Valuation Project Report

Valuation project report Valuation of the Incentive Stock Options for Procter & Gamble Co. Name: Haining Jiang Company background: In this valuation project, I will analyze a company which is mature and I am interested in. The name of the company is Procter & Gamble Co. the Procter & Gamble Company, together with its subsidiaries, engages in the manufacture and sale of a range of branded consumer packaged goods. The company operates in five segments: Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby Care and Family Care.In the year of 1837, William Procter and James Gamble settled in the Queen City of the West, Cincinnati, and established themselves in business. As a result, a new company was born: Procter & Gamble. Procter & Gamble became into a listed company at a stock price and dividend which are $ 1. 7 and $ 0. 01 per month respectively in 19 Jan. 1970. For many years, P & G keep following their purpose and social responsibility at every and every corner in the world: â€Å"We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers, now and for generations to come.As a result, consumers will reward us with leadership sales, profit and value creation, allowing our people, our shareholders and the communities in which we live and work to prosper. † Until now, P & G has become the largest consumer packaged goods company in the world at $ 67. 17 of the share price and $ 0. 562 of dividend per month. Main contents: 1. Discounted dividend valuation The most basic model is the Gordon Growth Model, which prices the stock by the dividend and future growth of dividends. The formula would be like this: V0=D0 (1+g)(r-g)=D1r-gWhere D0 is today’s dividend, which would be $ 2. 21 in our case. r is the cost of capital, r will be calculated like: Assume : The market premium = 6%* The risk-free rate = 3%* Given number in the case: ? = 0. 27 So, r = 0. 03 + 0. 27 x 0. 06 = 4. 62% The best way to estimate g is: The term g can be viewed as the return on owner’s equity times the earnings retention rate b. b = (1 – dividend payout ratio) = 1 – 58% = 42% return on equity = 14. 05% So, Sustainable growth rate = gs = 42% x 14. 05% = 5. 901% r< g, so we may meet a big problem when using the V0 formula above.But, as far as we all know, it is not possible that the firm can grow faster than r forever. The high return will attract other investors into the market to compete and the firm’s rate will eventually fall. And, I determine the long-run growth rate of dividends, gL = 3%*. g < r. Even if this data is not real in the true P&G case, I think it’s will be fine to continue our model. V0=D0 (1+g)(r-g)= $ 2. 21x(1+0. 03)(0. 0462-0. 03)=$ 140. 51 1) Two-stage dividend growth When the P & G is growing faster than r, one can use a multistage model, where the growth stages are broken into two parts.The first is the supernormal growth phase call gs , which is the rate that is higher than r. So we can assume: at the first period ( r < g ): gS = 5. 901% (as we calculated above) n = 3*; At the second period ( r > g ): r = 4. 62% (as we calculated above) gL = 3% (as we calculated above) D0 = $ 2. 21 (real data from P&G) ; As we all know the formula is: V0 = t=1n[ Dt1+rt+ Vn(1+r)n] Vn= D01+ gsn(1+ gL)(r- gL) So, V3= 2. 21Ãâ€"1+ 0. 0593(1+ 0. 03)(0. 0462- 0. 03) = $ 166. 88 V0 = 2. 21x(1+0. 059)1(1+0. 0462)1+ 2. 21x(1+0. 059)2(1+0. 0462)2+ 2. 21x(1+0. 059)3(1+0. 0462)3+ 166. 88(1+0. 0462)3 = $ 152. 27 2) Three-stage dividend growth We assume the P & G company experienced a life-cycle with a three stages that are: an early, development stage with high growth, a maturing phase with moderate growth, and a declining phase with little, no, or negative growth. The current dividend of $ 2. 21 per share will not change. Dividends are expected to grow at a rate of 10%* for 2 years. Following that, the dividends are expected t o grow at a rate of 8%* for 2 years. After the total 4 years, the dividends are expected to grow at a rate of 4%* per year, forever. The rate of return unchanged: 4. 2% (as calculated in 1. 