Attrition Rate Occurring In The Lower And Middle Level Management Business Essay

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Extended essay

How can you minimize the attrition rate occurring in the lower and middle level management of the company XYZ?

Abstract

Company XYZ is a branch of a pharmaceutical company which manufactures drugs for medicinal purpose. The major problem faced by the company is attrition. The attrition rate in the lower and middle level departments troubled the company. The main aim of the essay is to develop a strategy to decrease the attrition rate in the lower and middle level departments.

The primary data consists of the exit interviews conducted. It helped me to understand the major and the minor problems faced by the employees. The other primary data source is the verbal talks with the employees. The secondary data consists of the annual report of the firm which consists of the cost and pervious attrition rate of the company.

In the findings I have made graphs and table to display the data about the company. I have made a competitive study of the months and which month was bad for the firm. I have given my comment on every month's data and also calculated the attrition rate of that particular month.

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Based on the research I conducted I have given my opinion and an effort to reduce that attrition rate. The recommendations and the possible efforts that the company can put to decrease the attrition rate are given in the essay

Word count: 221

Table of content

Content

Page number

Abstract

2

Introduction

4

Findings and Analysis

6

July2009 to June 2010 Analysis and Graph

7 to 18

Comparative study

20 to 22

Attrition rate calculation

23

Data analysis and reasoning

24 to 31

Conclusion

31

Bibliography

32

Acknowledgement

33

Appendix

34

Introduction

The main branch of the company founded in 1999, and gained recognition as a world-class provider of small molecule process chemistry, custom synthesis services and full life-cycle API and drug intermediates manufacture for the global pharmaceutical industry. The company is making huge amounts of profit having a turnover of more than 100 crore. But the major problem faced is the attrition which happens in the organisation. The company is facing problems with their lower and middle level people leaving their jobs. The company experienced a huge blow when some of their higher level people left the job. The main of this essay to find the reason and come up with a solution for the problem

Research question:

How can you minimize the attrition rate occurring in the lower and middle level management of the company XYZ?

Theoretical framework:

I will be searching for new places for her business which will allow her to maximize her profits and minimize her expenses.

2.1 Human Resource Planning

2.5 Motivation

Methodology:

Primary Research

Sources

Method

Information

From the employees

Asking questions related to their work and interviews

Their demands, likes and dislikes about the job

Secondary Research

Going through the annual report of the business to understand the situation and check the history

Some problems and solution

Anticipated difficulties

Solutions

Attrition is a very important topic and the company won't give the required information

As for estimates of the company and keep a low profile

The employees won't take me seriously as I am a child

Ask the head of the department for help

The employees won't feel free to write the real reason

Make them feel comfortable. Earn their trust.(talk a lot to them as people tend to speak valuable information unnoticed

Findings and analysis of the data

The attrition study data is attached to the appendix of the essay.

The study of the entire company's employees is given below

July 2009:

Staff Rationalisation Data

Cost Centre wise Expense

Dept

Total Man Power

Man Power Changed

Cost Centre

Production unit 1

12

1

64

Production unit 2

19

0

81

Contract site

10

0

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Contract site-81

Quality Control 64

14

4

64

Quality Control 81

9

0

81

Quality Assurance

6

0

81

R & D

9

0

81

Maintenance

10

0

81

Stores & Excise

10

1

81

Commercial

1

1

81

IT

1

0

81

HR & Admin

8

0

81

Safety

2

0

81

According to the data provided there is a change in the man power in production unit 1, quality control 64, stores and excise and IT department. The company had to hire these people so that the production can grow. The salary paid by the company to the people is highlighted in yellow. The total salary paid is Rs 1669353. The company started their month with 12 workers in the production unit 1 and 19 in the production unit 2. The contract site maintenance and stores have 10 workers each. The quality control 64 had 14people and the 81 and R & D had 9 people. The quality assurance department had 6 and HR department had 8. There was 1 person for both IT and commercial and 2 people for safety

