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The Business Process Outsourcing industry in India has flourished and matured over last decade or so and has been a real overall success story as far as global outsourcing markets are concerned. A major part of the BPO business is done by the call centres that primarily focus on voice based business handling calls from clients in a pressure environment.
It has often been said that the call centre industry in India is plagued with the agent attrition issues and a lot of efforts are continuously made by the companies operating in the industry to reduce attrition and improve staff retention. A major component to the phenomenon of attrition in Indian call centre industry is how the management handles its key functions that impact an agent in the organisation both directly and indirectly. In several call centres across the country, key areas of management practices such as recruitment and selection, training and development, employee motivation through communication and performance management play a key role in determining their handling of the issue of attrition. An important area that is sometimes ignored by the organisations is the structure, particularly the way the management and agents share a formal and rigid relationship structure.
As the global outsourcing industry get more competitive, it is important for Indian call centres to curb the attrition issues and keep situation under control always to maintain value with their clients. While the obvious areas of management practices are often analysed and most firms, especially the ones with lesser resources tend to ignore an in-depth understanding within the practices being followed. Amongst factors dependent on individual staff, stress factor is often attributed to be a major contributor towards attrition however not much has yet been done in most organisations in the industry to provide assistance in this area.
Further, it is extremely important to consider the fact that attrition is not always the problem but sometimes it is the retention that becomes the key issue. Often a minor attrition might lead to exodus in call centres for reasons not justified enough. For the call centres in India to meet long term business objectives, it is a must that they put significant efforts to manage the situation post attrition as much as while attempting to formulate policies that look to curb the attrition at the outset.
1. Introduction & Aims and Objectives
Employee retention refers to the numerous policies and practices that help the organization to retain the best talent for a longer duration. It's a complete loss to an organization when an employee leaves the company once being entirely trained.
From past few decades, BPO sector in India has been relishing the biggest share of the world's outsourcing market. It has been noticed that the employees working in the BPO sector earns almost double the wages of the same age group working in other sectors of the country. However, the employees in the BPO sector are unsatisfied as they work under tremendous pressure as compared to the other industry because of target oriented workload with tight deadlines, odd working hours and strict working policies & procedures, all this enforced by electronic monitoring. This kind of working environment leads to higher than the normal stress level amongst the employees at work. Therefore, the work in BPO sector are said to be more stressful, while the back office jobs are more qualitative with less stress such as accounting.
The BPO sector plays a critical role in the Indian economy with worth of $11 million industry and employing more than 2 million people. However, if the industry is to achieve the projected $30 billion by 2013, the sector will have to resolve the issue of employee turnover at the present. Managers in the BPO sector have been struggling with the attrition issue and retention strategies since a while now. Some of the organizations have been successful in managing the issue of employee turnover in this sector. According to CIPD report (2008), the UK had an attrition rate of 17.3%, based on the survey of 779 organizations. In BPO special sector survey (2008), the employee turnover rate in BPO is 23.8% in India, followed by Retail at 18% and Communication at 22%. The study has also shown that an average BPO employee in India works not more than 11 months whereas in the UK they complete 3 years of tenure with an organization. Despite potential for remarkable growth, BPO industry continues to suffer from high level of employee turnover because of the several factors such as high stressful working environment.
Attrition and retention strategies are major concern and a challenge for BPO (Business Process Outsourcing) industry as it disrupts the day to day operations, increases the cost to the company considerably by recruiting and training new employees and also affects the overall business in terms of productivity and loss of clients due to inefficiency. Due to unplanned exits, the organization struggles significantly. It is extremely important to restraint attrition not only for individual organization but also for an industry as a whole.
However, this report only covers the call or contact centre sector of the BPO industry in India. The call centres are primarily voice based and do not covers the back end process or functions unlike non-voice processes.
Business Process Outsourcing (BPO)
BPO is a subcategory of outsourcing that comprises the contracting of responsibilities and operations of specific business processes to the third party service provider. Originally, it was related with manufacturing firms, such as Coca Cola that outsourced large section of its supply chain.
BPO is normally classified into back office outsourcing that consists of internal business processes such as finance, human resources, accounting and front office - which involves services related to the customers such as contact centres or call centres. Often, the business functions outsourced to the numerous nations like India and Philippines are known as ITES - BPO (Information Technology Enabled Services), LPO (Legal Process Outsourcing) and KPO (Knowledge Process Outsourcing). The following are the five major countries which are considered as hotspots for outsourcing businesses:
India - Engineering & Technical
China - Manufacturing & Technical
Mexico - Manufacturing
United States - Analysis & Creative
Philippines - Administrative
In 2010, the Philippines have surpassed India in front office business outsourcing i.e. contact centres as the leading business process outsourcing industry in the world.
Attrition refers to the reduction in the number of staff in the organization through resignation, retirement or death.
Employee retention is a practice in which the employees are encouraged to stay with the company for the longer period of time or until the project is completed.
1.2 Aim of the study
This research is aimed at gaining the insights of management practices being followed by managers in various call centres. It will allow us to evaluate the perspective of both the employees and the managers pertaining to the five fundamental management practices in any organization i.e. organizational structure, recruitment and selection, training & development, performance management and communication. How do these factors influence the organization? This will provide a profound understanding to the Indian call centres and will assist the mangers and the organization in controlling the attrition by reducing unnecessary churn.
Indian call centre industry needs to focus on the problems of high attrition and weak retention strategies as it can be detrimental for call centre industry as a whole. According to Cappelli (2000), the aim of improving the retention should not be restricted to only minimizing the attrition but should also have an influence on the agent's intention to leave the company.
