How To Reduce Attrition Without Increasing The Cost Management Essay

How To Reduce Attrition Without Increasing The Cost Management Essay

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by Improving Emotional Intelligence of People. Employee attrition is a high cost factor in most industries. Studies show that most important reason for attrition is immediate manager's behaviour and action which makes the employee stay or quit. Attrition can be reduced by increasing the EI of the managers. EI consist of Personal and Social Competences. By EI training, organizations can create a great work environment to reduce attrition. EI training is implemented by Analysis, Pattern Identification, Comparison, EI Study and Audit. This study contributes to providing an insight to ways of reducing cost of attrition using soft skills with an emphasis on EI

Key words: Emotional Intelligence, Attrition, cost factor, EI training

Introduction

Researchers of 21st century from the fields of psychology, education and business are converging on the concept of Emotional Intelligence , which is deemed as a sure pathway for success in personal and organisational life. "IQ gets you hired, but EQ gets you promoted" was the slogan mentioned in TIME magazine cover story on The EQ factor.(TIME,1995).Emotionally intelligent people can perceive, understand and regulate the emotions of others, thus making Emotional intelligence a significant factor in the success of inter personal interaction in work context. Increasingly we will see employers actively seeking people with high emotional intelligence

Emotional Intelligence

Emotional Intelligence or EI is "a form of social intelligence that involves the ability to

monitor ones own and others feelings and emotions, to discriminate among them, and to use this information to guide one's thinking and action. (Salovey & Mayer, 1990)."

Emotional Intelligence is not being soft- It means being intelligent about emotions. Daniel Golemen shares his insight on the power of emotional intelligence in his article in HBR " EI is twice as important as technical skills an IQ………." Developing & using EI skills offers a set of core abilities that impact many business issues important to individual & organizational success

In other words, how the immediate manager treats the people reporting to him/her, how the manager takes the success and failures, how he motivates the team, leads the team, etc form part of the Emotional Intelligence. A manger who has very high emotional intelligence will be able to perceive himself well in the organization and lead his team with a sense of purpose and direction.

EI consist of two major competence areas - Personal and Social Competences. The following grid will help the understand the EI framework better.

EI Framework

Personal Competence

Social Competence

SELF - AWARENESS

Emotional awareness

Accurate self-assessment

Self-confidence

SOCIAL AWARENESS

Empathy

Service orientation

Developing others

Leveraging diversity

Political awareness

SELF - REGULATION

Self-control

Trustworthiness

Conscientiousness

Adaptability

Innovativeness

SOCIAL SKILLS

Influence

Communication

Leadership

Change catalyst

Conflict management

Building bonds

Collaboration and cooperation

Team capabilities

SELF - MOTIVATION

Achievement drive

Commitment

Initiative

Optimism

1.2 Significance of Emotional intelligence at work place

Advanced emotional intelligence can be beneficial in many areas of life. However, the application of its usefulness has been most frequently documented in the professional workplace. Cherniss (2000) outlines four main reasons why the workplace would be a logical setting for evaluating and improving emotional intelligence competencies:

1. Emotional intelligence competencies are critical for success in most jobs.

2. Many adults enter the workforce without the competencies necessary to succeed or excel at their job.

3. Employers already have the established means and motivation for providing emotional intelligence training.

4. Most adults spend the majority of their waking hours at work.

The cost-effectiveness of emotional intelligence in the workplace has been an area of interest. Several studies have reported the economic value of hiring staff ,based on emotional intelligence. Some of the research findings pertaining to this topic are discussed in this article

Cherniss and Goleman (1998) estimated that by not following training guidelines established to increase emotional intelligence in the workplace, industry in the United States is losing between $5.6 and $16.8 billion a year. They found that the impact of training employees in emotional and social competencies with programs which followed their guidelines was higher than for other programs, and by not implementing these programs companies were receiving less of an impact and consequently losing money.