The table and the graph below shows the detail about the month of July 2009

August 2009

Staff Rationalisation Data

Cost Centre wise Expense

Dept

Total Man Power

Man Power Changed

Cost Centre

Production unit 1

6

6

64

Production unit 2

23

4

81

Contract site

12

2

Contract site-81

Quality Control 64

12

2

64

Quality Control 81

8

1

81

Quality Assurance

6

0

81

R & D

9

0

81

Maintenance

14

4

81

Stores & Excise

11

1

81

Commercial

1

0

81

IT

1

0

81

HR & Admin

8

0

81

Safety

1

1

81

There are lots of ups and downs which took place in this month many of the employees left their job and many were hired by the company. The sectors like production unit 1 and 2 had major changes .the production unit 1 was reduced to 6 people where are the production unit 2 was increased to 23 people. There are changes in departments like contract side, quality control 64, Quality control 81, maintained etc. Comparing the salary pay this month the payment has reduced to Rs 1598511 this is 70842 RS less than the last month. There were more people added to the contract side

September 2009

This is a better month compared to the other. Very less or no people are leaving the organisation. Also the salary paid is greater because the company need to stabilize after so many people left the organisation. But there is a major change this month. Person from research and department left which is an important position .The salary paid in total is Rs 2205241. People have been added to the sectors and only 1 person has left. This has been one of the efficient months for the company

Staff Rationalisation Data

Cost Centre wise Expense

Dept

Total Man Power

Man Power Changed

Cost Centre

Production unit 1

8

2

64

Production unit 2

24

1

81

Contract site

12

0

Contract site-81

Quality Control 64

13

1

64

Quality Control 81

8

0

81

Quality Assurance

6

0

81

R & D

8

1

81

Maintenance

14

0

81

Stores & Excise

11

0

81

Commercial

1

0

81

IT

1

0

81

HR & Admin

8

0

81

Safety

1

0

81

October 2009

Staff Rationalisation Data

Cost Centre wise Expense

Dept

Total Man Power

Man Power Changed

Cost Centre

Production unit 1

10

2

64

Production unit 2

24

0

81

Contract site

12

0

Contract site-81

Quality Control 64

13

0

64

Quality Control 81

8

0

81

Quality Assurance

6

0

81

R & D

8

0

81

Maintenance

12

2

81

Stores & Excise

12

1

81

Commercial

1

0

81

IT

1

0

81

HR & Admin

8

0

81

Safety

2

1

81

This is also one of the stable months there are no major ups and downs happening and the salary paid is also less compared to the previous month.

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Probably the best month for the company no one has been removed or no one has left their job in this month. Also addition to the staff indicates that the company is growing. There has been addition in the Production unit 1, maintenance, Stores and Excise and Safety. The cost has also decreased which is a good sign for the company

0

November 2009

Staff Rationalisation Data

Cost Centre wise Expense

Dept

Total Man Power

Man Power Changed

Cost Centre

Production unit 1

15

5

64

Production unit 2

31

7

81

Contract site

0

12

Contract site-81

Quality Control 64

13

0

64

Quality Control 81

9

1

81

Quality Assurance

8

0

81

R & D

8

0

81

Maintenance

16

4

81

Stores & Excise

11

1

81

Commercial

1

0

81

IT

1

0

81

HR & Admin

8

0

81

Safety

2

0

81

 

 

 

 

In the month the company faced major problem dealing with the loss of workers in contract site department. the company lost all their 12 workers along with 1 store and excise clerk but the company has done major recruitment in this month as the workers in both the production unit has increased and also they have added one chemist. This shows the increase in the business. The salary paid to the employees is low compared to the last month Rs 1763775. This is not a good sign for the business.

December 2009

Staff Rationalisation Data

Cost Centre wise Expense

Dept

Total Man Power

Man Power Changed

Cost Centre

Production unit 1

19

4

64

Production unit 2

30

1

81

Contract site

0

0

Contract site-81

Quality Control 64

15

2

64

Quality Control 81

10

1

81

Quality Assurance

10

2

81

R & D

7

1

81

Maintenance

18

2

81

Stores & Excise

11

0

81

Commercial

1

0

81

IT

1

0

81

HR & Admin

9

1

81

Safety

2

0

81

The company has still not employed any worker for the contact site and throughout the year they have not employed anyone. There are few changes in staff in the month of December but the company has tried to maintain the stability of the business. Although they lost a chemist from research and development department which is an important person. There has been addition in the production units, quality assurance, HR etc

