EFFECT

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Effects of Socio-Economic Factors on Turnover Rate and

Retention Policy of Telecom Sector in Pakistan

By

Baber Sultan

CIIT/FA-14-RPM-242/CVC MS Thesis in

Master of Science in Project Management

COMSATS Institute of Information Technology – Virtual Campus Fall, 2014

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COMSATS Institute of Information Technology

Effects of Socio-Economic Factors on Turnover Rate and

Retention Policy of Telecom Sector in Pakistan

A Thesis Presented to

COMSATS Institute of Information Technology – Islamabad In partial fulfillment

of the requirement for the degree of

MS in Project Management By

Baber Sultan

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Effects of Socio-Economic Factors on Turnover Rate and

Retention Policy of Telecom Sector in Pakistan

A Post Graduate Thesis submitted to the Department of Management Sciences as partial fulfillment of the requirement for the award of Degree of M.S in Project Management

Name Registration Number

Babar Sultan CIIT/FA-14-RPM-242/CVC

Supervisor

Dr. M. Imran Malik

Professor, Management Sciences Department Attock Campus

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Final Approval

This thesis titled

Effects of Socio-Economic Factors on Turnover Rate and Retention Policy of

Telecom Sector in Pakistan

By Babar Sultan

CIIT/FA-14-RPM-242/ CVC

Has been approved

For the COMSATS Institute of Information Technology – Virtual Campus External Examiner: ________________________________

Dr……….. Supervisor:

Dr. M. Imran Malik

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DECLARATION

I, Babar Sultan, CIIT/FA-14-RPM-242/CVC, hereby declare that I have produced the work presented in this thesis, during the scheduled period of study. I also declare that I have not taken any material from any source except referred to wherever due that amount of plagiarism is within acceptable range. If a violation of HEC rules on research has occurred in this thesis, I shall be liable to punishable action under the plagiarism rules of the HEC.

Date: 28 April 2016 _______________________

Babar Sultan CIIT/FA-14-RPM-242/CVC

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CERTIFICATE

It is certified that Babar Sultan, CIIT/FA-14-RPM-242/CVC, has carried out all the work related to this thesis under my supervision at the Department of Management Sciences, COMSATS Institute of Information Technology, Virtual Campus and the work fulfills the requirement for award of MS degree.

Dr. M. Imran Malik

Date: _____________

Head of Department

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DEDICATION

This thesis is dedicated to The Creator and His most beautiful creations. I also dedicate this work to my parents, wife and my friends whose inspiration and prayers have enabled me to complete this thesis within allocated time.

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Abstract... 1 1. INTRODUCTION... 2 1.1 Research Objectives...4 2. LITERATURE REVIEW... 4 3. RESEARCH METHODOLOGY...13 3.1- Subjects... 14 3.2 – Procedure... 14 3.3 - Type of Study... 14 3.4 – Research Tools... 14 3.5 Research Approach...15 3.6 - Research Instruments...15 3.7 – Time Frame... 15 3.8 - TREATMENT... 16 3.9 – VARIABLES FRAMEWORK...16 3.9.1 – DEPENDANT VARIABLES...16 3.9.2 Independent Variable...16 3.9.3 – INTERVENING VARIABLES...17 3.10 – HYPOTHESIS DEVELOPMENT...17 3.11 – Limitations... 18

4 – FINDING AND ANALYSIS...19

4.1 – Basic Findings... 20

4.1.1 Statistics of Survey...20

4.2 – Relationship of Basic Socio Economic Factors...21

4.2.1 – Relationship among Different Factors...22

4.3 Discussion and implications...31

5 – Conclusion and Recommendation...34

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Abstract

The importance of Retention Policy is getting a pivotal role in organization as the organizations strive to reduce their hiring, firing cost and the resources spent on training and development of employees. The role of Retention Policy is altogether changed in attainment of organization’s aims and objective. Companies have aimed for getting maximum benefit from the employees. Through this approach, companies not only reduce their cost on training but they also enhance the human capital utilization in a better way. Employees and human capital is a source of competitive advantage now days and through motivated, well trained and loyal employees organizations can maximize their profit. This research analysis the effects of basic socio economic factors on strategically designed retention policy. The research has been carried out through questionnaires whereby a survey was conducted in the telecom sector of Pakistan. Results were matched with the data directly taken from financial departments to recheck the results. A total of 100 questionnaires were filled randomly from employees working in different companies of telecom sector. After analyzing the data through SPSS (Statistical package for Social Science) important findings were made on the basis of which recommendations are given at the end of the report.

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1. INTRODUCTION

“A service provider's business is only as strong as its ability to manage its network and services delivery. In today's competitive environment, proper resource and service management is an absolute must. By partnering with NetCracker, Covad has taken an innovative and essential approach that allows it to realize the true value of its network, prevent revenue leakage, and increase customer satisfaction and retention rates. We are thrilled to be a part of Covad's market-leading strategy. “

Andrew Feinberg Corporate leaders face Employee retention as most critical issue now days. The result is in the form of the shortage of skilled labor, decreased economic growth and employee turnover. All aspects of the workforce stability issue in the face of unprecedented churning in the employment market with a focus on retaining your employees has become a challenge of today’s corporate world. This is one of the pivotal issue for corporate leaders in all fields of business globally. The question is how to address the uncontrolled turnover? The question has striked the organizations performance in all fields of operations. Today’s labor force is dynamic. Supervisors must take responsibility for their own employee turnover and must find out the reasons of their turnover. If they don't, they could be left without enough good employees who are leaving for the competitors. A wise employer will learn with passage of time that how to attract and keep good employees, because in the long run, this workforce will make or break a company's reputation. New supervisors must be prepared to be competitive, collaborative, supportive, and nurturing of their people potential. The old style of "my-way-or-the-highway" style of management is a thing of past. Most new supervisors need training to understand different theories of motivation to keep their employees engaged and happy.

