This case report is about retention issue in SIFCO. First part will give an introduction describing the rationale for the case study, including the SIFCO’s background & profile, its current position & performance and its internal & external environment. Second part will talk about the retention issue in SIFCO, issues identified in other firms and top retention drivers. Third section will describe the solution in detail, how it was implemented and the impact on users, methodologies, and other factors that contributed to the overall deployment. This next section will conclude the report by evaluating the solutions’ impact, lessons learned, and the next steps to be taken. Lastly a summary of this report will be given.

2.0 Introduction

2.1 Rationale for the case study

Human Resource plays a vital role to get maximum contribution from workforce. Employee Retention is one of the key challenges faced by business organizations. The business organizations in today’s context cannot afford to lose their critical workforce due to uncertainty of changing economy, increasing competition and scarcity of skilled workforce as this would in turn affect their bottom lines drastically. Employers in every part of the world have had to navigate a changing business landscape in recent history. In the past 5 years, the unstable external environment has heavily impacted businesses internally. In light of this, employers are increasingly identifying that retention is one of the most important issues influencing how they not only survive turbulent times, but move beyond them.

Retention is also a major issue to SIFCO because employees’ turnover rate is above 30%. These employees are difficult to engage in their works because they are not happy with the job due various reasons. As a result of this costs like cost of hiring, cost of onboarding, lost productivity, customer service errors and training costs are increasing. Hence the rationale for this study is to identify the causes of this issue and to overcome this issue by engaging them to get the best output in future.

2.2 Business Background

It has been documented that trading amongst and within the soldiers existed even before 1950s. Soldiers traded tobacco, razors, blades and other essential goods, as it was difficult for them to purchase these from outside while on duty. The name Kaaki was given to this business. Individual shares were sold at MVR 10 per share for the interested but Prime Minister Ibrahim Nasir bought back all these shares in 1960s and registered a company called Sifainge Ekuverikamuge Kunfuni which later became a household name SEK. After that the name has been changed to Sifainge Co-operative (SIFCO, 2015).

Mission: Its mission is to provide goods and services to the servicemen and their families at affordable prices and to provide other welfare services to them.

2.3 Current Position & Performance

Outlets: Sifco has its retail outlets in most of the Military bases across the country. The aim of these outlets is to provide quality goods to the servicemen and their families at affordable prices. Kaaki Cafes are located in both Bandaara Koshi and Kalhuthukkalaa Koshi to serve tea, coffee, soft drinks and light snacks.

Housing: Sifco has recently entered into an agreement with a real estate developer to provide quality and affordable housing units to MNDF personnel. The project was officially started on 2nd September 2013 and the units will be available within a time frame of 2 years.

Welfare: SIFCO issues loans worth of MRF 1 million per month which is to be paid annually with a minimal finance charge. Sifco also gives credit facilities for all the soldiers to shop from all its outlets and cafes which is a convenient way of trade. SIFCO also contributes yearly to other entities of MNDF like Dhivehi Sifainge Club and other Units in facilitating the needs of their respective soldiers.

Catering: MNDF has always faced challenges with regard to providing a quality meal to its soldiers. As a result of this, SIFCO was tasked to cater for this need and hence, SIFCO Catering was established on 15th September 2013 at Bandaara Koshi (SIFCO, 2015).

Senahiya: Senahiya is established to provide medical services to the soldiers and their families.
The medical services evolved and the first Military Hospital Senahiya was established in 2009 but was officially inaugurated on 16th September 2012. SIFCO took over the management of Senahiya on 6th August 2012. Its services also offered to MNDF, Maldives Police Service, Department of Immigration & Emigration, Aviation Security Command, Maldives Customs Services, and other citizens of Maldives. Senahiya also provides medicines through the pharmacy located in Senahiya.

Customers: SIFCO serves not only military and their families but also provide various services such as health, fireworks services to all customers in various parts of Maldives.

Business Partners: The major business partners include Euro Store, Happy Market, BHM Traders, STO, Lily Enterprises and Poise (SIFCO, 2015).

Competition: Currently the level of competition is relatively low but the competition in health industry is high.

Organization Structure

(SIFCO, 2015).