Subsequently, literature review will be conducted in respect to the attrition and retention in the call or contact centre industry. It will explore the five key management practices that majorly influence the attrition and retention strategies. The aim to conduct a literature review is to highlight the views on the management practices through various famous sources and its influence on the retention of employees.
1.3 Problem Statement
There are numerous problems of employee retention that has been discussed in past by many researchers. The common set of variables in management practices that impact the employee retention are recruitment and selection, compensation, work culture, performance management, training and development and effective communication that act as a motivation or de-motivation factor for an employee.
It has been perceived that there is a lack of communication of process from organizational front to enhance the ability and willingness of managers to take on responsibility in the HR practices. The responsibility of HRM does not rest only with the HR but also requires the participation of functional managers to make the whole process more effective and efficient. (Buford, 2006).
Attrition may be reduced if the other motivational factors associated with the employee satisfaction can be taken care of. Though, that does not indicate that it will help the organization in retaining the employees. Thus, the negative characteristics of job also need the attention respectively. Looking at the big picture of comprehended potential in BPO sector in India, it is clear that the issue of employee turnover cannot be ignored. Consequently, there is an extreme need of curbing the attrition rate of employees in the BPO sector in India.
1.4 Significance of the study
Apparently the study has become significant to many researchers because of the remarkable growth of BPO industry in recent years. Where industry is growing rapidly with leaps and bounds on one hand, the attrition rate has also been alarmingly high on the other hand in past few years. Thus, the issue of high employee turnover is costing a lot to an organization. In BPOs, the employees at middle and lower level are victims of dearth of job satisfaction and motivation. The study is an effort to evaluate the patterns of attrition in the BPO and analyze the relationship among the job satisfaction, employee retention and motivation so as to formulate the concrete recommendations for the industry to improve the retention strategies and curb the attrition. Thus, it is not only substantial for academicians but also for the professionals who can exploit it to restraint the employee turnover.
1.5 Objectives of the study
From the above study, it is evident that the attrition has been adversely impacting not only an organizational effectiveness but the BPO industry as a whole. It is important for the industry to come up with some concrete solutions to curb the attrition issue and improve the retention strategies. This research is conducted to overview broadly the reasons of high employee turnover and ineffective retention strategies in BPO and seek to narrow down it to the specific concerns surrounding management practices. The key objectives of this study are as follows:
To review and assess the fundamental theoretical factors affecting the retention of employees in BPO industry based on literature review.
To classify and rank the factors influencing the employee turnover in BPOs based on the secondary data and literature.
To identify and analyze the level of employee motivation with regard to the management practices.
To make recommendations in order to improve employee retention in BPOs and curb the ever-increasing attrition rate.
2. Literature Review
2.1 Call Centres in India
According to Gans et al., (2003), call centres are defined as a set of resources that are an essential part of many organizations, typically computers, personnel and telecommunications equipment that enables the delivery of services via telephone. The various functions performed by the call centres are customer service, help desk and emergency response services, order taking and telemarketing.
The call centres are basically of two types i.e. inbound and outbound. Inbound call centres are where incoming calls are handled by the agents or employees that originates from outside callers calling into a centre. This kind of centres provides the services such as help-desk, customer support, reservation and sales support, and claims processing and order-taking functions. Whereas, Outbound call centres are where calls originate from within the call centre and these outgoing call traffics are handled by the agents. These kinds of centres are typically associated with business surveys and telemarketing.
In an immense populated country, India is estimated to have a contact or call centre industry of approximately 50000 organised seats with an additional half million disorganized seats. The terminology of organized and disorganized are used by Indians themselves to differentiated between the legitimate and fly-by-night call centres and BPOs that are formed and pull apart shortly thereafter. The main cities for call or contact centre industry in India are Delhi, Bangalore, Mumbai, Hyderabad and Chennai. As per the size comparison of call or contact centre industry in other countries, Korea has over 300,000 seats, China- 230,000, Australia-200,000, Philippines has over 140,000, Malaysia has 35,000, Thailand - 30,000, New Zealand has more than 27,000 and Singapore has 20,000 seats. Thus, India is the leading and the largest call or contact centre market amongst the other countries in the region. The growth of Asia - Pacific call or contact centre industry at a regional level is of about 22% annually in terms of seat size. In comparison with other countries, Philippines seat growth rate is of about 33% per annum whereas India's growth rate is noticed to be 16% annually in terms of seat size that is proportionately lower than Philippines and has been reducing every year.
In India, approximately one third of the call or contact centre industry is based on the international market where 22% of contact or call centres service the USA, 18% to the UK, 7% to Australia, 3%-Singapore, 2%-global customer base, 1%-Hong Kong, 1% to New Zealand and 1 % to Japan. And almost three quarter of Indian call or contact centre industry is based on domestic market and service the domestic economy.
The requirement of about one quarter of call centres in India from the agent is to speak in a language other than their national language. The eight in ten call centres in India require their agent to speak in English to the customers. The other languages required in Indian call or contact centres are Kannada, Spanish, Tamil, Telugu, Malay, French, Italian and German.
In Indian call centre industry, six out of ten operate 7 days a week and one third 24*7 a week. (Wallace, C.M., & Organ, J.M., 2007a).Work of call centres in India involves agents to provide mainly voice to voice service to the clients primarily in the North America. Employee in Indian call centres learns American accent, work at night that is typically called as 'graveyard shifts' to cater to time zones of the United States. They are expected to be fluent while speaking in English language and also be aware about the day to day issues in America to some extent so as to converse with the customers in a casual manner (Mirchandani, 2004; Shome, 2006). Although, the clientele has spread across the globe such as the United Kingdom and Australia but the focus of Indian call centres are largely on U.S. as the major big companies that Indian call centres are associated with are Dell computers, AT & T, America Online, General Electric, GE Capital, American Express and Goldman Sachs etc. (Mirchandani, 2004; Shome,2006).