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Employee retention involves being sensitive and understandable to people's needs and demonstrating the various strategies to keep them motivated for the organization in the five areas described in Roger Herman's book on employee retention, "Keeping Good People". 1. Compensation 2. Growth 3. Relationship 4. Support 5. Environmental

It takes effort to find out what sort of energies, resources and directional effort to address the issue of employee retention. (Herman, 2010). Human capital is the major tactical and strategic asset of twenty first century which leads to the organization competitiveness and organizational strength. During the past recession, top 1000 leading companies of the market had shown the concern of staffing and employee retention as their primary concern. It has become the reality that a good worker can find employment in any organization operating in the same market (Herman, 2010).

With the current national economic turmoil and Pakistan's role in terrorism, it is important to develop the employee retention strategy to reduce the variable cost of the company. Keeping in view the economic growth, inflation rate, trade deficit and economic standing of Pakistan employee turnover is a crucial issue. Turn over can be described as company loses the money which it spent on its training and development. Training and development cost of the company which it has invested on the employee will be utilized by the other company. Due to the same reason, company has to develop a strategy to retain its employee for future development. Development of new strategy , hiring, firing, re evaluation of benefits and development plans cost the company in huge monetary terms (UK Essays, 2013)

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The value of the customer base is linked with job acquisition, job retention and primary managerial decisions now days (Gupta, 2006). These two horizons of time that pass before attaining a job and the time duration for which a customer retains it before dropping the job for some other job is inter related. Despite the application (and likelihood) of such a association of the concepts, few international publications replicate the interchangeable link between these two behaviors (Jain, 2002) . However, most of the scholors treat acquisition and retention of the job as independent (Gupta, 2004).

This research specifically takes into account the telecommunication sector of Pakistan. Now days, telecom sector of Pakistan has well structured human resource segment of theier organization. Basic Socio Economic factors have certain impact to formulate the employee retention policy. The Aim of organization is to utilize the potential of their employee by reducing the turnover ratio of their organization. As a by product, the organization enhances the competitive advantage. This research aims to establish as how the basic socio economic factors affect the retention policy and to which extent in this competitive environment.

The objectives of this research are presented as follows:

1.1 Research Objectives

The research is aimed to answer the following questions:

 Is there any correlation between turnover rate and rise in worth / value of socio economic factors?

 What are the types of socio economic factors which actually increase / decrease the retention rate of an organization?

 Are there any variables which impact the retention policy and for this reason play a significant role in determining the key areas of retention policy?

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2. LITERATURE REVIEW

The fundamental reason that workers abscond / switch over the organizations is dissatisfaction. Their dissatisfaction could crop up on many levels. Most of the published research has identified that MONEY is not the only reason of job dissatisfaction. Employees depart from an organization for other reasons such as career growth and development, a change in life style and change in life circumstances (Redmond, 2014). It is convenient to believe the reasons for dissatisfaction in expression of push factors (areas that make employees more dissatisfied) and pull factors (areas that make employees more satisfied). Employers are often inexperienced if they ignore retention supervision during periods of business slump. High levels of unemployment will deter some employees from considering a job switch over, but not everyone will do the same. Current research has proved that unemployment rates have little bearing on the turnover plans of an employee with specialized skills and training. Jack Welch, former CEO of General Electrichas described the skilled employee retention as "In bad economic times you have to take care of your best. Go hug your best. Give them a raise while you're laying other people off" (HBR, 2009).

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Exhibit 1

Job satisfaction model

Some of the factors which contribute towards a job dissatisfaction model are :-  lack of job security

 lack of promotions  poor benefits offering  poor work conditions  poor compensation  poor pay

Even after fixing all the above listed factors, we will not get a satisfied worker at the end (Field, 2008). Moreover, if we fix everything discussed above then we will find an employee in between satisfaction and dissatisfaction so they are neither satisfied nor dissatisfied. Poor pay and poor compensation can be linked to employee retention or motivation directly. Till the time an employee is not motivated, he will not be a useful instrument for the organizational growth. Due to the reason, the turnover ratio of the organization will be impacted. He will keep on looking for the extrinsic rewards which are financial in nature. This type of rewards may be called as needs of an employee which has to be fulfilled for a better job satisfaction. Maslow termed these needs as biological needs (Field, 2008). The basis of Maslow's theory of needs is that human beings are motivated by unsatisfied needs, and that certain lower level needs should be satisfied before going to higher level needs. As per the teachings of Abraham Maslow, there are general needs (physiological, safety, love, and esteem) which have to be fulfilled before a person is able to behave in a self-seeking mode. These needs were named as “deficiency needs.” While a person is motivated to fulfill these basic aspirations, they continue to move toward growth, and eventually self-actualization. The satisfaction of these needs is quite healthy. While preventing

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Self Actu aliza tion

Esteem

Needs

Social Needs

Safety Needs

Physiological Needs

their enjoyment makes us ill or act in an evil way. These factors are similar to the satisfiers and dis-satisfiers of Herzberg’s theory.

Exhibit 2 Maslow hierarchy of needs

According to Herzberg theory of motivation, there are certain job factors that result in satisfaction for the employee while there are certain job factors that prevent the dissatisfaction. The contrary term for “Satisfaction” is “No satisfaction” and the contrary term for “Dissatisfaction” is “No Dissatisfaction” (Herzberg, 2015).These factors are called “Hygiene Factors”. Hygiene factors are critical for job satisfaction at place of work. On the other hand, these factors do not direct the employee towards positive satisfaction for a long-term. But if these factors are missing / if these factors are non-existent at place of work, then they lead to dissatisfaction. As a result, employee quits or switch over the job. In other words, hygiene factors pacify the employees and do not make them dissatisfied if they are reasonably embedded in the organizational retention policy. Presence of these factors is extrinsic to work and leads to job satisfaction. Hygiene factors can be termed as dissatisfiers or maintenance factors as they are

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required to evade dissatisfaction (Herzberg, 2015). These factors explain the job environment / scenarios. The hygiene factors signify the physiological needs which the individuals desired and anticipate to be fulfilled. Hygiene factors include:

 Pay. The pay should be appropriate and justifiable as per the job description. It should be comparable to the same level of job in the same industry.

 Fringe Benefits. The employees of the organizations should be offered the health care plans like Pakistan Army. They must be offered for the next of kin, parents, children and for oneself.