2.4 Internal and External Environment: SWOT Analysis

(SIFCO, 2015).

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(A. Hameed, Personal Communication, June 21, 2015)

3.0 Issue: Employee Retention

Employee retention refers to the ability of an organization to retain its employees. It refers to the various policies and practices which let the employees stick to an organization for a longer period of time.

3.1 Reasons Why Employees Leave

1. Insufficient opportunities for growth and advancement

Employees want to make progress, to get ahead. They want to make that next step up the career ladder. They think about where they would like to be in 5 years time, in 10 years time. Their loyalty is largely to themselves, to make the most out of the natural talents, the skills, and determination they possess. They recognize the importance of building new skills, refining current ones, getting new experiences. Since there is no or few opportunities, they find other employers who provide these opportunities.

2. Insufficient recognition or appreciation

The Employees that don’t receive adequate recognition for their contribution, that get little appreciation for their efforts, start to wonder why they bother. And it doesn’t take much to tempt them away. Employees that did not feel valued, that felt that their efforts, their hard work, was not appreciated. That their achievements, their contribution to the success of the business, was not recognised.

3. Problems with direct manager

Some employees stay far longer than might otherwise be expected because of the relationship they have with their supervisor. Others leave jobs in the first few months because they sense their manager is not someone that brings the best out of them. And they need to get away. Because the daily challenge of dealing with someone they dislike, someone that lacks basic people skills, is just too much to bear. Poor relationships between employees and their managers are one of the most common reasons for employee turnover.

4. Dissatisfaction with pay

Some employees believe that they are not receiving a fair salary, a fair pay rise, a fair bonus. Dissatisfaction with financial rewards is complex issue. Much of the dissatisfaction is due to comparisons. A previously adequate salary starts to feel insufficient when employee have just learnt that a new arrival is receiving a higher wage for performing a similar role.

5. Stress

Some employees feel stress of work, the stress from working long hours, the stress related to pressure from above. Stress drives employees into the arms of alternative employers. They simply want to get away from the workplace, from the people involved, from the firm.

6. Lack of work life balance

Employees have responsibilities to their employer, to their families, to their friends. There are times when the demands of work require extra hours, staying late to get things finished, working during weekends to meet deadlines. For some employees the demands of work are no longer compatible with the needs of their family, the needs that exist beyond the workplace. They need a better balance. They need to have time for themselves. Time to take care of loved ones. Free time not devoted to work (A. Hameed, Personal Communication, June 21, 2015)

Challenges in Employee Retention

In the current scenario the major challenge for SIFCO is to retain its valuable and talented employees. The management can control the problem of employees quitting the organization within no time to a great extent but can’t put a complete full stop to it. There are several challenges to it.

Monetary dissatisfaction is one of the major reasons for an employee to look for a change. SIFCO has a salary budget for every employee which can be raised to some extent but not beyond a certain limit. Retention becomes a problem when an employee quotes an exceptionally high figure beyond the budget of the organization and is just not willing to compromise. The organization take cares the interests of other employees as well and can’t afford to make them angry. An individual should not be adamant on a particular figure, otherwise it becomes difficult for the organization to retain him.

Some individuals speak all kind of lies during interviews to get a job. They might not be proficient in branding but would simply say a yes to impress the recruiter and grab the job. It is only later do people realize that there has been a mismatch and thus look for a change. Problems arise whenever a right person is into a wrong profile. An individual loses interest in work whenever he does something out of compulsion. It is really important to get the reference check done for better reliability and avoid confusions later.

Some individuals have a tendency to get bored in a short span of time. They might find a job really interesting in the beginning but soon find it monotonous and look for a change. The management finds it difficult to convince the employees in such cases. It becomes really difficult for the HR Department to find out what exactly is going on in the minds of the individual. An individual should voice his opinions clearly to make things easier for the management.

Unrealistic expectations from the job also lead to employees looking for a change. There is actually no solution to unrealistic expectations. An individual must be mature enough to understand that one can’t get all the comforts at the workplace just like his home. An individual must not look for a change due to small issues. One needs time to make his presence feel at the organization and must try his level best to stick to it for a good amount of time and ignore petty issues (A. Hameed, Personal Communication, June 21, 2015)

As a result of this issue flowing costs are incurred.

