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Employee Attrition and Retention:
Exploring the Dimensions in the urban centric
Synopsis of the thesis to be submitted in fulfillment of the
requirement for the Degree of
DOCTOR OF PHILOSOPHY
Santoshi Sen Gupta
Enrollment No: 064009502
Under the guidance of
Dr. Aayushi Gupta
JAYPEE INSTITUTE OF INFORMATION TECHNOLOGY, NOIDA
A-10, SECTOR 62, NOIDA, INDIA
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TABLE OF CONTENTS
1.1 Basic Introduction
1.2 Need of the research
1.3 Aim of the research
1.4 Objectives of the study
1.5 Research Methodology
1.6 Significance of the Study
1.7 Scope of the study
2.0 Literature Review
2.2 BPO: An overview
2.2.1 Market Size of BPO in India
2.2.2 Growth of Indian BPO Industry
2.2.3 Attrition in BPO
2.3 Employee Motivation
2.4 Employee Involvement
2.5 Hackman and Oldham??™s Job Characteristic Model
2.6 Conceptual model of the research
3.0 Research Methodology
Exploring the dimensions of attrition in the BPO industry
4.1 Secondary Data Analysis
4.2 Primary Data Analysis
Exploring the dimensions of employee retention
5.1 Retention Factors
5.2 Regression Model of Retention
5.3 Model Validation
6.1 Analogy with established theories
6.2 Implications of the Study
6.3 Recommendations: Developing Retention Strategy
6.4 Limitations and scope for further research
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1.1 Basic Introduction
BPO! One reads the word and myriad of well-groomed youth on calls, fast money, and phenomenal
lifestyles seem to flash the mind in a jiffy. That??™s just the start. One reads it again, contemplates over
it, dives into the unveiled afflictions, and gives it a second thought and a completely differing
depiction blazes the mind. Lopsided working hours, unimaginable attrition rate, stress and burnout
exhibit its ugly side. No matter how the seesaw balances between the pros and cons, the fact remains
conspicuous, loud and unchanged. BPO, Business Process Outsourcing, is the mantra of employment,
the buzz of present, and the promise of future!
The last decade saw an upheaval in the growth and development of the Indian economy, which was
accompanied by the revolution in the technological front and a radical change in the way businesses
were done. Instead of being the jack of all trades, the smart organizations have now redefined the way
of working and now aim at being the master of their core business. Outsourcing the non-core processes
in order to concentrate on the core ones is how the companies prefer to work now. BPO has become
the obvious strategic choice of the companies looking at the visible profits of cost reduction while
improving the quality of service, increasing shareholder value etc. (Shah and Sharma 2006). With the
whirlpool of opportunities the Indian Business Process Outsourcing sector seems to be on a happy
ride. It has emerged rapidly, and its exports have grown from $565 million in 2000 to about $7.3
billion in 2005 (Budhwar et al. 2006). With the boat steaming ahead in the global markets, India has
already become the most privileged destination. Hence such an eternal inventory of opportunities
simply showcases a phenomenon which is no less than the renaissance for our Indian markets.
Today, India is the hottest destination for any company that wants to outsource its business processes.
From a negligible size in early 2000 to a gigantic size today, the BPO sector has been growing at an
unprecedented rate. In 2003, India accounted for 75 percent of the total BPO offshore delivery value
that was expected to increase by 55 percent annually over the next five years (Neale 2004). According
to Scholl et al. (2003), India??™s revenue from BPO operations was expected to grow from
approximately $1 billion in 2002 to $13.8 billion in 2007 and its share of supply was projected to be
57 percent of the offshore BPO market. According to Nasscom, the Indian IT-BPO industry (including
domestic market) recorded an overall growth of 28 per cent (currency adjusted), clocking revenues of
$52 billion in FY07-08 up from $39.6 billion in FY06-07. 2008 was a year of revolution for the Indian
IT ??“ BPO sector as it began to re-engineer challenges posed by macro-economic environment, with the
worldwide spending aggregate expected to reach nearly USD 1.6 trillion, a growth of 5.6 per cent over
the previous year. The BPO exports are up by 30 per cent (in US dollars), registering revenues of
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$10.9 billion (Nasscom 2009). Indian IT-BPO grew by 12 per cent in FY2009 to reach USD 71.7
billion in aggregate revenue. Software and services exports (includes exports of IT services, BPO,
Engineering Services and R&D and Software products) reached USD 47 billion, contributing nearly
66 per cent to the overall IT-BPO revenue aggregate. IT-BPO exports (including hardware exports)
reached USD 47.3 billion in FY2009 as against USD 40.9 billion in FY2008, a growth of 16 per cent.
Contrary to the sunny side of the story, we have a dark side of the BPO too.
The flip side of the BPOs revolves around the host of challenges that they have been facing since their
very inception. The major challenges being faced by the BPO industry in India can be classified into
internal and external challenges. The internal challenges include shortage of competent managers for
the middle and senior management and the high attrition rates. The external challenge is in the form of
opposition from the US politicians and the UK labor unions against shifting of the BPO operations by
local companies to India. One of the most significant internal challenges is high attrition rates.
Attrition refers to a gradual, natural reduction in membership or personnel, as through retirement,
resignation, or death (National Performance Review 1997). It means not only loss of talent, but also
includes the cost of training the new recruits. According to Mehta et al. (2006), of all the challenges
posed to BPO organizations at various levels, attrition, absenteeism and motivating employees are the
major ones that dominate at the middle level. The attrition rate in the industry has been hovering
around 35%, which is quite high for any industry. An average Indian call center employee works with
a company for 11 months, where as an average UK call center employee stays in a company for 3
years. According to some analysts (BPO India 2004), in general, the attrition rate fluctuates between
20% and 40%, while in the best companies, it averages around 15%. As per NASSCOM (2004) report,
the outsourcing industry would have a shortage of 262,000 professionals by 2012. Despite potential
for tremendous growth, BPO industry continues to suffer from high level of attrition stemming from
factors like high levels of stress and lack of opportunities for growth. Attrition in BPO, though varying
from industry to industry has reached an all-time high level of nearly 60% (BPO India 2004).
