How Can We Reduce Employee Attrition Before the First Year Without Using Bonds?

How can one ensure that employee attrition prior to their completion of 1 year is minimized? Conventional ways that companies have been using to minimize employee attrition include getting them to "Sign a BOND" indicating that they would continue to work for "X" years and/or if they still wish to leave, they shall be liable to pay an amount of Rupees "Y" which the company spent on training them.

Are there any other/better ways than "BONDS"? How about asking candidates to surrender their degree certificates for the duration that the employee desires to stay with the company?

Regards,
AM

I can understand that you are eagerly trying to find ways to reduce the attrition level; however, you might be missing the reasons why your employees leave your organization. If the exit numbers are high within a year, then there is something terribly wrong. How many times have you analyzed the root cause of the attrition? Do you conduct employee satisfaction/engagement surveys? If you still depend on bonds and the surrendering of educational certificates (which is illegal), it may be a short-term solution. Remember, "We make the employees, and the employees make the organization."

Regards

Thanks for your response and the kind advice. We are aware of employee satisfaction and engagement and have been working on it recently. We have also been analyzing the root causes and have been fairly successful in reducing attrition.

Understanding Legal Implications of Surrendering Educational Certificates

Regarding the surrendering of educational certificates, my predecessor had initiated this process. However, it would be beneficial to have a deeper understanding of the specific statutes or sections under which it may be considered illegal.

Unfortunately, as is often the case, some individuals who do not comply trigger the implementation of such processes that are unfriendly to employees (and which management would have been reluctant to implement due to their unproductivity), resulting in innocent employees bearing the consequences.

Anyway, I would appreciate it if you could provide details about the statutes or sections that deem making employees surrender their educational certificates or sign a bond as illegal.

Regards,
Amit

In my opinion, legally, there will be no points in taking a bond and asking them to surrender the certificates. There is no such statute to surrender certificates. As Mahesh rightly said, we have to see the root cause and try to resolve the problem. There may be many factors like the working environment, salary, etc.

Alternatives to Employee Bonds for Reducing Attrition

Bonds are not enforceable unless there has been substantial money spent on training. Keeping someone's original certificates as security is illegal; it is a criminal offense, so again, not a good idea. Keeping back a part of the salary to ensure that an employee does not leave is another method people use, but it is a violation of the Payment of Wages Act, so it will cause a problem.

Instead, you need to use a "Bonus/Incentive" clause for those staying for a certain period. This would be a part of the CTC but not a part of the monthly salary. However, this is again a tightrope walk. The amount must be large enough to entice the person to stay on to claim it but not large enough to affect your budget. This reduces their take-home pay (though the CTC looks larger), so you need to be careful. In case the take-home pay decreases significantly, they will walk off for a better job anyway. And of course, ensure you are not paying below minimum wages.

Understanding Employee Turnover and Legal Implications

Have you conducted a study on employee turnover? Have you tried to find out why employees are leaving? Instead of conducting this analytical study, you are considering a coercive method of signing a bond. What if employees disregard the bond as well? You may file a suit in court, but how many cases would you like to fight? What effect will it have on the organization's culture?

The basic issue could be that newly joined employees are not engaging with the organization's culture. But to address these cultural challenges, why would you adopt legal means? Do you think companies can grow by creating or invoking provisions of the law?

To understand why employees leave or to conduct an attrition analysis, click the following link. It is my reply to a past query on similar lines:

https://www.citehr.com/519562-employ...ml#post2211229

To know why employees quit the company, click the following link:

https://www.citehr.com/433012-employ...ut-notice.html

Before addressing organizational flaws, if you adopt the legal route, it could complicate the problems further. Please be cautious on that count.

Thanks,

Dinesh Divekar