The costs of high staff turnover can be incredible. Some of the substantial costs that occur when a person leaves organization include the following:

1. Recruitment costs: From advertising to the time spent interviewing and sourcing.

2. Training costs: Orientation materials and trainers’ time (ex. call center agents require on average 4 - 6 weeks or more of classroom training).

3. Lost Productivity Costs: A new employee operates between 25%-50% of productivity levels for the first three months, not including the time spent by existing employees to assist.

4. Lost sales costs: The loss of business when the role is vacant.

According to researchers why do employees leave?

Research says that most of the employees leave an organization out of frustration and constant friction with their superiors or other team members. In some cases low salary, lack of growth prospects and motivation compel an employee to look for a change (Kashyap, 2009).

Companies expect employee loyalty without committing job security or professional development. Employees say they are loyal, but leave the moment a better opportunity comes. The employer-employee relationship is based on a dishonest conversation. As a result of this dishonesty, employers continually lose valuable people. Employees fail to fully invest in their current job because they are scanning the marketplace for new opportunities (Hoffman, Casnocha, & Yeh, 2014).

According to Towers Perrin (2008) survey following are top retention drivers.

3.2 Top Retention Drivers

1. Organization’s reputation as a great place to work.

2. Satisfaction with the organization’s people decisions.

3. Good relationship with supervisor.

4. Understand potential career track within organization.

5. Ability to balance my work/personal life.

6. Fairly compensated compared to others doing similar work in my organization.

7. Work in environment where new ideas are encouraged.

8. Competitive training.

9. Input into decision making in my department.

10. Organization’s reputation for social responsibility.

3.3 Employee Retention Benefits

1. Businesses that invest in employees and have high employee engagement have a competitive advantage in their ability to make it through a recession.

2. These companies will emerge from the recession stronger and healthier unlike the companies whose workforce has been decimated.

3. Employees feel respected, valued, and appreciated

4. Employees get to be players and not just hired hands

5. Employees get to make a difference (Kashyap, 2009).

4.0 Suggested Solutions

4.1 Solutions and how they are implemented in SIFCO

1) Retention Focused Recruitment:

• Realistic job previews – are done to avoid new recruits leaving during the first few weeks when they discover the job is somewhat different to what they had expected.

• Sharing expectations at interview – Expectations regarding the pay policy, willingness to work long hours, ability to work effectively in teams, expected rate of rise in salary and preferred management style are explained.

• Person/skills - job fit – During the recruitment process they select recruits for competencies like talents, knowledge, self-management traits and motivations.

• Referrals - new recruits are referred to know more information about the performance with previous employers.

2) Retention Focused Orientation:

This orientation is carried out to get the new recruit settled into position as quickly as possible. During the orientation they explain many things like what is expected, how to add value, how to be a team player and help them to feel at home.

On their first day: they introduce the new employee to team members, give them a brief tour of the workplace, explain the importance of their role in the success of the business, introduce them to their buddy, brief them on the company's business strategy, objectives, values etc.

3) Job Sculpting:

• Move them internally – The employees are moved in new position internally.

• They increase job variety to provide more job experiences.

• Meaningful work - they explain how their job fits into the big picture, hence it can create meaning, thus increasing their motivation.

4) Work – Life Balance Measures:

They offer flexible working options by giving employees more control over the hours they work. They encourage part time work, flexi-time, job sharing and compressed workweek.

5) Retention Focused Reward:

Profit or gain are shared and monthly allowances are effective reward strategies from a retention perspective in this business.

6) Communication:

They use schemes that encourage employees to contribute their ideas on potential improvements. They appoint people in roles specifically designed to listen in to employee opinion. They have staff meetings in every month to discuss the issues in various departments and functional areas. Meantime they have get-togethers and outings in every month to build team work.

