CHAPTER-1

1. INTRODUCTION
1.1 INTRODUCTION ABOUT THE STUDY

Attrition is defined as a gradual reduction of the size of workforce through

normal means, such as retirement, resignation or death. This is normal in any
business and industry. Attrition rate is defined as the rate of shrinkage in size or
number.
This type of reduction in staff is one way a company can decrease labour costs:
the company simply waits for its employees to leave and freezes hiring. Attrition
of employees in a limited measure is desirable for influx of new ideas in any type
of organization. It helps organizations to maintain their agility in fast changing
environment. It brings in new blood, opens up new vistas for change, development
and improvement, shows avenues to expand operations and add to the creative
lines of the organizations. Attrition in a limited measure can thus bring gains to the
organization. However if attrition increases beyond a certain level, the gains are
transformed into pains. Recruiters explain that high attrition rates significantly
increase the investment made on. Significant investments in time and money need
to be made for acquiring employees in any organization.
Attrition in Manufacturing Industries

Companies in India as well as in other countries face a formidable

challenge of recruiting and retaining talents while at the same time having to
manage talent loss through attrition due to industry downturns or through voluntary
individual turnover. Losing talents and employees result in performance losses
which can have long term negative effect on companies especially if the departing
talent leaves gaps in its execution capability and human resource functioning
which not only includes lost productivity but also possibly loss of team-work,
harmony and
social goodwill. With attrition rates being a bane of every industry, companies are
devising innovative business models for effective retention of talent. There are a
lot of factors responsible for attrition and employers are getting increasingly
conscious of the factors that can keep an employee committed.
Attrition may be defined as gradual reduction in membership or
personnel as through retirement, resignation or death. In other words, attrition can
be defined as the number of employees leaving the organization which includes
both voluntary and involuntary separation. The employee gradually reduces his/her
ties with the company than crib about the underlying factors causing attrition. It is
symptomatic of a much deeper malaise that cuts deeper into the innards of
organizations.
Attrition rates vary from sector to sector and industry to industry.
Apart from the unavoidable ones like resignation, retirement, death or disability,
the causes are found to be many and varied. They vary according to the nature of
business, the level of the employees and the nature of the responsibility shouldered
by them. The obvious, common and main reasons are the ‘ergonomic discomfort’
experienced by the employee and the ‘functional incompatibility’ between the
corporate management and the employees. Very often an employee finds himself
among colleagues and superiors he is unable to cope up with. Or he finds himself
totally out of tune in his functions with the employee’s functional requirements,
failing to rise to the employer’s expectations. Another important reason is that the
employee’s remuneration is not voluminous enough to bear the brunt and cushion
the concussions of his family and social life.
 Employee retention refers to policies and practices companies use to
prevent valuable employees from leaving their jobs. How to retain valuable
employees is one of the biggest problem that plague companies in the competitive
marketplace. Not too long ago, companies accepted the “revolving door policy” as
part of doing business and were quick to fill a vacant job with another eager
candidate.
Kinds of Attrition
 Voluntary attrition- Voluntary attrition takes place when the employee
leave the organization by their own will. Pull factors like higher emoluments
elsewhere, better opportunities of growth and promotion etc. are responsible for
this kind of attrition.
 Involuntary attrition- Involuntary attrition takes place when the employees
leave the organizations due to some negative forces or push factors like faulty
promotion policy, biased performance appraisal etc.
 Compulsory attrition- It takes place due to the rules and regulations of the
government and that of the organization as well. It includes attrition taking place
due to attaining the age of retirement, completion of tenure etc.
Causes of Attrition
 Internal causes- These causes are pertaining to the internal environment of
an organization.Therefore, they are controllable.
 Salary
a. Insufficient salary
b. Delay in payment
c. No / delayed increment
d. Wage compression
  Promotion
a. Biased promotion
b. No / delayed promotion
Transfer
a. Forceful transfer
b. Transfer to a place employee is not willing to go

Workplace Infrastructure & amenities

a. Lack of hygiene
b. Lack of basic facilities like water, canteen, etc.

Task
a. Monotony of task
b. Task – labour mismatch
c. Team issues
d. Lesser job autonomy

Instability in leadership
Leading to confusion related to directions and commands which generate
frustration among the workforce.
1.2 INDUSTRY PROFILE
Chemical Manufacturing Industry
The chemical industry creates an immense variety of products which impinge on virtually
every aspect of our lives. While many of the products from the industry, such as detergents, soaps
and perfumes, are purchased directly by the consumer, 70% of chemicals manufactured are used to
make products by other industries including other branches of the chemical industry itself. The
industry uses a wide range of raw materials, from air and minerals to oil. With increasing
competition worldwide, innovation remains crucial in finding new ways for the industry to satisfy its
increasingly sophisticated, demanding and environmentally-conscious consumers.
The products of the chemical industry can be divided into three categories:
1. Basic chemicals
2. Speciality chemicals
 3. Consumer chemicals
Outputs range widely, with basic chemicals produced in huge quantities (millions of
tonnes) and some speciality chemicals produced in modest kilogramme quantities but with very
high value.

1.BASIC CHEMICAL

Basic chemicals, produced in large quantities, are mainly sold within the chemical industry
and to other industries before becoming products for the general consumer. For example,
ethanoic acid is sold on to make esters, much of which in turn is sold to make paints and at that
point sold to the consumer. Huge quantities of ethene are transported as a gas by pipeline around
Europe and sold to companies making polyethene.