Indian call centres have emerged as most productive and cost effective for various organizations across the global. The employees in Indian call centres provides services to the clients by making telemarketing to cater to customers on credit cards, network connections, insurance claims, computer hardware, financial plans and banking. The services that Indian call centres provides to their client has been phenomenal and thus the industry grew by 59% to $2.3 billion between 2002 and 2003 (Sharma, 2003), and it also showed the increase in the number of foreign companies outsourcing to India from 60 in 2000 to 800 by the end of 2003 i.e. more than 1200% increment (Mirchandani, 2004). Dell alone has more than 30 sites in India in four different cities with over 15,000 employees (Ribeiro, 2006).
In India's global leadership, the call or contact centre industry is well positioned with its growth in business process outsourcing and offshore information technology industries at a rate of more than 25% annually and creating export revenues of over $60 billion (NASSCOM, National Association of Software and Service Companies, 2005).
In a varied literature on Indian contact or call centres, some of them have discussed the issues related to HRM practices (e.g. Kuruvilla and Raganathan, 2008; Budhwar et al., 2010), and trade unionism and employee relations (e.g. D'Cruz and Noronha, 2006; Taylor et al., 2009). Some of them explored the concerns of work organization (e.g. Batt et al, 2005; Noronha and D'Cruz, 2009; Thite and Russell, 2008). The major attention is dedicated to the cultural contradictions implicated in transnational agent-customer interaction (e.g. ElSawad and Cohen, 2007) that also leads to attrition.
2.2 Growth in Indian BPO industry
Generally, for outsourcing call centres in English language India has been seen as the first option by the companies. Having said that, in the last 10 years we can see boom in BPO industry in Philippines which has shaken India's BPO business and clients are shifting due to the benefits of Philippines-situated call centers.BPO industry has seen extreme growth of 25-30 percent where as India shown 10-15 percent growth, according to Dani, research director at the Everest Group. Moreover, the country employs 400,000 people in this industry in comparison to India's 350,000 employees.
According to today's statistics Philippines BPO business made itself from US$350 million in 2001 to more than US$11 billion today. This kind of growth happened due to three causes:
Firstly, Cultural and language barrier has been overpowered due to the cultural exchange history between Philippines and United States. Filipinos start learning English language at an early age than Indians and large amount of population start discovering habit of American culture. These things help American consumers, as many of them complained now and then of not understanding Indian call centre people and their accent. At an entry level stage Filipinos earn US$ 300 per month which is US$ 50 more than Indian call centre people, but they have been taken positively by the American users.
Secondly, infrastructure is the biggest advantage of Philippines which helps them to be forward always from India. Outsourcing hubs in India like Gurgaon and Bangalore has to use generators and diesel to get an uninterrupted power of supply. However, problems like power supply and all are not really an issue which gives them good infrastructure and helps them to avoid extra overheads.
Thirdly, there is a great support of Philippines Government for the growth of this industry in their country. Provision of tax incentives and subsidies are the kind of help by government. Govt. simplified the administrative procedure of setting up call centres by companies. It also organizes company special visits to India to get the know-how of this industry, provides the benefits to single buildings to come under special economic zones and provided training to 40,000 students in communication and English.
The success of these policies can be measured by the availability of dominant American companies like AT&T, Expedia, Proctor and Gamble, JPMorgan Chase, IBM, Shell and the Hershey Company. But still, India has a convincing edge in all over BPO. Regardless of Philippines' growth in BPO, India's know-how in other fields is the added support over the new bee cultural and linguistic benefits. India has shown 14.8 percent
of growth last year in BPO sector and it is expected to jump US$100 billion line this year.
India's added advantage is their tremendous knowledge in "non-voice" products where it has huge amount of experience from years which is almost 90 percent of worldwide outsourcing sector worth. There are lot of complex and difficult work other than "voice" which consists of medical and legal sectors, banking process, research and analytics in many departments which needs high knowledge and expertise and Philippines in this regard are still behind from us with only one-fifth of earned revenues with one-third of workers employed working in these departments.
Nation like India which produces 4 million college graduates every year is never short of manpower. On the contrary, Philippines face the problem of meeting the manpower needs to continue their growth. There is increasing demand of 20 percent in this sector every year where as the number of university graduates passing each year is only increasing by 3 percent and as per the government data only 5-8 percent among them are get hired.
However, the overall position of this sector in Philippines is very favourable. In the Government latest plans more positive policies are coming in line for the outsourcing sector to cross the revenue of US$25 billion, or at least 10 percent of GDP, till 2016. Although, country is inexperience in difficult and complex areas of "non-voice" areas of BPO industry, the growth prospects are still very positive in call centres as now Indian companies are moving their processes eastward.
2.3.1 Maslow' Hierarchy of Needs
The most renowned description of needs is the one that articulated by Maslow (1954 as cited in Armstrong' Handbook). According to Maslow, there are five key categories of need that apply to individuals in general such as basic physiological needs that is lowest need in the hierarchy, subsequent to safety & security needs, social needs, esteem needs and the highest need of all in the end is self-fulfilment. It is a typical human tendency that the next highest need becomes dominant when the lower one is satisfied and the attention of an individual gets entirely shifted to satisfy the next highest need. The only need that is impossible to satisfy for an individual is self - fulfilment as it can never be satisfied. People are wanting animal; and only an unfulfilled need can motivate an individual's behaviour that is dominant need which is utmost motivator of behaviour. When people move upwards in the hierarchy of needs than the psychological development of an individual takes place but that is not an essentially straightforward development. However, the lower need always exist and it becomes dormant as motivator but as and when required an individual regularly return to his previously satisfied needs.
