Today, however, retention of valuable employees is a global challenge. Managers and top level authorities are constantly met with the issue of retaining employees, and there is a wealth of evidence that worldwide, retention of skilled employees has been of serious concern to managers in the face of ever increasing high rate of employee turnover (Arthur, 1994; Buck and Watson, 2002; Budhwar and Mellahi, 2007; Debrah and Budhwar, 2004; Samuel andChipunza, 2009; Tayeb, 1997). There are major challenges in attempting to retain employees (Barney, 1991; Price, 2003; Sinangil, 2004; Woods, Heck, and Sciarini, 1998) which become an increasingly important aspect of building organizational capabilities to ensure sustained competitiveness (Holland, Sheehan, and De Cieri, 2007). These challenges, among other things, are essentially linked with the infrastructural support, remuneration packages, leadership styles and cultures within an organization (Lok and Crawford, 1999; Pamela, 2003; Sheridan, 1992).

Such challenges are further complicated by the fact that highly skilled employees tend to change jobs for better financial rewards and improved working conditions. In addition, highly skilled employees are often poached by large scale international organizations that can provide them with better remunerations and other benefits (Zheng and Lamond, 2010).

Human resource management is a comprehensive approach to management of people at work and it seeks to achieve integration and coordination with overall planning and other managerial functions (Dunn, 1985). Organizations develop human resource policies that genuinely reflect their beliefs and principles and the relationship between management and employees, or they may merely devise policies that deal with current problems or requirements (Chew, 2005). These HRM practices should include compensation and benefits, training and development, performance appraisal, supervisor role and career advancement which may influence the satisfaction of the employee and the intention to stay or quit from their current organization. According to Huang (2001), HRM practices are areas that influence employees’ intention to leave, job satisfaction, and organizational commitment. Employees are our most important asset. Employee turnover represents a critical problem to an organization in terms of loss of talent, additional employment and training costs (Loi et al., 2006). It cannot be denied, effective HRM practices is important to reduce turnover, it can help organizations to achieve higher flexibility, product quality, and performance while remaining cost competitive by inducing workers to work harder and using the skills and information of their employees more effectively through moving decision authorities closer to those who have the relevant information (Bauer, 2004). On the other hand, Huselid (1995) suggested that a set of HRM practices referred as the high performance work systems were related to turnover, accounting profits, and firm market value. According to Mudor and Tooksoon (2011), the literature on HRM emphasis on the high performance working system practices’ on job satisfaction to enhance employee performance and contribute the organization performance. Job satisfaction and turnover intention surveys are very important to the employers. It provides useful information and the feedback of the employees that could be beneficial to the company by improving the HRM practices. Thus, it indicated that if the organization aims to be productive and effective company, they should first meet the employees’ needs (Berry, 1997).

Employee turnover is considered a serious issue for many organizations, thus scholars view this phenomenon as a persistent problem for the organization (Ahmad and Omar, 2010). Excessive turnover is dangerous for the organizations, and it undermines the efficiency and productivity of the organization. Moreover, in some occasions, it threats the organization’s long term survival (Brereton, Beach, and Cliff, 2003). Therefore, retention of top performing employees has become a big challenge for the employers (Samuel and Chipunza, 2009; Ovadje, 2009) because employers have nothing much to do except the arrangement for hiring and training new employees once the employee has quitted as argued by Dalessio, Silverman, and Schuck (1986).