7) Support:

Supervisor provides support to his subordinates. Management provide them recognition and appreciation. Supervisors provide valuable feedback to employees and make them feel valued to the organization. The feedback from supervisor helps the employee to feel more responsible, confident and empowered. Top management also support its employees in their personal crisis by providing personal loans during emergencies, counseling services, etc (A. Hameed, Personal Communication, June 21, 2015)

4.2 Factors that contributed to the overall deployment

1. Work culture of firm

2. Availability of constructive feedback and mentoring

3. Opportunity for advancement and professional development

4. Fair and appropriate reward, recognition and incentive systems

5. Availability of effective leadership

6. Clear job expectations

7. High levels of motivation (A. Hameed, Personal Communication, June 21, 2015)

4.3 Methodologies

1. Training. Through training, they help employees to achieve goals and ensure they have a solid understanding of their job requirements.

2. They use communication to build credibility.

3. Coaching/feedback. They provide formal and informal feedback to employees throughout the year.

4. They make employees feel valued.

5. They provide growth opportunities (A. Hameed, Personal Communication, June 21, 2015)

4.4 Impacts on Users

1. Performance and productivity: The solutions confirm that employees have a deep desire to feel they are succeeding and that their talents and capabilities are being used in a way that makes a difference to the business. Employees sense their actions are fulfilling this desire and they began to develop a sense of belonging and a feeling that the company is their company.

2. Communication: The solutions enabled an effective and sensitive communications which provide employees with insight on exactly what is driving employee morale and how staff members feel about the company. The employees understand the roles and responsibilities better and always keep in mind the vision and mission of the company.

3. Loyalty: The solutions helped to increase the loyalty and the commitment of employees to the business.

4. Morale: The solutions helped to create a positive work environment and strengthen an employee’s commitment to the organization. Strategies that target employee retention increased company morale and give employees a sense of pride in what they do.

5. Cost: The solutions helped to offset employee replacement costs and reduces the indirect costs such as decreased productivity and lost clients (A. Hameed, Personal Communication, June 21, 2015).

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4.5 Other Recommended Retention Strategies and Models

Ina addition to the strategies used by them the following strategies and model are used in several firms to retain their employees. Hence these following strategies and models will help them to overcome current retention issues.

1. Working environment

The primary employee retention strategies have to do with creating and maintaining a workplace that attracts, retains and nourishes good people. This covers a host of issues, ranging from developing a corporate mission, culture and value system to insisting on a safe working environment and creating clear, logical and consistent operating policies and procedures. Some strategies include clarify business mission, create a values statement, communicate positive feelings, stay focused on the customer, be fair and honest, cultivate a feeling of family, promote integrity, do not tolerate sub-par performance, insist on workplace safety and make work fun.

2. Employee relationship strategies

Employee relationship strategies have to do with how business treat its people and how they treat each other. Employee relationship strategies that impact employee retention include build mentoring relationships with people to increase their emotional ties to the organization, be firm and fair, celebrate longevity, encourage humour in the workplace and focus on building individual self-esteem (Kashyap, 2009).

3. Employee support strategies

Employee support strategies involve giving people the tools and equipment to get the job done. When people feel they have what they need to perform, job satisfaction increases dramatically. Employee support strategies include give people productive work to do, provide challenges, remove obstacles and barriers to getting the job done, adjust jobs to fit strengths, abilities and talents, establish effective communication systems, clearly define job responsibilities and accountabilities, encourage people to take initiative, encourage, recognise and reward creativity and innovation, and when possible, offer job flexibility.

4. Employee growth strategies

Employee growth strategies deal with personal and professional growth. Good employees want to develop new knowledge and skills in order to improve their value in the marketplace and enhance their own self-esteem. Training and education can include in-house curriculum for skills training and development, outside seminars and workshops, paying for college and continuing education, cross-training and having employees present workshops in their areas of expertise.

5. Employee compensation strategies

Effective employee compensation strategies stem from one fundamental principle: money alone will not retain most employees. Today, more and more companies pay for performance – in every position, not just sales. To retain employees, firm’s compensation plan needs to incorporate this trend. Firm needs to use a variety of hard (monetary) and soft (non-monetary) employee compensation strategies to make it difficult for other companies to steal their people away (Kashyap, 2009).

6. Establish a Social and Transparent Mindset from the Top

The formation of a culture starts at the top -- executives must exhibit transparency, equality and trust to establish a companywide social mindset. Employees feel a stronger connection to the company when they are included in communications. And the more communication, the better.