January 2010

Staff Rationalisation Data

Cost Centre wise Expense

Dept

Total Man Power

Man Power Changed

Cost Centre

Production unit 1

23

4

64

Production unit 2

29

1

81

Contract site

0

0

Contract site-81

Quality Control 64

16

1

64

Quality Control 81

10

0

81

Quality Assurance

10

0

81

R & D

8

1

81

Maintenance

18

0

81

Stores & Excise

11

0

81

Commercial

1

0

81

IT

1

0

81

HR & Admin

9

0

81

Safety

3

1

81

The company has responded well after losing a chemist by employing a new chemist. There are also few more people added to the production unit and to safety. The cost is higher than the last month because of the addition.

February 2010

Staff Rationalisation Data

Cost Centre wise Expense

Dept

Total Man Power

Man Power Changed

Cost Centre

Production unit 1

25

2

64

Production unit 2

29

0

81

Contract site

0

0

Contract site-81

Quality Control 64

17

1

64

Quality Control 81

10

0

81

Quality Assurance

10

0

81

R & D

8

0

81

Maintenance

18

0

81

Stores & Excise

11

0

81

Commercial

1

0

81

IT

1

0

81

HR & Admin

9

0

81

Safety

3

0

81

Again the company is stable this month. The salary part is also very stable and the business is doing well. Addition of 2 more employees to the production unit. The cost is again higher than the previous month

March 2010

Staff Rationalisation Data

Cost Centre wise Expense

Dept

Total Man Power

Man Power Changed

Cost Centre

Production unit 1

26

1

64

Production unit 2

29

0

81

Contract site

0

0

Contract site-81

Quality Control 64

16

1

64

Quality Control 81

10

0

81

Quality Assurance

9

1

81

R & D

7

1

81

Maintenance

18

0

81

Stores & Excise

11

0

81

Commercial

1

0

81

IT

1

0

81

HR & Admin

9

 

81

Safety

3

0

81

Again the company lost their one chemist from research and development. But otherwise everything looks normal. There is addition in the quality assurance which is a great new and also this has increased the salary expenses of the company

April 2010

Staff Rationalisation Data

Cost Centre wise Expense

Dept

Total Man Power

Man Power Changed

Cost Centre

Production unit 1

26

0

64

Production unit 2

28

1

81

Contract site

0

0

Contract site-81

Quality Control 64

21

5

64

Quality Control 81

10

0

81

Quality Assurance

11

2

81

R & D

7

0

81

Maintenance

18

0

81

Stores & Excise

11

0

81

Commercial

1

0

81

IT

1

0

81

HR & Admin

10

1

81

Safety

3

0

81

This is a very good month for the company as there is lot of addition in the stall many people of high post are being recruited and this indicates the growth of the business

May 2010

This is also a normal month for the company although there are new people coming in the business very few people are leaving the organisation.

Staff Rationalisation Data

Cost Centre wise Expense

Dept

Total Man Power

Man Power Changed

Cost Centre

Production unit 1

27

1

64

Production unit 2

29

1

81

Contract site

0

0

Contract site-81

Quality Control 64

26

5

64

Quality Control 81

7

3

81

Quality Assurance

11

0

81

R & D

7

0

81

Maintenance

19

1

81

Stores & Excise

11

0

81

Commercial

1

0

81

IT

1

0

81

HR & Admin

10

0

81

Safety

4

1

81

June 2010

Staff Rationalisation Data

Cost Centre wise Expense

Dept

Total Man Power

Man Power Changed

Cost Centre

Production unit 1

27

0

64

Production unit 2

29

0

81

Contract site

0

0

Contract site-81

Quality Control 64

24

2

64

Quality Control 81

8

1

81

Quality Assurance

12

1

81

R & D

7

0

81

Maintenance

19

0

81

Stores & Excise

11

0

81

Commercial

2

1

81

IT

1

0

81

HR & Admin

10

0

81

Safety

3

1

81

Again a stabilized month for the company. This is a better sign as the business never wants people to leave their organisation

Comparative study

Comparison in between production unit 1 for all the years:

