High Attrition Rate at Call Center Industry: an Hr Manager’s View

UNIVERSITY OF SANTO TOMAS COLLEGE OF COMMERCE AND BUSINESS ADMINISTRATION This Research Proposal is being presented to the Faculty of the Department of Human Resource Development & Management Entitled: High Turnover Rate and Employee Benefits in Call Center Industries: The HR Manager’s View By: Buotan, Aldrin M. Dimaculangan, Rey Karl A. Flores, John Andrew S. Malabanan, John Peter M. Marquez, Gerard Ephraim L. Tagunicar, Cedie N. September 1, 2012 Epa, Manila Introduction

Today’s best companies understand the real key to maintaining a world-class workforce is not just to hire the best employees, but to keep them once they are hired. Retaining progressive workforce has not been an easy task to every employer or organization and thus becomes a real challenge to cope up with the fast pace business world currently we are on and if this fails, surely high turnover rates will occur and will be prominent in an organization. An employee turnover rate refers to the movement of employees out of an organization.

It is often cited as one of the factors behind the failure of an employee productivity rate and is also one of the chief determinants of labour supply (Snell & Bohlander, 2010, Principles of Human Resource Management, 15th edition, United States, p,415). Competing organizations are constantly looking to steal top performers, and “poaching talent is becoming an increasingly common way for organizations to build themselves them up as a larger company to be able to expand and earn more profits, while at the same time tearing their competitors down (Noe et. l. 2010, Human Resource management: Gaining a Competitive Advantage, 7th edition, New York, p461). Turnover comes in good times and in bad, to good companies and to those that are struggling of every size. Losing a good and talented employee is never easy, and sometimes is predictable, but sometimes, it can be prevented, “you can’t run a service business when you are at war with your employees” (Greg Davdidowitch, Noe et. al, 2010, Human Resource Management: Gaining Competitive Advantage, 7th edition, New York).

Knowing the rate of turnover at a certain organization is the first step to understanding whether employees’ departs within the range of normal for a type of business and industry. Turnover is a key benchmark in assessing the health and stability of organizations. A high turnover rate suggests there may be something wrong with the basic structure of a company, its salary levels or even its benefits. Too high turnover rate can also mean that an organization is losing productivity and knowledge, including an understanding of products and processes. The consequences of the loss are both financial and in the morale of those who remain.

Leading reasons that employees give for their departure: a better opportunity or increased responsibilities, higher pay or more benefits, or they are moving to a different location. Benefits may one of the best reasons to reduce turnover rate and increase the retention in an industry. Employee benefits that is part of the total compensation package, other than pay for a worker, provided employees in whole or in part by employer payments, example of which are life insurance, pension, workers compensation and vacation (Milkovich, G & Newman, J1984, Compensation, New York, p. ). Employee benefits are compensations given to employees in addition to regular salaries or wages. Some benefits are legally required, e. g. , social security benefits, Medicare, retirement benefits, maternity benefits, service incentive leave, etc. Other benefits are offered by the employer as an incentive to attract and retain employees as well as increase employee morale and improve job performance (Labor and Employment Blawg… A work in progress, June 1, 2010, Philippine Labor Laws, < http://www. laborlaw. usc-law. rg>, viewed: August 22, 2012). Aside from giving benefits mandate by law, there are other benefits that an industry can offer to reduce their turnover rate. Our study will focus on how an industry uses its turnover rate in making decisions to improve their benefits program. The researchers have chosen the call center industries in the Philippines to best suit their subject matter about employee turnover rate and benefits. There are certain reports and data that shows the high turnover rate over call center industries locally.

Turnover rate in the country’s call center has gotten so worse that it has hit 60 to 80 percent, according to the Call Center Association of the Philippines (CCAP) (AURELIO A. PENA, Davao Today March 20, 2008, http://www. gmanetwork. com/news/story/85640/news/specialreports/rp-call-centers-reel-from-world-s-highest-turnover, viewed: 8/20/2012). Globally, it is an accepted norm in the industry to have a 30 to 40 per cent turnover. Both Australia and India call centers have turnover rates of only six to 10 percent.

Top government officials are alarmed that an emerging industry that has generated around 2 billion US dollars in annual revenues is reeling from a worsening turnover crisis. Labor accounts for between 65% and 75% of the ongoing costs of running a contact center. But employee turnover is so high in the call center industry that much of that money is spent on repeated efforts to hire and train people who aren’t right in the first place, and/or are managed ineffectively, resulting in high turnover.

Call center organizations have come to accept that a recurring percentage of their workforce will have to be replaced every year. Those replacements will have to be found, assessed and trained. And then the cycle will repeat again, as a percentage of those new hires will in turn leave. The average turnover is about 35% in the call center industry, which means – in three years, an entire contact center agent pool will have been turned over (Inova Solutions, July 5, 2011, “Reducing Agent Turnover in Contact Centers” viewed 8/20/2012, http://blog. novasolutions. com/2011/). This studies shows that there are certainly high turnover rates on call center industries in the Philippines. A study conducted by Datacraft Asia in 2009 suggested that Asian call center agents are aware of the large demand for their service, so they are confident that they can easily land a new job after they resign. Better salary offer from other call center outsourcing firms, tight and shifting schedules, stress from dealing with difficult customers and lack of holiday breaks are also causing many agents to leave their job.

