and positively affects employee downsizing rate
 Tips for creating an effective organizational climate for
minimum employee down sizing
 What do you mean by organization
 Contents of organizational climate
 Organizational vital signs-a leading indicator of satisfaction
measuring
Of employees
 Organizational climate-employee satisfaction survey
 Employee down sizing & employee motivation are closely
knitted
 Employee down-sizing & employee engagement
 Diagnostic tool
CHAPTER3. RESEARCH OBJECTIVES
CHAPTER4. RESEARCH METHODOLOGY
 Methodology
  Research design
 Nature of data
 Data collection
 Sample size:
 Sampling technique
 Sampling procedure actually employed:
 Analytical tools:
CHAPTER5. DATA ANALYSIS
CHAPTER6. CONCLUSION & IMPLICATIONS
CHAPTER7. RECOMMENDATIONS
BIBLIOGRAPHY
APPENDIX
 Chapter-1
INTRODUCTION
What Is employee Down Sizing
Employee downsizing is a nightmare feared by most of the employees working in the

corporate world. In management parlance, the term downsizing refers to pruning

(including layoffs and retrenchments) of the size of workforce for a variety of reasons:

⇒ Obsolescence of skills consequent upon up gradation of technology,

⇒ Shift in the organizational requirements;

⇒ Outsourcing;

⇒ Modernizing,

⇒ Restructuring or even reducing the activities of industrial units; and

⇒ Redesigning the job in an organization.

Employees, nowadays, will have to reconcile with the ugly realities of the corporate

world and they may have to be prepared for alternative employment as the axe may fall

on anyone at any time.

Due to the globalization of business, organizations are able to develop a number of

approaches by which to employ human resources, technology, and capital to implement

innovative projects in different parts of the world. They are able to derive maximum

advantage due to these possibilities. While the larger goals appear justifiable and in the

interest of most stakeholders, they lead to frequent changes at the organizational,

functional, and individual levels.

At the organizational level, such changes can lead to closure of businesses, off-shoring,

merging with another organization, outsourcing, restructuring, etc. At the functional

level, it can imply changes in the availability of resources, changes in the scope of

activities, etc. As a sequel to these developments, employees can be redeployed,

transferred, rendered redundant, or let go within a very short span, without adequate

preparation for these changes. Such changes take their toll in terms of organizational

productivity, nature of employer-employee relationships and the associated social costs.

People who contribute to the organizational goals are the organization's assets. These

assets are turned into liabilities due to reasons mentioned earlier. The challenge is to

manage employee exit without disrupting the organization's functioning. Those

individuals who lose jobs are the hardest hit. For the affected employee, the emotional

trauma of losing a job is very difficult to cope with. Aside from the financial implications

of a job loss, they have to reconcile with the loss of self-esteem, self-confidence, and a

breach of trust between the employer and the employee. Along with the individual,

his/her family also gets deeply affected with the involuntary job loss of a family member.

The pain is not limited to the individual alone but affects a number of others. The effect

is also felt by other employees who remain in the organization as they suffer from the

guilt and are also faced with the fear of job insecurity.

The fundamental reason to resize the organization is to improve organizational

performance and to reduce costs of operation. While these changes are expected to fetch

significant gains for the companies in the long run, an analysis of corporate experiences

of downsizing shows that such measures are not always implemented with careful

consideration of all the implications. Downsizing also brings, in its wake, a number of

associated hidden costs, which companies tend to overlook in pursuit of short-term gains.
The flip side of downsizing is that the organizations lose expertise, skills, knowledge,

experience and valuable relationships, which walk out of the door every time somebody

leaves. A number of alternative approaches can be implemented to achieve the over-

riding goal of enhancing business performance. At the same time, it is true that

downsizing in many cases is an inevitable option. However, downsizing should be

considered not as the first but the last option. If the axe has to fall, it should be preceded

by a careful consideration of the consequences of such a drastic action.

How Down-Sizing affects employees’ morale

Every year companies spend millions in recruitment due to employee turnover. Turnover

and its associated costs are a burden that used to be just the cost of doing business. But

more and more companies are investing time and effort in making better hiring decisions

and doing more to keep the employees they do hire. Employee retention is now a buzz

word in today’s business world.

Over two-thirds (70%) of HR managers state that employee retention is a primary

business concern. HR managers currently find employee retention a business challenge,

long-term demographic changes, such as the retiring Baby Boomer population have the

potential to aggravate this issue. All companies, regardless of size, are struggling with

how to keep employees from leaving for more money or better opportunities. Studies

consistently show that even though employees may say they are leaving for more money,

when those same employees are asked several months later why they really left, the

money factor is about 5th or 6th on the list. The first few reasons include lack of

recognition, disagreement with the culture or direction of the company, poor treatment by
their boss, lack of excitement about their growth prospects, and poor relationships with

co-workers. ?

How much? When you add the costs of finding an employee, training the new employee,

lost productivity and filling in for the employee who leaves, the cost can easily equal

150% of the base salary of the person who left. So, if you are paying someone $50,000,

the cost to replace that person will be approximately $75,000. This money comes out of

your hard-earned profits.

This is one of the key reasons that companies are focusing so much effort on keeping

their current employees. Some of the steps taken by companies to retain their work force

are:

• Ensure you offer competitive compensation.

• Ensure you offer basic health care benefits at reasonable rates. Consider adding

lifestyle benefits that are cost effective (read easy on the cash flow).

• Find out what employees want from their career and do what you can to provide

for their needs.

• Be as flexible as possible about how the work gets done.

• Be as flexible as possible as to when and where the work gets done. Can it be OK

for an employee to take a few hours off to attend to a family or personal matter if

they can accomplish the job at their home in the evening?

• Take a real and genuine interest in people’s career aspirations and personal lives.

• Recognize positive contributions to the company. Communicate company

progress, financial news, major customer or sales activities on a regular basis. Follow

up on your commitments to provide information or answers.

• Have regular (bi-weekly or monthly) meetings with all employees where they can

ask you questions about your plans, company progress, new developments to look

for, etc. Be accessible to them so you can learn their needs. If you can respond to

their needs before they become real issues, they won’t begin looking for greener

grass.

• Ask former employees why they resigned. Even if they left six months ago, they

still have a valid perspective.

• Routinely ask employees what you can do to make the company a better place to

work. Set boundaries if necessary as to what items are not negotiable; such as

ownership in the company or 50% per year salary increases.

PRACTICES TO REDUCE EMPLOYEE DOWN-SIZING

Many companies face the challenge of employee turnover, and incur heavy losses. The

employers provide several attractive packages in order to retain the employee. Reasons for

employee turnover constitute several controllable and non-controllable factors.

Good economic time’s means lowered unemployment, increased productivity, and better

prospects for growth in all sectors. However, economic prosperity also means increased job-

hopping among the job seekers. Opportunities abound everywhere with increasing

competition for talent among companies. Frequent job changes are no longer a stigma, but

they are becoming norm. The issue of employee turnover is so pronounced in today’s world,

that even in Japan, where life-time employment and high employee loyalty are the norms,

workers are becoming increasingly mobile. Even survival will become questionable, if the

company witnesses higher turnover among the top performer. With the increasing mobility

among the workers, “ employee retention ” poses a distinct challenge to any company.

Companies that are inflexible, or whose organizational culture is characterized by

domination and autocracy are likely to have dissatisfied employees no matter how good the

incentives to stay may be Or, at the very least, the tenure of their employees is likely to be

highly sensitive to changes in specific (usually monetary) incentives: small changes in

compensation may lead to numerous departures. There are however other aspects of the work

environment or particular jobs that can act as strong ‘de-motivators’ that can cause people to

leave their employment. These include

Lack of control over one’s work

• Feeling bored or unchallenged by repetitive tasks

• Lack of job security

• Lack of learning opportunities

• More generous compensation or benefits package offered elsewhere

• Concerns about the future of the firm

It’s Not Just the Pay …

While remuneration and other types of benefits continue to be an important factor in the

retention equation, it is important to note that the current HR literature treats them as only

one potential area for retention, and not always in and of themselves, sufficient to ensure

strong employee commitment. Over the past 10 or 15 years, the business literature dealing

with employee participation, workplace wellness, work-life balance and other topics has

mushroomed, indicating a strong interest in and recognition of how other aspects of working

life influence people’s decisions to stay with or leave a company.

Why do people choose to leave or stay?

Setting aside list of retention policies and programs, it is clear that there is broad agreement

in the HR literature about the general features of any potential HR program that contributes

to good retention. Most of these are directly related to creating a satisfactory work

environment for employees and thus, in turn, to good retention. These features

• A stimulating work environment that makes effective use of people’s skills and

knowledge, allows them a degree of autonomy on the job, provides an avenue for

them to contribute ideas, and allows them to see how their own contribution

influence the company’s well-being.

• Opportunities for learning and skills development and consequent advancements

in job responsibilities.

• Effective communications, including channels for open, two-way

communication, employee participation in decisions that affect them, an

understanding of what is happening in the organization and an understanding of the

employer’s main business concerns.

• Good compensation and adequate, flexible benefit plans.

• Recognition on the part of the employer that employees need to strike a good

balance between their lives at work and outside of work.

• Respect and support from peers and supervisors.

 Chapter-2
LITERATURE REVIEW
Conceptual approach to employee downsizing

"Reflective Restructuring

According to Theo Blackwell of The Work Foundation, in 1980s and 1990s many

companies resorted to downsizing their human resources in order to cope with economic

pressures. But what most of these companies do not realize is that downsizing does not

always lead to savings in reality or increase in the market worth of the company. On the

contrary, the downsizing companies may be branded anti-people. It usually leads to

repetitive downsizing and results in the loss of employee morale and loyalty and thereby

affects overall productivity levels. However, they can adopt alternative approaches to

cope with economic uncertainties. Wayne Cascio had proposed a new strategy termed as

"reflective restructuring", which enables companies to offer a range of smarter options to

employees. The article explains the significance of this new concept and provides

examples of companies in the US and UK which have adopted the strategy. It also

explains that while companies in the US are at a greater liberty to downsize, the UK

business environment is not amenable to such measures.

Kalyan Chakravarti in the article, "Downsizing and Outsourcing: An Indian

Perspective", explains the economic situation of India since Independence (post-1947)

and in the aftermath of the economic liberalization (post-1991). Against this backdrop,

the author analyses the performance of the Indian Public Sector Undertakings (PSUs). He

outlines the causes that resulted in surplus manpower among PSUs. However, after India

opened up its economy, most PSUs were compelled to streamline their operations to

increase their efficiency. One of the major steps taken to achieve this goal was to shed
the excess staff on their payrolls through the "golden handshake," by floating Voluntary

Retirement Schemes (VRS) and Compulsory Retirement Scheme (CRS). The other major

step was to outsource non-core activities and focus on their core competencies. The

article provides a snapshot of the Indian experience of downsizing and also discusses the

social implications of these drastic measures.

Barbara L Davison explains, in "The Difference Between Rightsizing and

Wrongsizing", the differences among the terms used in conjunction with downsizing,

i.e., rightsizing, resizing, upsizing, sidesizing, and wrongsizing. The author clarifies that

rightsizing need not imply reduction of personnel. In certain cases, it can also mean

increase in the numbers. The article explains the need for tying rightsizing efforts with

the overall strategy, identifying critical growth areas as well as those needing

consolidation, analyzing the effects of rightsizing on all functional areas, evaluating the

financial implications, and ensuring that each department and employee adds measurable

value. The author illustrates how to carry out a rightsizing exercise with the help of a

process example, which describes the most important steps. In this connection, it cites the

examples of a few companies, such as Ernst & Young, Cisco, Agilent Technologies, and

Schwab, which have implemented rightsizing. The article also illustrates a few

alternatives to downsizing and highlights new workforce concepts, i.e., "Just-in-time"

workforce and the "Portfolio" workforce, to cope with fluctuations in business cycles.

Rick Maurer of Maurer & Associates, emphasizes the need for organizations to act

swiftly to cope with changing business conditions and on their requirement of human

resources. Business leaders need to continuously assess the mix of skills required as well

as the number of employees required for the present and the future. In addition, they
should engage in a process of benchmarking with companies in the same industry. The

article explains that downsizing may prove to be a risky strategy that may not always

bring about much improvement in terms of the productivity or revenues to the

organizations. Hence, to cope with changing requirements of staff, companies should

consider a number of different alternatives to downsizing. Further, it is of the utmost

importance to plan workforce requirements keeping in view the turbulent business

environment.