According to the graph the months like august, September and October are pretty bad for the company. The company started the year with 12 employees in the 1st month. The company lost 6 people in the 2nd month. But the company came back on track after that as they started to recruit people and tried to stabilize the people count. The company has been stable after the month January as the no of people employed started to attain some constant figure

Comparison in between production unit 2:

This has been more like a steady unit. There has been increase in the employees after the 1st month. In the 1st month there were 19 employees which then increased to 23 in the 2nd month. Although this unit has been good there were few people leaving their jobs also. In January and April they lost 1 employee. But apart from thins thing this has been a good sector

Comparison in between the quality control 64

This sector had many ups and down in this year. The sector started with 14 employees in the start of the year. But it was reduced to 12 people in the 2nd month. Later on the company tried to come back and they had 13 employees for both September and October. But in November the employees reduced to 9 people which were a very big decrease. Even after that the company made a good come back and was able to get some stability in the months later on.

Comparison in between the contract site

The most shocking sector in the company. I was doing well in the 1st 4 month but suddenly in the 5th month the employees reduced to 0 and it remained the same throughout the year. The company suggest that the people felt their jobs because of developmental needs

Attrition per month:

Month

Attrition rate in percentage

Jul-09

6.3

Aug-09

8

Sep-09

1

Oct-09

1.7

Nov-09

10.6

Dec-09

1.5

Jan-10

0.7

Feb-10

0

Mar-10

2

Apr-10

0.7

May-10

2

Jun-10

2

Average

3.041666667

If we look at the month of July 2009 the attrition rate of the company is very high 6.3% is not a good figure for the company. In the month of august of 2009 the attrition rate of the company reached to 8% which is not at all good for the company. After that month the attrition rate of the months of sept 2009 and October 2009 has been pretty low compared to the other 1 and 1.7 respectively. But in the month of November 2009 it broke all the records of the company by reaching to 10.6% as the attrition rate. After that month the company has been doing well to stop the attrition rate to grow. The month of Feb 2010 has been amazing for the company as no employee has left or has been removed by the company and the attrition rate is 0%. But again in May it went up to 2% which is not bad but there is still rise. the total attrition rate of the company has been 3,.04% in average which is not a bad figure but still company has been facing many problems to persuade lower and middle level people from not leaving their jobs.

Here is a table which shows who left the organisation:

Compelling offers

Efficiency of the employees not met

Functional and Leadership skills not met

Production unit 1

Workers (undergraduate)

Production unit 2

Worker (undergraduate)

Contract site

Workers (undergraduate)

Quality Control 64

Chemists(grads) location benefits

Quality Control 81

Chemists (grads) location benefits

Quality Assurance

1 manager,1 assistant manager & 2 executives (monetary benefits)

R & D

Chemist (grad)

Maintenance

Engineer (grad)

Stores & Excise

Clerk( grad B.A)

Commercial

IT

HR & Admin

Safety

Officer (diploma )

This is the table which displays all the people who left the organisation. There are lots of people who leave the organisation because of compelling offers and expectation mot met. The company face a major problem when they lost their manager, assistant manager and executives. These people are very important for the company as they are on a higher post and company needs to do something to stop other people from leaving the company

Reasons for leaving the company:

These were the reason found by the company by the exit interviews

Compelling Offer

Efficiency of the employees not met

Functional and Leadership skills not met

Compelling offers: The competitor many times give a compelling offer which is hard to resist. The opposing companies' makes offers which are very appealing and convincing which makes the employees leave the job. It is like a dialogue in Godfather movie by Michael "I'll make him an offer he can't refuse." The talent of the employees is the most important thing for the company and themselves. More talented the employee is the more appealing offers he receives

Efficiency of the employees not met: this is related to the work handed to the employees. Many times employees as difficult questions like 'when will i get promotion or when will i get my salary increased'. It is usually hard for the company to answer these kinds of questions to the people who are not efficient enough and this leads to person leaving his job. If the person has a very good performance record and is very efficient in hi/her work the manager has no problem in responding to them. Sometime people from higher post are also removed because of this reason