The nature of turnover phenomenon is complex, thus the causes of turnover vary on the basis of context of research, and nature of the organizations. That is why the generalization of turnover research findings is questioned across situation and population (Griffeth, Hom, and Gaertner, 2000). In spite of having more than 1500 academic researches on employee turnover, surprisingly it is still the vibrant field of further research (Holtom, Mitchell, Lee, and Eberly, 2008). This is because employees have different reasons for turnover decision in different countries, and even reasons are quite different within the same industry. It is unfortunate that most of the empirical studies on turnover were conducted in western context mainly in US, Canada, UK, and Australia (Ovadje, 2009; Maertz, Stevens, and Campion, 2003). The results of these studies may not be generalized to other contexts for instance Asian context which is characterized by collectivism and high power distance. Scholars still continue searching the answer of what determine employee turnover in different contexts as context is important to understand the turnover phenomenon (Chen and Francesco, 2000). Therefore, it is expected that a study of turnover in a collectivist context should provide additional insights into the turnover phenomenon. Thus, this paper is expected to enrich the current turnover literature in the context of Chattisgarh in particular and Indian in general. Practically, among all the organizational resources, people are the most important resources, while on the other hand, they are most difficult to control as well (Szamosi, 2006; Perez and Ordonez de Pablos, 2003). Employee turnover, although it is mainly a concern to the professionals of human resource department (Peterson, 2004), academics and organizational managers have paid much attention to this current phenomenon (Ton and Huckman, 2008) due to its detrimental effects on the organizations. Practically, among all the organizational resources, people are the most important resources, while on the other hand, they are most difficult to control as well (Szamosi, 2006; Perez and Ordonez de Pablos, 2003). As people are the most valuable asset for the organizations (Szamosi, 2006), the organizations invest great deal of resources to attract and retain talented employees. Thus it is undoubtedly unfortunate and costly when employees leave organization willingly or voluntarily. That is why academics and organizational managers paid much attention to employee turnover issue, particularly the voluntary nature of turnover (Ton and Huckman, 2008).

2.1 Employee Retention:

Employee retention is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until the completion of the project. Employee retention is beneficial for the organization as well as the employee. Employees today are different. They are not the ones who don’t have good opportunities in hand. As soon as they feel dissatisfied with the current employer or the job, they switch over to the next job. It is the responsibility of the employer to retain their best employees. If they don’t, they would be left with no good employees. A good employer should know how to attract and retain its employees. Frank et al. (2004) define retention as “the effort by an employer to keep desirable workers in order to meet business objectives” (Natalie et al., 2011). Retention is the ability to hold onto those employees you want to keep, for longer than your competitors (Johnson, 2000 cited in Madiha. et al., 2009). Retention is considered as multifaceted component of an organization’s human resource policies. It begins with the hiring of right people and persists with working agendas to keep them involved and devoted to the organization (Freyermuth, 2004 cited in Madiha et al., 2009). Employee retention is an important element in determining the success of the company.

2.2 Human Resource Management Practices:

HRM Practices refers to organizational activities directed at managing the pool of human resources and ensuring that the resources are employed towards the fulfillment of organizational goals (Daud, 2006). Organizations develop human resource policies that genuinely reflect their beliefs and principles and the relationship between management and employees, or they may merely devise policies that deal with current problem or requirement (Chew, 2005). A number of recent studies have consistently identified six essential human resource management practices as crucial to organizational effectiveness. These six practices include: (1) recruitment; (2) selection; (3) compensation; (4) employee participation; (5) training; and (6) performance appraisal (Osterman, 1994; Pfeffer, 1994; Delery and Doty, 1996). As supported by Lee and Lee (2007) HRM practices on business performance, namely training and development, teamwork, compensation/incentive, HR planning, performance appraisal, and employee security help improve firms’ business performance including employee’s productivity, product quality and firm’s flexibility. In addition, Zaini, Nilufar and Syed (2009) indicated that four HRM practices that are training and development, team work, HR planning, and performance appraisal have positive and significant influence on business performance. All these HRM practices help to create a workforce whose contributions are valuable, unique difficult for competitors to imitate. The adoption of HRM can have an instrumental function, as it affect attitudes such as job satisfaction, morale, and positive feelings about future prospects (as manifested in perceived competitiveness). These attitudes, in turn, can affect the likelihood that an employee will seek alternative employment (or quit) (Chow, Haddad and Singh, 2007). Like many other managerial topics, there is a lack in research pertaining to turnover and HRM in developing countries despite calls to expand the international HR perspective (Baruch and Budhwar 2006). This lack of knowledge limits contexts relating to HRM theory (Wright, Scott, Snell and Dyer, 2005). Consequently, HR practitioners face, in developing countries, an absence of focused strategies for combating high turnover rates and improving organizational performance (Khiiji and Wang 2006).