Implementation of employee down sizing

Sumati Reddy of the ICFAI University, Hyderabad, India outlines ways in which

employers can implement a well-considered downsizing program. If downsizing is

inevitable, organizations must pay due attention to the rationale for downsizing,

involvement of employees in designing the program, formulation of a fair and equitable

policy, Equal Employment Opportunity (EEO) guidelines, legal counsel, etc. The article

also suggests the use of objective data to formulate the downsizing plan. In conclusion, it

points to a few indicators to assess the effectiveness of a downsizing program.

Carlton Becker of ORC enumerates a number of lessons from the collective experience

of layoffs by companies across the globe. These lessons largely pertain to the need to

remain lean and mean in a fast-changing global business environment, rightsizing the

right way, considering scientific alternatives to downsizing, paying attention to the after-

effects of downsizing, and being aware of the legal implications of downsizing. The

author points out that mass layoffs should be viewed as a change process to be

implemented by adopting a systems approach. It explains the strategic role of HR

executives during the whole process, especially during the initial stages of rightsizing. It
further explains the step-by-step guidelines that HR executives can adopt in the

downsizing process. The article shares the experiences of a few companies such as

MacMillan Bloedel, Canada, DaimlerChrysler AG's US unit Motorola, Hallmark Cards,

and Lucent Technologies.

Ann E Feyerherm of Graziado School of Business and Management, Pepperdine

University, CA, USA, also provides guidelines based on the first-hand experience of a

manager involved in a downsizing effort in a company in South California. Although, her

team of management consultants explored several alternatives to avoid downsizing, they

had to face the inevitable reality of the downsizing spectre. Since the axe had to fall, the

best approach adopted was to downsize with dignity and to ensure that those who were

let to go were equipped with new skills to enhance their career prospects. Also, the

author describes specific measures undertaken to achieve these twin goals and

enumerates the lessons learnt through these difficult times. She concludes that during

these difficult times, she had no other principle to live by other than the one she had

within.

Robert M Tomasko, provides guidelines to be adopted while implementing a downsizing

strategy. Many organizations are beginning to realize the adverse effects of employee

downsizing and are looking for ways to do so in a more humane manner. Lessons can be

learnt from those organizations that have been able to maintain, and sometimes even

enhance, employee morale. Such organizations give due attention to each of the three

phases of downsizing, i.e., planning, its implementation, and managing the results. The

author adds a few essential aspects to be considered while downsizing. These suggestions

pertain to the importance of adopting participative downsizing, managing the rumor mill,
providing continual and frequent communication, and paying special attention to the

results. The article concludes by saying that those organizations, which have been active

in managing the human side of downsizing would find that they have laid the

groundwork for new and stronger relationships with their employees.

Seymour Siegel focuses on the need for organizations to take care of two things in order

to gain competitive advantage in the 21st century. The first pertains to the management

of knowledge workers and the second to the appropriate management of knowledge

itself. In an era of downsizing, organizations need to pay special attention to the fact that

with downsizing, organizations also stand to lose on the vital and tacit knowledge

inherent in the outgoing employees. Managers are always confronted with the challenge

of capturing and codifying explicit and tacit knowledge and then converting it into

innovative products and services. The article describes a number of organizational

practices, which, if managed on an ongoing basis, can offset the loss that can occur as a

result of downsizing. It also discusses a number of steps to manage knowledge assets.

Coping with Downsizing

Neela Radhika of the ICFAI University, Hyderabad, India, describes a new phenomenon

observed in the aftermath of downsizing - Pink Slip Parties. It describes how Pink Slip

Parties came into practice and the reason for using the term `Pink Slip'. The article

elucidates the special features of these parties with respect to attendees, the kind of music

played during these parties, the colour of wristbands or badges, message boards, and

activities. Pink Slip Parties offer a number of benefits to both job seekers, who had lost

jobs on account of downsizing, as well as the recruiters. The effectiveness of these

parties are analysed vis-à-vis the nature of support gained by laid-off workers in
restarting their careers. The article also points to new developments in this area, such as

Layoff Lounges.

Mika Kivimäki, Jussi Vahtera, Jaana Pentti, and Jane E Ferrie reports the results of a

study conducted to investigate the effect of the psychosocial work environment on

employee health. This study was conducted among 1,110 municipal staff in Raisio,

Finland, between 1990 and 1995. It encompasses the period prior to downsizing, during

downsizing, and when downsizing had slowed down. The downsizing exercise was a

reactive one, conducted through retirement and hiring freezes, and letting go the

temporary employees. Some of the significant findings of the study are: downsizing

results in changes in work, social relationships, and health-related behaviours that lead to

increase in certificated sickness due to increases in physical demands, job insecurity, and

reduction in job control; sickness absence increases twofold in a major downsizing as

compared with sickness absence during a minor downsizing; downsizing was associated

with negative changes in work, impaired support from spouse, increased prevalence of

smoking, and sickness absence. It has been found that this study was unique in the area

of employee downsizing and employee health as it studied a natural experiment, which is

rarely feasible.

Jonathan Kelley explains that the significance of downsizing depends on its long-term

impact on workers. It presents a model to study the probability of re-employment among

workers shed by downsizing firms as compared with those departing from stable or

growing firms. This model can also be used to examine the impact of downsizing on the

duration of jobless spells, continuity or change in occupation, on earnings, and on job

satisfaction among workers who obtain employment. The model combines three factors:
re-employment by age, gender, and education. Some of the significant findings of the

study are: downsizing is not a disaster for most of the workers; 75% of the downsized

employees find jobs, and most of them do so quickly; workless spells between jobs are

short or non-existent; and the most serious grounds for concern relate to groups of

vulnerable workers, such as older workers and women.

Carl Van Horn, William M Rodgers III, Neil Ridley, and Laurie M Harrington of

Rutgers, offers glimpses of the consequences of involuntary job loss for workers and

their employers. It describes the evident patterns of worker dislocation: it affects both

blue-collar and white-collar employees, workers of all races, ages, education levels,

occupations and industries; and it happens at very short notice (usually one week or less,

and many do not receive any advance warning). The report describes the impact of job

loss on individuals and their families, the most significant being emotional distress and

financial hardship. It delineates the differences in approaches by small and large firms.

Large firms offer more assistance and better severance pay as compared with smaller

firms. It also provides guidelines for employers, employees and policymakers to deal

with the consequences of job dislocation. The experience of downsizing employees

during the last few years points to the need for employees to be prepared for a job loss at

any point of time in their career. This report also includes examples of effective practices

of a few companies to bring succour to the displaced workers.

DOWNSIZING AND EMPLOYEE ATTITUDE

In today's competitive market, many companies have found that staying in business

means downsizing. However, this everyday event in the business world is a unique

(hopefully) event for you and your employees. It is important to remember that this event

affects not only the "downsized," but also those who remain.

Why Is this Important?

Downsizing has become a common occurrence in today's business world. Because of

this, and many other factors, many employers and employees no longer believe in the

concept of lifetime employment. As a result, employers often underestimate the need to

provide support to employees, both those who are being released and the 'survivors.'

Many employers feel that the only support they can provide is expensive outplacement

services.

The decision to downsize is made for strategic and financial reasons. The expectation is

that the expense reduction will lead to a positive impact on the bottom line and will

ultimately be reflected in improved profitability and productivity. However, many

organizations neglect to factor in the psychological impact of downsizing on those who

remain. In fact, if downsizing is handled improperly, the problems it was designed to

correct may be intensified due to the impact on the loyalty and attitudes of the survivors.

Effects on Work Effort

In an attempt to determine the impact of downsizing, the effects of job insecurity and

economic need to work on employee attitudes was examined by Brockner and his

colleagues in 1992. In this study, Brockner decided to use work effort as a measure of job
attitudes. The study found that high job insecurity coupled with high need to work,

resulted in increased work effort following a layoff. High job insecurity, coupled with

low need to work resulted in no change in the level of work effort. This seems to indicate

that when there are high levels of job insecurity, as would be expected during

downsizing, employees with a high need to work will increase their work effort, while

those with a low need to work will have no change in work effort.

While this result is interesting, of more interest was the finding that variables moderated

this observed relationship. Specifically, Brockner found that the remaining employees'

perception of the fairness of the lay-off process and their attachment to the lay-off

victims colored their views. This issue of fairness has been found to be related to a

number of other work-related variables and has its roots in theories of organizational

justice.

The Justice Theory

Theories of organizational justice propose that people attend to the processes used to

determine outcomes as well as to the end result in determining "fairness." For example,

as Brockner's study reported, the remaining employees considered the way in which their

co-workers were treated during the downsizing process as well as the outcome (i.e.,

losing their jobs). From this perspective, layoff survivors can be expected to exhibit the

most negative reactions when they identify with the layoff victims, and feel the victims

have not been well compensated.

"When survivors perceived that those laid off had been dismissed with little or no

compensation, they reacted more negatively (from an organizational perspective) to the

extent that they felt some prior sense of psychological kinship with the laid-off parties."

(Brockner et al., 1987).

What Brockner's study would indicate is that employees are affected by more than just

the fact of layoffs. They are affected by how the layoffs are managed and by what is done

for the individuals in those positions. Brockner found that negative attitudinal changes

were reflected in survivors' reduced work performance and lowered commitment to the

organization. Conversely, the study showed that employee commitment can actually

increase during a layoff process when the company shows some commitment to

displaced workers.

The post-layoff setting provides organizations with a rather unique...situation in which to

express their commitment to employees; that is, if organizations show commitment to

their dismissed workers (through caretaking activities of providing severance pay and

outplacement counseling,)—even as they are in the process of becoming uncommitted to

them by laying them off--the more committed to the organization are survivors apt to be"

(Brockner et al., 1987).

Brockner's study indicates organizations can proactively affect surviving employees'

attitudes during periods of downsizing. The next section describes some steps that can be

taken to minimize the negative effects of downsizing.

Strategies for Maintaining Positive Employee Attitudes

According to survey results from a study on employee loyalty conducted by Industry

Week, there are eight factors affecting employee loyalty. They are, in descending order:
equity, security, good management, integrity, empowerment, good communications,

benefits and personal support (McKenna, 1991).

Downsizing is a stressful time for employees, and is a time in which they will question

each of the eight factors mentioned in the above quote by McKenna. By communicating

with employees, making them feel part of the organization, and working to restore

loyalty, it is possible to avoid some of the most dangerous pitfalls of downsizing.

Communicate

During downsizing, the losses due to decreased employee loyalty, morale and lost

productivity are compounded by the complexity of the layoff process. For example, the

rumor mill that develops, or intensifies, during the preliminary planning stages results in

employees spending significant amounts of time gossiping and worrying about what may

happen. Unfortunately, many managers in the position of being "in the know" are guided

by a policy in which they are to avoid talking about rumors with employees. While this

policy may seem appropriate, the associated costs, in terms of lost productivity and

employee loyalty, may be significant. Communication will help to curb the worry and re-

direct employee energies to the job at hand (Fisher, 1988).

"If you don't know something, or you do know but SEC rules or other legal constraints

have momentarily sealed your lips, come out and say that. Silence is the worst policy"

(Fisher, 1988).

The most preferred method of communication is personal appearances from upper

management; however, any communication at all will be helpful.

Ensure that communications cover the following topics:

Talk about the fact that changes are coming; employees already know, but it will increase

their trust level if they hear it from you;

• explain the purpose of the downsizing;

• explain the need for growth and profitability (which can be perceived as legitimate

reasons when presented in an appropriate manner);

• if possible, explain future plans including detailed plans for restructuring, upgraded

technology, or some processes to increase efficiency;

• communicate, whenever possible, that though employee downsizing is necessary,

each employee who is let go will receive appropriate severance pay and (if you intend

to offer it) job placement assistance;

• emphasize that laid-off employees will be treated with respect and dignity; this is

important for managing and maintaining remaining employees' moral and company

commitment.

• Most importantly, listen carefully to employee concerns and adequately address each

concern to whatever degree possible. This must be done with sincerity and no sense

of condescension, such as "calming the mob."

In addition, justification for the layoffs is extremely important, especially if times are

good and the downsizing is a part of strategic growth and profitability. Employees need

to understand that you sincerely need to make these cuts and it is not a whim or a

mistake.