The foremost contributor to the area of emotional intelligence and leadership is Daniel Goleman, who has written several books on implementing emotional intelligence in an organization, including Working with Emotional Intelligence (1998) and The Emotionally Intelligence Workplace (2001). Goleman posits that leaders high in emotional intelligence are key to organizational success; leaders must have the capacity to sense employees' feelings about their work environments, to intervene when problems arise, to manage their own emotions in order to gain the trust of the employees, and to understand the political and social conventions within an organization (Goleman, 2001). In addition, a leader has the capacity to impact organizational performance by setting a particular work climate. Goleman outlines six distinct leadership styles and how they affect the climate of the organization

Leadership Style and Impact on Organizational Climate (Goleman, 2001)

LEADERSHIP STYLE

Coercive

Authoritative

Affiliative

Democratic

Pacesetting

Coach

When Appropriate

In a crisis, to kick-start turnaround, or with problem employees

When change requires a new vision, when clear direction needed

To heal rifts in a team or to motivate during stressful times

To build consensus or to get valuable input from employees

To get quick results from a highly motivated and competent team

To help an employee improve performance or develop long-term strengths

Objective

Immediate compliance

Mobilize others to follow a vision

Create harmony

Build commitment through participation

Perform tasks to a high standard

Build strengths for the future

Impact on Climate

Strongly negative

Most strongly positive

Highly positive

Highly positive

Highly negative

Highly positive

EI

Competencies

Drive to achieve; initiative; emotional self control

Self-confidence; empathy; change catalyst

Empathy; building bonds; conflict management

Collaboration; team leadership; communication

Conscientious-ness; drive to achieve; initiative

Developing others; empathy; emotional self-awareness

Now, from this table how the different components of EQ could be utilized for different managerial style can be clearly seen. All the five leadership styles mentioned here are suitable for different organisations , depending on the management philosophy and the organisational climate. So by identifying the leadership style practiced in each firm, along with enhancing the EI competency corresponding to that will help in a major way to improve leadership skill and there by improved retention.

1.3 Teaching Emotional Intelligence:

Training programs aimed at improving emotional intelligence can occur in several different areas of training and development within an organization, including management training, communication and empathy training, conflict resolution and stress management training, as well as self-management training and training provided to unemployed workers (Cherniss, 2000). However, it is important to realize that traditional training curriculum and delivery are not generally successful in developing emotional intelligence competencies. Traditional programs generally adopt a "one size fits all" approach that ignores individual complexities while focusing on cognitive learning (Dearborn, 2002).

Organisations can assist employees in developing emotional competencies by providing appropriate training. The Consortium for Research on Emotional Intelligence in Organizations, which consists of researchers and practitioners from business schools, the federal government, consulting firms and corporations, has developed guidelines for best practices in teaching emotional intelligence competencies. Organisations can definitely utilize these services and improve the emotional intelligence of employees and there by retain the talents.

Some of the comprehensive strategies for retention include the following:

Hiring and screening employees based on EQ competencies

Build an emotionally skilled leadership by training.

Improve the organisational climate by fostering healthy interpersonal relationship among employees

Encourage people to build a network of support .

Motivate the employees to take up EQ training by showing the pay off on the job

Competency models and succession plan based on EQ competencies

Create readiness for change.

Envision desired outcomes by bench marking

Continuously promote EQ environment

3.The study

The basic study involves facts drawn from secondary literature survey. Even before research in the area of E.I. had begun, the Ohio State Leadership Studies reported that leaders who were able to establish mutual trust, respect, and certain warmth and rapport with members of their group were more effective (Fleishman and Harris, 1962)

Research work undertaken at national and international level are quoted here.Research work published by Daniel J. Svyanket and M.Afzlur Rahim, University of Akron in The international Journal of organisational analysis(2002, Vol -10 No 4 Pg 299-301 , shows a clear indication of positive relationship between EQ and employees behaviour in the organisation. It was found that team performance, cohesiveness, empathy etc are positively correlated to EQ level of employees.