Behaviour/ ActionMaslow's hierarchy of needs has an intrinsic appeal and has been very famous. But the study showed that Maslow's needs hierarchy hasn't been verified by experiential done by Bridwell and Wahba (1979). It has also received criticism for its apparent rigorousness (every person has different priorities and it is quite unacceptable that needs move steadily upwards in the hierarchy) and for the misleading conceptual language of Maslow. In fact, the doubt was raised by Maslow himself about the validity of strict hierarchy need order.
Maslow - Need Satisfaction
2.3.2 Herzberg's Two Factor Model
Herzberg et al. as cited in Armstrong's handbook, developed the two factor model i.e. satisfiers and dissatisfiers. The needs of employees were divided into two groups by him. The first group revolves around the wants to develop in one's job as a basis of individual growth such as recognition, achievement, responsibility, advancement and the work itself. Whereas the other group operates as an important base to the previous and is also allied with unbiased treatment in supervision, compensation, administrative practices and working conditions. In medical terms, the second group formulae a hygiene factor, meaning environmental and preventive. Herzberg has pointed out in his theory that the financial incentives work as a motivator for short term but its effect wears off quickly.
It has been highlighted by many companies on various occasions that there has been dissatisfaction amongst the employees with the wages, leaving to pursue higher education, illness and physical strain. In Indian call centre industry most of the employees are young people and thus the motivation level is low as their needs are higher and keeps on accumulating over the period of time whether in regards to physiological needs or psychological needs.
2.4 Management Practices
Many practices have shown that manager's behaviour towards their employees helps in increasing their motivation and retaining them in the company (Buckingham, 1999; Thompson et al., 1999). But those studies did not say anything about the specific action and behaviour to increase the retention.
There has not been really specific set of HRM practices which is agreed by everyone but generally the most common practices are: job security, job previews, orientation programming, compensation systems, performance appraisals, career advancement, training and development, and effective communication (Delery & Doty, 1996).
Many authors (Huselid, 1995; Hemdi & Nasurdin, 2007) pointed that HRM practices has a positive impact in the hotel industry in building trust in an organization which helps in keeping the employees retention level. Performance measures, training and development and career advancement are the HRM practices used in this study.
Pfeffer (1994) and Telfer (2008) both said that application of 16 management practices will lead to increasing productivity and profitability among the organizations. These practices consists of information sharing, participation and empowerment, selectivity in recruiting, incentive pay, self-managed teams, measurement of practices, skills development and training. Teffer (2008) also states Deloitte Best Company to work for (BCTWF) consist training and development, performance management and communication.
Call centre agent decision to stay or to leave depends upon 11 complex factors which have been suggested by Mashatola (2003). These factors that employee expect are growth opportunities; and the organization's size and external image; stimulation and challenging role; work schedules that fit with lifestyle needs (day time job); behaviours of co-workers; perception of general treatment of employees (fairness, transparent, trust and freedom of expression); the organization's interest in the individual's non-work interest; management's competence in managing work and guiding agents; accessibility of workstation; excellent facilities and technology; working conditions with minimum stress.
HR practices like selection, employee retention, job and work design, training and pay performance measures have been practiced by Holman et al. (2005). These practices are controlled by the management. Call centre agents are the better people who can throw light upon the "intention to leave" factor. Organizational system is formed in the manner which constitutes and backs the management principles, performance and communication in any organization. Both agents and managers impressions are going to be studied with the help of this research and it will be concluded on the basis of five management principles and analyze which holds retention the most.
2.4.1 Recruitment and Retention
Call centre has the potential to provide high turnover rate to recruitment system. High turnover rate is the major problem in the call centres and this problem takes birth from recruitment system where capable employees are not given the right job and they have been put at the wrong areas (Doshi, 2002).
Many of the new employees join the call centre and most of them in few days of time generally feels that the working environment is not suitable for them which leads to take call centres turnover high (Moss et. al., 2008). These studies point out that selection procedure and putting right people at right area are the major departments that need to be work upon. In UK as well, 9% of call centres use Psychometric and aptitude tests in the selection system (Moss et. al., 2008).
Studies (CIPD, 2008) found that highest turnover rate is in retail, call centres, catering and hotels. If candidates are shown environment and organization with the help of job previewing tool, early resignations can be prevented as this will keep the expectations of employee and employer and post-employment will go smooth.
Increased turnover rates are due to the weak recruitment process and poor selection choice which can be blamed on both employee and employer (CIPD, 2008). Analoui (2007) brought the new system i.e. flexible recruitment practices which have great impact and it teaches organization to be flexible in this constantly changing working culture. A new flexible method of recruitment and code of conduct for departments of work force is required to select the best candidates who suited best for the job requirements. Analoui (2007) further explained that putting right people at right area is work of HR planning.
Jassim et. al. (1998) explained that managers use different selection models as they have different eligibility criteria to recruit people and that is why they use different models so that they can employ right person for the job.
Grobler and Warnich (2005) said that communication binds various elements, coordinating activities, allow people to work together and produce results. According to them, communication itself is the action to convey information.