Make Valuable Employees Part of a Progressive Organization

To stay or not to stay? That is the question some remaining employees ask in the

aftermath of their company's downsizing process—particularly those who have other

employment opportunities outside the company. When these employees see some top
managers leave voluntarily, they may question the long-term prospects for the company

and consider an immediate job change. This is something to watch out for, as the people

who leave under these circumstances are generally those with valuable skills and

training.

A former West Coast bank manager who left when he saw his manager leave made this

comment for an article in Fortune: "If you let people get the idea that the company is not

just cutting back but is sinking into mediocrity, morale really goes to hell" (Fisher, 1988).

This quotation highlights the importance of managing perceptions with "positive press"

and communication from upper management. Discuss the downsizing as a step towards a

more efficient and profitable business with an attractive future.

Rebuild Loyalty

Long after downsizing is completed, continue communicating with employees to re-build

security and trust. Do not allow management to assume remaining employees are merely

grateful to still have jobs. Employees need to feel they are valued, that they have a place

in the company, and that management believes that they are an important part of the

success of the organization. To emphasize this point, talk about where the company is

headed, and describe any plans for growth and prosperity.

 EMPLOYEE MORALE DURING DOWNSIZING

Why morale matters

Of course employees will feel unsettled during downsizing. However, just accepting loss

of morale as an inevitable consequence may undermine the very productivity gains

intended by the change. So employers should seek to minimise the unwanted impact of

downsizing. They also need to recognise the extent to which the manner of managing

such change affects how employees feel about the change, and their future relationship

with the company.

Downsizing can threaten employees’ sense of well being in several ways. They may see

the company as having behaved unjustly or unfairly. They obviously feel less secure.

They may also lose the belief that their contribution to the business will be rewarded in

future. These responses may easily threaten business performance. Survivors of

downsizing can become unduly risk averse and narrowly focused, and therefore less

creative and open to change.

But ‘morale’ is not a simple concept. It consists of many facets and may be manifest in

many outcomes. These outcomes include:

• whether employees stay with the organization

• whether they achieve organisational or personal goals

• whether they are able to adopt new working practices and learn new skills

• how they respond to customers

It is a useful start to identify specific outcomes of morale which the organisation wishes

to address.
The organisations involved in the study suggested three common strands to a strategy for

influencing morale. They were the ability to:

• anticipate likely employee response

• identify interventions to impact morale

• monitor and evaluate morale and the impact of actions taken.

Anticipating employee response

A number of ‘risk factors’ were identified as indicating circumstances in which

downsizing was most likely to hit morale. They included:

• failure to convince the workforce that job reductions were necessary

• apparent lack of clarity or unfairness in deciding on individual redundancies

• lack of care over redundant staff

• lack of alternative career development options if promotion becomes unlikely

• changes which leave survivors unclear of what is expected of them, or how they will

acquire the new skills they may need

• managers who are unwilling or unable to provide adequate time and support to

individuals.

Anticipating impact also means understanding that individuals in different job groups or

career stages may respond differently to downsizing. Although it is often difficult to

address interventions to particular workforce groups, they can sometimes be tailored with

varying needs in mind.

Interventions to build morale

It is difficult to target interventions with any precision to influence morale. However, the

participating organisations identified several broad kinds of action which they saw as

particularly relevant.

Communicating with employees during downsizing is vital. Conveying the reasons for

such a painful change is central. Employees need to understand the business reason for

reducing headcount, and how the change will be managed. Breaks in communication are

seen as sinister, and lead to rumours. Attempts to deny the reality of the painful aspects

of the change are seen as insensitive. So communication has to be honest in dealing with

the negative feelings of employees. It is important to communicate throughout the period

of change, not just at the beginning.

Giving direct support to the ‘survivors’ as well as the ‘victims’ of downsizing leads to

other types of intervention. They may address such areas as Stress Management and

Careers Counselling.

Organisation Development initiatives may be used to try and improve the effectiveness

of the emergent organisation. They may include work to rebuild relationships between

and within groups and departments, often through team building activities. Enhanced

access to training and work experience may be needed to help staff adjust to new job

demands.

Performance Management often needs attention to ensure that staff feel that the new

demands are realistic in terms of the reduced staff resource. They also need to be clear

what is expected of them in the new organisation. Reward strategies may also need
realigning, but there is a lack of clarity at present about the link between alternative

reward strategies and morale.

The employee’s relationship with their line manager may have a significant effect on

how well they cope with downsizing. For line managers to support staff effectively at a

time of difficult change, they in turn have to feel as though they know how to handle

queries and problems. It can help for managers to share their concerns with their peers

and discuss how to deal with staff issues. Some companies use regular forums for

managers to do this throughout the change period, and avoid them feeling isolated.

Monitoring and evaluation

Evaluating the success of attempts to influence morale during downsizing is not easy.

There is a natural tendency not to want to ask people how they are feeling when you

expect negative responses. Also we know relatively little about cause and effect in the

area of morale. Ownership of the issue may be difficult to establish — senior

management itself often being in a state of flux during periods of downsizing.

Many managers believe — or like to believe — that the general level of staff morale is

outside their control. There are indeed many limitations to controlling morale including

the variation in individual response, the impact on individuals of what they see

happening to other employees, and the variation in response over time. Separating the

impact of different interventions can be difficult, and downsizing is seldom the only

organisational change going on. In spite of the difficulties of evaluating the impact of

specific responses on morale, organisations are using a range of measures to monitor

some of the outcomes of morale. For example, staff turnover, absence from work and

performance indicators (eg customer service) are often monitored numerically.

‘Softer’ measures of attitudes and perceptions of employees are obtained through the

increasing use of employee attitude surveys. These can be used both to identify variations

in response within the workforce, and track changing perceptions over time. Managers

need to understand how employees are feeling in their part of the organisation as well as

in aggregate. Upward feedback is another way of collecting information on employee

morale and response to initiatives. It can also be used as a starting point for improving

relationships within teams in the wake of downsizing.

EMPLOYEE RETENTION STRATEGY INTO HIGH GEAR

The new age economy, with its attendant paradigm shifts in relation to the human capital,

in terms of its acquisition, utilization, development and retention, has placed a heavy

demand on today's HR professional. Today HR is expected to comprehend,

conceptualize, innovate, implement and sustain relevant strategies and contribute

effectively towards giving the corporation its winning edge. With a dynamically

changing and volatile demand-supply equation, especially against erratic attrition trends

and cutthroat competition no longer restricted to local or regional boundaries, a need for

strategizing and putting in place a robust mechanism for attracting and retaining top

talent becomes vital for the company's very survival and growth.

The first step in the process is to communicate all of your expectations and requirements

before making an offer of employment. Review the appropriate job descriptions and all

its’ requirements with your candidate. Mutual understanding of job requirements is

essential as many candidates eager for employment may overlook essential duties or

prerequisites. This is a good time for any testing you may require as well as drug testing

or background checks.

The new age workforce comprises mostly of knowledge workers, who are techno-savvy,

aware of market realities, are materially focussed and have higher propensity to switch

jobs. They prefer to experiment and explore new opportunities, are high risk takers with

higher aspirations and expectations and generally have a totally different mind-set about

job and careers.

In the current scenario, does supply really outstrip

demand? Supply of what and demand of what? What

kind of people get the pink slip and whom do the

companies ring fence? In any organization the

employees may be broadly classified into four broad

categories in terms of their performance and potential.

There are people who are woefully inadequate in both

dimensions, who we may call 'strugglers' and there are the 'under-performers', whose

performance falls below their potential. This constitutes about one fifth of the total

human capital at our disposal and these people obviously qualify to be the first

candidates for the pink slip.

The other two segments comprise of the 'solid pro's' and the 'stars' who are at the higher

end of the performance continuum. The former may be relatively lower in their potential

as compared with the latter, but contribute immensely to the company's overall

performance. We could call this as the 'talent' segment. This is the segment we do not

want to lose. We've got to protect this group from the pull of all non-retentive forces and

that needs effective retention strategies that have to be kicked into high gear.

Retention strategies have to be viewed holistically against the total systemic framework

of talent management that encompasses the 'talent', the 'corporation' and the

'environment'. Attrition and retention should be seen as reciprocal phenomena, which

have an inverse relationship with each other. Recruitment and needs for downsizing must

also be considered in conjunction. An understanding of the inherent considerations of an

individual who wishes to join a company and continue to stay, and potential

compulsions, which push him away, would help.

The company's brand image crowns the list of the priorities for the job seeker, other

important considerations being; the pay package and other pecuniary benefits, the class

and quality of people that work in the company, the challenges of the job and

attractiveness of the position & designation, the opportunities for career growth and

professional development and the kind of technology, he would be exposed to.

Dissatisfaction in any of these aspects causes severe cracks to appear in the bonding.

Anxieties and apprehensions arising from restructuring, movements, marginalization,

power politics, change of boss, change of tasks and responsibilities, mergers and

acquisitions etc. could be instrumental in taking decisions to leave. Other factors could be

to explore better prospects elsewhere, to start one's own venture, to take up higher studies

or certain private compulsions.

From the company's perspective, its brand equity, philosophy, vision, mission, culture,

values and ecology have a direct bearing on talent attraction and retention. Other

company- related attributes that impact employee retention include high demand on

performance, need for new competencies, broader, deeper and diverse job expectations,

need for re-skilling and re-deployment, career offerings and growth prospects, goal &

role clarity, policies & processes and organizational communication.

Putting in place an effective sensing mechanism to gauge comfort, contentment and

commitment levels becomes a pre-requisite to designing and implementing any

worthwhile retention strategy. Many such instruments have evolved over the years and

include employee satisfaction surveys, organization climate audits, open forums, one-to-

one sessions, exit interviews, ex-employee interviews, grape vines, informal social

interactions, case studies and a multitude of trend analyses based on hard attrition data.

Whatever may be the instrument, whether used singly or in combination, the success
depends on collection and collation of unbiased responses, cataloguing of direct and

proximate clues, their effective analysis and drawing sound inferences.

In order to appreciate the push and pull effect on the individual in the context of attrition

and retention a qualitative force field listing may be helpful. While on the one hand, a

compelling brand image, astute leadership within the organization, an enduring culture

and an environment that is trusting, caring and nurturing, credibility, transparency,

empowerment, responsiveness and creative policies on compensation, recognition etc

would exert a positive influence on the subject talent, on the other hand, compliance,

control, rigid power structure, knee-jerk changes, unexciting and drab jobs, unjust

discrimination, unrealistic deadlines, lure of lucre and poaching would be debilitating.

The retention strategies should be designed

such that the retentive forces are

maximized and the debilitating forces

minimized. Retention strategies should not

be orchestrated in isolation but must form

part of the overall strategies for

strengthening the pull on the talent, which

in fact include sourcing, staffing and development strategies in addition. A robust

sourcing strategy is crucial to the exercise since the type of people one selects should not

only fit into the job in terms of skill set but should match the company culture in terms of

attitude, personality and commitment. An effective selection process ensures the entry of

the right kind of people into the organization, with the desired loyalty and sense of

belonging that goes a long way in restricting attrition in the long run.
The first step for individual companies is to develop detailed profiles of the kind of

people they are after by analyzing the job profiles, career paths, background and

experience of their current high performers. Once we know what we are looking for,

there are a number of routes we can take. Some get what they need largely through

acquisitions, which is fine if acquisitions are an intrinsic part of corporate strategy. Some

"outsource" by picking up people they believe are better trained elsewhere. Those who

can attract the best college graduates and excel at early development, "insource", instead.

While in the first case one gets ready -made talent and benefits from their instant

utilization, in the latter instance, one can shape the raw talent in the mould of one's

unique culture and work ethos. A judicious mix of campus hires and lateral hires often

works. Other sources could be from project trainees and interns, from business associates

on contract or even through retainership of free-lancers.

Some strategies will be more effective for some companies than others. For example,

companies having a slower growth rate, have fewer opportunities to develop people

through rotation, so they will tend to get talent in from the outside. But while each

company will gravitate naturally toward a dominant sourcing method, no company

should rely exclusively on one strategy. Talent winners recruit continuously rather than

strictly on as required basis just to fill up vacancies. One should continuously scan the

environment and bring in the talent whenever one finds it. Talent scouting in fact could

be a constant sourcing activity. Although the dominant strategy could be to spot talent

early and develop it within, regular lateral hires is a good way to accommodate rapid

growth especially at middle or senior level, refresh the gene pool and calibrate the

internal talent standard. Fitting a talent to the job is traditional but there may be a need to

design a job around the talent as the nucleus. Similarly it is a conventional approach to
view manpower needs as a derivative of the business needs. But when it comes to rare

talent, it may be worthwhile to build and articulate one' business around the talent at

one's disposal.