Also, allegations of labor code violations in small call centers are on the rise. Some agents who did not receive incentives or bonuses as promised during recruitment are likely to terminate their contract (Eli, May 24 2011, Philippine call center outsourcing industry fights attrition rate, http://outsourceyourcallcenter. com, viewed: 8/20/2012). Due to this high turnover rates that are currently in call center industries, there are certain solutions pertaining to benefits and motivation that could help to lower down the high turnover on call center industries.

Government mandated benefits such as: Social Security System (SSS) contributions, Philippine Health Insurance (Phil Health) contributions, Home Development Mutual Fund (Pag-ibig Fund) contributions, 13th month pay, service incentive leave, meal and rest periods, overtime pay, special holiday/rest day rates, and night shift differentials and company benefits such as: holiday bonus, mid-year bonus, and paid holiday and vacation leaves (Honey Amabelle D. Young, March 8, 2012, “Employee Benefits in the Philippines”, weblog, viewed: August 22, 2012, < asyoutsource. om/blog/>). With these benefits, call center industries will surely lower down their turnover rate and could save more money on costly training and development programs. Other companies give a little more than the minimum benefits required by law in order to be competitive or at least be at par with community or industry practices. There are also employers who give more benefits than required out of compassion for employees who are loyal to the company. Managers of call center face many challenges.

They are responsible for operations that are capital intensive, with a high demand for continual investment to keep up with rapid developments in technology. They are also responsible, in many cases, for large numbers of staff often working with different shifts. Human resources manager in call center industries plays a vital role in valuing employees to reduce high turnover rate and improve their company retention capability. HR managers have the “bird’s eye” view on what is happening on personnel related issued on an industry.

Their views on issues such as turnover rates and giving benefits to their employees are important points to consider because they are the one who would create certain solutions to such problems for the more efficient and smoother run of a call center industry. As HR students and future HR managers, the researchers would like to understand and to get the views and insights of HR managers on this phenomenon and find out if there are improvements to employee benefits to lower this turnover rates.

As HR students, the researchers would like to spearhead this study in order to analyze and make realistic solutions that could help the call center industries on this growing phenomenon. The researchers will conduct a semi-structured interview to the HR Manager of call center industries here in the Philippines. The following central questions will guide the interviewers: 1. ) How do Human Resources Managers view on the high turnover rate on call center industries? 2. ) What new benefits are implemented to reduce turnover rate and what changes in employee benefits were introduced to improve employee retention?

Our study will focus on how a call center industry uses its turnover rate in making decisions to improve their benefits program rates in call center industries. Methodology Research Design The research design that the researchers adapted in this study is phenomenological research design, particularly the transcendental or psychological phenomenology. This design aims to get the meaning of as this is a qualitative analysis of narrative data, methods to analyze its data must be quite different from more traditional or quantitative methods of research (Janet Waters, “Psychology; Capillano University, viewed: August, 25, 2012, http://www2. apilanou. ca). This type of research design is the most effective in terms of expressing the essence of how high turn-over rate shapes the organizations’ benefit system. Data Gathering Procedure The researchers has gathered — Human Resource Managers from different Call Centers Companies, both Local(PacificHub) and International(HSBC and PhilAm Life) Companies, who have an adequate years of experience in dealing with the prevalent High Turn-Over rate in their previous and present employers.

The subjects’ group age ranges from late 20s to the late 40s with the average years of experience of 3 to 10 years from the same employers. The researcher adopts a person-centered and holistic perspective. It helps to generate an in-depth account that will help the researcher a picture of reality regarding their lived experience to answer the researcher inquiry about the subject. The researchers will conduct their interview by setting a date time for each manager during the collection of data or their answers regarding the interview.

The Researchers will proceed to the process of meeting the manager and Data Collection. Each session may last up to 2 hours, depending on the interviewee’s length of views and insights on their experiences also known as Extended Interview. Story telling will be conducted also to ask the emotions of the HR Manager and his/her intellectual memory and consciousness about the turnover rate in call center industries. The Researcher has chosen Call Canter Companies that has attrition rate of 30 to 40 % to be able to qualify as a reliable source of information about the topic. Data Exploitation

During the interview, the main concern of the researchers was to get the view of HR manager in the high turnover rate and the benefits given? The questionnaire for HR mangers shall include their robotfoto (Kelchtermans & Ballet 2002), basis on the rate of employee turnover in the last 3 years, number of employees employed and the employee benefits or other discretionary benefits given. The researchers will be using an interview to gather the participants’ descriptions of their experience, or the participants’ written or oral self-report, or even their aesthetic expressions (e. . art, narratives, or poetry, essays). The phenomenon of high turnover rate is the main subject of this research and how the HR managers have experienced it in call center industries. This research is going to be conducted by taking interview; Interview is the appropriate method for collecting of data and giving a questionnaire to the Human Resource managers with full knowledge in the call center industry chosen by the researchers, to find out their view on the high turnover rate and benefits given to their employees.

The HR Managers are chosen by their number of years in service in the industry. After the researchers gather the essential data for their research, they will, and then follow the Collaizi’s Procedure, reading and re-reading of the interview and analyzing or extraction of the information to significant statements or quotes and coming up with the categories (Cool Analysis) and combines the statements into themes (Warm Analysis).

The researchers will develop phenomenal referents of the person’s interviewed. After this procedure, the researchers can gather the data by the use of data analytic tools in data reduction such as Repertory or Kelly Grid in order to categorized and give themes to the insights/referents of the manager. Study site Data Gathering Procedure