7. Use New Tools to Jump-Start Collaboration

At the end of the day, effectively working together is what makes a social business, and there are now many tools to help facilitate that. Internal social networks can connect employees and get departments and units talking and collaborating. The result will be not only make for more efficient work processes, but more engaged employees. Use new technology to help create community (Kashyap, 2009).

8. Retention Model

(Kashyap, 2009).

Motivational Theories

The following theories need to be considered in order to retain their employees because these theories are proven and used by other successful firms.

An alternative motivation theory to Maslow’s Hierarchy of Needs is the Motivator-Hygiene (Herzberg’s) theory. The theories have overlap, but the fundamental nature of each model differs. While Maslow’s Hierarchy implies the addition or removal of the same need stimuli will enhance or detract from the employee’s satisfaction, Herzberg’s findings indicate that factors garnering job satisfaction are separate from factors leading to poor job satisfaction and employee turnover. Herzberg’s system of needs is segmented into motivators and hygiene factors. Like Maslow’s Hierarchy, motivators are often unexpected bonuses that foster the desire to excel. Hygiene factors include expected conditions that if missing will create dissatisfaction. Examples of hygiene factors include bathrooms, lighting, and the appropriate tools for a given job. Employers must utilize positive reinforcement methods while maintaining expected hygiene factors to maximize employee satisfaction and minimize retention (Kashyap, 2009).

5.0 Evaluation

5.1 Quantitative Perspective

The evaluation of HR performance including the retention, shows that total performance has increased by 4% and retention improved by20%. The below HR balance scorecard shows more details.

HR Balanced Scorecard Dashboard

Perspective Current Performance Previous Performance

Employee turnover 54% 61%

Recruiting 66% 68%

Retention 72% 52%

Training and Development 26% 21%

Total Performance (218÷4) 54.5% 50.5%

Note:

- Can change the values in weight column, the value must be between O and 10;

- 10 value means that the perspective or goal is the most valuable

- Can change the values in Performance column:

Strategy tree and scorecard details:

Weight Performance

Perspective Description (x of 10) (%)

Employee turnover 2 54%

Cost per Hire 1 30%

Turnover Cost 3 70%

Turnover Rate 1 80%

Time to Fill 3 40%

Length of Employment 2 50%

Total Performance Employee turnover 54.0%

Recruiting 4 66%

Vacant Period 2 80%

Performance Appraisal 4 90%

Manager Satisfaction 1 20%

Turnover Rates-New Hires 1 80%

Financial Impact-Bad Hire 2 20%

Total Performance Recruiting 66.0%

Retention 2 72%

Preventable Turnover 4 80%

Diversity Turnover 2 40%

Financial Impact-Turnover 4 80%

Total Performance Retention 72.0%

Training and Development 2 26%

Learning and growth

Opportunities 4 20%

On the job learning

Contentment 3 30%

Opportunities for new hires 3 30%

Total Performance Training and Development 26%

The Total Performance in HR Balanced Scorecard Dashboard 54.5%

(A. Hameed, Personal Communication, June 21, 2015)

5.2 Qualitative Perspective

1. Performance and productivity: The performance and productivity of the employees have increased as a result of implementing the retention solutions.

2. Communication: The role and responsibilities of the employees, vision and missions of the company are clear to employees.

3. Loyalty: The loyalty and the commitment of employees have increased.

4. Morale: The motivation and morale of the employees is increased.

5. Cost: Various HR cost have decreased (A. Hameed, Personal Communication, June 21, 2015).

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5.3 Lessons learned

1. Employees need opportunities for growth and advancement,

2. Employees need recognition and appreciation,

3. Employees need good direct manager who cares about them,

4. Employees need good pay.

5. Employees need work life balance (A. Hameed, Personal Communication, June 21, 2015)

5.4 Next steps to be taken

1. Opportunities for Growth: More in house and off the job training, educational opportunities for the employees will be provided in future.

2. Recognition: Employees will be recognized for both individual and group achievements. Acknowledgement of effort and accomplishments will be timely in order to be effective.

3. Train mangers: Managers will be given more leadership training to improve the relationship between the employees and managers.