Aggressive development strategies complement the retention strategies in a big way.

Providing opportunities to the employee for both professional and career growth and

giving the due priority to this important activity makes the company's position in the

market for talent attractive and compelling. Well - articulated strategies in the context of

sourcing and development augment the retention strategies in crafting a powerful

employee value proposition that remains central to the problem of attraction and

retention of top talent.

At the heart of the matter remains a basic question, ' Why would a talented person want

to work here?' Organizations with superior employee value propositions have a

compelling answer to this question. A McKinsey study (1998) that studied 77 companies

from a variety of industries to investigate talent problems, suggests that 'creating a

winning value proposition means tailoring a company's 'brand' and 'products'- the jobs it

has to offer - to appeal to the specific people it wants to find and keep. It also means

paying what it takes to attract and retain strong performers - the 'price'. Looking at the

retention problems against the perspective of enduring employee value propositions

about these three dimensions, namely brand, products and price helps to clarify our

focus.
 We are clear about the talent segment that we wish to

attract and retain, we would have to ensure that our

brand is tailored to that segment. No brand can be

transformed over night, since it is a continuous,

evolutionary and slow process. But there may be a

need for some companies that have deep rooted beliefs,

mind-sets and culture, which have not kept pace with

time, to review their traditional image and perhaps shed it off in preference to a

contemporary, more vibrant disposition. The objective should be to make it a compelling

place for employees, customers and investors. This is intrinsically linked with its

business and the products it offers: the jobs. With 'great jobs', the brand would

automatically take care of itself because the top talents joining the company for the great

jobs, would reinforce the values that the company is seeking to build. To the brand

dimension, that qualifies the company as a 'great company' several components

contribute. In order of priority these are values and culture, quality of management,

exciting challenges, strong performance, industry leadership, talent of existing people,

development opportunities, inspiring mission, enjoyable work atmosphere and job

security.

The attributes that were identified in the context of 'product' - 'great jobs' include freedom

and autonomy, exciting job challenge, career advancement and growth and fit with the

boss. A rule of thumb: ' A great job is that which consists of at least 80 % of things that

an employee would love doing.' As for the 'price', money may not be the prime

determinant but it does matter. Money alone cannot make a great employee value

proposition, but it can break one. Under the dimension of compensation and lifestyle, the
determinants identified include differentiated compensation, high total pay packages,

geographic location, respect for lifestyle and acceptable pace and stress.

The ability to define, develop and deliver a winning employee value proposition should

be at the core of all retention strategies particularly for large companies facing challenges

from a multitude of smaller companies as employers. The lure of the latter in terms of

excitement, flexibility, impact ( a big fish in a small pond ), reward and even equity

ownership has to be countered with a stronger proposition bolstered by the former's

magnitude of impact (big fish in a big pool), depth (vast resources to take risks and to

support big decisions ) and variety ( large spectrum of expertise and experience to be

shared ).

All retention strategies must be built around a compelling, distinctive and exciting

employee value proposition. For the sake of clarity we may envisage these strategies in

three distinct yet overlapping domains: cultural, transformational and transactional. First

of all let us dwell upon the cultural aspects as relevant to the issues under consideration.

Culture is somewhat like "the operating system" of the organization. It drives the

organization and its actions. It guides how employees think, act and feel. It is dynamic

and fluid, and it is never static. Some aspects of culture are visible and tangible and

others are intangible and unconscious. Some of the most visible expressions include the

architecture and decor, the clothing people wear, the organizational processes and

structures, and the rituals, symbols and celebrations. Other concrete manifestation of

culture are found in commonly used language and jargon, logos, brochures, company

slogans, as well as status symbols such as cars, window offices, titles, and of course

value statements and priorities. An outsider can often spot these artifacts easily upon
entering an organization. For insiders, however, these artifacts have often become part of

the background. Essentially organizational culture is seen in two broad dimensions. The

hard dimensions relate to the functional, technical and control aspects, while the soft

aspects deal with inspiration, emotion, energy, enthusiasm, collaboration and

camaraderie, openness, sense of belonging, etc. A culture that is open, trusting, nurturing,

authentic as well as empowering tends to attract and retain top talent.

Transformational strategies that impact retention in good measure encompass mentoring,

coaching, counseling, competency & performance development programmes, retraining,

re-skilling, redeployment & job rotation, challenging assignments, job enrichment and

above all promotion of a knowledge building and knowledge sharing culture.

Innovative, dynamic and competitive compensation strategies, various welfare initiatives,

social & community activities, workload balancing, effective work-life integration,

reward & recognition, establishment of good communication & feedback network, etc.

form the transactional strategies. Anti poaching measures may also find their place in this

category. Although technology based defences against an aggressive e-recruiter like

various e-security mechanisms work for some time, the real potent measures are inherent

in enhanced job satisfaction and strengthened relationships within the organization.

If one examines the entire life cycle of an employee within an organization, starting from

recruitment till superannuation through phases of induction, settling down, contribution,

growth, maturity and rise to top levels, the retention strategies have to be selectively and

appropriately applied to the phase to which the employee belongs. While

transformational strategies like mentoring, coaching, training, etc. are eminently suitable

for people in induction, settling down and growth phases, fulfilling the higher order
needs, ego gratification, etc. should be predominantly successful for senior positions.

Cultural strategies, however, are over pervasive across all phases.

In order to be able to orchestrate and implement effective retention strategies, the first

step should be to understand the scope of the retention problem that is unique to one's

organization. The target group, which is crucial to the company's operations and success,

should be identified and the strategies are directed appropriately. It is a paradox that the

companies which invest heavily in recruitment and development and make a good job at

that, are prone to more risk of poaching. A sound sensing and tracking system to assess

the volume and causes of attrition by performance level could be useful. The ability to

identify good performers, who are prone to leave for any job or management, related

issues and timely intervention to address these issues, could be effective.

Creating and delivering a great employee value proposition is clearly the best way to

retain the people. This would encompass building and sustaining a compelling brand

image with an appealing culture and inspiring values, tailored to the talent segment that

one seeks to attract and retain, offering great jobs and career opportunities, building an

effective learning framework, investing in work place infrastructure, moving on poor

performers, instituting effective reward and recognition programmes, putting in place

innovative compensation schemes. But most importantly, when the organization is

successfully able to convey the message that it cares for employees, retention works best.
STEPS TO EMPLOYEE RETENTION

Employee retention is now a very crucial issue, because in the 21st century, the only

sustainable source of competitive advantage for any company is “Human Resource”. To

maintain a stable workforce, employers must deliberately engage in retention activities.

These efforts range from offering attractive compensation packages to involving

employees in every sphere of the functioning of the organization. Today’s employers

prefer to have a stable, committed, flexible always heavy competition among the

employers to attract the best talents to enhance their competitive positions in the market.

Becoming an employer of choice and using employer branding attract and retain the best

talents available in the market.

There exists a keen interest in the concept of company or workplace ‘culture’ and its

connection with an employee’s sense of ‘commitment’ to his or her employer. Authors in

the HR field speak increasingly of the need to ensure retention by nurturing ‘affective

commitment,’ or, simply put, an employee’s desire to remain a member of a particular

organization for motives beyond compensation or obligation .

A ‘culture of commitment’ is more than just the sum of particular HR policies or

retention initiatives. It is related rather to overall organizational culture, in other words,

not just particular programs but rather how such programs fall into a company’s overall

values, how it communicates with its employees about those values, and how employees

perceive their own role within the company and the value that the company attaches to

their individual contribution.

Because workplace culture depends a lot on how individual perceptions and feelings

hold together, it can of course be difficult to say exactly what decisively makes up a
particular company’s culture. Branham (2001) suggests that commitment-oriented

corporate cultures depend on a number of objective and subjective elements. Cultures of

commitment, he writes:

• View employees as partners.

• Recognize the human needs of all employees.

• Invest in people as the primary source of competitive advantage.

• Communicate clear corporate mission, vision, strategy, goals, and objectives.

• Commit to long-term strategy and the people needed to carry it out.

• Reward system and management styles to support the mission and strategy.

• Focus on “managing the performance contract,” not controlling the people.

• Put a premium on employee involvement in new ideas and innovation.

• Focus on results, not on who gets credit.

• Trust employees enough to delegate.

• Tolerate “intelligent error” and experimentation.

Nevertheless, the literature strongly supports the notion that people stay with their

employers if the culture of commitment is strong. Beyond this, however, it is also clear

that people are more likely to stay if the perceived workplace culture—however this is

communicated—is a good “fit” with the individual’s own interests, orientation and

attitudes. Indeed, while compensation, personal and professional development

opportunities, and other incentives are important in attracting people and keeping them

happy, their decision to stay with the company depends vitally on how well they fit in to

the company’s way of doing business, how it treats employees, what it expects of them,

and how people relate to one another in the workplace.

Howell, M.A., Brumback, G.B., Newman, H.S., and Rizzo, J.R., 1968,U.S. Public

Health Service, Bethesda, Maryland. This study is concerned with the relationship

between dimension of work satisfaction and behavioral indices of retention . Contention

that the satisfier-dissatisfier dichotomy is supported by the fact that motivator factors are

more often responded to as satisfiers than dissatisfier and hygiene factors more often

responded to as dissatisfiers than satisfiers does not necessarily imply the

unidimentionality of the motivator and hygiene factors like workplace and workforce.

A Changing Work Force and Workplace

Fundamental changes are taking place in the work force and the workplace that promise

to radically alter the way companies relate to their employees. Hiring and retaining good

employees have become the chief concerns of nearly every company in every industry.

Companies that understand what their employees want and need in the workplace and

make a strategic decision to proactively fulfill those needs will become the dominant

players in their respective markets.

The fierce competition for qualified workers results from a number of workplace trends,

including:

• A robust economy

• Shift in how people view their careers

• Changes in the unspoken "contract" between employer and employee

• Corporate cocooning

• A new generation of workers

• Baby boomers striking out on their own after hitting corporate ceilings

• Changes in social mores

• Life balance

Concurrent with these trends, the emerging work force is developing very different

attitudes about their role the workplace. Today's employees place a high priority on the

following:

• Family orientation

• Sense of community

• Quality of life issues

• Volunteerism

• Autonomy

• Flexibility and nonconformity

To hold onto your people, you have to work counter to prevailing trends causing the job

churning. Smart employers make it a strategic initiative to understand what their people

want and need -- then give it to them.

Forrest, David J., December 1999, Keep Employees, is a consultant in leadership

coaching, management development and employee retention in Fort Collins, Colorado.

Suggest one of the foundation stones of companies which attract, retain and motivate

high performing employee is a positive and valuing attitude toward them. In this era of
monster mergers and mega corporations, it is all to easy for top management to see

employees as expendable resources to be hired and fired at will according to the current

short-term business plan. So the employer attitude is the foundation of employee

retention.

Herman, Roger E., September 2003, Floral management, is a business futurist and an

Hr and management consultant based in Greensboro. Suggests “You can improve your

employee retention by being more sensitive to why people leave. Ongoing research

reveals the following five principal reasons:

 It doesn’t feel good around here.

 I don’t get the support I need to get my job done.

 There’s no opportunity for advancement.

 Compensation is the last reason most people leave.

FIRST STEP

The first step in the process is to communicate all of your expectations and requirements

before making an offer of employment. Review the appropriate job descriptions and all

its’ requirements with your candidate. Mutual understanding of job requirements is

essential as many candidates eager for employment may overlook essential duties or

prerequisites. This is a good time for any testing you may require as well as drug testing

or background checks.

Carefully check the references of prospective employees. Remember that verbal

recommendations should be followed up with letters. Wait until these letters are received

and reviewed before making that final offer of employment. It is a common

misconception among job seekers that references are not routinely checked and past

practice is the root of this assumption. In the past, small employers and indeed many

larger ones did not follow up on all references provided by applicants. In some cases,

only cursory phone calls were made and the result was that unqualified or unsuitable

applicants were hired. This only led to more employee turnover when deficiencies were

discovered. To avoid this follow phone calls with written inquires to all references.