Attrition in BPOs has terrible effects on the organization. The high attrition costs increases the costs to
the organization considerably. They have to combat the amount of disruption due to unplanned exits.
The more the people leave an organization, the more it is a drain on the company??™s resources like
recruitment expenses, training and orientation resources and the time. The high attrition rate also
affects the productivity of the organization. Therefore, it is extremely important to curb attrition not
only for an individual firm but also for the industry as a whole. Many researchers have worked
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enormously on the BPO sector, citing its challenges, issues, and opportunities in and around employee
performance, employee satisfaction, employee turnover etc.
1.2 Need of the research
Most research in the BPO sector has addressed only specific problems related to its environmental
analysis like challenges, growth and opportunities, the problem of attrition, the HRM systems, and
issues of job stress, job satisfaction, individual performance etc. Research done in the area of
employee motivation and satisfaction has discussed domains like education (Sharma and Jyoti 2008,
Smerek and Peterson 2006), private public employment (Demoussis and Giannakopoulos 2007),
financial institutes (Kazemzadeh and Bashiri 2005), ITES industry (Dash et al. 2008), oil industry
(Okpara 2006), government ministries (Al-Ajmi 2006), labor market (Brown et al. 2007), to name a
few but not much inclusive and structured work has been done in the domain of BPO sector. Literature
review has also shown how various researchers have identified a plethora of reasons behind the
escalating problem of attrition and how many of them have even suggested recommendations to
combat it (Misra 2007, Prakash and Chowdhary 2004, Joshi 2004). Many researchers have also
worked on various domains like the HRM systems and practices (Budhwar et al. 2006), job
satisfaction (Sharma 2006, E-sat survey 2005), and burnout prevention (Kanwar et al. 2008).
However, no systematic and comprehensive work has been found that collaborates all the facets viz.
attrition, retention, employee motivation, involvement etc to combat the most smoldering problem of
the present times i.e. attrition. Another interesting thing that emerged from prior researches and
focused group interviews taken for pilot survey is that reducing attrition may not always mean
increasing retention. Attrition may reduce if the negative characteristics of the job are taken care of.
However, that does not mean employees increase their willingness to stay in the same organization.
Thus different set of factors emerged for attrition and retention respectively. Looking at the big picture
of the much realized potential of the BPO industry in India and the impending curse of attrition in this
sector, it can be confidently said that the problem can not be overlooked. There is a dire need of
tackling the problem of attrition in the BPO industry of India and for this employee motivation has
been chosen as an effective tool. There is need to develop a concurrent strategic method, an innovative
development paradigm that can be utilized to curb the ever-increasing attrition rate in the BPO
industry. Thus the need for this study can be clearly defined in two points:
1. Attrition is a burning problem for the promising industry of BPO, especially because it fails to tap
the full utilization of the human resources and wastes much of its time, money and resources due to
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2. Dearth of motivation among the BPO employees is one of the bitter truths that is responsible for
the attrition in this sector, and it is time we enhanced it in the BPO sector.
1.3 Aim of the research
This research aims to produce a model for employee retention conjoining it with other aspects of
perceived attitudes viz. employee motivation, employee satisfaction, employee involvement and life
interest and work compatibility etc. To attain the aim of the research, the Hackman and Oldham??™s Job
Characteristics model (1976) was taken as the basic foundation. Hackman & Oldham (1976) proposed
the Job Characteristics Model, which is widely used as a framework to study how particular job
characteristics impact on job outcomes, including job satisfaction. The model states that there are five
core job characteristics (skill variety, task identity, task significance, autonomy, and feedback) which
impact three critical psychological states (experienced meaningfulness, experienced responsibility for
outcomes, and knowledge of the actual results), in turn influencing work outcomes (job satisfaction,
absenteeism, work motivation, etc). The basic hypothesis of this research that employee motivation,
employee satisfaction, employee involvement, and life interest and work compatibility lead to
prolonged sustenance is an extension of this model with minor modifications in it. It is proposed that
the Job Characteristics model is modified by redefining job dimensions as growth prospects,
accountability, sense of accomplishment, self-esteem, job security, interpersonal relationships,
working conditions, by extending organizational outcomes as satisfied, motivated, involved and
retained employees. Figure 1 is the modified Hackman and Oldham??™s Job Characteristics model which
has been taken as the base to study the research questions pertaining to this research. The new model is
also designed to be of use as a management tool and must therefore be simple and flexible enough to
be of use to the management of an organization. Typical management questions would involve the
likely motivational impact of job redesign, such as increasing employees??™ level of control and
responsibility over their work behavior or introducing a scheme whereby employees participate in
certain management decisions. The model should therefore allow managers to manipulate a host of job
characteristics and investigate the likely effects upon the motivation, performance and sustenance of
the workforce. This study aimed at exploring the dimensions of attrition and retention. Based on our
ground work; initial survey and personal interviews held with the BPO employees, it was found that
factors that contribute to attrition are quite different from the factors that contribute to retention. Thus
based on this, we developed two basic models of our research as shown in figure 2 and figure 3.