1). We can break the calculation in to six steps: (1) Calculate the dividends for years 1 through 5: year| Dividend growth rate| Dividend| 1| 10%| 2. 431| 2| 10%| 2. 674| 3| 8%| 2. 888| 4| 8%| 3. 119| 5| 5%| 3. 275| (2) Calculate the present value of each of these dividends for years 1 through 5: Year| Dividend| Present value| 1| 2. 431| 2. 3236| 2| 2. 674| 2. 4430| 3| 2. 888| 2. 5220| 4| 3. 119| 2. 6035| 5| 3. 275| 2. 6130| (3) Calculate the present value of the dividends beyond year 4: P4= $ 3. 275(0. 0462-0. 04) = $ 528. 23 (4) Calculate the present value of the price at year 4:PVP4 = $ 528. 23(1+0. 0462)4 = $ 440. 92 (5) Calculate the sum of the present value of the dividends: PVdividends in year 1-4= t=110Dt(1+0. 0462)t = $ 12. 51 (6) Calculate the price today as the sum of the present value of dividends in years 1-4 and the price at the end of year 4: P0=$ 440. 92+$ 12. 51 = $ 453. 43 3) The uses of the dividend valuation models (1) The price-earnings ratio also known as the price-to-earnings ratio or PE ratio, is the ratio of the price per share to the earnings per share of a stock. Let us observe these data from P&G firstly: ?| 2012| 2011| 2010| stock price| $66. 6| $64. 50| $60. 44| current earings per share| $3. 82| $4. 12| $4. 32| P/E ratio| 17. 37173| 15. 65534| 13. 99074| dividend payout ratio| 58%| 50%| 42%| If we take the DVM and divide both sides by earnings per share, we arrive at an equation for the price earnings ratio in terms of dividend payout, required rate of return, and growth: P0E0= Dividend payout ratio x (1+g)r-g We can conclude the information below according to the above formula: Increase in dividend payout rate will cause increase in P/E ratio, this point is also obviously in the table above, the data comes from the real P&G case.Increase in r will cause decrease in P/E ratio Increase in growth rate will cause increase in P/E ratio. (2) we can also use the DVM to relate the price-book value ratio to factors such as the dividend payout ratio and the ROE. We assume the B0 indicate the current book value per share and ROE0 indicate the current return on book equity. As we all know: ROE0 = E0B0 , and P0=D0 (1+g)(r-g)=D1r-g ; So, we can get the formula easily below: P0=B0x ROE0 x D0E0x (1+g)(r-g) So we could get the conclusion through analyzing the above formula: increase in B0 will increase in P0; ncrease in ROE0 will increase in P0; increase in D0E0 will increase in P0; increase in g will increase in P0; increase in r will increase in P0; I believe there are plenty of other conclusions we can get from those formulas, I just mention some of them in my valuation report here. But in other words, we can fully use the DVM to find all the related fundamental factors to have further understanding through DVM. 4) What if there no d ividends? I think it’s acceptable and expectable if the P&G isn’t paying dividends now, but chooses to reinvest its money.It is a sign that the dividends in the future will be even larger. Of course, I won’t stick around with the company long enough to receive any of those dividends. But because of the growth of the company, I will realize that the eventual dividends will be even larger with the increasingly share price. After that, I can sell me shares to someone else to get my profit from it. Summary: â€Å"Valuation is the process of determining what something is worth at a point in time. When we value investments, we want to estimate the future cash flows from these investments and then discount these to the present.This process is based on the reasoning that no one will pay more today for an investment than what they could expect to get from that investment on a time and risk adjusted basis. †1 I think the paragraph I cited above not only give us the best conclusion of by valuation project report, but also tell us a definitely reason we study finance. Please Note: If the number followed a * behind it, it means this number is assumed and the others without * are all real data from P&G company finance report. 1: cited from the â€Å"Dividend Valuation Models†, by Pamela Peterson Drake, Ph. D. , CFA.