The next step is to communicate all relevant personnel policies to new hires in the form

of some type of employee manual. Vacation and sick time, dress codes, confidentiality

agreements, and disciplinary policies are just some of the topics that should be addressed.

If you don’t have an employee manual, make a checklist of all important issues and get

written documentation that these matters have been discussed with prospective

employees. Documentation can be essential if there is dispute about personnel matters

that lead to subsequent termination.

Once your candidate becomes an employee, the pressure on management to keep them

mounts. Many factors affect employee satisfaction and managers need to do all they can

to maintain a level of morale and development strong enough to sustain employee

satisfaction. This does not mean sacrificing values, principles, or policies. It does mean

having a sound Human Resource Policy, training and development opportunities, and a

positive work environment.

For many companies, HR policies and training opportunities are formalized parts of their

business. Smaller companies need to focus on scaled down versions to cover their

smaller workforces. Many times, an employee handbook might be a collection of memos

and training opportunities are less frequent. But in the nature of a small business these
things might not impact upon employee understanding and satisfaction. The one thing

that all employers need to focus on is maintaining a positive work environment.

Managers need to keep a keen ear to the ground when it comes to employee satisfaction

and morale. People rarely suffer in silence and trouble areas usually surface quickly.

Managers need to address them just as quickly. Don’t be afraid to share the pressures and

concerns with your employees. Encourage them to share their pressures and concerns

with you. The companies with open lines of communication are much less likely to lose

employees due to dissatisfaction. Keeping the office door open is the key to successful

employee relations and companies that make it a priority reap the rewards. Many

companies maintain employee assistance programs as part of their benefit packages and

these prove invaluable in preventing turnover due to employee’s personal problems. But

smaller companies can enjoy comparable benefit by having a sensitive and caring

manager or senior employee to provide an ear to troubled employees.

Employee turnover is costly and disabling to every company but employers have more

control over turnover than they may think. True, in a competitive marketplace, some

turnover is inevitable as career paths change and better opportunities arise. But an ethical

and invigorating workplace holds a special attraction to many workers. Most surveys

show that money is not the first consideration employees make when choosing to stay in

a job. More intrinsic values such as appreciation, ethics, and environment are high on the

list of assets that every company can offer.

'RETENTION'

Each employee’s background, motivation, and goals (both personal and professional) are

different. Yet 95% of the time, employers and mangers focus on the simplest common

denominator for praise: money. By finding out what really motivates each individual,

managers can tailor rewards to employee’s motivations. The surprising thing is that

many times these tailored rewards cost no more than traditional monetary raises, but are

appreciated much more.

Some good examples are:

• Additional time off to spend time with family or vacations.

• Flexible working hours to accommodate personal needs.

• Opportunities to participate in work focus groups or committees.

• Public or company recognition during a staff meeting.

• Industry or job specific training.

• Spot rewards (such as cash or movie tickets) for immediate feedback.

With unemployment rates at an all-time low, the growing challenge for employers

continues to be retaining key employees. The key is knowing each employee well

enough to ensure that motivational factors are taken into consideration. By focusing on

each individual employee, not just traditional yearly compensation increases, mangers

and organizations can build lasting employee appreciation and loyalty.

 ORGANIZATIONAL CLIMATE ALSO AFFECTS EMPLOYEE
RETENTION RATE AND POSITIVELY AFFECTS EMPLOYEE
DOWNSIZING RATE

Organizational Climate

Litwin and Stringer define organizational climate as 'a set of measurable properties of

the work environment, perceived directly or indirectly by people who live and work in

this environment and assumed to influence their motivation and behaviour'.

Traditionally, organizational climate alms to capture a snapshot of an organization at

one point in time. Organizational climate research has had a long and active history,

with much of its foundation drawn from psychology. Because of space constraints and

the availability of excellent articles which review the extensive history of the

organizational climate literature, we will only briefly review the organizational climate

literature here. Organizational climate is largely based on Lewinian field theory, which

is a result of Lewin's work on experimentally-created social climates This work was

advanced by several early key studies including Litwin and Stringer and Tagiuri and

Litwin. Litwi n and Stringer investigated how organizational climate affects individual

motivation. They also suggested that organizational climate was comprised of nine

dimensions: structure, responsibility, reward, risk, warmth, support, standards, conflict,

and identity. Taguiri and Litwin's book was comprised of a series of essays that treated

climate in ways ranging from a subjective interpretation of organizational

characteristics to an objective set of organizational characteristics. Other early studies

were aimed at identifying the dimensions comprising organizational climate

After the 1960s and early 1970s, the focus of the organizational climate field became

more clearly defined. More recently, organizational climate researchers have begun to

consider how organizational climates develop. Three schools of thought have

developed: the subjectivist, objectivist, and interactionalist perspectives. Probably the

most troubling issue that the organizational climate literature continues to face is

defining the appropriate dimensions that comprise organizational climate.

Organizational climate is a fairly general term which refers to a class of dimensions

which can be critiqued for being too diverse . In addition, the multidimensional nature

of organizational climate makes it more difficult to define sharp borders. Organizational

climate scholars have responded by making empirical and theoretical arguments to

distinguish organizational climate from various other const ructs, such as structure and

individual satisfaction. While these and other efforts have been helpful, some fuzziness

around the borders and differentiation of the organizational climate construct still

remains.

Research on organizational climate has continued more recently, including Joyce and

Slocum's study of person and organizational fit, Joyce and Slocum's investigation of the

extent to which organization members agree about their organizational climate, Glick's

discussion of the difficulties of measuring organizational climate, Denison's

investigation of the relationship between organizational climate and performance, and

Koyes and DeCotis's work on measuring organizational climate. Even more recently,

Denison has investigated the difference between organizational culture and

organizational climate, and Griffin and Mathieu have looked at how perceptions of

organizational climate vary with the hierarchical level in an organization. Anderson and
West contributed to the literature by exploring the link between organizational climate

and innovation.

Measuring Organizational Climate

At its most basic level, organizational climate refers to employee perceptions of their

work environment. Generally, these perceptions are descriptively based rather than value

based. For example, the phrase, "I have more work to do than I can possibly finish" is a

description of a person’s workload, while the phrase "I like my job" is a positive

evaluation of one’s job. Thus, organizational climate is more than simply a summary of

employee likes and dislikes.

The assessment of organizational climate typically occurs via an off-the-shelf or

customized survey containing questions about he work environment. Although

administration procedures used when conducting a survey can vary, ideally employees

are asked to report to a designated work site at a scheduled time to complete the survey,

and employee participation is voluntary.

Selecting a Survey

Once a decision is made to conduct an organizational survey, it can be difficult to

identify the "right" survey to use. Although not a comprehensive list, the following

factors may be helpful in reducing the number of survey choices:

Determine the scope of information included in the survey. As might be imagined, there

are a large number of organizational climate areas that exist. Recent research has

identified more than 460 different types of work environment characteristics that have

been measured. Many of these characteristics can be classified into the following major
areas: job, role, leader, organization and work group. In many companies there are

particular areas where employee feedback would be useful. For example, a company

concerned about the impact of recent managerial downsizing may want to ensure that

leadership/supervisory components are included in the survey.

Make sure the number of climate areas included is kept to a manageable level. Not only

will including too many areas on the survey increase the time and effort needed to

administer the survey, but it also can make the interpretation process more difficult. On a

related issue, many users of organizational surveys find it useful to add a few customized

items to the survey. Although adding items does not always add to the scientific value of

a survey, it can go a long way in generating support from the company’s management

team.

It can be extremely helpful to choose a survey that offers some flexibility in its

administration capabilities.

For example, some companies may require the ability to administer the assessment using

a paper-and-pencil format, while others may prefer an intranet format. Factors such as

employee demographics can be important, also. Some companies may require both an

English and Spanish version of the survey to accommodate all of their employees.

Finally, identify some general pieces of information you would like to see in a report

once the survey responses have been analyzed. For example, some companies may have

an interest in only reviewing the average levels of item responses within the company,

while others may want to see how the company scored compared to other companies

throughout the nation.

In addition, some companies may want to have results broken down department-by-

department or item-by-item while others may want one set of analyses based on the

entire set of employee responses. In any event, the publisher/director of an organizational

survey should assist a company in selecting an instrument that will meet their specific

reporting needs.

Benefits

Companies that conduct organizational climate surveys may experience one or more of

the following benefits:

• Employee involvement- By administering an organizational survey, employees are

given an opportunity to be involved in the company at a different level than is

typically defined in their job descriptions. Research has shown that employees who

are more involved in the company also may be more satisfied with their job, miss

fewer days of work, stay with a company longer, and perform better on the job.

• Positive work outcomes- In the last 30 years, a significant amount of evidence has

been accumulated documenting the importance of the work environment in relation to

organizational performance. In general, research has shown that factors in the work

environment are related to outcomes such as employee motivation, job satisfaction,

intentions to quit, job performance and even organizational productivity. In addition,

an emerging area of research has indicated that organizational climate can influence

customer perceptions of the quality of goods or services delivered by a company.

• Communication forum- In many companies it can be very difficult to communicate

with the majority of employees. Recent trends such as organizational restructuring

 and/or merging of companies has resulted in "flat" organizational responsibility

charts, which increases the number of employees for which each manager is

accountable. As a result, some managers only have limited amounts of time to talk to

employees about day-to-day activities. Conversations regarding an employee’s work

environment can fall to the wayside, and in some instances, never take place.

Organizational surveys that occur on a scheduled basis (e.g., annually, biannually,

etc.) can be a more efficient way for managers to gather important information.

• Industry comparisons- Organizations often look to other companies when

determining organizational policies and procedures. It is quite common for

companies to "explore the market" or conduct benchmark studies when considering

issues such as new product development, salary or employee benefit policies,

marketing strategies, etc. A common question is "How do we compare to others?"

One advantage of conducting an organizational survey is that it can provide an

opportunity to compare the company’s work environment to that of other companies.

Many surveys offer a national normative database that can be used to facilitate

comparisons across a variety of conditions and industries.

• Proactive management- Administering organizational climate surveys allows

managers to be much more proactive in managing their employees and work

environments. When used on a scheduled basis, organizational surveys can help

pinpoint problem areas within the work environment before they grow into a crisis

needing immediate attention. Problems that require a reactive posture interrupt the

normal workflow, and typically cause delays in providing products or services to

customers.
 TIPS FOR CREATING AN EFFECTIVE ORGANIZATIONAL
CLIMATE FOR MINIMUM EMPLOYEE DOWN SIZING

• Listen to the entire organization with ease.

• Collect perceptions in real-time.

• Reduce organizational bias.

• Validate the questions and thus improve the results.

• Facilitate candid and open feedback from employees who respond anonymously.

• Identifying areas of inefficiency or performance gaps.

• Identify root causes for poor productivity (such as poor communication or poor

process efficiency).

• Reduce transition time during changes in the organization (such as reorganization,

relocation, a change in ownership, new products/services, or rapid growth).

• Inform leaders with the information needed to make the best decisions.

• Give employees an organized voice to assist leaders in taking actions.

• Gain a fresh perspective of the organization.

• Facilitate, track and execute informed action steps in one system.

• Increase productivity.
 WHAT DO YOU MEAN BY ORGANIZATION

1.

(i) The act or process of organizing.

(ii) The state or manner of being organized: a high degree of organization.

2. Something that has been organized or made into an ordered whole.

3. Something made up of elements with varied functions that contribute to the whole

and to collective functions; an organism.

4. A group of persons organized for a particular purpose; an association: a

benevolent organization

(i) A structure through which individuals cooperate systematically to conduct

business.

(ii) The administrative personnel of such a structure.

An organization is a formal group of people with one or more shared goals.

According to management science, most human organizations fall roughly into five

types:

• Pyramids or hierarchies

• Committees or juries

• Matrix organizations

• Ecologies

• Composite organizations
Pyramids or Hierarchies

A hierarchy exemplifies an arrangement with a leader who leads leaders. This is the

classic bureaucracy. Usually one "rises" by seniority, or by acquiring authority over more

people.

Pyramids are an effective way to achieve repeatable results because they have the

shortest path from the standard-setter to the worker.

They suffer from communication and supervisory faults because the organization is only

as good as its weakest link. They lack creativity because they have poor communications.