In 2006, Yates described on communication ROI study of Watson Wyatt where substantial evidence was found that bringing improvement in employee engagement is the result of high internal communication practice. Engagement of employees is like satisfaction towards job, which also influences productivity and retention of employee. Yates (2006) describes how effective communication increases ROI. (Figure)
The Watson Wyatt (2006) defines eight effective communication areas i.e. making employees learn about the institute and values, guiding employees to understand the industry, merging employee's actions and customer's needs, to provide employees with information on the value of the rewards programs and policies, integration of new workforces into the institute, and executing strong headship by applying the organizational change.
Figure: Communication Flow (Watson Wyatt, 2006)
As stated by CIPD (2008), communication plays a very progressive role in relationship building. An effective communication system creates media for employees to use their voice within the pre-defined framework of studies, assessments, grievance systems and training within organisations. A lack of this will result in dis-satisfied employees with many different mechanisms to manage their problems before they resign or form the intention of resigning. The teams based and top down communication areas have now been obsolete where management is in need of working on a very effective informal relationship for retaining employees. (Borstorff et. al. 2007)
Poor communication results in disinterest of employees to work which raises unnecessary stress levels at work place(Atkinson, 2006), and hence influencing job satisfaction. So, good communication is always a necessity to work effectively. (Jassim et al., 1998)
Luss and Nyce (2004) provided further elaboration on the Watson Wyatt communication ROI survey (2003), which explains that the organizations have a 50% better chance to reduce turnover rates if they do effective interaction and communication with their employees. Murlis and Schubert in 2001 claimed six main elements in the employee performance model expressed by the Hay Group (2001). These six elements are consisting of practices like performance management, training and development and communication. The Watson Wyatt survey (2003) described that good communication is more likely to report a rate of turnover less that other industry peers, by a consequent variance of 18% less revenue.
The Communication across levels can be amended by communicating less formally (Pfeffer (1995); managers and employees are more likely to know what is actually going on and able to communicate ideas more directly.
2.4.3 Performance Management
The word performance management has been taken from the two management tool of managing and increasing performance which has been the result of actions taken by Total Quality Management in 1980s (Grobler et al., 2005). Grobler et al. (2005) agreed on Renton's (2000) work that there are 20 key things require for the active performance management which includes in increasing retention of employees.
There were three general tactics that have been used by Holman et al., (2005) for his study; electronic performance monitoring, performance appraisal and call quality monitoring. These tactics help in building base and finding development requirements and individual training. Homan's found out that 10% monitoring systems of call centers had negative effects on agent's health.
Performance management helps in gaining job satisfaction, employee involvement provide workers a 'voice' which has been generated from coaching and recognitions which made a bridge of relationship and communication medium. This system helped in finding and honouring brilliant performance while it provides coaching, training and counselling to poor performers. Performance appraisal in form of salaries is another factor which influences performance management (Petrescu et al., 2008).
Performance management is an important tool of management which measures individual's performance, their capabilities, improvement needs and their future prospects. Employees are becoming more mature every year which also explains that employees retention is not only depend on high pay checks. Employees would prefer the working culture where they are recognized and rewarded, training and coaching is provided to develop insufficient skills which is not possible without performance management. It helps in measuring, evaluate, compare, be fair and get the most out of the performance goals. Employee satisfaction is the factor which is somehow connected in employee retention (Nettleton, 2008).
2.4.4 Training and Retention
Voluntary turnover is also generated due to insufficient training programmes and growth prospects founded by CIPD. Many employers agreed on the fact that training helps in improving retention as it boosts motivation and increase morale. Good training provision at entry level staff in Marriott Hotel helped in retaining them for the longer period (Umiker, 2004).
Employee development has the major role in retaining employees which has been found by Cappelli (2008) one of the precious element in organizations. He further explained that companies should allow employees to move internally rather than losing them to other firms. This helps in employee's career advancement and lead to decrease labour turnover.
Organizations where individuals can find their personal professional growth, necessary career planning and where they are appreciated of taking risks and managed them tend to have higher employee retention (Gaffney, 2005).
Generally call centre people get 15 days of training in the first year and seven days training in second year and 70% of their training depend on their performance basis (Holman et al., 2005).
Witty (2009) from Vault.com agree on the study done by World at work. Training and growth opportunities are the most important factors of retention ranked by the study. These further explained that if employers show true interests in the company and their employees than employees feel honoured and their loyalty increases towards the company. Staff dissatisfaction is the major cause in high turnover rates after six months which happens due to bad ongoing job experience, insufficient training, inappropriate management decisions and salaries.
Improvements in staff retention have been seen due to the focus on training to employees which also added an advantage to the organizations. Employees feel more worthy working in the organization, work enjoyment increases and they find satisfaction with their work-life balance (Atkinson, 2006) where as bad training increases employee desire to leave the organization (Atkinson, 2006). Ray added that training is an important part of target employee retention strategy which will also help in achieving higher level of customer service excellence. Training gives the scope to develop the require skills to the staff and that is why it is a retention tool which is also a component of employee psychological contract of employment (Vowler, 2005).
2.4.5 Structure and retention
The structure of organization includes allocation of tasks, reporting duties, coordination and interaction pattern mechanism. (Robbins, 1990) Robbins identified three different components of structure which includes complexity, formalization and centralization. Structure of three components was then broadened into six.
As described by Robbins et al, organizational structure is a formal delegation and coordination of tasks. (Robbins et. al, 2007) Managers in the organization need to address six elements of structure that includes departmentalization, specialization, decentralization, formalization. Span of control, and, chain of command. Robbins et. al (2007) also argued that structure of organization brings impacts on attitude and behaviours.(Robbins et. al, 2007)
Depending on the objectives, there are various ways to structure the organizations, and hence making processes and functions being different. Inappropriate structures will affect the efficiency of managers and their performances. The span of control is the ratio employees reporting to managers (Robbins et al, 2007).