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Figure 1.4: Modified Hackman and Oldham??™s Job Characteristics Model
of the work
High quality of work
Experienced responsibility for
outcomes of the work
with the work
Knowledge of the actual
Low absenteeism and
results of the work activities
High Work Motivation
Feeling of accomplishment
High Satisfaction with work
Prestige inside and outside
High Involvement with work
Personal and Work
Figure 1: Modified version of Hackman and Oldham??™s Job Characteristics Model
Based on the Hackman and Oldham??™s Job Characteristics Model and the modifications made to it, a
clearer and more lucid pictorial framework of the model is given in Figure 2 and 3. Figure 2 clearly
illustrates the basic constructs of the attrition model: personal characteristics, negative job
characteristics (job dimensions), and the final resultant as attrition. Figure 3 illustrates constructs of
retention model i.e. personal characteristics, intrinsic job dimensions and the resulting level of
satisfaction, motivation and involvement (work outcomes) and the final result i.e. retained employees
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Lack? of? motivation?
Power? and? politics?
Low? career? growth?
Lack? of? skill? variety?
of a BPO job
Figure 2: Basic model for attrition
Figure 2 clearly suggests the personal characteristics as age, education, gender, marital status and
tenure along with the negative characteristics of a BPO job i.e. monotonous nature of job, lack of
motivation, poor mentoring, power and politics, dissatisfaction with colleagues, low career growth,
lack of skill variety, irregular working hours, achievement not recognized etc. These two collectively
result in the attrition of employees. The question is how much do these factors actually contribute to
attrition. Similarly figure 3 describes the personal characteristics and core job dimensions which are
intrinsic in nature and how do they contribute to retention of employees.
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Prestige inside and
Figure 3: Basic model for retention of employees
1.4 Objectives of the study
The major motivation of this thesis is derived from the studies of Mehta et al. (2006), Budhwar et al.
(2006), Shah and Sharma (2007), Misra (2007). It is clear from the review of earlier research that
solutions are required to some specific problems of practical importance in the field of escalating
attrition in BPOs. The broad objective of this thesis is to identify the root causes of attrition in BPOs,
analyzing the level of employee motivation, satisfaction and involvement, generate a model for
maximizing sustenance of employees in the organization and come up with concrete
recommendations, which will eventually be valuable to the organizations to retain their employees for
a long term. The specific objectives of this thesis are:
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1. To identify and rank the factors of attrition in BPOs based on accumulative literature review and
2. To explore and analyze the dimensions of attrition in BPOs based on primary data collected from
3. To identify and explore the dimensions of employee retention in BPOs based on primary data
collected from field survey.
4. To develop a regression model for escalating the stay of employees in BPOs and give
recommendations for the same.
5. To assess the existing level of employee motivation and validate the model by studying the impact
of recommendations on a small patch.
1.5 Research Methodology
The general intent of this descriptive study was threefold. Therefore a systematic and organized methodology was obtained for the research study. A survey design was used to obtain the required information. The population for this study comprised of employees working in various BPOs in the National Capital Region. A sample size of 500 was chosen for this study. Simple random sampling technique was used to gather data from the respondents, because of which respondents diverged from every age group, gender, organization, marital status etc. but were restricted only to low and middle level employees, where the attrition is highest. The questionnaire was intricately designed to tap the
demographic variables including age, education, gender, marital status, and tenure of the respondents. It also gathered information about the factors responsible for attrition, the factors that can be employed to retain the employees in a BPO, their overall level of satisfaction, motivation, involvement and life interest and work compatibility. Main data collection began in the month of July 2008. Statistical Package for the Social Sciences (SPSS) version 17.0 was religiously used for the statistical analyses.
1.6 Significance of the Study
The significance of the study lies in the detonation of the BPO industry in the recent years. Where on one hand the sector is growing with leaps and bounds, on the other the employee turnover has been alarmingly high, thus costing a lot to the company. The middle level and low level employees are victims of dearth of motivation and employee satisfaction also seems to be brandishing. The study is an attempt to assess the patterns of attrition in BPO and analyze the relationship among employee[pic]
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motivation, job satisfaction and employee retention, so as to utilize employee motivation to retain employees in an organization. Thus, not only is it significant for academicians but also for professionals who can exploit it to control the employee turnover.
1.7 Scope of the study
Although the development of motivation model to tackle the problem of attrition in the BPO sector has inputs from a variety of sources including primary and secondary sources, the study is confined to the data collected from the national capital region of India. Moreover, only selected facets of job characteristics have been considered for the study. There are many which can be included in order to assess employee motivation. Therefore the scope of the study is limited to the geographical location of the sample size and also to the selected dimensions of personal characteristics and employee motivation.
2. Literature Review
With the boat of success steaming ahead in the global markets, India has already become the most
privileged destination for Business Process Outsourcing. The word which one would simply lisp in the
beginning of this century has become the most pronounced and sought after term. Generating
revenues, fostering employments, elevating the living standards, an eternal inventory of opportunities
simply showcase a phenomenon which is no less than the renaissance for our Indian markets. Many
researchers have talked about BPOs in their works, highlighted its capability as money making sector,
showcased its doom of high employee turnover, sketched out its strengths, weaknesses, opportunities
and threats, and also chalked out its dynamics of HR. Other researchers have extensively worked on
various perceived attitudes of employees like their satisfaction, motivation, its influence on their
tenure, their loyalty, commitment etc. This chapter unfolds all the relevant literature about the BPO
industry in India, theories and research works of employee motivation and satisfaction, and
collaborates the findings to tackle the problem of attrition in this sector.
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2.2 BPO: An overview
Grossman and Helpman??™s (2005: 135) statement, ???We live in an age of outsourcing,??? clearly
designates that outsourcing has now become an acknowledged, accepted and established business
strategy. One of the most familiar forms of outsourcing is business process outsourcing (BPO), i.e.,
transferring the operational ownership of one or more of the firm??™s business processes to an external
supplier that, in turn, administers the processes according to some predefined metrics (Ghosh and
Scott, 2005; Stone, 2004). BPO or Business Process Outsourcing thus refers to the rearrangement of
entire business functions to some other service providers, primarily in low cost locations. The service
provider may be either self-owned or a third party. This relocation or transferring of business
processes to an external provider is essentially to accomplish increased shareholder value.