Committees or Juries

These consist of a group of peers who decide as a group, perhaps by voting. The

difference between a jury and a committee is that the members of the committee are

usually assigned to perform or lead further actions after the group comes to a decision,

whereas members of a jury come to a decision. In common law countries legal juries

render decisions of guilt, liability and quantify damages, juries are also used in athletic

contests, book awards and similar activities. Sometimes a selection committee functions

like a jury. In the middle ages juries in continental Europe were used to determine the

law according to consensus amongst local notables.

Committees are often the most reliable way to make decisions. Condorcet's jury theorem

proved that if the average member votes better than a roll of dice, then adding more

members increases the number of majorities that can come to a correct vote (however

correctness is defined). The problem is that if the average member is worse than a roll of

dice, the committee's decisions grow worse, not better! Staffing is crucial.
Staff Organization or Cross-functional Team

A staff helps an expert get all his work done. To this end, a "chief of staff" decides

whether an assignment is routine or not. If it's routine, he assigns it to a staff member,

who is a sort of junior expert. The chief of staff schedules the routine problems, and

checks that they are completed.

If a problem is not routine, the chief of staff notices. He passes it to the expert, who

solves the problem, and educates the staff -- converting the problem into a routine

problem.

Staffs make decisions quickly, and carry out assignments efficiently, though less reliably

than committees or matrices. For this reason businesses often prefer to use this method.

Staffs break down easily, usually from bad selection of people

Matrix Organization

On the face of it, this is the perfect organisation. One hierarchy is "functional" and

assures that each type of expert in the organization is well trained, and measured by a

boss who is super-expert in the same field. The other direction is "executive" and tries to

get projects completed using the experts.

Matrices are the only known organizations that can consistently create complex technical

products like airplanes and engines.

The problem is that going through channels takes too long. Getting approval to actually

do anything often needs the approval of each type of expert, and both of each expert's
bosses! The trick is to speed approvals: make approval everybody's number one job, and

simplify sign-offs.

Ecologies

This organization has intense competition. Bad parts of the organization starve. Good

ones get more work. Everybody is paid for what they actually do, and runs a tiny

business that has to show a profit, or they get canned. For example: upper managers

invest, and if they make bad investments, there's no profit. Engineers rent their designs

out to manufacturing. Facilities people rent space, etc.

This is a really effective organization. But it's wasteful because all those dead pieces of

organization have valuable training, and are very hard to recycle. They're bitter, and they

will stop taking it after a while. Reorganization follows.

This may reflect a rather one-sided view of what goes on in ecology. It is also the case

that a natural ecosystem has a natural border - ecoregions do not in general compete with

one another in any way, but are very autonomous.

Composite Organizations

These try to use each of the above types of organization in the right places. Very

occasionally, a true organizational genius can make this work, for a while.

Don't bet on it in the long term. Success outgrows the ability of the genius. There just get

to be too many special cases.

"Chaordic" Organizations

An emerging model of organizing human endeavors, based on a blending of chaos and

order (hence "chaordic"), comes out of the work of Dee Hock and the creation of the

VISA financial network. Blending democracy, complex system, consensus decision

making, co-operation and competition, the chaordic approach attempts to encourage

organizations to evolve from the increasingly nonviable hierarchical, command-and-

control models.

Climate

The prevailing psychological state

Organizational climate

Organizational climate refers to a set of measurable properties of the work environment,

that are perceived by the people who live and work in it, and that influence their

motivation and behavior. Climate characteristics that have been determined to

significantly impact a company’s bottom line are: flexibility, responsibility, standards,

rewards, clarity and team commitment.

 CONTENTS OF ORGANIZATIONAL CLIMATE

1. Responsibility: the extent to which individuals feel accountable for their own job

performance.

Job clarity: the extent to which individuals understand what the organization expects

of them

Job commitment: the extent to which individuals are willing to do whatever is

necessary to get the job done.

2. Assimilation: The extent to which individuals feel the organization treats them as

integral parts of the organization.

Organizational clarity: the extent to which individuals understand the organization

and how they fit into it

Organizational commitment: the extent to which individuals feel loyal to the

organization

3. Efficiency: the extent to which the organization accomplishes work in an orderly and

timely manner

Practices: the extent to which systems and procedures facilitate effective job

performance

Operational support: the extent to which the organization accomplishes work

without unnecessary effort and distractions.

4. Excellence: the extent to which individuals are committed to producing quality work

Standards: the extent to which the organization clearly defines and emphasizes

superior job performance

Challenge: the extent to which individuals have to expand their abilities to obtain

work objectives
5. Innovation: the extent to which the organization is committed to maintaining state-

of-the are technology and expertise.

Change management: the extent to which changes within the organization are

beneficial and occur effectively.

Progress: the extent to which the introduction of new ideas or equipment improves

productivity.

6. Recognition: the extent to which individuals feel that they make important

contributions that the organization values

Reinforcement: the extent to which the organization appropriately rewards

exemplary job performance

Esteem: the extent to which individuals feel successful in their jobs

Team Spirit: the extent to which individuals feel that the people with whom they

work support them personally and professionally

Cooperation: the extent to which individuals work with and help one another to

achieve common goals.

Interpersonal relationships: the extent to which mutual good feeling exist between

individuals who work together.

 ORGANIZATIONAL VITAL SIGNS-A LEADING
INDICATOR OF SATISFACTION MEASURING OF
EMPLOYEES

Organizational Vital Signs:

• identifies the readiness for, commitment for, and skills for change;

• identifies the values, emotional competencies, and behaviors needed for success;

• alerts managers to needs and opportunities for training, communication, and

development;

• helps build strategies for sustainable growth;

• is scalable, measurable, and practical.

ORGANIZATIONAL CLIMATE-EMPLOYEE SATISFACTION

SURVEY

The Organizational Climate Assessment is a powerful instrument, especially when

provided organization-wide with specific departmental demographic separation and

analysis. Each category has been designed to assess one of the key categories, which

affect employee performance. This assessment should be administered anonymously

company wide, broken out by departments of 6 or more people to protect the identities of

respondents. Every precaution should be taken to insure confidentiality in order that

respondents will feel comfortable sharing their true opinions and perspectives

The objective of performing an employee climate assessment is to identify the key areas

which are hindering production, reducing effectiveness and which might generate

unexpected costs in the near future. The idea and approach is for the organization not to

simply perform an academic exercise, simply because they ‘do it at this time every year’,

but to critically examine themselves to see where the company and it’s employees might

be finely tuned to generate higher levels of performance. Once identified, opportunities

to strengthen existing approaches, which are working well, as well as select appropriate

interventions for addressing the weakest areas, should be aggressively pursued for the

maximum benefit of everyone.

This assessment is designed with the following assumptions in mind:

Fundamental care of the employee as an asset

Organizations are successful because of the quality of work employees perform. When

employees are cared for, and the right environment is created where there are no barriers

to performance, their true value to the organization can be fully realized.

Respect for the dignity of the employee and the sensitivities of human

beings

Humans have fundamental needs for safety and security, affiliation and acceptance,

involvement as well as self-actualization. The extent to which these and other human

needs are fulfilled lead to higher levels of commitment, initiative and performance.

Organizations, who include an emphasis on fulfilling the needs of their employees to

some extent, will enjoy a more productive and stable workforce.

Full understanding of the realities of business

This assessment is written with full realization of the realities of business, and not an

unrealistic utopian view of an idealized work environment. The factors emphasized and

measured in this assessment are the important levers to optimizing employee workplace

performance, not just creating an environment where everyone feels better.

Embracing optimization and improvement

An irrefutable trend in business today, continuous improvement and increasing levels of

efficiency are a way of life, and these factors are given appropriate emphasis in this

assessment because they represent an ever present dynamic with which every employee

must deal.
Keys to motivation and commitment

Rather than only identifying potential problem areas to be avoided, this assessment

focuses on areas where human behavior can be leveraged more positively to create

employees with higher levels of motivation and commitment.

 EMPLOYEE DOWN SIZING & EMPLOYEE

MOTIVATION ARE CLOSELY KNITTED

A manager’s job is to influence the people in the organization to accomplish the goals

and objectives with optimal efficiency and effectiveness. One of the most critical and

vexing concerns of management and supervisory personnel in any organization

understands of motivation and its role in performance. Motivation is the desire within an

individual that stimulates him or her to action. Higher the motivation, higher the moral

of productive work force.

For motivation, we have to attempt to identify the factors that influence behavior,

particularly the ways in which people respond to the action of those around them and to

other stimuli in their environment. Today, we no longer have a socially simple world.

The powerful forces are making it more complex all the times. People are products of

experiences they have never relinquished. Personal history will always make its claim

even though it operates silently and usually beyond the individual’s awareness.

One of the earliest approaches to motivation was Frederick Taylor Theory that the

employer essentially bought or exchanged the purchasing power of his wage dollars for

the worker’s time, interest, effort and contribution. This was the first widely accepted

motivation theory. At that time, it seemed to accurately describe workers responses to

existing environments. As time passes, it become clear that monitory rewards, including

the plethora of incentive wage and bonus plans, did not by themselves buy interest,

commitment and motivation. In post World War II ear, new motivation theories evolved

by behavioral sciences in response to the changing environment of time. Especially

noteworthy were the conceptual contributions of Douglas Mc Gregor, Abraham Maslow,

Herzbeg, David Mc clelland, Johan Morse and Jay Lorsch.

MOTIVATION – HYGINE THEORY

The motivation – TWO FACTOR THEORY – proposed by Herzberg postulates that:

The factors causing job satisfaction (and presumably motivation) were different from that

causing job dissatisfaction. He developed the motivation-Hygiene theory to explain

these results. He called the satisfiers motivators and the dissatisfied hygiene factors,

using the term “hygiene” in the sense that they are considered maintenance factors that

are necessary to avoid dissatisfaction but that by themselves do not provide satisfaction.

Herzberg reasoned that because the factors causing satisfaction are different from those

causing dissatisfaction, the two feelings cannot simply be treated as opposites of one

another.

Therefore, managers who seek to eliminate factors that create job dissatisfaction can

bring about peace but not necessary motivation.

MOTIVATORS HYGIENE FACTORS

• Achievement Company Policy & Administration.

• Recognition, Leadership.

• International relation, welfare & salary.

• Challenge, growth, Working condition status & security.

• Responsibility and accomplishment.

• Motivation through job rotation and security.

 • Satisfaction by communication.

• Appraisal & feedback.

When hygiene factors are adequate, people will not be dissatisfied, but neither will they

be satisfied.

To the question “HOW do you motivate employees? “ Hertzberg has but one answer “the

only way to motive the capable employees is to give him challenging work for which he

can assume responsibility” (and thus drive at least partial satisfaction of his higher need).

Hertzberg’s concept can be viewed as special application of Maslow in a highly complex

industrialized society, in organization having tasks and people more appropriate to Mc

Gregor’s Theory ‘Y’. In spite of limitations, Hertzberg’s contribution to study of

motivation cannot be ignored. Hertzberg’s theory is widely real and his recommendations

followed by many managers.

 EMPLOYEE DOWN-SIZING & EMPLOYEE

ENGAGEMENT

EMPLOYEES ENGAGEMENT

In today’s technologically advanced World, employees are aware of what services should

they deliver for a particular return from their employer. On the other side employer has

no choice but to satisfy his employees by identifying and fulfilling his wants, the

employer has to use the motivation theories as these provide a good idea of how and in

what way they will get motivated and satisfied. The above logic applies to every industry

whether it is politics, economics, technology or society. For instance, in a society the

same person who is an employee plays a role of a member of the family. His duties are to

control his children so that they do not get into a bad company and they should

concentrate on their studies. Now the same question comes How to motivate them to

study? Here the employee acts as an employer and the children act as his employees.

WHAT DO WORKERS WANT?

"Supervisors generally ranked good wages, job security, promotion and good, working

conditions as the things workers want from their jobs. While workers felt they want most

is full appreciation for work done, felling "in" on things, and sympathetic understandings

of personal problems -all incentives that seem to be related to affiliation and recognition

motives. It’s not only good money but there is lot of other needs, which an employee

wants to fulfill for being satisfied and committed towards the job. These needs vary from

one employee to another, workers needs are totally different from the managers and are

rated as least important by Mana

Employee engagement goes beyond the employees’ intent to leave. It includes the

employees’ commitment to the organization and motivation to contribute to the

organization’s success. By creating a workforce that is passionately involved with the

company, the organization can create a sustainable competitive advantage for itself. This

article throws light on the issues to be addressed by the organizations for creating an

engaged workforce.