Functional and Leadership skills not met: Fewer staff reduced or wiped out spending on development, and higher expected levels of accomplishment do not present a winning picture. Most of the people receive training in school or college to build up their functional skills and develop their leadership skills, these investments are highly valued by any company. Functional skills are the skills a person has beyond his work like handling stress. Leadership skills are required to lead a group. These are very important to succeed in work as they get you promotion but lack of these skills is highly risky

Compelling offers was one of the major threats for the company. Majority of their staff left the company for this reason. They lost their higher people because of this reason. The chemist form quality control sites left because of compelling offers which offered them location benefits. As majority of the people from this sector were living far away. Travelling to the company was a very had thing for the people to do as they use to waste lot of time in this. So most of the people left their job for this reason. The biggest problem for the company was when the higher level people like 1 manager, 1 assistant manager & 2 executives left their jobs. They left their jobs for monetary benefits. The other company gave them a better package with high salary which made these people to leave their job. The other people who left their job were from the R & D and Stores & Excise.

Efficiency of the employees not met: people were removed from the company because they were not able to reach the expectation of the company. Lower level people were removed for this reason. Employees like workers and security people were asked to leave because of this reason.

Functional and Leadership skills not met: again works for contract side were removed from this sector. All the 12 workers left because of developmental needs. These people lost their jobs because they were not able to cope up with the new requirements of the company. This sector remained empty till the end of the year as the company never required anyone for this sector.

Apart from these factors there are other factors also which affected the rate of attrition in the company:

According to the survey I conducted there were other reasons like:

Salary

Lack of Job Satisfaction

Not Getting Promotions

Discrimination in the Workplace

Consciously tarnishing of relationship.

Frustrating Employee

Life cycle Changes Not Managed properly

Hiring an inappropriate person

Consciously tarnishing of relationship: bad behaviour with the employees or manager is taken in the concern in this aspect. According to the research no employees have left the organisation because of this reason but there were few complain which were because of this. Few of the employees were facing problems created by their managers on purpose. Though these were not serious issues as 'a small spark can light a fire' this can be a reason for employees to quit their job and find a better place. When this thing happens it create a gap in between the employee and the company which is hard to remove. According to me the company must take a strong action my punishing the person who does this as the employees are very important part of the company and loosing employees for this reason is very poor for the company.

Frustrating employee: the company agreed to the fact that the people have an attitude of forgetting their responsibility. This can also lead to the attrition as the company will try to get rid of such people.

Life cycle changes not managed properly: major life events in the employee's life can cause problems to the company for e.g. marriages; divorce, birth of a kid, death in the family etc are all occasions when the employer has a chance to reinforce the relationship. Most of the times the company does not think about the employee and this creates a barrier in between the employees and the company which can make the employee leave the job. The company can organise different plans for the employees which will help them in this situation. Like if a female employee is pregnant then allow her to take a leave of 6 months which will help the employee and the company. This will also allow the company to develop a strong bond in between the company and the employees thus reducing the attrition rate

Hiring an inappropriate person: Many companies face this problem. Many times the company is unable to select an appropriate employee of the job thus making a wrong hire. There is a term in business "Do Not Hire the Best - Hire the RIGHT Person".

In this company these are the factors which can affect the rate of attrition. If these factors are left unanswered then these can play a major role in the attrition rate but if controlled then can also minimize the attrition of a company.

Salary: this plays an important role in the employee's life. If we compare the data about the people from this company have left majorly because of compelling offers which contains the aspect of salary. If the employees are not well paid for their work then there is always a chance of them leaving the job. And this is one of the major thing with the companies try to avoid as if people leave then the company has to spend lot of money just to get new employees. In this case the higher authorities have left their jobs for monetary benefits which consist of their salary part.

Lack of job satisfaction: no employees will work in a company where he feels lack of job satisfaction. People most of the time seeks for job satisfaction. And if they are not satisfied then there is 100% chance of them leaving their job.

Not getting promotions: many times it happens that the company is not giving the employees credit of what they do. And promotion is one factor. If the employee is not able to reach the expectation of the company and then ask for promotion the company will no way permit that and this can cause the attrition to happen. Currently some employees were not given the promotion promised to them. If the copmapny wants to keep a goot working relationship with the employees it is important for them to give people what they deserve. This doesn't mean the company must promote every employee. This should be done to the employees who deserve it.