Seven structural variables were included by Price (2001) and Huselid (1995) in casual model, i.e. job stress, justice, social support, remuneration, repetitiveness of work, promotional chances (Price, 2001; Huselid, 1995).
Difference between tall and flat organizational structures were reported by Carzo and Yanouzas (1969); Where Tall organizational structure takes longer to process decisions but they are superior while rated on profit, performance and rate of return on revenue. Whereas in flat organizational structures, it take much longer time to resolve the conflicts and coordinating the efforts.
Tall structures give better performance than flat structures. So, performance management is able to contribute positively to reduce turnover. While comparing tight and loose organizational structures, loose structured groups are more time effective in making decisions and hence reach employees satisfactions (Carzo, 1963).
It is evident that an effective retention management is very challenging in the call centre industry, therefore five key management practices have been chosen for the research.
Organization structure establishes the environment for an effective communication that strengthens the right relationships. An effective recruitment process helps the organization in selecting the right people as per the job specifications. Performance management measures benchmark standards, the improvements, highlights limitations in training process and improves productivity.
Training and development act as a strong pillar to support growth in any business and helps in creating sustainability. This literature review has been prepared to create a background for the research in order to achieve the objective that is to improve the retention strategies and curb attrition in call centres in India.
3. Key Questions
Based on the above literature review it is evident that for attrition to be improved in the call centre industry in India there are several key questions concerning the variables that are central towards management practices. Some of the particular question the paper will further intend to answer can be outlined as below -
A. Recruitment & Selection - The most vital question that needs to be answered in this area is if both the managers and the agents perceive this variable to be an important factor to reduce attrition?
B. Communication - A key question that emerges in this area is if both the managers and the agents perceive the levels of communication followed in their organisations in the same manner and if communication is an important factor to reduce attrition?
C. Performance Management - Another question from the performance management area is how the managers and agents think about efficiency of the process and also how much importance they feel the variable has to the retention levels?
D. Training & Development - Under the training and development area, the key question for further discussion is how satisfied the agents and managers are with the programmes being followed and how do they perceive the importance of the factor in staff retention?
E. Call Centre structure - The question that needs to be explored further in this area is if the managers and agents are both satisfied with the structure of their organisations and how important do they think a structure is to control attrition?
4. Research Methodology
To help in achieving the objectives, it is important that an appropriate research methodology is adopted. In this chapter a detailed explanation of the research methodology followed for the study will be discussed. It is important in context of a well organised and planned research that the methodology helps in achieving overall aims and objectives of the research based on the literature reviewed that essentially forms the theoretical basis of the research.
The following specific aspects of methodology are important to be discussed in details to further understand how the research was conducted and how the information gathered formed a basis for the analysis -
4.1 Research Methods
It is important that different research methods are understood to allow identification of the most appropriate method to follow during the research. As have been highlighted by Zikmund (2003), there are three types of research methods -
a. Exploratory research that is undertaken to address ambiguous problem.
b. Descriptive research that describes the used to describe the features of a population or a phenomenon.
c. Causal research which is undertaken to establish relationship between the events that have taken place and their cause or reason.
Since the research was concerned with investigating how different management practices that are being followed in call centre industry in India impact the employee retention, it was clearly identified that the most appropriate research method in the scenario was descriptive research.
4.2 Research Strategy
There are two types of approaches that can be followed in a research viz. inductive and deductive. Again, an important step was to understand the main difference between the two strategies to decide on the appropriate one.
Collis and Hussey (2003) highlighted that deductive approach is the dominant strategy that is followed in natural sciences. The deductive approach is based on laws offering the basis of explanation which in turn help anticipate phenomena. The strategy therefore naturally leads to prediction of occurrence of specific phenomena which can thus be controlled. The other research strategy is based upon inductive approach which primarily concerns with utilising the research and analysis conducted to formulate a theory or helping in concluding a research.
It was identified that the most effective approach for the research strategy was to follow a deductive approach. There was also a limited use of the inductive approach to help in comparison and conclusion of the research findings based upon existing theories and acknowledged research work. Further since the descriptive research method is used when an existing body of knowledge is applied to ascertain the validity of research questions, the research was conducted by using mixed-methods research incorporating both quantitative and qualitative data. The data was collected through survey questionnaires that were aimed at two different groups, call centre agents and managers. The research was conducted on a confidential basis and no companies and respondents were required to provide with their personal details if they did not desire to do so.
The questionnaires were voluntary and the data was kept confidential throughout the process. There was complete discretion followed in throughout the data collection process. The questionnaires that were used were targeted towards two different types of respondents - one focussed on call centre managers and another focussed on call centre agents. The survey questions were grouped under five different variables with different questions covering different aspects that were important to provide answers to the research question. Based on the literature review above it can be understood that motivation and management practices are closely related when it comes to agent attrition in a call centre environment. This further leads to key questions revolving around the five main variables already discussed in the previous chapter - recruitment, training, organisational structure, communication and performance management.
4.3 Data collection techniques & methods
A careful consideration to both the qualitative and quantitative data collection techniques was given. To conduct a comprehensive study, it was important to follow mixed-methods research including both quantitative and qualitative data collection.
A qualitative technique is the one which helps in collection of data that is not easy to be quantified. The research was conducted under different variables identified during the literature review above; the data collection revolved around those key variables itself. The qualitative research process was designed to help the researchers to understand people, social and cultural contexts (Myers, 1997). Since the subject area of employee attrition is more concerned with human resources, some of the areas such as beliefs, emotions and value attitudes of the researched people could not be quantified it was important to follow this data collection technique too. There was some use of quantitative data collection technique applied during the research as well. Based on different variables and a potential debate around those variables were important to the findings or not, a set of research questions were established accordingly.