The evidence of a significant relationship between employee engagement and financial

performance is undeniable.

-Towers Perris

Talking about the engagement and commitment of an employee to an organization, most

companies are of the opinion that they do have a few, but they still want more. Why? It is

merely because these companies have come to the realization that their organization’s

long-term success relies on employee performance, which is directly impacted by the

level of employee engagement and commitment to an organization. Well, some

organizations think that simply making people happy and paying them handsome pay

packets is the solution. But it is not so. These are things which an organization need to

consider to attract and retain the most qualified individuals, however, when it comes to

engaging employees in their work, there are definitely some more issues that need to be

worked out. Engagement requires engaging not only the employees’ minds but their

hearts as well and this is something that the organizations can neither force not buy in

order to succeed in the marketplace.

What is employee engagement?

An engaged employee is a person who is fully involved in and is enthusiastic about, his

or her work. Such employees are attracted to, and inspired, committed and fascinated by

their work. In a recent research by Hewitt Associates, it was found that engaged

employees are not only intellectually committed to the organization but are also

emotionally attached to it, as is measured by three primary behaviors: Say, stay and

strive.

The age old business dictum goes that “satisfied employees create satisfied customers”

by constantly striving for the best, contributing to the bottom line of the company success

by their motivation and enhanced performance. It is believed that an engaged employee

always acts positively in the interest of the company and takes unconcealed pride in the

success and prosperity of his employer. The engaged employees and the organizations go

that extra mile for each other, thereby realizing the benefits that flow through an

investment in such a relationship.

Does Engagement Really Make a Difference?

According to the former GE Chairman and CEO, Jack Welch, a company’s health is

determined through it’s energized workforce who not only realize the mission of the

organization and have an understanding of how to achieve it, help the organization win in

the long run. Engaged employees care about the future of the company and are willing to

study entitled, The War for talent, reported that a shortage of skilled employees was an

emerging trend and it was more so due to the fact that the organizations fail in their

attempts to create a workforce that is not only cognitively vigilant but also emotionally

connected to the organization.

Research has proven that wholly engaged employees tend to be more self-motivated,

reliable, and have higher levels of organizational loyalty. They are capable of delivering

sustained affecting the key results areas such as employee turnover, sales, innovation and

customer satisfaction, engaged employees in customer facing roles are more likely to

treat customer is ways that positively influence customer satisfaction and are more than

twice as likely to be company advocates. They share information with colleagues and

pass on ideas that speak up for the organization. Engaged employees are much more

likely to feel secure and stable in their position and are in fact the ambassadors for the

company, singing its praises to everyone, and taking the best foot forward to deliver and

over-deliver for customers and the colleagues alike.

How to measure employee engagement?

To determine the level of employee engagement, the organizations should make use of a

comprehensive employee feedback and to improve levels of productivity and

commitment by identifying the root causes of workplace attitudes. They also help in

developing an understanding of the extent to which employees are passionate about their

work and emotionally committed to their company and to their co-workers.

There are several standardized tests, toolkits and instruments available which can help

determine the level of employee engagement in an organization. survey of the Gallup

Organization Identifies strong feelings of employee engagement in four key areas –

customer satisfaction / loyalty, profitability, productivity and employee turnover. The

questionnaire has been administered to a multitude of companies across the world.

Results from the survey show a strong correlation between high scores and superior job

performance and many organizations have found it to be a definitive measure of the

engagement level of their employees. Standard Chartered, for example, introduced

annual survey to measure improvement in the engagement of teams. The results are used

to develop action plan and continually monitor the follow-through of the teams. This

focus has seen a continuous rise in both the number of engaged teams and extent to

which the employees are engaged at Standard Chartered.

Many organization use employee satisfaction survey to identify the root causes of job

issues and create solutions for improvements with due consideration given to the

viewpoints of employees. Certain employee opinion survey are also in practice that offers

accurate identification of employee behaviors, feelings, and thoughts for improved

organizational development. The other ways used to measure the employee engagement

levels is through tracking changes in the attrition rate and growth in productivity and

business.. The data collected from these surveys can furnish information that can help the

management in the following ways:

• Identifying cost-saving opportunities

• Improving productivity

• Reducing turnover

• Curbing absenteeism

• Strengthening supervison

• Evaluating customer – service issues

• Assessing training needs

• Streamlining communication

• Benchmarking the organization’s progress in relation to the industry

• Gauging employees understanding of and agreement with the company mission.

The surveys must also be integrated with the culture survey s and since the culture varies

within the organization, the companies must aim at measuring the engagement at work
group level. The organization also need to keep in mind that it is not just about the

surveys; whatever follows is of great importance. After evaluating the results from these

surveys it is imperative for the management to work out the problem areas and take an

appropriate action. Many a times it so happens that the good news is communicated

expeditiously to all concerned but the key challenges tend to be avoided. This makes the

employees feeling unheard, thus leading to resentment and this poses a significant threat

to engagement levels within the organization.

The survey findings must aim at bbehavioral changes required to improve desired

outcomes at the organizational, team and individual levels. While HR plays an

instrumental role in the survey process, the extent to which the change program can be

successful is the responsibility of an organization’s leaders.

 DIAGNOSTIC TOOL

The diagnostic tool

Current studies suggest that employee engagement will be influenced by:

1. Employee perceptions of job importance. This study has found that “…an employees

attitude toward the job [‘s importance] and the company had the greatest impact on

loyalty and customer service then all other employee factors combined.”

2. Employee clarity of job expectations. “If expectations are not clear and basic materials

and equipment not provided, negative emotions such as boredom or resentment may

result, and the employee may then become focused on surviving more than thinking

about how he can help the organization succeed.”

3. Career advancement/improvement opportunities. “Plant supervisors and managers

indicated that many plant improvements were being made outside the suggestion
 system, where employees initiated changes in order to reap the bonuses generated by

the subsequent cost savings.”

4. Regular feedback and dialogue with superiors. “Feedback is the key to giving

employees a sense of where they’re going, but many organizations are remarkably

bad at giving it.”

5. Quality of working relationships with peers, superiors, and subordinates. “…if

employee’s relationship with their managers is fractured, then no amount of perks

will persuade the employees to perform at top levels. Employee engagement is a

direct reflection of how employees feel about their relationship with the boss.”

6. Perceptions of the ethos and values of the organization. “‘Inspiration and values’ is

the most important of the six drivers in our Engaged Performance model.

Inspirational leadership is the ultimate perk. In its absence, [it] is unlikely to engage

employees.”

Approaches suggested for creating an engaged workforce

Employee engagement can occur when the organizations work on removing the

blockades to work which necessitates having a clear understanding of the levers required

to improve the key employee attitudes of satisfaction and engagement so as to create an

optimally functioning system.

There can be more than one way to improve the level of employee engagement in a

company. In fact, there are many different things that companies not only can do, but

also need to do. Most organization have a range of practices to improve the engagement

level of their employees. Best practice recommends starting right at the selection or
recruitment stage by having the right employees working in the right jobs and having a

strong induction and orientation program in place. Besides giving the employees clarity

on the vision and goals of the organization, it is essential for organizations to put into

place regular technical / soft – skill training and development programs and the

certification programs to drive people towards excellent performance as it so happens at

HCL infosystems.

Once the employees become a part of the system, efforts have to be put into place to

engage employees to their highest level. This includes giving emphasis on certain areas

which go a long way in affecting the level of engagement of the employees and includes:

• Communication: A proper communication system helps employees in finding out

what is going on within the company outside their immediate team. They also help to

create an environment of trust and openness within the organizations where they are

able to talk openly. Employees who feel they are listened to are able to express

dissatisfaction and work together to resolve their causes, without it affecting their

performance.

The initiative must be taken by the leaders at the top as it happens at the Sum

Microsystems where the CEO interacts with Sun employees through WSUN, a forum

on Sun’s intranet. He uses this to sustain an active, an ongoing dialog on the

corporate goals and direction.

The organizations must work towards implementing the communication forums to

provide regular feedback to all people, including team meetings and conferences. 3M,

for example encourages employees to bring forward their questions or concerns

through such programs as Let’s talk It Over, Between Us and various internal and

external help lines.

 Beside using the regular employee opinion and satisfaction surveys, an update on the

various organizational issues can be tracked by the organizations through the usage of

in-house magazines and online communications, including discussion boards by

company personnel including the senior management.

• Reward Schemes: These form an important part of a company’s overall employee

engagement program. Studies have long shown that while money in itself is not a

motivating factor the absence of financial reward can be a significant demotivator.

Thus the role of reward schemes in boosting . Thus the roles of reward schemes in

boosting employee engagement are? To remove barriers to satisfaction in the

organization and provide a framework for rewarding everyone in the organization for

their performance. This may be achieved through right compensation and benefit

programs, stock ownership and profit sharing plans and recognition programs. People

want to know if their input matters and that they are contributing to the organization’s

success in a meaningful way, for which there must be performance based reward

scheme in place.

In fact, organizations must have flexible benefit schemes, as Hewitt Associates does, to

attract and retain their talent, which provides employees with the freedom to choose how

they receive their benefits tailoring a package to suit their lifestyle.

• Developing the right culture: The organizations must have clear and humane HR

policies and take initiatives to maintain the quality of work life of its employees.

Opportunities must be provided for social interaction such as family gathering

barbeques, and trips to the cinema or picnics. At HCL Infosystems, a balance

between personal / professional lives of employees is maintained through recreational

activities like festivities @ HCL, get-togethers @HCL, sport@HCL. The company

 also encourages an open and transparent culture to empower its people and develop

entrepreneurs.

The organizations must demonstrate a commitment to employees’ well –being by

providing opportunities for career advancement and be developing a safe, clean and

inspiring work environment for their all-round growth. The employees must be

provided with enough resources to solve their day-to-day problems or to do a job

well. Culture – building activities are great for generating a feeling of belongings.

Giving employees a feeling of belongingness is crucial in creating a thriving

organization that people feel committed to and others want to join.

• Leadership: Effective leaders who help in setting the tone for creating an engaged

workforce can really differentiate an organization from its competitors. Everyone in

the organization with leadership responsibility must have the emotional intelligence

and leadership skills needed to switch and employees on they must act as role

models, demonstrate and set high standards to which others can aspire. Good

practices include effective performance management and a fair evaluation of

performance. The leaders must act as coaches and mentors and must give an honest

feedback and guidance to their employees.

Ideas should be sought from all employees and the frontiline employees should be

allowed to exercise a degree of discretion during service delivery E.g., allowing

employees to spend up to a certain amount to correct a customers problem or handle a

complaint. The success of Microsoft, for example, stems in part from Bill gates’

belief that smart people anywhere in the company should have the4 power to drive an

initiative. Initiatives such as Six Sigma are dependent, in part on the active

participation of employees on the shop floor.

For great managements, the path towards engaging employees and keeping them

engaged beings with asking them what they want and what is important in order to be

effective in their roles. Effective leaders don’t wait to get the resignation to know that

an employee is dissatisfied.

An organization can always gain a competitive advantage by creating an engaged

workforce. It therefore, becomes, imperative for the organizations to identify the

level of engagement in their organization, strive to eliminate the reasons behind the

disengaged workforce and implement strategies to make them fully engaged.

Employee engagement is something that is very difficult to accomplish but if efforts

are made on an ongoing basis, it can shrivel with relative ease.

 Chapter-3

RESEARCH OBJECTIVES

The objective of the study is:-

1. To make a conceptual study of Employee Down-Sizing

2. To study as to what cause this Employee Down-Sizing

3. To study the impact of Employee Down-Sizing on the employee’s morale

4. To study as to how Employee Down-Sizing, Employee Retention and employee

commitment are inter related

 Chapter-4

RESEARCH METHODOLOGY

A Research Methodology defines the purpose of the research, how it proceeds, how to

measure progress and what constitute success with respect to the objectives determined

for carrying out the research study. The appropriate research design formulated is

detailed below.

Exploratory research: this kind of research has the primary objective of development of

insights into the problem. It studies the main area where the problem lies and also tries to

evaluate some appropriate courses of action.