 Physical Working conditions. The working conditions has a vital impact on the retention of an employe. If the employee is working in far furlong area away from his duty station, then travelling allowance, daily living allowance, perdiem etc should be paid. The working conditions should be clean, safe and healthy. Otherwise compensation should be paid.

 Status. The status of the employee should be retained.

 Interpersonal relations. The employee should be trusted and respected within the organization. There should be no conflict, grudge or humiliation which should be present within the employees.

 Job Security. The organization should provide the job security to the employees. They may pay less but the organization should strengthen the bond with job security.

Most of the research had aimed to identify the reasons that what are the factors which determine the intentions of an employee to quit (Saks, 1997). Due to the diversity of the employed work force and lack of consistency in the findings, there is no steadiness in the findings of the study. Consequently, there are numerous reasons of employees switching over the jobs. It was identified that job related stress and stressors compelled the employee to quit

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the job and search for another (Ongori, 2007). These are the individual decisions which make one motivated enough to quit the job. There are other factors like locus of control, powerlessness, and personal control which intimidate the employee to quit. Locus of control is defined as the external factors which are in the control of the situation. These external factors are luck, chance, situation, and other powerful factors which can influence ones life (Akar, 2013). Manu et al. (2004) It was argued by many researchers that employee quits on financial reasons (Ongori, 2007). By using economic medelling technique they have reasoned that employee switch over the job due to the economic reasons and this model can be used to predict the turnover ratio of the market.

Organizational stability can be improved by analyzing the local labour market conditions (Redmond, 2014). Organizational attachment and loyalty is obtained through high wages, fringe benefits and good working conditions (Idson, 1993). How ever some researchers argue that turnover in the market can be predicted with local unemployment rates and job satisfaction. Role stressors are important contributors in local market turnover rate.

Role ambiguity can be defined as the difference between what organization expects us that what we should do on the job and what we want to do for the organization. This creates uncertainty about our role in the organization. There is a gap in understanding the organizational goals and our role. This misunderstanding leads in the gap of expectations of organizations and employee thinking (Erdil, 2014). Inadequate job description, Insufficient information and vague expectations of management may leed to dissatisfaction and the employee feel less involved in attaining the organizational goals. Other contributing factors are extensive job pressure, lack of consensus on job functions and performance evaluation and management methods which leads to dissatisfy the employee and he switches over the job (Ongori, 2007). Disregard of recent research and discussions to downgrade the significance the of money and pay as organizational reward, there are abundant examples that money can be taken as positive reinforce and motivator to retain the employee if the pay structure is designed properly and have the positive impact on the employee retention policy (Luthans, 2013)

Moreover, money is not only a motivator but it act as a positive reinforce. The more an employee gets the more he want s it. The basic concept here is that once the money is sufficient to satisfy the basic needs, then an employee jumps to another need and goes ahead

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in Maslow hierarchy of needs. There is proof that if the pay is reduced, morale is adversely affected. Career growth is the primary concern of the employee but compares his monetary benefits with the local time and market. An employee always tries to get a higher salary from the local market if the switching cost is low. The discussion arises that why high performers leave? The data in Exhibit 3 demonstrate this loom. The data was taken from the survey of medical doctors and nurses while measuring their satisfaction. One of the questions of the survey was to ask about the plans to quit or stay in the organizations. This way the employees were distributed in two groups of leavers and stayers. The information on performance as taken from the personal files and data. After the analysis it was revealed that high performance leavers were the one who were dissatisfied from the standard of training and lack of promotional scenarios. Differences among the doctors and nurses were significant statistically. This issue can be addressed by a focused strategy of in-house training and addressing the promotional criterion. Moreover, the remunerations can be enhanced keeping in view the credentials and educational standards of the doctors. It can create the sense of competition and they tend to enhance their education. By keeping a closer look at the personal data of the employees, it is evident that why performance is linked with the turnover. Employee gets frustrated if they are not recognized at organizational level and they are not given the timely raise. As a result they quit the job and switch over to other due to less switching cost. On the other hand, across the board pay raise and increased fringe benefits may tend to retain the low performance employee in organizations. A cautious and focused deliberate plan to this dilemma should engross performance-based rewards (merit pay, productivity bonuses). In this way salary growth and career management can be interlinked for the employee (Idson, 1993).

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Exhibit 3 Satisfaction Differences Among High and Low Performers Intending to Quit and to Stay

Theories of turn over and quitting the job provided a representation of a decision making process. As the modeling of decision making includes the factors of switching over the job, they provide useful information about the factors of quitting. During the past 25 years , number of models have been analyzed. The data obtained from the modeling gives a fair idea of factors influencing the turn over. One of the models of employee turnover is described in exhibit4. The prime objective of this model is to describe and elaborate the conditions of employee retention that how employee expectations and alternatives play a role in his turnover decisions.

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EXHIBIT 4 Employee Turnover Decision Process

In the model described above the expectations of the employee are the monetary benefits and rewards from the organization. Keeping in view the present price hike and inflation, the monetary benefits are balanced. In this way the intrinsic reward system is not interli ked with extrinsic reward system of the organization. To motivate an employee and to retain him in the organization, he looks beyond the monetary benefits to work for the organization. Like Pakistan Army, most organization offer a wide range of benefits to the employees. Many of these fringe benefits are very low cost but valued very high in the perception of the employees. The perceived value of fringe benefits is of vital importance for organization and for the retention policy to be successful (Rhodes, 2007)

Employee normally considers the inflation rate and in comparison the salary offered to them. In Pakistan, the rate of inflation was recorded as 10.2 % in November of 2011. Since 2003 till 2010, the average inflation rate in Pakistan was 10.15 %. It was recorded maximum value of 25.33 % in August 2008 and a record low of 1.41 percent in July of 2003. Inflation rate refers to a general rise in prices measured against a standard level of purchasing power. The common measure of inflation rate is Consumer Price Index, which measures inflation in the whole of the domestic economy (Trading Economics, 2016). Inflation refers to the decreasing of purchasing power and persistent rise in price of common goods. Inflation can be measured by calculating the price of two goods at two identical points without compromising the quality of the goods. Inflation can be measured by different methods depending upon the calculations. The most common measure of the inflation is CPI.