The importance of managing human resources, the essence of the organization, has been growing over the past years in academia and in practice because the HRM practices help employees to form their attitudes and behaviors (Meyer and Smith, 2000). Earlier, one of the studies found that perceptions of human resource practices are more important than the actual practices in developing employee commitment (Kiniki, Carson, Bohlander, 1992). Management scholars and practitioners have exerted continuous efforts in learning more about human resource practices and how these practices enhance employees’ performance and achieve organizational goals (Ahmad and Schroeder, 2003; Boselie et al. 2001; Guest, 1997; Huselid, 1995). The influence of human resource practices on performance at organizational level, individual level, or group level is an important issue in the area of human resource management and organizational psychology. In this regard, positive perceptions of human resource practices cause employees to believe in social exchange relationship between employees and the organization (Wayne et al. 1997; Lee and Bruvold, 2003). Generally, employees who are satisfied with the organization are willing to contribute to the organization (Eisenberger et al. 2002).

Human resource practices have received increased attention for its impact on organizational performance. The majority of the research in this area has focused on the degree to which these human resource practices can enhance individual and organizational performance. Little work has explored the psychological processes by which such practices influence employee attitudes and behaviors (Zhang and Agarwal, 2009). Thus, there is lack of knowledge of how these human resource practices affect individual employees’ perceptions, their attitudes, and their behaviors; and what employees actually think and how they react to the practices (Deery, 2002; Harley, 2002; Grant and Shields, 2002). Furthermore, little explanation has been given in relation to how these human resource practices influence individual turnover decision (Allen et al. 2003). The plethora of literature of human resource practices have been reported exclusively undertaken in the context of western countries including few other developed nations (Nasurdin, Hemdi, and Guat, 2008; Su and Yeganeh, 2008). There is a lack of information regarding dynamic nature of human resources in the context of developing countries. Moreover, it is difficult to generalize the human resources practices of the western context, and adopt the western concept of human resources practices to the developing countries.

Therefore, more research is needed in the developing context to understand the dynamic nature of human resources and the influence of various human resources practices on the employees of developing countries. According to Budhwar and Debrah (2004), there is a greater need to know how employees in various parts of the world perceive human resource practices in different context. Thus, the current study is also expected to fill the gap in our knowledge on human resource practices in the context of developing countries such as India.

2.2.1. Work Environment and Job Design:

Work environment is an important factor for an employee to be successful in their carrier. If the environment does not motivate employees to work then it will be an excuse for employees for not performing to the standard and reason as environment is too noisy, condense, not hygiene, fill stress and no fun in the working environment. Besides using compensation, retaining talented employees may also be accomplished through improving their work environment and job design. An independent study conducted by ASID (2004) (American society of interior design) as cited in Shoaib et al (2009) demonstrated that physical or work environment contribute as a major factor affecting the decision of employee’s whether to stay or leave the job. Work place design has an impact on employee and employees tend to live with the job as long as they are satisfied. In fact, safe working conditions are directly and positively linked to the quality of employees’ work environment. According to Kramer and Schmalenberg (2008), healthy working conditions are empirically linked to reduced employee turnover, increased job satisfaction and lower degree of job stress and burnout among employees. Therefore, creating better conditions are crucial to maintain an adequate workforce for any organization. To reinforce the importance of working conditions, Pejtersen and Kristensen (2009) argued that positive working conditions will not only reduce employee strain but also contribute to a more motivated workforce and in the long-run greater organizational effectiveness, and lower employee turnover. In this regard, researcher explained that working conditions may not increase employee commitment; however dissatisfaction with this factor may create negative effect on employee commitment which in turn may affect turnover decision (Herzberg, 1968). Workspace designs have a profound impact on workers and tend to live with job as long as satisfied (Brill, Weidemann, Olsen, Keable and BOSTI, 2001).