Some of the general services provided by the BPOs are Receivables and Payables, Inventory
Management, Order Processing, Cash flow Analysis, Reconciliation, Data Entry, Payroll Processing,
QuickBooks Accounting, Financial Statement Preparation and Accounting Services. Some of the web
based services include live online sales and order entry, E-commerce transaction support, Live online
enquiry handling, Web Design/Development.
2.2.1 Market Size of BPO in India
Speedy transformation is taking place in the global BPO market. It is escorted by increased
investments in BPO services. Most of the principal business companies of the world are adopting BPO
as a strategic business solution. The BPO industry is quite assorted, with several sub-segments, each
exhibiting its own unique and exclusive characteristics. The size of the global BPO market was
projected to be $173bn by 2007, of which $24.23bn would be outsourced to offshore contractors
(Gartner 2005). Of this, India has the potential to generate $13.8bn in revenue. “The projection
includes revenues of pure play Indian BPO service providers, captives operations of MNCs operating
in India, third party service providers and BPO subsidiaries of IT services firms.
2.2.2 Growth of Indian BPO Industry
BPO is a varied and speedily growing offshore market with an estimated annual growth rate of 60
percent (Tapper, 2004). Brown and Stone (2004) reported that BPO accounted for 34 percent of the
global outsourcing contract value in 2004 and estimated that BPO services would grow from $1.3
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billion in 2002 to $4.3 billion in 2007. The Indian BPO sector has emerged rapidly, and its exports
have grown from $565 million in 2000 to about $7.3 billion in 2005. These exports were projected to
increase to $20 billion by 2007 and employment in the sector was expected to rise from its current
level of 300,000 to over 1.1 million by 2008 (Chanda, 2005; NASSCOM, 2005a). The first
NASSCOM-McKinsey study (Indian IT Strategy, 1999) had set an ambition of USD 50 million in
exports by 2008, and as a matter of fact, the industry has been on track to achieve this figure. The
aspiration for 2010 however, is expected to witness a delay of three to four quarters on account of the
global meltdown. The IT-BPO industry has traveled from a USD 4 billion sector in 1998 to a breath-
taking USD 52 billion in 2008 employing over 2 million people (NASSCOM 2009). Looking at the hit
side of the fabulous growth of the BPO industry, a number of leading software service companies also
made a foray into the BPO domain, either directly, or through the mergers and acquisitions route. Most
Indian IT leaders today such as Wipro, Patni, Satyam, HCL, among others, have presence in this
market. The segments like customer care and administration showed a promising growth of over 75%
which was the highest among all.
2008 was a year of transformation for the Indian IT ??“ BPO sector as it began to re-engineer challenges
posed by macro-economic environment, with the worldwide spending aggregate estimated to reach
nearly USD 1.6 trillion, a growth of 5.6 per cent over the previous year. In the global market, software
and services touched USD 967 billion, an above average growth of 6.3 per cent over past year and the
worldwide BPO grew by 12 per cent, the highest among all technology related segments. 2008 was a
strong year as number of contracts, total contract value and annualized; and contract values exceeded
as compared to 2007. Among all users above average growth was witnessed in the Government,
Healthcare and manufacturing segments (NASSCOM 2009). Indian IT-BPO grew by 12 per cent in
FY2009 to reach USD 71.7 billion in aggregate revenue
2.2.3 Attrition in BPO
Attrition is defined as a reduction in the number of employees through retirement, resignation or death
and attrition rate is defined as the rate of shrinkage in size or number (BPO India 2009). Attrition of
employees in a limited measure is desirable for influx of new ideas in any type of organization. It
helps organizations to maintain their agility in fast changing environment. It brings in new blood,
opens up new vistas for change, development and improvement, shows avenues to expand operations
and add to the creative lines of the organizations. Attrition in a limited measure can thus bring gains to
the organization. However if attrition increases beyond a certain level, the gains are transformed into
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pains. Recruiters explain that high attrition rates significantly increase the investment made on
employees (Prakash and Chowdhury 2004). Significant investments in time and money need to be
made for acquiring employees in any organization. These can never be translated into profit when
attrition is high.
There is an escalating paucity of the appropriate skills gained through the education system, which is
short on quality and relevance. Because of dearth, hiring new talent has become more expensive. In
1999, the average pay packet of an entry-level agent was $160??“$180; now it is $300??“$350. Due to
high attrition rates, every employee who leaves costs the company another $900??“$1100 to recruit and
train a replacement. Finding the right candidate and sustaining it is now becoming a problem. Years
ago, the success rate was of choosing the right candidate was 20 percent (Rediff.com, 2005a, 2005b;
Sangameshwaran and Rai, 2005). Besides this, BPO employees are experiencing problems related to
stress, sexual and racial abuse, and dissatisfaction at work (Walletwatch, 2003; Cacanas, 2004; Singh,
2005b; Witt et al., 2004; Rose and Wright, 2005; Houlihan, 2002). Inside a BPO organization, HR
related issues arising at all levels have become significantly alarming and need to be addressed soon.
Major HR-related issues standing as problems in the various levels of management include attrition,
HR policies, absenteeism, performance appraisal, and manpower allocation (Mehta et al. 2006). In
organizing, the major concerns at the lower management level are related to job design and job
requirements, like night shifts, monotony, and long hours. At the middle-management level, critical
issues were related to HR, organizing, and motivation. Middle-level managers have difficulty retaining
good employees, motivating them to put in their best effort, and keeping them happy. Often managers
are not trained to work with teams and directing and motivating numerous teams simultaneously is
challenging (Mehta et al 2006).