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EXHIBIT 5 Pakistan Inflation Rate

Inflation rate and the price of each factor have a direct impact on the retention rate of an organization. Employee switching cost is low due to the fact that competition in labor market is very high. Employee switches their jobs within the same sector for even the difference of PKR 2000.00-5000.00. Skilled labor is available in the market and organization can head hunt easily. We can take money as a reward from contemporary theories.

It is realistic to assume that successful employees consider themselves a useful employee for other companies as well. These companies might be competitors. In past research, rewards and outcomes are linked together for employee motivation. Whereas, corporate culture is a self motivating culture for corporate employees. In the area of human resource management, money is taken as the best motivator in an organization. But in a high profile career in an organization, money will be the sole motivator alone. The top management of that organization should exert some efforts to improve the corporate culture. If the top management is successful in creating the

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atmosphere like Google and Silicon Valley at the work place, the best employees will not be willing to quit the job (Arnulf, 2014).

Whenever the discussion on retention ratios, retention policies and turnover rate is discussed in top management, the primary topic is money especially bonuses, salaries, compensations etc. Retention policies can be very successful if they have a deliberate focus on more ways to use the money than just increasing salary . Employee loyalty must be addressed by creating a culture and drive within the company to retain that employee. The retention program expenditures must be articulated with the company vision and retention policy (Southgate, 2014)

3. RESEARCH METHODOLOGY

The methodology of every research paper has a significant role as it depicts that how the data was collected and what all are the parameters of analysis through which we can reach to a solid conclusion of our research.

In this part I have endeavored to crystallize the methodology as clear as possible for better comprehension of results. This section is further subdivided into sub parts for better understanding.

The research has aimed to establish as to whether there is any affect of basic socio economic factors on retention of employees of telecom sectors or not. For the purpose of the research and problem statement above I have structured my research as

:-3.1- Subjects

The subject of the research is chosen from the telecommunication sector of Pakistan. Research encompasses the employees of twin city Islamabad / Rawalpindi working in local telecommunication set up. Samples are taken randomly from a population in which the data is distributed normally. The companies in my research included Mobilink ,Telenor, U-fone, Zong and Warid as they are the five major telecommunication companies. Total of 100 respondents are included in the survey for the purpose of

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research. They are included from their middle and top management level. Lower level employees were not taken as the switching cost for the company and the cost of hiring and firing is quite low for the company.

3.2 – Procedure

The nature of study is hypothesis testing. In order to analyze the data, information was collected through one questionnaire which was circulated in five telecommunication companies. The result of questionnaire was recorded and analysis was done. To further reinforce our hypotheses, exact inflationary indexes were obtained for the period of five years and the turnover ratio of the organization was computed. Current turn over ratio and inflationary index was not taken as sample due to unstable market and spikes in the recorded data. To match our results, the relationships between the variables were analyzed so as to figure out whether basic socio economic factors and turnover ratio are interlinked or not. The research was concluded on the basis of key findings. The detail of procedure which was followed for carrying out this project is described in Para 3.3. 3.3 - Type of Study

The type of study is descriptive. The research aimed to find out the relationship between the persistent rise in socio economic factors and the impact on turnover ratio. The project is of quantitative nature as the target is to quantify the factors, count them and establish a statistical model in an attempt to explain the impact of socio economic factors on turnover ratio.

3.4 – Research Tools

For a sophisticated study and finesse in analysis, SPSS (Statistical Package for Social Science) is used. The research approach used is correlation; in which hypothesis testing will be carried out. Focused statement will be made in the questionnaire which predict in answer to the research question. The hypothesis developed will be based on finding of previous research. The ultimate objective is to decide whether to accept or reject the hypothesis. In the research the deductive approach is used. The following approach in the research has been used.

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3.5 Research Approach

After arranging the data in order and analyzing, exact figures of inflationary indexes for the last set of 5 years are obtained from government revenue office to further match the results of survey. For the base results following approach is used.

 Development of Hypothesis  Data collection

 Analysis of data with the help of SPSS  Debate and impact of the results

 Matching of surveyed data with exact governmental data  Conclusion

3.6 - Research Instruments

Research was based on following instruments:  Internet

 Survey

 Study of past historical research work

 Secondary Data ( through books, articles, publications)

3.7 – Time Frame

Research study is co-relational. Time horizon for the research is cross sectional. Due to the reason the data is collected once in minimum possible time and analyzed to reduce the effect of time. It is analyzed to get the results based on the analysis and to answer the research questions.

The time frame of this study was approximately three months and was divided into:  Research design

 Data collection and Data analysis  Conclusion

3.8 - TREATMENT

The data was recorded in tabulated form after the synchronization. The data is examined by comparing the corresponding responses received in the questionnaire. SPSS was used

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to investigate the results. Correlation test was carried out so as to establish the relationship (if any) between different variables. In addition both descriptive and inferential statistics were used to evaluate the data collected from the questionnaire. The data received from the questionnaire was used to test the hypothesis and verify that whether basic socio economic factors have any impact on retention rate of an organization.

3.9 – VARIABLES FRAMEWORK

First of all we will identify the variables of the research and then we will demonstrate them graphically which shows the relationship among different variables.

3.9.1 – DEPENDANT VARIABLES

The dependant variable under study is:- Turnover ratio

3.9.2 Independent Variable

The impact of independent variable on dependant variable is either positive or negative. In our study the independent variables are:

 Children Education  Food and beverages  Recreation cost

 Dress code and suiting  House rent

 House hold furniture  Fuel

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3.9.3 – INTERVENING VARIABLES

The intervening variables act as a surface between time and other variables. They are hypothetical variables to establish the link between other variables. Following variables are taken as intervening variables but the values of intervening variables are taken accurately to further refine our study.

 Laundry

 Communication  Transportation  Unemployment rate

3.10 – HYPOTHESIS DEVELOPMENT

The research primarily aims to recognize as to whether basic socio economic factors have some impact on retention of the employees in an organization or they both are independent factors and operate independently. For the purpose of analysis, the main hypothesis has been taken as null hypothesis.