2.2.2. Hires and Promotions

Many studies have been conducted to understand the impact on hiring and promotion on employee retention. Companies need to be very sensitive on the employees that they are about to hire. Huselid and becker (1999) as cited in Moncraz, Zhao and Kay (2009) said that selective hiring procedures are necessary to ensure effective retention of the most qualified employees while lowering employee turnover in the long term. Miller and Wheeler (1992) found that the lack of meaningful work and opportunities for promotion significantly affected employees' intentions to leave an organization. Organizations were able to improve their employees' retention rate by adopting job enrichment programs and enhancing their advancement opportunities. Besides promotion opportunities, the evaluation criteria used in the promotion and reward system also had significant effects on employees’ turnover intentions (Quarles, 1994). Ineffective performance appraisal and planning systems contributed to employees' perceptions of unfairness and they were more likely to consider leaving the organization (Dailey and Kirk, 1992).

2.2.3. Employee Recognition, Rewards and Compensation

The term ‘reward’ is discussed frequently in the literature as something that the organization gives to the employees in response of their contributions and performance and also something which is desired by the employees (Agarwal, 1998). A reward can be extrinsic or intrinsic it can be a cash reward such as bounces or it can be recognition such as naming a worker employee of the month, and at other times a reward refers to a tangible incentive, reward is the thing that an organization gives to the employee in response of their contribution or performance so that the employees become motivated for future positive behavior. In a corporate environment rewards can take several forms. It includes, cash bonuses, recognition awards, free merchandise and free trips. It is very important that the rewards have a lasting impression on the employee and it will continue to substantiate the employee’s perception that they are valued (Silbert, 2005). “Employee compensation includes all forms of pay and rewards received by employees for the performance of their jobs” (Snell S and Bohlander G, 2007, p.378). “Employee benefits constitute an indirect form of compensation intended to improve the quality of the work lives and the personal lives of employees” (Snell and Bohlander, 2007, p. 448). Attractive remuneration packages are one of the very important factors of retention because it fulfills the financial and material desires as well as provide the means of being social by employee’s status and position of power in the organization. Many researchers demonstrate that there is a great deal of inter-individual difference in understanding the significance of financial rewards for employee retention (Pfeffer, 1998; Woodruffe, 1999). An organization’s reward system can affect the performance of the employee and their desire to remain employed (e.g., Bamberger and Meshoulam, 2000, MacDuffie, 1995).

2.2.4. Training and Development

Training was included as a high-performance HRM practice, among others, by Huselid (1995), McDuffie (1995) and Koch and McGrath (1996). In the field of human resource management, training and development is the field concerned with organizational activity aimed at improving productivity and enhancing skills of individuals and groups in the organizational setting. Development refers to formal education, job experiences, relationships, and assessments of personalities and abilities that help employees prepare for the future. Firms with superior training programmes may also experience lower staff turnover than firms that neglect employees training and development. Employees who are working in firms with good technical and non-technical training programmes, realize that their market value grow more favorably than in other firms, if the training is of the general type that also increases productivity outside the firm. Therefore, they may have an interest of remaining longer in the firm.

Career development is a system which is organized, formalized and it’s a planned effort of achieving a balance between the individual career needs and the organization’s workforce requirements (Leiboiwitz et al, 1986). The rapidly growing awareness makes it obvious that people can give the firm its leading edge in the market place. The new challenge for the HR professionals is to identify the developmental strategies which can inspire the commitment of employees to the firm’s mission and values so that the employees become motivated and help the firm to gain and maintain a competitive advantage (Graddick, 1988). Career development is important for both the organization and individual (Hall, 2002). It’s a mutual benefit process because career development provides the important outcomes for both parties (Hall, 1996; Kyriakidou and Ozbilgin, 2004). Organizations need talented employees for maintaining the sustainable competitive advantage and individuals require career opportunities to develop and grow their competencies (Prince, 2005).