Discrimination at the work place: this is a very common thing which happens in the work place. In every company this happens and the company must make sure that there is a friendly environment. Because if the employee is not happy then he will look for a place where he can work happily. The company can reduce this by encourage employees and keeping bonding time for the employees to get together.

Effects of attrition on the company:

After losing so many lower level people as well as higher level people the company has faced many problems. Attrition increases the cost of the company as the company needs to hire new people and then train them etc. The company here lost majority of the workers and this decreases the production capacity of the company. Also as people are leaving the company needs to spend money to fill the spaces and also to catch up with the productivity.

The cost incurred after attrition is in different sectors:

Recruitment cost

Training cost

Lost productivity cost

New hire cost

Lost sale cost

These are the cost which the company has to pay after attrition happens

In recruitment cost the company needs to pay for the advertising agency, the office which brings people for jobs etc. But in this case the company's HR department always keeps 15% extra employees for this reason. So when lower level people leave their job the company only needs to pay for their medical check up which is around Rs 1000 per employee and rest all is taken care by the HR department.

Training cost is something which the company needs to pay according to the demand. Even if the employee is old or new the company needs to train them. But in case of a new employee the company needs to train them from scratch thus increases the cost incurred for training. The training cost differs from time to time depending on the training course and the person training them.

Lost productivity cost: the employees can't give their 100 % immediately after they start working. It requires little time to do so. The company needs to cover up this cost after the employee is comfortable with his/ her job.

New hire cost: the company needs to spend some amount of money in other facilities which will be given to the employee. Even if the company is adding new people they need to provide them these facilities. This cost comes under new hire cost.

NOTE: I was not able to calculate the amounts as the company was not ready to exposes their finance part.

Solution for the attrition and recommendation:

For the monetary benefits given to the people the company can conduct exit interviews so as to know what the demands of the employees are. Also the company can give people annual appraisals and then after the employees are happy with their work they can convert it to performance appraisals. The annual appraisals can be used as a motivation trick to make employees work hard and stick to their job. Also every manufacturing site is allocated with budgeted expense for the next month. This prepared budgeted expense is decided on the basis of the last 6 months average. The company can leverage this budget to approx 15% per month in order to tackle the inflation which takes place.

For people who left the jobs because of long distance problem the company can provide the employees and their families with an accommodation and also admission for their children in the best schools in palghar. The company can do this by reduction a part of the employee's salary and using it for this purpose. By doing this they can also avoid people leaving their company for compelling offers. Because of people are looking for comfort and money then the people will get everything they want near the company itself. they will get a little rise in the salary which is little less than the other company but they will also get education for their children and a place near the company which will allow them to cut short their travelling expense and time. Also they HR department in the company can have 20% extra people in the recruitment sector for lower level people. But the company suffered a major problem when they lost higher level people so the solutions above can be used to avoid the future problems.

Conclusion:

The company needs to conduct exit interviews to understand the problems faced by the people apart from that the company need to create bonds in between the employees and the owners to understand the real problem of the employees

The average budget can be estimated 15 % extra per month as if attrition happens the company can easily overcome it.

For long distance problems the company can provide their employees with an accommodation by reducing some part of their salary.

The HR department can keep 20% extra people to adjust the attrition rate which happens.

Bibliography

Book sources

Baysinger, Barry D., and William H. Mobley. Employee Turnover: Individual and Organizational Analyses. Ft. Belvoir: Defense Technical Information Center, 1982. Print.

Internet sources

"Seven Reasons for Attrition." Abhijit Bhaduri's Official Website - The Author of 'Mediocre But Arrogant' & 'Married But Available' Web. 7 Dec. 2010. <http://abhijitbhaduri.com/2010/09/seven-reasons-for-attrition/>.

"About Arch Pharmalabs - World-class Small Molecule Process Chemistry, Custom Synthesis Services and Full Life-cycle API and Drug Intermediates Manufacturer." Archpharma Labs. Web. 2 Jan. 2011. <http://www.archpharmalabs.com/the-company/who-we-are.asp>.

Acknowledgement

I would like to thank Dr. Vikas Sadvilkar - Sr. Vice President - Technical of the firm to help me gather this information and guide me in various areas.