Attrition in the BPO industry is two fold. One part of the attrition is where the employee leaves the
industry entirely. The other section of attrition is where the employee joins another firm in the
industry. Both the sections have separate reasons which need to be identified. The primary reason for
people leaving the industry is due to the cause that the industry is viewed as a gap filler occupation.
There seems to be a flaw in the way the industry is structured. The industry has been mainly dependent
on youth who take out time to work, make money in the process while thinking of career alternatives.
Hence for this group BPO is never a long term career but only as a part time job. The easy availability
of BPO jobs is only a source of easy money till the time there is no other source of funding. Also the
unfriendly working conditions, late night work shifts, high tension jobs acts as a deterrent for people to
stick to this industry for long time. In addition, the BPO jobs are not being taken with a positive spirit
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by the society on a large. Research says that nearly 50 per cent of those who quit leave the industry
(Prakash and Chowdhury 2004).
2.3 Employee Motivation
Employee motivation has been extensively reviewed for this research. Literature on the established
well known motivation theories has been reviewed as one of the final results of our study shows
intrinsic motivation factors as a significant dimension of employee retention in the BPO industry.
Theories of motivation were intricately studied to understand the concept of motivation as an
important predictor of employee turnover. Motivation theories have been broadly classified into need
based theories and process based theories. These theories form the pedestal of all work on motivation.
Here these theories have been discussed to understand the philosophy of motivation so as to
incorporate the same in the study of employee retention. Johnson and Gill (1993) describe motivation
in work organizations as ???the processes by which people are enabled to and induced to choose to
behave in particular ways???. Motivation is therefore coupled with a search for the ways by which
members??™ job performance and productivity may be enhanced or maintain.
2.4 Employee Involvement
Literature on employee involvement was also extensively reviewed as one of the significant
determinants of employee retention came out as involvement factors. Many researchers have worked
on employee involvement and participation at various levels and in various domains. Employee
involvement is an important attribute of job satisfaction, employee motivation and even employee
retention. Employee involvement has a direct correlation with productivity, quality, efficiency,
absenteeism, and even motivation. Employee involvement has received much attention in the area of
work organization in recent decades. Although changes in the work organization during the last
decades are diverse and difficult to summarize by a few key concepts, there has emerged an agreement
that employee involvement and monetary incentive systems are important measures in modern
personnel management (Delery and Doty 1996), (Appelbaum et al. 2000), (Godard 2004). Addison et
al. (2000) shows that establishments of different sizes might be affected differently by employee
involvement. Employee involvement produces improved enterprise performance through diverse
channels including enhanced discretionary effort by employees (Jones et al 2003). There is also a high
association between peer review and employee involvement in work organization and better the peer
review, better is the efficiency towards work. Employee involvement also affects the important
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dimensions of individual performance, organizational citizenship behavior, defined as individual
discretionary behavior that promotes the organization and is not explicitly rewarded. The main
principle behind all initiatives for increasing the involvement of workers is to get the lower-level staff
more involved in the decision making and work processes, and to grant these employees greater
autonomy and control over job tasks and methods of work (Cappelli and Rogovsky 1994). Typical
measures are teamwork, lean management, and reduced hierarchic levels (Godard 2004).
2.5 Hackman and Oldham??™s Job characteristics model
Hackman and Oldham??™s Job characteristics model has been used to develop the conceptual model for
the research. The Job Characteristics Model by Hackman and Oldham (1976) focuses on the
interaction between the psychological states of employees, the job characteristics that are believed to
determine these states and the attributes of individuals that determine how positively a person will
respond to a complex and challenging job. Few of the aspects of the model have been amended with
reasons. This amended model then generates a base for the theoretical skeleton of the research model.
2.6 Conceptual Model of the research
The Hackman and Oldham??™s Job Characteristics Model was taken as the foundation to generate a
conceptual model for the research. The three psychological states applied in the model are experienced
meaningfulness of the work; experienced responsibility for the outcomes of the work and knowledge
of the actual results of the work activities. All these can be purely classed as intrinsic to the job itself.
Consequently, the model predicts only intrinsic (internal) motivation. The effects of extrinsic rewards,
such as pay and other benefits, self-esteem, job security, hours of work and working conditions, etc.
and the resulting extrinsic motivation are ignored. Moreover, there are several job dimensions that
have been found to have an effect on worker satisfaction and motivation that are not included in
Hackman and Oldham??™s formulation of the model. It may also be argued that personal and work
outcomes need to be amended. The outcomes limit to high internal work motivation, high quality of
work performances, high satisfaction with work, and low absenteeism and turnover. It may be noted
here that along with personal outcomes as mentioned here, involvement with work may also breed as a
result of the critical psychological states. The personal and work outcomes may be redefined as high
work motivation, high work satisfaction and high work involvement. If this be the case, it may result
in organizational outcomes too. Organization outcome will be a chain of events, wherein the
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organization cultivates satisfied employees; who feel motivated; show high involvement and hence
The research aims to find out the factors that cause attrition, how do these dimensions vary across the
personal characteristics, what factors actually contribute to attrition. Similarly, it studies whether
satisfaction, motivation and involvement enhance the stay of an employee in the organization. Thus,
based on our literature review, we assume that personal characteristics and job characteristics together
lead to the level of satisfaction, motivation and involvement in an employee, which further leads to
their sustenance in the organization for a long term.
3. Research Methodology
The general intent of this descriptive study was threefold. Therefore a systematic and organized
methodology was obtained for the research study. A survey design was used to obtain the required
information. The population for this study comprised of employees working in various BPOs in the
National Capital Region. A sample size of 500 was chosen for this study. Simple random sampling
technique was used to gather data from the respondents, because of which respondents diverged from
every age group, gender, organization, marital status etc. but were restricted only to low and middle
level employees, where the attrition is highest. The questionnaire was intricately designed to tap the
demographic variables including age, education, gender, marital status, and tenure of the respondents.