The research methodology for the present study has been adopted to reflect these realties

and help reach the logical conclusion in an objective and scientific manner. The present

study contemplated an exploratory research

RESEARCH DESIGN

The research design is the basic framework, which provides guidelines for the rest of the

research process. The present research can be said to be exploratory. The research design

determines the direction of the study throughout and the procedures to be followed. It

determines the data collection method, sampling method, the fieldwork and so on.

NATURE OF DATA

PRIMARY DATA: Primary data is basically fresh data collected directly from the

target respondents; it could be collected through Questionnaire Surveys, Interviews,

Focus Group Discussions Etc.

SECONDARY DATA: Secondary data that is already available and published .it

could be internal and external source of data. Internal source: which originates from the

specific field or area where research is carried out e.g. publish broachers, official reports

etc.

External source: This originates outside the field of study like books, periodicals,

journals, newspapers and the Internet.

DATA COLLECTION

Primary data: Primary data was selected from the sample by a self-administrated

questionnaire in presence of the interviewer.

SAMPLE SIZE:

The survey is conducted among 100 respondents

Sample Area: NCR Delhi

Sample unit: Employees of many BIG companies in Nehru Place (Delhi), these people

were requested to fill in the questionnaires during the lunch intervals at the Nehru Place

premises

SECONDARY DATA: Secondary data has been used which is collected through

⇒ Articles,

⇒ Reports,

⇒ Journals,

⇒ Magazines,

⇒ Newspapers and
⇒ Internet

SAMPLING TECHNIQUE

Random sampling technique has been employed to extract the fruitful results. This

includes the overall design, the sampling procedure, the data collection methods, the field

methods and the analysis procedures

SAMPLING PROCEDURE ACTUALLY EMPLOYED:

The process employed to select the sample was simple random sampling. Simple random

sampling refers to that sampling technique in which each and every unit of the population

has an equal and same opportunity of being on the sample. In simple random sampling,

which item gets selected is just a matter of chance.

ANALYTICAL TOOLS:
Simple statistical tools have been used in the present study to analyze and interpret the

data collected from the field. The study has used percentiles method and the data are

presented in the form of tables and diagrams.

 Chapter-5

DATA ANALYSIS

1. What Is Your Primary Reason For Leaving The Company?

1. Benefits 7. Better Job Opportunity

2. Commute 8. Conflict with Other Employees

3. Conflict with Manager 9. Family Reasons

4. Job Expectation 10 Not Challenging

5. Pay 11 Personal Reasons

6. Reallocation/Move 12. Working Condition

 25%

20%

15%

10% benefits
commute
conflict with manager
job expectation
pay
5%
reallocation/move
better job opportunity
conflict with other employees
family reasons
0%
not challenging

5%
personal reasons
benef its
commute 5% working conditions
conflict w ith 5%
manager
job expectation 10%
pay 15%
reallocation/move 3%
better job 20%
opportunity
conflict w ith other 5%
employees
family reasons 5%
not challenging 5%
personal reasons 2%
w orking conditions 22%
2. How Long Have You Been Thinking About Leaving The Company?

1. One Month Or Less 2. One To 5 Months

3. More Than 5 Months

50%
45%
40%
35%
30%
25%
20%
15% one month or less
10% one month to 5 month
5% more than 5 months
0%

one month or less 10%

one month to 5 40%
month
more than 5 50%
months
3. How Satisfied Are You With The Company You Work For?

1. Extremely Dissatisfied 2.Very Dissatisfied

3. Neither Satisfied nor Dissatisfied 4. Very Satisfied

5. Extremely Satisfied

25%

20%

15% extremely dissatisfied

10% very dis satisfied

5% neither satisfied nor

dissatisfied
0%
very satisfied
extremely dissatisfied 20%
extremely satisfied
very dis satisfied 25%
neither satisfied nor 25%
dissatisfied
very satisfied 15%
extremely satisfied 15%
4. How Was Your Working Experience?

1. Much More Positive than Negative

2. More Positive than Negative

3. More Negative than Positive

4. Much More Negative than Positive

30%
25%

20%
15% much more positive than
10% negative
more positive than negative
5%
0% more negative than positive

much more positive 20%

much more negative than
than negative
positive
more positive than 30%
negative
more negative than 30%
positive
much more negative 20%
than positive
5. If Your Experiences Are More Negative Than Positive, What Factors

Are Responsible? Select All That Apply.

1. My Performance Evaluation and the Outcome

2. My Role, Responsibility and/ or Title

3. Job Training

4. My Boss

5. My Co-Workers

6. My Compensation

7. Change in Compensation Package

8. Company Savings Plan

9. Medical Benefits and Insurance

10.Relocation

11.Vacation Time

12.Other
 25%

20%

my performance evaluation
15% and the outcome
my role, responsibility and/or
title
job training
10%
my boss

my co-workers

5%
my compensation

change in compensation
package
0% company savings plan

my performance 25%
medical benefits and
evaluation and the
insurance
outcome
my role, 10%
relocation
responsibility
and/or title vacation time
job training 5%
my boss 10% other
my co-workers 10%
my compensation 2%
change in 8%
compensation
package
company savings 5%
plan
medical benefits 10%
and insurance
6. How Flexible Is The Company With Respect To Your Family

Responsibilities?

1. Very Inflexible 2. Somewhat Inflexible

3. Neither 4. Somewhat Flexible

5. Very Flexible

25%

20%

15%

10% very inflexible

somewhat inflexible
5% neither
somewhat flexible
0% very flexible

very inflexible 25%

somew hat inflexible 25%
neither 10%
somew hat flexible 25%
very f lexible 15%
7. Do You Have A Clear Path For Career Advancement?

1. Strongly Disagree 2. Somewhat Disagree

3. Neither Agree or Disagree 4. Somewhat Agree

5. Strongly Agree

30%

25%

20%

15%
strongly disagree
10%
somewhat disagree
5% neither agree or disagree
0% somewhat agree
strongly agree
strongly disagree 25%
somew hat disagree 10%
neither agree or 10%
disagree
somew hat agree 25%
strongly agree 30%
8. How Satisfied Are You With Your Position At This Company?

1. Very Satisfied 2. Somewhat Dissatisfied

3. Not Satisfied nor Dissatisfied 4. Somewhat Satisfied

5. Very Satisfied

35%
30%
25%
20%
15%
10% very satisfied
somewhat dissatisfied
5%
not satisfied nor dissatisfied
0%
somewhat satisfied
very satisfied 20% very dissatisfied
somew hat 30%
dissatisfied
not satisfied nor 10%
dissatisfied
somew hat satisfied 5%
very dissatisfied 35%
9. What Part Of Pay Play In Your Decision To Leave The

Organization?

1. 20-40% 2. 40-60%

3. 60-80% 4. 80-100%

30%

25%

20%

15%
20-40%
10% 40-60%
60-80%
5%
80-100%
0%

20-40% 20%
40-60% 25%
60-80% 30%
80-100% 25%
10. Does Working Conditions Affect You To Leave Your Job?

1. Yes 2. No

70%

60%

50%

40%
yes
30%
no
20%

10%

0%

yes 65%
no 35%
11. How Would You Rate The Morale In Your Company?

1. Low 2. Very Low

3. High 4. Very High

35%

30%

25%

20%

15% low
very low
10%
high
5% very high
0%

low 35%
very low 20%
high 25%
very high 20%
12. Could This Company Have Done Anything To Encourage You To

Stay?

1. Yes 2. No

60%

50%

40%

30%
yes
no
20%

10%

0%

yes 40%
no 60%
 Chapter-6

CONCLUSION & IMPLICATIONS

The present report indicates that the following features:-

1. Better job opportunities in outer market & pay are the main reasons for increasing

attrition rate.

2. The employees do not feel valued by their employer.

3. The working environment in the company also make them to leave their job.

4. Performance Appraisals are not given at regular intervals so that the Employee

feel motivated for its work.

5. The work schedule is very much inflexible & Stressful.

However an effective retention policy could be followed to make the employees stay in

the company starting form recruitment and selection of employees, providing an effective

pay packages and compensation, outlining an efficient career development path for

employees and most importantly catering to their emotional, mental and family needs.

Also practices should be followed to bring the ex-employees back in the company.
 Chapter-7

RECOMMENDATIONS

 Employees retention strategy should be adopted to bring back the ex employees in the

organization as well as to retain the present employees.

 Compensation and salary should be matching with the employee’s contribution to the

organization.

 Periodic reviews of the employees satisfaction level regarding to issues like salary,

work position and environment etc

 The company should initiate the career development path of its employees along

with the development of the organization

 BIBLIOGRAPHY
1. Charles R. Greer, Strategic Human Resource Management: A General Managerial

Approach, Second Edition, Person Education, 2004

2. Tyson, S., Lawrence, P., Poirson P, Manzolini, L., and Seferi, S.V., Human

Resource Management – Strategies, Issues and Cases, Kogan Page, London,

1999.

3. Barney Olmstead and Susanne Smith (2001): Creating a Flexible Workplace:

How to Select and Manage Alternative Work Options

4. Khanewal Rohit (February 2002), "Winning the Retention Game", Human

Capital, Pg. 10-12.

5. Brockner, J., Grover, S., Reed, T., & Dewitt, R.L. (1992). Layoffs, job insecurity,

and survivors' work effort: evidence of an inverted-U relationship. The Academy of

Management Journal, 35, 413-425.

6. Brockner, J., Grover, S., Reed, T., Dewitt, R.L., & O'Malley, M. (1987).

Survivors' reactions to layoffs: We get by with a little help for our friends.

Administrative Science Quarterly, 32, pp. 526-541.

7. Fisher, A.B. (1988, May 23). The downside of downsizing. Industry Week, pp.

42-51.

8. Joinson, C. (1995, February). Easing the pain of layoffs. HR Magazine, pp. 68-

74.

9. McCune, J.T., Beatty, R.W., & Montagno, R.V. (1988). Downsizing: Practices in

manufacturing firms. Human Resource Management, 27, pp. 145-161.

10. McKenna (1991, February). What can restore fading loyalty? Industry Week, pp.

50-51.
 APPENDIX
QUESTIONNAIRE

NAME: -

JOB TITLE: -

ORGANIZATION: -

CELL NO. :-

AGE GROUP: -

1. What Is Your Primary Reason For Leaving The Company?

1. Benefits 7. Better Job Opportunity

2. Commute 8. Conflict with Other Employees

3. Conflict with Manager 9. Family Reasons

4. Job Expectation 10 Not Challenging

5. Pay 11 Personal Reasons

6. Reallocation/Move 12. Working Condition

2. How Long Have You Been Thinking About Leaving The Company?

1. One Month Or Less 2. One To 5 Months

3. More Than 5 Months

3. How Satisfied Are You With The Company You Work For?

1. Extremely Dissatisfied 2.Very Dissatisfied

3. Neither Satisfied nor Dissatisfied 4. Very Satisfied

 5. Extremely Satisfied

4. How Was Your Working Experience?

1. Much More Positive than Negative

2. More Positive than Negative

3. More Negative than Positive

4. Much More Negative than Positive

5. If Your Experiences Are More Negative Than Positive, What Factors

Are Responsible? Select All That Apply.

13.My Performance Evaluation and the Outcome

14.My Role, Responsibility and/ or Title

15.Job Training

16.My Boss

17.My Co-Workers

18.My Compensation

19.Change in Compensation Package

20.Company Savings Plan

21.Medical Benefits and Insurance

22.Relocation

23.Vacation Time

24.Other
6. How Flexible Is The Company With Respect To Your Family

Responsibilities?

1. Very Inflexible 2. Somewhat Inflexible

3. Neither 4. Somewhat Flexible

5. Very Flexible

7. Do You Have A Clear Path For Career Advancement?

1. Strongly Disagree 2. Somewhat Disagree

3. Neither Agree or Disagree 4. Somewhat Agree

5. Strongly Agree

8. How Satisfied Are You With Your Position At This Company?

1. Very Satisfied 2. Somewhat Dissatisfied

3. Not Satisfied nor Dissatisfied 4. Somewhat Satisfied

5. Very Satisfied

9. What Part Of Pay Play In Your Decision To Leave The

Organization?

1. 20-40% 2. 40-60%

3. 60-80% 4. 80-100%

10.Does Working Conditions Affect You To Leave Your Job?

1. Yes 2. No
11. How Would You Rate The Morale In Your Company?

1. Low 2. Very Low

3. High 4. Very High

12. Could This Company Have Done Anything To Encourage You To

Stay?

1. Yes 2. No