4. Revise salary: Salary structure will be revised. 10% to 20% of basic salary will be increased. Bonus will be given based on the performance twice a year.

5. The company will establish a Social and Transparent Mindset from the Top.

6. The company will use New Tools to Jump-Start Collaboration: Internal social networks will be used to connect employees and get departments and units talking and collaborating.

7. Motivational Theories: The two motivational theories, Maslow’s Hierarchy of Needs and Herzberg’s will be considered in order to motivate and retain the employees (A. Hameed, Personal Communication, June 21, 2015)

6.0 Conclusion

SIFCO is a business organization which provides various products and services mainly to MNDF employees and their families. In addition to this, some products and services are provided to the public. Currently one of the major human resource issue in SIFCO is employee retention. Employees leave the organization due to insufficient growth opportunities, insufficient recognition, problems with manager, dissatisfaction with pay, stressful work environment and lack of work life balance. As a result of this cost various costs are incurred.

According to the researchers these issues are also common in other organizations. According to them top retention drivers include Organization’s reputation as a great place to work, satisfaction with the organization’s people decisions, good relationship with supervisor, understand potential career track within organization, ability to balance my work/personal life etc.

Solutions implemented in SIFCO include retention focused recruitment, retention focused orientation, job sculpting, work life balance measures, retention focused reward, communication and support. Factors that contributed to the overall deployment include work culture of firm, availability of constructive feedback and mentoring, opportunity for advancement and professional development, fair and appropriate reward, recognition and incentive systems, availability of effective leadership and clear job expectations. Solutions impact on the users include increases in performance, improves in communication, increases in loyalty, increases morale and decreases cost. Other recommended strategies include improving working environment, employee relationship, employee support, employee growth, employee compensation, considering of motivational theories.

The solutions are evaluated in qualitative and quantitative perspectives. Quantitative evaluation balance scorecard shows there is an improvement in total HR performance and employee retention. Qualitative evaluation shows there is an improvement in performance, communication, loyalty, morale and decreases in cost. The lessons learned include Employees need opportunities for growth and advancement, employees need recognition and appreciation, employees need good direct manager who cares about them, employees need good pay, and employees need work life balance. The next steps to be taken include offering more growth opportunities, recognition, training the managers, revising salary, using motivational theories.

7.0 References

Hoffman, R., Casnocha, B & Yeh, C. (2014). The Alliance: Managing Talent in the Networked Age. United States: Harvard Business Review Press. Retrieved June 15, 2015, from https://www.goodreads.com/book/show/20763746-the-alliance

Kashyap, A, K. (2009). Employee Retention Strategies Adopted by Big Bazaar. Retrieved June 15, 2015, from https://www.google.mv/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CBwQFjAA&url=https%3A%2F%2Fwww.scribd.com%2Fdoc%2F53140349%2FEMPLOYEE-RETENTION-PROJECT&ei=FI6NVY-hENeRuATC-aToCQ&usg=AFQjCNEDKHEvxIVUGKN04jmiaqKTE6Deig&bvm=bv.96783405,d.c2E

SIFCO. (2015). Services. Retrieved June 30, 2015, from http://sifcomaldives.biz/home

Towers Perrin. (2008). Closing the Engagement Gap. A road map for driving superior business performance. Towers Perrin Global Workforce Study 2007-2008. Retrieved June 15, 2015, from www.towersperrin.com

Appendix - 1 Interview

Just to get us started, let’s tell us your name and other Information you are interested in. Let’s start.

Questions:

1. Is the employee retention an issue in human resource management in SIFCO?

2. What are the reasons for employee turnover?

3. What are the challenges in employee retention?

4. What are the strategies used to retain employees?

5. What are the factors that contributed to the overall deployment?

6. What are the methodologies used?

7. What are the impacts on users?

8. What are the results of these strategies?

9. What are the lessons learned?

10. What are the next steps to be taken in future?

11. Is there anything else you would like to add to this discussion before we end?

Thank you for cooperation. I am excited to learn about what you think.

Adam Khaleel

Sunday, December 20, 2015

Module Name: Human Resource Management - 1

Contents

1.0 Executive Summary