It also gathered information about the factors responsible for attrition, the factors that can be employed
to retain the employees in a BPO, their overall level of satisfaction, motivation, involvement and life
interest and work compatibility. Main data collection began in the month of July 2008. Statistical
Package for the Social Sciences (SPSS) version 17.0 was religiously used for the statistical analyses.
A questionnaire was intricately designed to tap the factors responsible for attrition, the factors that are
expected to be present in a specific job for retention. The instrument was divided into 4 parts. The first
part gathered information about the personal profile of the respondents which included their age,
gender, education, marital status, and tenure. Part II consisted of questions about their reasons for
change or probable change in their jobs. Part III aimed at knowing what according to the respondents
is important for their sustenance in an organization. And last of all, Part IV was about their overall
perception of the work which included their level of satisfaction, level of motivation, level of
involvement and level of life interest and work compatibility.
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To test the validity of the instrument, a pilot study was done on 100 participants in the month of
January 2008. Based on their responses, validity tests were done to check for the validity and usability
of the instrument. Cronbach alpha, KMO measure of adequacy and Bartlett??™s test of sphericity were
conducted. Cronbach alpha was calculated to measure the internal consistency reliability of the
instrument. The cronbach alpha came as 0.898 for Part II and 0.963 for Part III thus the instrument was
considered reliable for the study. Kaiser-Meyer-Olkin test was done to measure the homogeneity of
variables and Bartletts test of sphericity was done to test for the correlation among the variables used.
The KMO value for part I of the instrument was 0.745, and for part II was 0.767, both of which are
acceptable as a middling value. The Bartlett??™s test showed significant results for both the parts and
hence the instrument was accepted for further study. Table 1 summarizes the entire result viz.
cronbach alpha, KMO test values, and Bartletts??™s significance of the instrument. On getting quite
meritorious results of the validity, the instrument was floated for data collection.
Table 1: Tests of Validity of the questionnaire
Bartletts Test of
4. Exploring the dimensions of attrition in the BPO industry
4.1 Secondary Data Analysis
In order to gain a deeper understanding about the phenomenon of high attrition, and identification of
the factors behind it, a lot of literature on BPO, particularly what got published during 2004 and 2005
was studied in detail. Major causal factors for high attrition in Indian BPO industry identified in this
study were based on qualitative research using secondary data. These were compared with causal
factors for attrition identified through personal interview with a number of BPO employees in the
NCR. There was a close similarity between the two results, authenticating the qualitative research on
causal agents for attrition identified in this study. The study ranked low perceived value and
monotonous work as number one factor attrition. Rank two was shared by high salary expectation and
unusual working hours. Next factor was disillusioned employees; rank four was shared by stress and
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burnout, pressure to perform on metrics, and lack of motivation. Finally rank five was jointly shared
by lack of security and social interaction.
Table 2: Summary of ranks from secondary study
Causal Agents / Factors
Score (on 1) (Rank)
Higher Salary Expectation
Lack of Security
Lack of Social Interaction
Unusual Working Hours
Pressure to perform on Metrics
Low Perceived Value
Stress and Burnout
Lack of Motivation
On the basis of these ranks and factors, an interesting inference was drawn. Low perceived value
stands out as the most significant factor for attrition. Increased dissatisfaction leads to reduced
motivation, which in turn results in lowered efficiency. When the efficiency is lowered, employees are
not able to deliver their expected output which results in their leaving the job. When employees quit,
the perceived value is further lowered. Thus a vicious circle is formed as shown in figure 4.
Figure 4. Vicious Circle of attrition
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Moreover, it gives rise to the prevalent gap in motivation in this industry as shown in Figure 5. BPO
industry is growing at a sweltering pace but the gap between the actual and expected level of employee
motivation in the industry is increasing due to the formation of a vicious circle. New employees join
the industry with excitement (because of big bucks and vibrant work culture) resulting in higher levels
of motivation. However, they soon get disillusioned as the realities strikes in. Employee motivation
gets a beating at a fast pace. Gap between the actual and expected level of employee motivation
increases as the employee spends longer time in BPO industry. The objective concluded some findings
about attrition through the way of motivation.
Time Spent in Organization
Main Causal Agents for Depletion of Motivation: Low Perceived Value;
Monotonous Work; High Salary Expectation; Unusual Working Hours;
Disillusioned Employees; Stress and Burnout; Pressure to Perform on Metrics;
Lack of Security and Social Interaction.
Level of Motivation
Figure 5. Motivation Gap
Motivational measures appropriate for BPO employees need a close examination and implementation
on a high priority. Thus, the first objective was effectively achieved as it resulted in the formation of
vicious circle of attrition and also gave a clear picture of the gap in motivation prevalent in the BPO
industry. The next objective aimed at exploring the dimensions of attrition based on the primary data
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4.2 Primary Data Analysis
Objective 2. To explore and analyze the dimensions of attrition in BPOs based on primary data
collected from field survey.
The second objective was fulfilled with the help of a number of statistical analyses that included factor
analysis, regression, t-test, Duncan??™s mean test, and correlation. In order to identify and evaluate the
factors behind attrition based on primary data, factor analysis was done. Principal component analysis
was the method of extraction. The Kaiser rule for number of factors to extract was applied. 8 factors
were extracted viz. dispirited perceptual factors, unfavorable working conditions, hostile
organizational culture, discontented personal factors, substandard nature of job, uncongenial
organizational support, low self-fulfillment, and mystified career path.