Ho (Null Hypothesis) = Basic socio economic factors do not have any impact on retention of employees

Incase these factors have some impact (after analyzing the statistical results) then resultantly null hypothesis will be rejected. Null hypothesis has been has been developed on the fundamental assumption that if the retention policy has been formulated keeping in view the rise in price of socio-economic factors then the turnover rate would decrease.

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Presentation of sub hypothesis will further establish the conclusive evidence about the null hypothesis.

H1 or the 1st_{hypothesis aims to set up the positive equivalence between the basic socio economic} factors and the turnover ratio of the organization. Research suggests that there is a positive link in the employee and retention reward system. These rewards are of different types and we take pay and its allowances as a primary reward. On the other hand rewards keeps on changing as per the existing economic scenarios. An employee has to fulfill his basic security needs to be more satisfied and he retains himself in the same organization ( Maslow hierarchy theory).

H1 = Basic socio economic factor have some positive correlation with turnover of the employees. Therefore, turnover rate would be on decreasing rate.

Basic socio economic factors play a vital role in reward determination and retention tools of organizations. Still organizations have not linked this aspect of reward with retention policy of their human capital retention goals and the employees take less time to switch the job. Basic socio economic factors have great importance and impact for day to day living. If H1 is accepted, then organization must keep in view the persistent rise in socio economic factors and its impact on daily life. The main reasons rooted in switching over the jobs are the persistent rise in socio economic factors and absence of retention tools who keep them motivated to work in the same organization.

3.11 – Limitations

The limitations of this study are as follows:

 Information was collected from the head offices of telecom sectors located in Rawalpindi and Islamabad. As they are cosmopolitan cities so they may be biased due to geographical constraints,

 Response might be biased as the nature of variables are subjective,

 Some people were expected to be hesitant in participating in survey as the nature of study is sensitive culturally,

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4 – FINDING AND ANALYSIS

This section discusses the detailed findings and analysis of the data collected through various means like interviews, questionnaires and oral assessments. In order to evaluate the impact of basic socio economic factors on retention of employees of telecom sector in Pakistan, interviews were carried out with middle and high level managers which revealed important sights on the importance of basic socio economic factors and its impact on their daily life. In past few years the role of retention policy has been entirely changed in organizations. Telenor has emerged as a good retainer organization of the employees due to its good retention policy and organizational reputation. Companies are more proactive in aligning their retention policies with the ultimate goal of their organizations. In this pretext, organizations will not only save the overhead cost of staffing, hiring, firing but save the TND cost of old employees being retained.

In present Scenarios a balanced retention policy will help the organization to reduce its overhead cost of hiring and firing. CEO jack Welch of GE Company says that organizations should embrace the older employees in bad times and develop the employees for future. By keeping the employee in bad days of business and not taking the option of lay off, the employee will be more motivated and work harder. In the present scenarios of capitalistic society where job switching is a trend, organizations must formulate some strategy through retention policy to keep their employees. Therefore, the pivotal role of retention cannot be overlooked in any organization. The goal of employee retention is only achievable if companies base their retention policy by keeping the persistent rise in the socio economic factors apart from the base salary , pay raise on appraisal, bonus and other fringe benefits. In the study, it was observed that most of the companies determine the motivation level of employees by good compensation package and salary alone.

In addition, it was divulged during the interaction with the employees that the pay is increase after the evaluation of annual performance appraisal and not by keeping the persistent rise in socio economic factors. Pays and salaries are increased on the bases of performance appraisals in the shape of bonuses and pay raise once a year. Whereas the effect of socio economic factors is long lasting and effect during the whole year. In all telecom companies, the salariy raise is interlinked with the performance appraisal at the end of the fiscal year.

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4.1 – Basic Findings

Employees have been invariably attracted with higher pay scales and better fringe benefits of other organizations within the same sector. Compensation and benefits include the retention tools or the retention factors to address all those areas which are important for an employee. With this, basic socio economic factors play a vital role in managing and retaining the employees with a constant rise equivalent or more than the inflationary index. This research has been taken up in order to study the link between basic socio economic factors and the retention policy of a telecom company of Pakistan.

The questionnaire for this study was devised to have a closer look on basic socio economic factors on retention of employees in the organization. The questionnaire is attached in Appendix A. response received from the questionnaire is discussed as below:

4.1.1 Statistics of Survey

The data in regard to socio economic factors as received from the circulation of the questionnaire is summarized as under

:-Statistics

Petrol Prices Recreation_Cost

Food & Beverage Prices

Children

Education House Rent

Valid 100 100 100 100 100

Missing 0 0 0 0 0

Statistics

Utility Bills Dress Code & Suiting New Job Search Last Job Quiting Transportatio n Cost Valid 100 100 100 100 100 Missing 0 0 0 0 0

Table 1 Data of Questionnaire

For choosing the basic factors, the criterion was developed. Only those factors are considered which are essential for the living of an employee and based on needs (Wisc, 2014).100 respondents were circulated the questionnaire and they all have to fill in the questionnaire. Total 10 variables were taken as basic socio economic factors. All questions and the interlinked responses were valid ( Ref to table 1).

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Another aspect of the survey was the pay scale of the respondents. The pay scale was divided into 5 groups and the results shown that maximum number of the employees fall within 50 thousand to 70 thousand rupees.

20000-30000 30000-50000 50000-70000 70000-90000 90000 + 0 5 10 15 20 25 30 35 40 45 50 13 25 47 10 5

SALARY RANGE

Table 2 – Salary Range

There were 47 respondents who fall within the category of 50-70 thousand pay range and the least were above 90000. However 30000 to 50000 group was 25 % of the total participants. Here these two groups constituted 72 % of the total results.

4.2 – Relationship of Basic Socio Economic Factors

Basic socio economic factors are taken on the basis of day to day livings. Total of 10 factors are taken which constitute the main portion of the budget of a house hold person. These factors are interlinked with each other and by increase in one factor the consumer adjusts the other factor on the basis of priority. Now days, companies give non monetary benefits to their employees instead of monetary benefits. Employee of telecom sectors is given multiplicity in activities. They are not compensated according the persistent rise in socio economic factors. They are given other fringe benefits which cost the company less and give the liberty to adjust the budget. The result is the switching of the job to the competitors even if there is a little difference in the pay. Due to

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current world wide recession telecom sector of Pakistan has also been hit. This is because of declining ARPU (average revenue per user) and decreasing growth rates that the companies are now concerned about containing their costs and hence decreasing their operational costs (Raiz, 2015). The companies don’t keep in mind the interrelationship of basic socio economic factors with the turnover ratio of the organizations.

