A Study on Effect of Attrition

Topics: Insurance, Financial services, Insurance in India Pages: 41 (7377 words) Published: April 3, 2013
ISBN - 978-93-81583-46-3

A Study on Effect of Attrition over Financial Performance
of the Companies in Life Insurance Sector in India
Somen Mitra1, Anup Kumar Ghosh2
1
Research Scholar, 2Professor
1
School of Management, Pacific Academy of Higher Education
and Research University, Udaipur, Rajasthan
2
School of Management, Disha Technical Campus, Raipur
1
somenmitra09@gmail.com; 2aghoshmid@gmail.com

National Conference on Emerging Challenges for Sustainable Business 2012 731

A Study on Effect of Attrition Over Financial Performance of The Companies…

A Study on Effect of Attrition over Financial Performance of the Companies in Life Insurance Sector in India
Subtheme : HRM & OB

Abstract

The US$ 41-billion Indian Life insurance industry is considered as the fifth largest life insurance market and growing at a rapid pace of 32-34 per cent annually, according to the Life Insurance Council. Since the opening up of the insurance sector in India, the industry has received FDI to the tune of US$ 525.6 million. The government is likely to reintroduce the Insurance Bill which proposes to increase the FDI cap in private sector insurance companies from 26 per cent to 49 per cent. Despite the tremendous opportunities, there are few challenges and one of the most emerging is the scarcity of skilled human resource in the sector and the ever rising rate of attrition, which continues to haunt the employers. A marked difference has been observed especially in case of private sector employees , whose attrition has been on the higher side. This not only adds up to the cost of the organisation but also creates a negative psyche among potential employees, common people, investors about the impression of the sector which is mostly unfavorable in nature. This study attempts to identify the several causes which are responsible for attrition in this particular sector and the impact of the same on the financial performance of the companies. This study also tries to formulate a relationship between attrition and financial growth (negative) and there from suggests some remedial measures to arrest attrition at a manageable level.

Key words: Attrition, Perception, Life Insurance Sector, Work-Life Balance, Financial Performance.

National Conference on Emerging Challenges for Sustainable Business 2012 732

A Study on Effect of Attrition Over Financial Performance of The Companies…

Full Paper

1. Introduction
In the last 20 years i.e., in the LPG (Liberalization, Privatization, Globalization) era, Indian insurance industry has passed through an unprecedented level of innovation and growth. This growth is largely due to innovative products and processes introduced by formation of joint ventures (JV) between foreign and Indian companies in the early stage of post liberalization era. Alike China, Africa or Middle East, India too has been following the path of privatization, liberalization and deregulation which has entailed the entry of foreign players resulting in increased level of competition and innovation as well as facilitating market consolidation (Anand,2011). It is a fact that services sector represents approximately 55% of India’s GDP and it is maintaining a growth rate of 10.3% or more. The opening up of insurance sector has contributed favorably to insurance growth in the country. GDP from insurance sector which constituted 12% of GDP in 2000-01 increased to 19.3% in 2004-05 (IRDA Reports 2010). Though insurance comes within financial service industry, it remains to hold a stand alone industry status with a larger scope for innovation, be it product or process innovation. This elusive character of the product and service(s) makes it more inclined to adopt innovative ideas to develop and maintain growth. Integration of tangible or intangible resources from participating firms provides a joint venture or alliance with strategic rents that are achieved not necessarily because it has better or more...

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