Table 3: Factors for attrition from factor analysis
??? Low Perceived Value
??? Lack of Equality
??? Lack of Advancement Opportunities
??? Incompatible Policies
??? Power and Politics
??? Dissatisfied with Colleagues
??? Lack of Teamwork
??? Dissatisfied with compensation
??? Personal Reasons
??? Dearth of self-motivation
??? Lack of Skill Variety
??? Monotonous Nature of Job
??? Absence of Challenge
Substandard Nature of Job
??? Irregular Working Hours
??? Emphasis on quantity over quality
??? Ineffective Supervision
??? Lack of Autonomy
??? Achievement not recognized
??? Poor Mentoring
??? Unsure of career growth
Mystified Career Path
The next step involved computing the correlations between the independent variables and the
dependent variable in order to find out the relationship between the two. Substandard nature of job,
dispirited perceptual factors, discontented personal Factors, uncongenial organizational support, and
hostile organizational culture have significant correlations with the dependent variable that is
probability of quitting the organization. All the correlations are positive. It should be noted here that
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the dependent variable in the equation is the employee??™s probability of quitting the organization and all
the independent variables are positively correlated with it. That means these pessimistic dimensions
like substandard nature of job, dispirited perceptual factors, discontented personal factors etc are
positively correlated with the employees??™ probability of quitting an organization. The only three
variables which do not have a significant correlation are low self fulfillment factors, mystified career
path and unfavorable working conditions. That means it cannot be said with statistical significance that
probability of quitting increases with the increase of uncertainty of career growth or poor mentoring or
even achievement not being recognized.
Table 4: Relationships (Correlation coefficients) between factors of attrition,
and probability of quitting the organization (N=500)
Factors of attrition
Probability of quitting
Substandard Nature of Job
Dispirited Perceptual Factors
Discontented Personal Factors
Uncongenial Organizational Support
Hostile Organizational Culture
Low Self-Fulfillment Factors
Mystified Career Path
Unfavorable Working Conditions
** Significant at .01 level.
Regression analysis was also done in order to find out the contribution of these factors to the stay of an
employee. Substandard nature of the job, discontented personal factors, uncongenial organizational
support, dispirited perceptual factors and hostile organizational culture are the main determinants of
attrition in the BPO industry. The value of multiple R is 0.60 and the value of r square is 0.36 in the
equation. It states that 36% of the attrition in a BPO is explained by these factors. An employee tends
to leave the organization because of the substandard nature of the job, discontented personal factors,
uncongenial organizational support, dispirited perceptual factors and hostile organizational culture.
Y= 1.78 + 0.38X1 + 0.42X2 + 0.34X3 + 0.33X4 + 0.09X5
Y = Stay in the organization
X1 = Substandard nature of job
X2 = Discontented personal factors
X3 = Uncongenial organizational support
X4 = Dispirited perceptual factors
X5 = Hostile organizational culture
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These dimensions were then compared across all the personal characteristics i.e. age, gender, marital
status and education. In the gender dimension, factors like dispirited perceptual factors, unfavorable
working conditions, discontented personal factors, monotonous nature of job, and low self fulfillment
factors had significant difference in the mean values of males and females. Dispirited perceptual
factors, discontented personal factors, and low self-fulfillment factors were ranked higher by male
In the marital status dimension, significant difference was found in the mean values of dispirited
perceptual factors, unfavorable working conditions, discontented personal factors, hostile
organizational culture, uncongenial organizational support and low self fulfillment factors.
Uncongenial organizational support, hostile organizational culture, low self-fulfillment factors,
discontented personal factors, and dispirited perceptual factors as factors responsible for attrition were
ranked higher by married employees as compared to unmarried employees.
In the education dimension, all the factors except for mystified career path had significant differences
in mean and standard deviation values between graduate and post-graduate respondents. Factors like
hostile organizational culture, uncongenial organizational support, and dispirited perceptual factors
were highly significant as compared to others. Hostile organizational culture, uncongenial
organizational support, monotonous nature of job, discontented personal factors, and unfavorable
working conditions were all ranked higher by graduates as compared to post graduates. Post graduate
employees ranked perceptual factors and self-fulfillment factors as important reasons for leaving an
In the age dimension, dispirited perceptual factors and monotonous nature of job showed highly
significant differences in mean and standard deviation values. Mystified career path, unfavorable
working conditions and hostile organizational culture were other significant factors. Organizational
culture, working conditions, nature of job was ranked highest by employees less than 25 years of age.
Dispirited perceptual factors along with mystified career path were ranked highest by employees more
than 35 years of age than other less aged employees.
When the dimensions were compared across the three tenure groups, uncongenial organizational
support, hostile organizational culture, low self-fulfillment factors, and discontented personal factors
showed significant differences in mean and standard deviation values. Unfavorable working
conditions, dispirited perceptual factors and substandard nature of job did not have any significant
difference in the mean values or standard deviations. F value was highest in case of organizational
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support. This factor was ranked highest by respondents with less than 1 year of job. Hostile
organizational culture, discontented personal factors, and mystified career path was ranked highest by
respondents with more than 3 years of experience. Employees with 1 to 3 years of experience ranked
low self fulfillment factors as the highest. Thus the second objective of exploring the dimensions of
attrition through primary data was successfully achieved.
5. Exploring the dimensions of employee retention
5.1 Dimensions of retention
Objective 3. To identify and explore the dimensions of employee retention in BPOs based on
primary data collected from field survey.
For the fulfillment of the third objective, a series of statistical analyses were done. It began with factor
analysis, followed by mean tests to compare the dimensions across various characteristics and ended
with the computation of correlations. In order to identify and evaluate the factors behind retention
based on primary data, factor analysis was done. Principal component analysis was the method of
extraction. The Kaiser rule for number of factors to extract was applied. All total 4 factors were
extracted viz. intrinsic motivation factors; hygiene; life interest and work compatibility factors; and
Table 6: Factor Analysis of the factors of retention
Loading Factor Name
??? Opportunity for personal growth and development in my job
??? Opportunity in my job position to give help to other people.