The overall study was based both on primary as well as secondary data research. The primary data collection formed major basis for the study but it was also applied to some of the key theories and findings of other relevant research in form of secondary research. Further while most data was collected through survey questionnaires, the analysis was also expressed in terms of numbers to present an easy understanding.
4.4 Sampling methodÂ & Frame
The initial proposal was sent to 15 call centres to conduct a research on managers and agents from which 10 call centres participated in the study. Saunders et. al (2009) suggest that it is vital to limit the focus of study to the target population only. Therefore the study was focussed only towards call centres involved into voice based business outsourcing services located in India. Further only relevant respondents such as managers who were direct providers to the agents were considered as the target respondents for one category of survey.
The research adopted a non-probability sampling method since the sample size selected was based on convenience and personal judgment of the researcher. Also, convenience sampling was used for respondent selection. The survey intended to conduct the surveys in at least 10 call centres covering responses from 10 managers and 200 agents. The sampling method was non- stratified and a standard base of questions was asked from the respondents.
Since the surveys were not carried out on a personal basis, the response rate was expected to be on the lower levels. It was however decided that a confidence level above 40% would be good enough to generate useful data for the study.
4.5 Data Integrity
It is important for the data to be both valid and reliable to ensure that an effective relationship between different variable and the findings can be established. Since the data generated came from researcher's primary work and also based on published and acknowledged secondary work, the data integrity could be well assured.
It is also quite important that the data sensitivity is given due attention in questionnaires that are based on 'agree / disagree' responses. This is because of the fact that sometimes very subtle attitude changes could mean a different response and the true feeling of the respondent might not be expressed. During the research the sensitivity issue was taken care of by putting the neutral response, strongly agree and strongly disagree options as well to provide greater scope for authenticity and sensitivity of the data.
4.6 Data Analysis
Kvale (1996) suggested 'the process of analysing qualitative data is likely to begin at the same time as you collect these data as well as continue afterwards'. The data analysis was therefore an important area which formed the basis of result interpretation and reporting the outcome of the overall study.
Since there were two types of data that were used for the research - primary and secondary, different approaches were used to analyse the data thus collected and researched. The primary data was generated in the form of numbers and percentages to understand the importance of different variables to the main issue of attrition in the call centres. Further, the primary data was used to analyse the relationships of the different variables with theories and past relevant studies that formed secondary research.
4.7 Respondent Profiles
The managers and employees researched during the study were not profiled against age, religion, gender or any other differentiating factor. The only two major aspects that were considered were that the company was an active voice based call centre and the managers and agents were involved into the same activity.
Below is the breakup of company size and number of agents and managers interviewed amongst the total ten companies that were involved in the survey -
A. Large & Mid-Sized - Two call centers with total staff of more than 250 participated and the researcher surveyed two manager and 50 agents each at both the call centers.
B. SME's - There were further two types of SME's amongst the respondents where three companies between staff size of 50 to 250 agents participated with one manager each and 20 agents very surveyed. Also, from the firms having staff size between 20 to 50 agents, another 5 companies were surveyed with one manager and 8 agents responding from each of the companies.
4.8 Research Limitations
As like any other research there are several potential research limitations that the researcher faced and must be considered accordingly
a. It is worth considering that the respondents might not always provide accurate information considering influence of the managers in case of agents and the organisational influence in the case of managers.
b. While the research aims to represent the call centre industry in India, it must be observed that most responses in the research conducted were from the northern part of the country especially Delhi and National Capital region.
c. It is also worth noting that while the researcher has attempted to cover broader variables responsible for agent attrition, there are several other reasons which could lead to intention to leave. This could not be all covered due to limits of time and scope of the report.
5. Data Findings & Analysis
This section of the report discusses the results of the surveys being conducted in the call centres so as to deliver the answers to the purpose as defined for this study. It is aimed at gaining the perception of managers and agents in the call centres with respect to the five key management practices.
A proposition is a statement concerned with the relationship among concepts, and an assertion of a universal connection between events that have certain properties (Zikmund, 2003). In this section the results are separately presented for each management practices. The question is grouped into each factor as below:
5.1 Data collected
An analysis of primary data has been conducted in the form of survey to gather the perception of both the managers and agents separately on five key management practices i.e. communication, structure, performance management, recruitment and training. The questionnaire of survey format to collect the data can be found in appendix 1.
To conduct a survey, 15 call centres were approached out of which only 10 approved the request and allowed the survey questionnaire to be distributed in their companies. The smaller call centres are chosen as a source of primary research which is also known as because to its major evident impact unorganized seats in Indian call centre industry and that hardly gets published anywhere also. Thus, to gather the information through secondary data on smaller call centres is very challenging. For the purpose of easy understanding of the survey results, the collected data is presented in the form of percentage and it shows only figures of disagree and strongly disagree collectively as disagree and same for agree and strongly agree as agree in the spate tables of different management practices.
5.1.1 Recruitment and Selection
The difference in opinion of both the managers and the agents are almost nothing with respect to the recruitment and selection process in the call centre industry. The percentage of 37.25% from agent's viewpoint and 39.25% from manager's perspective clearly shows a very low level of confidence in the recruitment and selection process. The managers have slightly higher expectation than the agents from the process of recruitment and selection in the call centres so as to fill in the right jobs with the right candidates. The figure below also indicates that the agents are unsatisfied with the ineffective recruitment and selection process that tend to make them feel that call centre jobs are easy before joining.
Thus, it leads to high turnover in the call centres and makes the recruitment and selection an alarming factor for the industry and needs immediate attention to control it.