4.2.1 – Relationship among Different Factors

Respondents were asked regarding impact of patrol prices on their living standards. 70 % of the employees replied that this facet of economic factors have a grave impact on their house hold budget. Whereas 19 have replied that it has some impact but not completely and only 11% replied that there is no impact on them.

Petrol Prices

Frequency Percent Valid Percent Cumulative_Percent

Valid True 11 11% 11.0 11.0 Somewhat True 19 19% 19.0 30.0 Not True 70 70% 70.0 100.0 Total 100 100.0 100.0

Table 3 Fuel prices

Here the correlation test with turnover of Fuel prices is .852 and test of significance ( 2 tailed) is .067 which is again significant.

Fuel prices Pearson correlation .852

Sig. (2tailed) .067

Table 3 a

Here we had assumed that Fuel prices have indirect impact on the retention of the employee. Companies do not give the compensation for the fuel prices rather adjusts as a whole in pay package. In second question recreation cost and its rise is analyzed. When asked about planning a recreational trip and its complexities, 31 % of respondents have replied that they feel uncomfortable while planning a trip due to price hike. Whereas 44 % respondents said that they are ok with the price hike and its impact. Here it is significant to illustrate that the survey was

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conducted in Rawalpindi and Islamabad where the nearest places for excursion is Murree and suburbs which is within the radius of 100 kilometers. 25 % had replied that there is no impact at all on the recreation cost ( ref to table 4)

Recreation Cost

Frequency Percent Valid Percent Cumulative_Percent

Valid True 25 25.0 25.0 25.0 Somewhat True 44 44.0 44.0 69.0 Not True 31 31.0 31.0 100.0 Total 100 100.0 100.0

Table 4 Recreation Cost

Recreation Cost Pearson correlation .794

Sig. (2tailed) .109

Table 4 a Recreation Cost

Recreation cost is highly correlated with turnover as it goes higher and there is no catering for in the retention policy then there is a significant impact on the turnover ratio of the organization. Another important factor is food and beverage price. Every organization gives some motivation for a quality of life both inside or outside the organization. The perspective of quality of life is different both inside and outside the organization. Within outside the office, type of food is also taken as quality of life. Prices of food and beverages, although a negligible factor, but have great implications. 60% of the respondents had replied that increase in food and beverage prices have a great impact in their retention ( ref to table 5 impact of increase in food prices).

Food & Beverage Prices

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30 % respondents have replied in either way that they are ok with the price hike and only 10 % have not been affected with any price hike.

Food & Beverage Prices Pearson correlation .910

Sig. (2tailed) .032

Table 5 a Food & Beverage Prices

Education of children is an important factor and takes away a major chunk of our salary. It includes the transportation cost of children as well. In telecom sector retention policy, the factor of education of children is ignored. Maintain the education standard and the standard od school is not easy due to the price hike of tuition fee of schools. When inquired from our respondents, 58 % of them had replied that there is a great impact of this factor. Keeping in view the educational standards and the number of educational institutions, it is the desire of every individual to get the best education for their kids. 17 % had no issued linked with the educational standards ( ref to table 6 and 6a).

Children Education

Table 6 Children Education

Whereas the correlation of educational standards with the turnover ratio is as shown in the table below ( ref table 6a)

Children Education Pearson correlation .869

Sig. (2tailed) .056

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Telecom sector does not accommodate their basic level employees for the living and utilities. There are many rationales for the issue but the most important is the high cost of living in major cities of Pakistan. Telecom companies do not own any residential set up in the cities that they can give it to their employees like Engro, Pak Arab or Pakistan Army. Companies usually offer house rent to their employees as percentage of their basic pay. But unfortunately due to high price and persistent rise in this fact does not match with the adjustment in the rent and remunerations. In table 7 and 7 a we can clearly see that 75 % of respondents are affected with the rise in house rent whereas only 20 % says that it has some effect but not that much.

House Rent

Frequency Percent Valid Percent Cumulative_Percent

Valid True 5 5% 5.0 5.0 Somewhat True 20 20% 20.0 25.0 Not True 75 75% 75.0 100.0 Total 100 100.0 100.0

Table 7 House Rent

Here it is worth mentioning that some employees have the house of their parents.

House Rent Pearson correlation .869

Sig. (2tailed) .056

Table 7 a -House Rent

Turnover ratio is exceedingly correlated with the house rent and employees seek a better and balanced prearranged pay if they switch over to some other organization.

Utility bills and price of basic necessities again have impact on the turnover ratio but organizations do not cater for this aspect as well. Table 8 and 8 a shows the relationship between the utility bills and turnover .

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Utility Bills

Table 8 - Utility Bills

Utility Bills Pearson correlation .915

Sig. (2tailed) .030

Table 8 a - Utility Bills

Utility bills and turnover ratio has almost the same impact. Both are highly correlated with each other and they are significant as well. With increase in the basic utility frills like electricity, gas and water the percentage increase in index does not match with the corresponding percentage increase in the pay. The percentage increase is taken in organizations are random and based on ones perception of basic economic factors.

Dress code and suiting is another important facet dealing with basic factors. Some bureaucratic organizations are the one which forces and keeps a dress code for their office timings like strategic plans division, Mobilink, Investment and law firms etc. Even after office timings they have the social gatherings with a dress code. Apart from Telenor which is matrix organization, almost all telecom companies have a dress code. What part of the pay, an employee spends on dress code and suitings? The question was responded in a way that 77% complimented the fact that there is an effect on their life style by persistent increase. Only 6 % have no issues with the price hike of clothing (Ref to Table 9 and 9a).