??? Feeling of self-esteem a person gets from being at my
??? Authority connected with my position.
??? Feeling of self fulfillment a person gets from being in my job
position (i.e. feeling of being able to use one??™s own unique
capabilities, realizing one??™s potentialities)
??? My role at the current job position.
??? Prestige of my job position inside the organization.
??? Amenities like housing, conveyance, medical benefits
??? Opportunity to develop close friendship in my job position.
??? Salary offered for my job position.
??? Facilities provided for effective working (lighting, air
conditioning, seating etc.)
??? Security of my job position.
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??? Feeling of worthwhile accomplishment in my job position.
??? Opportunity one gets to move ahead in life and become fairly
well-known and well-off.
??? Consideration given by the government to this profession.
??? Prestige of my job position outside the organization (that is
regard received from others not in the organization.)
??? My overall involvement in the work
??? Sense of accountability for a person at my job position.
??? Opportunity in my job position for participation in the
determination of methods and procedures.
??? Opportunity for independent thought and action.
The dimensions of retention so formulated after the factor analysis were then compared across the
various personal characteristics of the respondents chosen for the study. On the basis of gender
comparison, extrinsic hygiene factors, involvement factors and life interest and work compatibility
factors had their mean values significantly higher in case of females as compared to males. On the
basis of marital status comparison, the mean value of involvement factor was higher in case of
married employees than unmarried ones. On the basis of education, all the factors except involvement
factors had significant differences in mean and standard deviation values between graduate and post-
graduate respondents. Life interest and work compatibility factors, intrinsic motivation factors and
extrinsic hygiene factors were all ranked higher by post graduates as compared to graduates. On the
basis of age comparison, extrinsic hygiene factors, life interest and work compatibility factors and
intrinsic motivation factors showed highly significant differences in mean and standard deviation
values. Extrinsic hygiene factors; life interest and work compatibility; and intrinsic motivation factors
were ranked higher by employees more than 35 years of age than other less aged employees. On the
basis of tenure groups, intrinsic motivation factor and life interest and work compatibility was ranked
highest by the respondents with more than 3 years of tenure. Involvement factor was ranked highest by
the second tenure group i.e. with 1-3 years of tenure in the present organization.
Relationships were also found out between the various retention factors and the perceived attitudes of
the employees. All the correlations had positive and significant coefficients, thus stating the fact that if
an organization is able to exploit the retention factors, viz. motivation factors, hygiene factors,
involvement factors, and life-interest and work compatibility, the employees can readily and
voluntarily express their willingness to continue.
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5.2 Regression Model for retention
Objective 4. To develop a regression model for escalating the stay of employees in BPOs and give
recommendations for the same.
For the fourth objective, regression analysis was done. The dependent variable was sustenance in an
organization, and the independent variables were personal characteristics viz. age, gender, education,
marital status, and retention factors viz. motivation factors, extrinsic factors, involvement factors, and
life interest and job compatibility factors. All these eight factors were put in the model as independent
variables and willingness to continue in the organization was put as the dependent variable. Intrinsic
motivation factors, employee involvement factors, age and education are the main determinants of
retention. The value of multiple R is 0.60 and the value of r square is 0.36 in the equation. It states that
36% of the retention in a BPO is explained by these factors. An employee??™s sustenance in an
organization can be rightfully explained by these factors.
Y= 1.78 + 0.47X1 + 0.15X2 – 0.13X3 ??“ 0.11X4
Y = Stay in the organization
X1 = Intrinsic Motivation Factors
X2 = Involvement Factors
X3 = Age
X4 = Education
After forming the regression model, value for each respondent??™s willingness to stay in the organization
was calculated. These predicted values were then compared to the actual values as given by the
respondents. There was a strong correlation between the actual and predicted values. The correlation
came out to be 0.659** which was significant at 0.01 level. Thus, on the basis of the regression model
it can be concluded that intrinsic motivation factors; and involvement factors are quite instrumental in
retaining the employees in an organization and at the same time, age and education negatively
contribute to the sustenance of the employees in the organization. Employee involvement is a proven
tool to motivate and retain employees and according to the result here, it can be constructive in the
Indian BPOs too. In the West, there has been ongoing interest in getting workers more involved in
various processes, such as decision-making and information sharing. Employee participation adds to
employees??™ growth needs and sense of achievement through a healthier deployment of their dexterity
and potential. Employee participation in planning and decision making and in articulating new policies
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also acts an important tool to improve employee motivation. Finding ways to intrinsically motivate
employees to improve effectiveness and performance can have long lasting impact on their sustenance
Based on the two dimensions i.e. motivation and involvement which, according to the regression
model, significantly contribute to the sustenance of an employee in the organization, employees can be
broadly classified into four broad categories. There are people who are woefully inadequate in both
dimensions i.e. neither are they involved in the work, nor are they motivated to perform. We may call
such people as ???detached??™ who leave the organization for no rhyme or reason, hence extremely
difficult to be retained. Next comes the disgruntled??™ who get involved in the given assignment but
lack aspiring motivation. Such people are moderately to highly difficult to be retained as they lack in
the basic intrinsic motivation. The other two segments comprise of ???strugglers??™ and ???stars??™ who are at
the higher end of the motivation continuum. The former may be relatively lower in their involvement
as compared with the latter. ???Strugglers??™ lack involvement but have a high degree of intrinsic
motivation, because of which they struggle hard to work. It is moderately difficult to retain them. The
ease and art lies in fulfilling their involvement needs by expanding their responsibilities, empowering
them, making them involved in decision making etc. ???Stars??™ are highly motivated and highly involv