2. SPECIALITY CHEMICALS

This category covers a wide variety of chemicals for crop protection, paints and inks,
colorants (dyes and pigments). It also includes chemicals used by industries as diverse as textiles,
paper and engineering. New products are being created to meet both customer needs and new
environmental regulations. An everyday example is household paints which have evolved from
being organic solvent-based to being water-based.
3. CONSUMER CHEMICALS
Consumer chemicals are sold directly to the public. They include, for example,
detergents, soaps and other toiletries. The search for more effective and environmentally safe
detergents has increased over the last 20 years, particularly in finding surfactants that are capable
of cleaning anything from sensitive skin to large industrial plants. Parallel to this, much work has
been done in producing a wider range of synthetic chemicals for toiletries, cosmetics and
fragrances.
NATURE OF THE INDUSTRY
Chemicals are an essential component of manufacturing and are vital to industries
such as construction, motor vehicles, paper, electronics, transportation, and agriculture. Although
some chemical manufacturers produce and sell consumer products such as soap, bleach, and
cosmetics, most chemical products are used as intermediate products for other goods.
Major segments: Chemical manufacturing is divided into seven segments: basic
chemicals, synthetic materials, agricultural chemicals, paint, coatings, and adhesives, cleaning
preparations, and other chemical products.The seventh segment, pharmaceutical and medicine
manufacturing, is covered in a separate statement.
The chemical industry segments vary in the degree to which their workers are
involved in production activities, administration and management, and research and
development. Industries that make products such as cosmetics or paints that are ready for sale to
the final consumer employ more administrative and marketing personnel. Industries that market
their products mostly to industrial customers generally employ a greater proportion of precision
production workers and a lower proportion of unskilled labour.
1.3.2. THE INDIAN SCENARIO OF CHEMICAL INDUSTRY:
Chemical industry is an important constituent of the Indian economy. Its size is
estimated at around US35 billion approx., which is equivalent to about 3%of India’s GDP.
Chemical industry is a significant contributor to the Indian economy, accounting for11%of total
industry output and 13% of gross value added by the manufacturing sector in FY10. The industry
contributes to 10%of India’s total exports and is a net earner of foreign exchange. It is also a
significant employment generator and participation field for small and medium scale industries
(SMEs). The size of India’s chemical industry was approximately 83Bn in FY10, and could grow
at 15% annually to 330Bn in 2020 in the most likely scenario, outpacing the GDP growth rate.
1.3.2. THE INDIAN SCENARIO OF CHEMICAL INDUSTRY:
Chemical industry is an important constituent of the Indian economy. Its size is
estimated at around US35 billion approx., which is equivalent to about 3%of India’s GDP.
Chemical industry is a significant contributor to the Indian economy, accounting for11%of total
industry output and 13% of gross value added by the manufacturing sector in FY10. The industry
contributes to 10%of India’s total exports and is a net earner of foreign exchange. It is also a
significant employment generator and participation field for small and medium scale industries
(SMEs). The size of India’s chemical industry was approximately 83Bn in FY10, and could grow
at 15% annually to 330Bn in 2020 in the most likely scenario, outpacing the GDP growth rate.
The growth is expected to be driven by rising demand in end use segments and rising exports
fuelled by increasing export competitiveness.
CHARACTERISTICS OF INDIAN CHEMICAL INDUSTRY
 High demand potential, as the Indian Markets develop and peer capita consumption
levels increase.
 High degree of fragmentation and small scale of operations.
 Low cost competitiveness as compared to other countries due to high cost of feedstock
and power, taxation structure and cost of capital.
1.3.4. THE GLOBAL SCENARIO
Increased investment on research and development (R&D) would enhance India’s global
competitiveness in the chemical sector. Currently, India has a minuscule investment in R&D of
just 0.5 per cent of the industry’s overall sales of Rs 5, 50,000 crore ($100 billion). But, by 2017,
the industry requires to increase its R&D spends to four per cent, experts said on the sidelines of
a valedictory function of the stalwarts of the industry here.
According to the government’s Five Year (2012-17) Plan, compared to the developed
world (the US and Europe) or China, the current penetration of specialty chemicals within
India’s end markets is low. With increased focus on improving products, usage intensity of
specialty chemicals within these end markets will rise in India over the next decade.
Focussed growth and planning for the chemicals sector would enhance India’s global
competitiveness further, increase domestic value addition, provide technological depth and
promote sustained economic growth. In order to realise the growth envisaged above and leverage
the India opportunity effectively, the chemical industry would require significant investments in
capacity creation, technology development, access to feedstock and a larger pool of skilled
human resources.
Focussed growth and planning for the chemicals sector would enhance India’s global
competitiveness further, increase domestic value addition, provide technological depth and
promote sustained economic growth. In order to realise the growth envisaged above and leverage
the India opportunity effectively, the chemical industry would require significant investments in
capacity creation, technology development, access to feedstock and a larger pool of skilled
human resources. the export front, India’s performance, however, is likely to remain lower due to
the ongoing slowdown in the European economies.
COMPANIES
The largest chemical producers today are global companies with international operations and
plants in numerous countries. Top chemical companies by chemical scales in 2016 includes;
Table1.1: Top Chemical Companies of 2016

Rank Company 2016 chemical Headquarters

Sales (USD in
billions)
1 BASF $63.7 Germany
2 Dow Chemical $48.8 United States
Company
3 Sinopec $43.8 china
4 SABIC ( Saudi $34.3 Saudi Arabia
Arabia Basic
Industries
Corporation)
5 Formosa Plastics $29.2 Taiwan
Corporation
6 INEOS $28.5 United Kingdom
23 Reliance $12.9 India
Industries
1.2 COMPANY PROFILE