The below table indicates the similarities in the perception of managers and the agents in respect to the communication process in the call centre industry. There is no significant difference has been found through the survey in the view point of both the managers and the agents. However, there are disagreements also but is not majorly demonstrating the poor communication process in the call centres.
With respect to the communication process, the mangers perception shows the agreement of 69.4% to the statements as mentioned in the table below and agent's 54.8%. Thus, most of the call centres are following an effective communication process and there is no gap as such between the managers and the agents.
5.1.3 Performance Management
In table 3, the survey has shown the results that indicates the dissimilarities between the manager's and the agent's perspective. The managers in the call centre industry are more tend to perceive that there has been an effective performance management practices are followed whereas the percentage of agent's perception is just 41% that is 25% lower than what managers think.
A major difference has been noticed between the managers and the agents from the perceptive of goal settings. The agents have more disagreement about the goals that are set by their managers are not clear and is not SMART which reflects in the form of building pressure on the agents in the call centres to achieve the targets in a shorter span of time even after not having it specific and attainable. The figures also specifies that the goals that an agent is expected to achieve is discussed by the managers inappropriately.
The performance management practices in the call centres are alarming and thus, needs an attention so as to retain the best talent and curb the attrition or else can have major impact on the organizations in the longer run.
5.1.4 Training & Development
The results of survey on training and development process in the call centres from managers and the agent's perspective are found to be identical and positive. An aggregate percentage of agreement from agent's viewpoint is 58.6% and 68.2% from manager's viewpoint. The managers and the agents both admit the facts that the training and development process in the call centres is effective and appropriate.
The percentage below shows the minimum disagreement on various statements. However, the expectations of managers are slightly higher than the agents that build the pressure a little in terms of outcome expected.
5.1.5 Call centre structure
The call centre structure plays a very important role in any industry in achieving the organizational goals effectively and efficiently. In the table 2 below, there have been similarities found in the perception of the managers and the agents. It shows the percentage of agreement of 51.5% from manager's point of view and 61% from agent's perspective.
On the other hand, the collective disagreement on the statements is 25.25% from the agent's side and 35% from the manager's viewpoint. However, the managers to some extent have more expectations than the agents in regard to the structure of the call centres but it doesn't indicate their high confidence level.
From the above data analysis conducted on key variables of management practices, it can clearly be seen that the primary research suggests that while most agents and managers considered recruitment and selection along with performance management systems in particular being largely responsible to high attrition rates in the call centre industry in India.
While the surveys suggested that communication and training and development were not major issues that concerned call centre industry in India, it is also worth noticing how the industry analysts have expressed their position regarding the issues.
Budhwar et.al (2009) suggested that employee attrition issues were related to several other factors which were somehow or the other impacted by management practices. For example, high turnover of employees could be attributed to their psychological situations which were dependent on the amount of stress a typical call centre agent would have to undergo. It was observed that a very less percent of time was spent within the training and development areas in terms of stress management sessions. Further, it was found that communication within the organisations on important issues such as this was lacking overall more so in smaller call centres. Their research analysed that one of the biggest problems related to attrition was growing stress that agents faced in a typical call centre environment. While there is not much that can be done in terms of the environment or the nature of business itself, what was advised was that the structure of organizations was worth considering as well. As has also been found in the primary research conducted during this paper, the managers seem to have more expectations from the agents than they deem necessary and it can also be implied that a generally process oriented work flow could lead to the environment becoming very bureaucratic and formal. It could therefore be important to consider the ways of improving internal communication, work on the organizational structures and performance management systems in a call centre.
While the above does not mean that other aspects of management practices can be ignored as it is extremely important for the agents to feel motivated and engaged in their work and achieve the common goals with the organisation. While based on Maslow's and Herzberg's theories that have been discussed above, it can be understood further that practically it might not be easy to find a way where the employees' aspirations can be met without compromising on the work standards.
A key theme that can therefore be drawn from the research is that there is a significant scope for continuous improvement in management practices being followed in the Indian call centre industry with respect to the recruitment and selection, organizational restructuring, performance management and training and development amongst other key areas.
Based on the above discussion, it can be seen that the research has effectively questioned the application and importance of the key aspects of management practices in Indian call centre industry. The literature review attempted to consider the existing knowledge that can be effectively applied to the attrition and retention of manpower in the industry.
The importance of proper recruitments and selection practices, training and development, communication strategies, performance management of the staff and an organisation's structure has always been considered important for any industry. It has been found based on the above research that the same variables hold significant importance when it comes to the call centre industry in India where average attrition rates are very high and businesses must work across multiple areas to ensure sustainability.
It can finally be concluded that based on the discussion they have a better perspective in terms of understanding the factors that can impact a call centre's staff attrition or retention levels. The organisations and managers taking decisions are now in a better position relatively to define and re-align strategies that can help them create a better environment for their organisations to potentially curb the attrition levels to manageable levels and thereby contribute to achievement of long term goals of their organisations as well as the industry on the whole.
The study has shown that attrition rate and its consequences are alarming and thus, it is important for the Indian call centres to take individual and collective actions to tackle the issues. Also, it is essentially required to take comprehensive look at what can be done in the long and short run.
The issue of attrition can be addressed or curbed in two significant ways:
Actions to control attrition
Actions to manage the impact of attrition
8.1 Actions to control attrition
In India, the call centres are of different sizes with diverse clientele and therefore, the actions to curb attrion should be taken as an industry and independantly. Actions to control attrition are as below:
8.1.1 Short Term Actions
Pay for Complexity
The current practice to pay to associates is very basic