2.2.5. Employee Performance Assessment

Performance assessments is one of the way that employers can utilize as an important factor to retain employee. One of the motivation factors that keep employees to continue to perform effectively is by receiving a good performance assessment. “The performance appraisal can be defined as a process, typically delivered annually by a supervisor to a subordinate, designed to help employees understand their roles, objectives, expectations and performance success” (Snell S and Bohlander G, 2007, p. 332). Performance appraisal is a process of inspecting and evaluating an individual’s performance in his duty to facilitate the decision of career development of the individual. It evaluates the individual overall contribution to the organization through assessment of his internal characteristics, working performance and his capability to pursue higher position in organization (Gruman and Saks,2011). In order to enhance organizations’ ability to survive through turbulent environment, mostly top corporations take great concern on managing the performance measures of their employees. It is common understanding that top talents are keys to business success today, but how a company manages its talents or human resources would be the fundamental to all the success where effective structure of performance measurement would ensure company fully utilize its competitive resources to maximum.

3. CONCLUSION:

To conclude, the literature review has suggested that organization culture, structure, and HR systems and practices would effectively interact to attract and retain knowledge workers. Kamoche (1996) suggested that a company may establish HR capabilities to gain a competitive advantage through appropriate HR policies and practices to secure nurture and retain their key personnel. Specifically, the impact of human resource policies and practices on recruitment and retention of knowledge workers could be reflected in the programmes relating to rewards, career development, corporate culture, job security and training (Causer and Jones, 1993; Kamoche, 1996; Newell et al, 2002).

Reward systems that contain financial and non-financial rewards could have a severe impact on both recruitment and retention of knowledge workers. The theoretical and empirical research suggests that compensation (pay and benefits) plays a critical role in attracting and retaining employees. In addition to the standard benefits package, organizations may consider to provide tailor-made and hidden benefits to meet the individual worker’s needs. For example, extra days-off in compensation for working over-time could be used as a retention tool. Non-financial rewards may be related to the nature of work, such as challenging or interesting work and the recognition of personal achievement (Horwitz et al, 2003; Newell et al, 2002). In some cases, knowledge workers may value intrinsic rewards more than purely financial rewards. This implies that organizations may consider the impact of job design on the recruitment and retention of knowledge workers, such as using job customization or job rotation as instruments to retain employees (Cappelli, 2000; Horwitz et al, 2003). In addition, career development and training practices may influence the recruitment (especially internal recruitment) and retention of knowledge workers (Causer and Jones, 1993; Kamoche, 1996; Newell et al, 2002). In view of career development, promotion opportunities would be one important consideration for the retention of knowledge workers. However, Butler and Waldroop (2001) argued that there is a trend shifting from traditional career paths that were based on the firm’s interest, to sculpting jobs based on the interests of knowledge worker professionals. In particular, for engineers in high technology firms, a technical ladder separated from the managerial roadmap would be helpful to retain the specialists who are more interested in the development of cutting edge technology (Causer and Jones, 1993; Haesli and Boxall, 2005).

Horwitz et al (2003) suggested that one of the key retention strategies was top management’s support in creating a conductive working environment where allowed the employees to work in a fun, flexible and resourceful manner. This implies that organizations may shape a corporate culture through proper work design and working practices. For example, the organizations could create a working culture enabling employees to act freely, adopt management practices that facilitate effective communication, pay attention to job design, and allow employees to gain prominence through self-development and involvement in interdisciplinary and cross-functional projects.

Based on the literature review the HRM practices may not be universal but could be ‘context-specific’, the hypotheses were devised to test whether different organizations within various ownership groups may use different HRM practices and retention practices for the management of employees. The findings found that there were relationship between the independent variables (HRM practices) and the dependent variable (Employee Retention). The literature review indicates that human resource management practices linked to individual HRM practices. This brief literature review tries to explore the relationship between HRM practices and employee retention. Based on the above literature review a conceptual framework has been developed to examine the impact of HRM practices and employee retention for further research. The conceptual frame work embraces five major variables which are used to develop the basic model of relationship between HRM practices and employee retention. The major variables which are used to develop the relationship between HRM Practices and Employee Retention for further research are: (1) Work Environment & Job Design, (2) Hires and Promotions, (3) Rewards, Compensation and Recognition, (4) Training and Development, (5) Employee Performance Assessment.

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Received on 15.09.2012 Modified on 25.10.2012

Asian J. Management 4(1): Jan.-Mar. 2013 page 54-59