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Dress Code,Suiting &Clothing

Table 9 Dress Code,Suiting &Clothing

An employee has to spend some amount on his clothing, suiting which is as per the designation. Dress Code,Suiting

&Clothing

Pearson correlation .909

Sig. (2tailed) .032

Table 9a - Dress Code,Suiting &Clothing

There is a great correlation between the price hike of clothing and the retention rate / turnover ratio.

Another key basic socio economic factor is unemployment rate. On one hand there is a cheap labour market available for the company and on the other hand, recruiting cost and cost of hiring, firing will increase. The more unemployment rate the more is the switching of the job trend by employees. Moreover , when asked from the respondents about the new job search so 90 % of the respondents have replied that they keep on searching new jobs even while working in one organization ( Ref to Table 10 and 10 a).

New Job Search

Frequency Percent Valid Percent Cumulative Percent Valid True 2 2.0 2.0 2.0 Somewhat True 8 8.0 8.0 10.0 Not True 90 90.0 90.0 100.0 Total 100 100.0 100.0

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When the results are compared with the turnover ratio so it was evident that turnover ratio is quite correlated with the unemployment rate.

New Job Search Pearson correlation .952

Sig. (2tailed) .013

Table 10a -New Job Search

Transportation cost is another fundamental socio economic factor effecting the employees. It includes the financing schemes, short term loans, and even car purchasing debts financed by the organizations. Pakistan Army gives its employees flexi loans and easy debt financing through Canteen Stores Department. Telecom sector of Pakistan has no such policy for its employees for their retention. When asked from our respondents regarding the transportation cost so the reply was affirmative by 78% of employees (Ref to Table 11 and 11a).

Transportation Cost

Table 11 Transportation Cost

When we have pitched the results with the turnover ratio the results are as follows: Transportation Cost Pearson correlation .791

Sig. (2tailed) .111

Table 11a - Transportation Cost

There is a positive correlation in transportation cost and turnover of the employees. And the test of significance shows that there is a significant result for these two variables.

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Here we can see that new job search and switching to new jobs is now trend. Sometimes it may happen for career growth but mainly it is due to the better pay structure and remunerations. Index of Dependent & Independent Variables from 2005-2010

Table 12 – Index of Dependent & Independent Variables from 2005-2010

In Table 12 we can clearly see the persistent rise in the index (GoP, 2010). We have taken 2000 year index as 100 and then take the yearly index after 2006. From 2008 to 2009 the index has given a steep rise but turnover was not significant. It was due to the reason that there was a transformation of Government and new avenues were forecasted. New mandate was given to the elected government and there was a hope that new government will take the economical growth upwards. We have noticed that there is a persistent rise in the inflationary index and the fuel prices. For our reference I have taken the exact figures from OGRA (Oil and Gas Regulatory

Year 2006 2007 2008 2009 2010 Fuel Prices 147.2 4 156.6 5 165.1 7 198.9 2 223.9 7 Recreation Cost 105.6 5 105.7 6 107.8 6 120 124.6 2 Food & Beverage 134.3

9 148.2 1 174.3 6 215.6 9 240.4 1 Children Edu Cost 125.0

3 133.8 2 140.8 8 165.2 7 184.2 3 House Rent 132.3 6 141.2 1 154.4 7 180.9 204.5 Utility bills 124.2 5 131.6 4 141.0 8 159.5 8 168.6 5 Dress Code & Suiting 117.5

8 123.7 133.7 9 152.8 2 160.9 1 Un employment Rate 110.6 6 120.9 1 132.2 3 147.2 5 155.3 2

New jobs search 119.4

9 124.5 5 138.2 8 163.1 7 179.1 7 Transportation & Communication 130.9 9 134.6 3 138.6 6 192.5 5 200.8 9 Turnover 9.34 12.1 14.39 15.11 15.91

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Petrol Prices Product Jan-12 Feb-11 Feb-10 Jan-09 Jan-08 HOBC 111.9 1 86.67 86.84 72.08 64.88 Premium 89.54 72.96 71.21 57.66 53.7 High Speed Diesel 98.82 71.89 Light Speed Diesel 86.78 70.95 61.06 48 32.57 Kerosene Oil 89.24 66.61 64.06 51.87 35.23 Table 13 –Petrol Prices (GoP, 2010)

In our analysis we have not taken any exact figure of any specific item of Oil and Gas but we have taken the index to show the persistent rise in fuel prices. It includes all the forms of fuel and further more prices of compressed natural gas were also averaged.

As a whole we can summarize the two tailed test of significance and correlation of all the variables from where we can see that there is a basic relationship between the variables both

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Table 13 Correlation and Test of Significance of basic factors

4.3 Discussion and implications

The role of retention was completely misunderstood till past couple of decades till the time organizations had not realized the fact of increased overheads in terms of hiring and firing cost. Retention of employees is now used as a strategic tool for the attainment of its strategic goals. On the other hand, retention policy is made to retain the employees for longer term. The retention policy is also used to avoid the switching of own employees to their competitors. It will be having a devastated effect if a company loses its employee to its competitor. Now days, retention policy is made with an aim to maximize the utilization of home trained employees and avoid getting newer and in experienced employees from the market. Today's challenge for every organization is to devise such a policy which is not only unique but also practicable in today competitive world.

Money has long been viewed as a incentive and, it is preferred on other fringe benefits. Money is ranked at the top by some market surveyors and very little rank in low. The prioritization of money varies with the location and individual in accordance with the telecom sector. However, as the well-known scholar and consultant Manfred kets de Vires recently declared, ‘It’s easy to say money isn’t every thing as long as we have enough of it. Unfortunately, through, the typical scenario it’s that the more money we have, the more we want.” Also commenting on money, steven Kerr, the well-known organization behavior scholar and executive at both GE and Goldman Sachs referenced in the last chapter, noted that “Nobody refuses it, nobody returns it, and people who have more than they could never use ever use do dreadful things to get more (Luthans, 2013). Money is always taken as a reward or it is linked from the retention. We can say that money is taken as reward or as a retention tool. Our research also shows the same results that money is taken as the main tool for retention and an employee always seek a better position keeping in view the money factor. Money is taken as a very broad term and we canalize it to a specific platform. From money as a whole we mean the compartmentation in the salary package. Or we can term it as socio economic factors which can be measured with money. We take fuel prices as a first basic socio economic factor. The correlation with turnover ratio is 0.852 which states that it is highly correlated. This rejects our null hypothesis Ho , which states that Basic

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socio economic factors do not have any effect on retention of employees. Another important finding here is that when we have pitched all the variable with the turnover ratio so the correlation is very high and the two tail significance level is also very significant.