An article was presented by Ioannis Tsaousis, University of Aegena, Greece and Ioannis Nikolaou, Athens university of Economics and business, Greece in " International Journal of organisational Analysis, ",2002, Vol .10, No 4, Pg 327-342 , titled, "Emotional intelligence at work place; Exploring its effect on occupational stress and organisational commitment" , talks about the research conducted by them by administering EQ questionnaire and an organisational stress screening tool. The results showed a positive relation between EQ and organisational commitment

Studies conducted by Jigisha .B. Dholakia & Geethika Kaushal, TAA Communication Area, IIM, Ahmedbad ( working paperno. 2001-05-01, Pg 2-15), titled" Emotional Intelligence at work place. A priliminary study of male executives in private and public sector organisation" reveals a relationship between EQ and work place situations.

During the recent studies conducted at L'Oreal , it was found that when the sales people were selected on the basis of emotional competence, the turn over was reduced by a drastic 63% !! Likewise, when Metlife selected sales people on the basis of optimism, which is one of the emotional intelligence competencies, they out sold other Metlife people by 37% and showed reduced attrition.

The link between EQ and leadership was clear from the study at PepsiCo. In a pilot project, executives selected for EQ competencies outperformed their colleagues, delivering 10% increase in productivity,87% decrease in executive turn over (!) and over $ 3.75m added economic value. At one of the Motorola's manufacturing facility used HeartMath's stress and EQ program and realized that 93% of employees showed increase in productivity.

It is very interesting to note that unlike IQ, which is almost decided at birth, EQ can be improved by training and nurturing. A study conducted at Case Western University, a competency building program increased the Emotional Intelligence skills by 40 % to 75 % among the respondents, and that effect lasted at least through the 5- 7 years of the study.

The US Air Force spends millions on recruitment every year , but their professional recruiters were only picking up an average of one recruit per month. A $ 10,000 investment in EQ testing helped them to profile top performers and in one year , they saved $2.7 million. Following this success, The General Accounting Office requested that the Secretary of Defense order all branches of armed force to adopt this procedure in recruitment and selection.

Gallup's land mark research of over two million working Americans on" employee Engagement"( a sense of emotional connection to the organisation) it was identified that teams with higher engagement showed 50% less turn over and 38% above average productivity.

A recent meta analysis of 69 independent studies explored the predictive validity of emotional intelligence with diverse job performance outcomes (Van Rooy & Viswesvaran, 2004). Results suggested diverse measures of EI correlated .23 with job performance (k=19, N=4158) and .22 with general mental ability. These correlations suggest that EI can be considered a moderate predictor of job performance

and success which has a direct impact on retention. A recent study by Career

Systems International in 2005. They surveyed over 7,500 employees in diverse

industries about retention factors-things available in organizations that engendered

commitment and a willingness to stay.The top five retention factors included: 1) Exciting Work/Challenge (48.4%); 2) Career growth/learning (42.6%); 3) Relationships/working with great people (41.8%); 4) Fair pay (31.8%); and 5) Supportive management/great boss (25.1%).

Another research conducted by John Humphreys, Bill Brunsen and Dale Davis, College of Business, Eastern New Mexico University, Portales, New Mexico, making use of Pearson product moment correlation, shows significant correlation between EQ and organisational commitment(0.303)

A study of the relationship between emotional intelligence and performance in UK call centres by Malcolm Higgs published in the" Journal of Managerial Psychology" June 2004 Volume: 19 Issue: 4 Page: 442 - 454 shows a strong correlation between Emotional intelligence and Individual performance, which corresponds to reduced attrition

4 .Results

These findings appear to add support to the growing body of literature indicating the

constructs of EI and organisational commitment having a great significance.

What is highlighted above appears to be an accurate description of what is happening in general in most of the organisations across the world. One of the most important and significant findings from this study is the positive correlation between Organization commitment and higher emotional intelligence.

5.Conclusion

From the research studies discussed above , we can arrive at the conclusion that we can definitely reduce the cost of attrition by improving the emotional intelligence of employees. The primary reasons for an employee to leave the job are relationship based. So one of the key retention factor is the quality of relationship between employee and his supervisor. As leadership guru Richard Leider says" People do not Leave companies- They leave Leaders!!!". When analytical brilliance is coupled with emotional intelligence, breakthrough achievements can be gained. When many research studies converge to similar conclusion, we don't need a Mc Kinsey to tell us that, we need to have Emotionally Intelligent employees to have a stable organisation!!