In most of the management literature dealing with money researches has focused on money as pay and the ways in which pay affects motivations, job attitudes, and retention. In particular, money helps people attain both physical (cloth automobiles, houses) and psychological (status, self-esteem, a feeling of achievement) objectives. Here Maslow theory of motivation can be discussed as money is taken as extrinsic reward for an employee. Vroom (1964) expectancy model also describe the same phenomenon that whether reward is likely to enhance the worker motivation. Here we assume that the motivation is directly linked to the retention. If an employee is not motivated in an organization so he will not working in the same organization. Or he moves elsewhere. The theory explains the three main facets i-e expectancy, instrumentality and valence. An effective retention policy must take into account all these three factors. An employee must have a firm belief that

:- His will to work in the same organization will bear good performance.  His good performance will fetch him good remuneration

 Good remunerations are valued and as expected

Research has proved that if anyone of these factors are weak then the policy made is not impactive “ in the eyes of an employee”. For example, Telenor is the only company which gives the medical cover for the parents as well. This is called a glue factor in retention policy. If retention policy does not take care of these rewards and we have taken the rewards as the basic socio economic factors then any retention policy will not be having any impact on the employees. The correlation of new job search as congruent to the turnover ratio which we have trermed as the unemployment rate is 0.952 which is highly correlated.

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5 – Conclusion and Recommendation

This research was aimed to find out the basic facts for a practicable retention policy and the effects of socio economic factors on the retention policy in telecommunication sector of Pakistan. The relationship of different factors among themselves and with the turnover of the organization was analyzed. Also, it was analyzed that what all are the basic socio economic factors in the perception of employees which are necessary to be addressed in the retention policy. If the pay raise annually is not aimed to maintain the balance of rise in basic socio economic factors then the employee will switch over to the other organization with a better pay structure, even at a lower shade appointment. Results have reinforced the fact that basic socio economic factors have a direct correlation with the turnover rate of the organization. However, there are certain factors like clothing which are not significant as per our test of significance. More over we have gathered the data from Ministry Of Finance And Auditor General Pakistan Revenue and these figures further matched and second our research. The figures are taken in the last phase of research when our results are finalized. Our results has tested ten variables and they all are positively correlated with the turnover ratio, means when value of one variable increases, value of other variable will also increase. Further research is required in this field that what all can be other possible factors which directly affect the retention plans of an organizations and retain their employees for a longer period.

Money has also played a vital role in helping develop theories of organizational behavior. For example, if employees are interested in money, how much effort will they expend in order to earn it, and how much is “enough”? It is like the philosopher Arthur Schopenhauer once said, “Wealth is like seawater, and the more we drink the thirstier we become.” Moreover, if people

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work very hard but do not receive the rewards they expect, how much of a dampening effect will this have on their future efforts? Further research in this field will give finesse to these type of questions and further refine the retention policy of an organization.

Following recommendations can be made on the basis of my

research:- Since there is a strong relationship in the basic socio economic factors and the retention policy of telecommunication, so basic socio economic factors should form part of retention policy.

 Effective retention policy is made keeping in view the persistent rise in basic socio economic factors.

 Glue factors must be incorporated in retention policy refraining the employees by switching the job.

 There is balanced and equated rise in pay structure which is necessary for every employee keeping in view the rise in commodity index.

 Rise in pay should form part of retention policy. It should be justified keeping in view the rise in socio economic factor index.

 Rise in pay annually should be independent from the performance and appraisal system and should form part of retention policy.

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EVALUATING THE IMPACT OF BASIC SOCIO ECONOMIC FACTORS ON RETENTION POLOICY OF TELECOM SECTOR

This questionnaire is being filled as a part of research being conducted for the MBA program (HRM Specialization) at NUST Business School (NBS). This survey is entirely for research purpose and therefore all the information collected will be kept confidential.

1- Name of your Company_______________________________________

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___________________________________________________________________________ ______

3- For how long you have been working in this organization? 4- What is your salary range?

20,000 - 30,000 30,000 - 50,000 50,000 - 70,000 70,000 - 90,000 90,000 +

5- Does increase in patrol prices have any impact on your monthly home budget?

Very true SomeWhat True Not True

6- Do you agree with the fact that you feel uncomfortable while planning a long excursion trip due to price hike?

7- Does your company cater for increased food and baverages price every year in your salary every year?

8- In your present salary, you manage the education of your children in the best institution available?

9- You feel comfortable while paying your house rent from your prescribed salary?

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11- Your yearly increase in salary caters for annual increase in food and beverages?

12- Do you meet your dress code and standard of your suiting in present pay package comfortably?

13- You think and plan for a better job keeping in view the financial crunch?

14- You manage the increased transportation cost within your salary?

APPENDIX (B)

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True Somewhat True Not True 0 10 20 30 40 50 60 70 80 11 19 70

Impact of Petrol Prices on Monthly Budget

Frequency

True Somewhat True Not True 0 5 10 15 20 25 30 35 40 45 50 25 44 31

Impact on Recreation Cost

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True Somewhat True Not True 0 10 20 30 40 50 60 70 10 30 60

Impact of increase in Food Prices

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True Somewhat True Not True 0 10 20 30 40 50 60 70 17 25 58

Quality Education of Children

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True Somewhat True Not True 0 10 20 30 40 50 60 70 80 5 20 75

Impact on House Rent Payment

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True Somewhat True Not True 0 10 20 30 40 50 60 70 80

Impact of Utility Bills

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True Somewhat True Not True 0 10 20 30 40 50 60 70 80 90 6 17 77

Effect on Dress Code & Suiting

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Continuous New Job Search

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True Somewhat True Not True 0 10 20 30 40 50 60 70 80 90 10 12 78

Easily Meeting Increased Transportation Cost

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Frequent job Switches

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