The Middle Passage essays

The Middle Passage essays Sometime between the years 1600-1800, black Africans were subjected to a grueling expedition of torment and torture. This trip was known as the "Middle Passage." It was named so, because it was the middle leg of the "Triangular Trade" route that was used by European merchants (Black Peoples of America paragraph 1). The first part of the voyage would carry cargo to the African coast, where the goods were then exchanged for Africans, The second part of the trip consisted of the Africans being traded for goods in America. The ship would then head back to Europe. While slave-trading was outlawed in most countries, it was a lucrative business, therefore often overlooked. Slave trade through the middle passage actually began with African captors trading African slaves. According to an about.com article, "African captors kidnapped their countrymen and brought them to slave factories on the west coast of Africa" (about.com paragraph 2). This may have began as a means to just make a living, providing food and clothing for trader. Apparently greed soon took over, and slave trading became a profitable, I dare say, "occupation." Slaves were often kidnapped from their village and families and carried to slave factories on the west coast of Africa. This journey alone cost many lives, as it was a long and tedious one. The slaves could then spend anywhere from days up to a year in these factories awaiting a horrible, yet unknown journey ahead of them. Once these people (who were not thought of as people at the time), were on the ships, they were shackled ...

60 Nationalities in Spanish

60 Nationalities in Spanish In Spanish, most of the words for the people who hail from particular countries around the world look or sound very similar to the word for the country in English. For example, colombiano  is the word for a male hailing from Colombia and boliviana  is the word for a female from Bolivia. An interesting distinction that varies from English to Spanish is that words used for nationalities are not capitalized in Spanish. Nationalities Can Be Nouns or Adjectives As in English, the words  for nationalities can be used in Spanish as either adjectives or nouns. An example of the adjective form is I want a French  coffee or Yo quiero  un cafà © francà ©s. An example of the noun form is He is an Italian or Él  es italiano. Who You Are Addressing Usually Matters In Spanish, nouns, and adjectives usually, have a masculine form and a feminine form depending if the person being referenced is male or female. The masculine form is usually used to refer to more than one person of unknown gender. For example, They are American would be translated as Ellos son americanos, which is the masculine plural form. A majority of nationalities end in -o.The feminine form for nationalities ending in -o is made by changing the -o to an -a. For example, the word griego, for a person from Greece, changes to griega when referencing a female. Another common ending for nationalities is  -à ©s. Words ending in -à ©s  can be made feminine by changing the ending to -esa. Thus the feminine form of inglà ©s,  for someone or something  from England, is inglesa. A Few Nationalities Do Not Change with Gender There are some nationalities that do not change form with gender. Nationalities that have irregular endings, such as -ense, as in the  word  costarricense, used for Costa Rican, do not have a separate masculine or feminine form. The word remains the same when describing either gender. The same can be said for  nationalities that end in -a. These do not change, such as  croata  for Croatian, or  belga  for Belgian. The following sampling of 60 countries is listed with the masculine form of the nationality. Use the masculine and feminine rules to change the word depending on the person being addressed and the endings of the nationalities that are given. Related Grammar Rules Plural nouns and adjectives for nationalities follow the regular  rules for plurals., typically by adding an  -s  or  -es. The names of most countries as well as provinces, states, and regions is masculine. The main exceptions are those whose names end in an unstressed -a, such as Francia, Argentina, and Gran Bretaà ±a. Canad, which ends in a stressed -, is masculine. A few country names, the biggest of them being la India, cant stand alone and need the definite article. For some countries, such as (los) Estados Unidos, the definite article is optional., List of Nations and Nationalities Alemania (Germany) - alemnArgentina - argentinoAustralia - australianoAustria - austriacoBà ©lgica (Belgium) - belgaBelice (Belize)  -   beliceà ±oBolivia - bolivianoBrasil - brasileà ±oCanad - canadienseChile - chilenoChina - chinoColombia - colombianoCorea del Norte (North Korea) - nortecoreano, norcoreanoCorea del Sur (South Korea) - sudcoreanoCosta Rica - costarricense, costarriqueà ±o (uncommon)Cuba - cubanoCroata (Croatia)  - croataDinamarca (Denmark) - danà ©Ecuador - ecuatorianoEgipto (Egypt) - egipcioEl Salvador - salvadoreà ±oEscocia (Scotland) - escocà ©sEspaà ±a (Spain) - espaà ±olEstados Unidos (United States) - estadounidense, norteamericano, americanoFilipinas (Philippines) - filipinoFrancia  (France)- francà ©sGales (Wales) - galà ©sGran Bretaà ±a (Great Britain) - britnicoGrecia (Greece) - griegoGuatemala - guatemaltecoHaità ­ - haitianoHonduras - hondureà ±oHungrà ­a  -   hà ºngarola India - indio, hindà º Inglaterra (England) - inglà ©sIrak, Iraq - irakà ­, iraquà ­Irn - iranà ­Irlanda (Ireland)  - irlandà ©sIsrael - israelà ­Italia (Italy) - italianoJapà ³n (Japan) - japonà ©sMarruecos (Morocco) - marroquà ­Ã‚  (Moro is sometimes used but can be considered offensive.)Mà ©xico, Mà ©jico - mexicano, mejicano  (the first spelling is used in Mexico, while usage varies elsewhere)Myanmar/Birlandia (Myanmar/Burma)  -   myanma/birmanoNicaragua - nicaragà ¼enseNoruega (Norway) - noruegoNueva Zelanda (New Zealand) - neozelandà ©sPaà ­ses Bajos (Netherlands) - holandà ©sPalestina  (Palestine) - palestinoPanam - panameà ±oParaguay - paraguayoPerà º - peruanoPolonia (Poland) - polacoPortugal - portuguà ©sPuerto Rico - puertorriqueà ±ola Repà ºblica Dominicana (Dominican Republic) - dominicanoRusia - rusoSudfrica (South Africa) - sudafricanoSuecia (Sweden) - suecoSuiza (Switzerland) - suizoTaiwan - taiwanà ©sUruguay - uruguayoVenezuela - venezolano Notes on Americano Estadounidense is understood everywhere to refer to U.S. residents, but in some areas it can seem overly formal. In parts of Latin America, norteamericano is preferred with speaking of the U.S., although in some places that term is understood include persons or things Canadian (but not Mexican). Americano can be understood to mean Latin American in some areas, but American in the U.S. sense in others. Quick Takeaways As in English, noun and adjective forms of nationalities in Spanish use the same words.Although names of countries are capitalized in Spanish, names of nationalities are not (except at the beginning of a sentence.)The most common endings for nationality names are -o and -es.

Organizational Development Assignment Example | Topics and Well Written Essays - 1500 words

Organizational Development - Assignment Example During recent years, the field of human resource management has seen a transformation as a result of changing workplace trends. A common concern for human resource managers has been to manage compensation and rewards in such as a way that employees feel motivated. At the same time, human resource managers are concerned with talent retention and this requires designing effective compensation plans that not only motivate employees and drive performance, but also retain high performing employees. However, many of the problems resulting from compensation plans differ from organization to organization. The dynamics of each organization shape the type of compensation plans that are going to work best given their situation. For example, organizations focusing on sales may pay their employees in terms of commissions and piece rate. On the other hand, high tech companies like software firms may pay their employees in terms of employee stock units. This is what Google and Facebook are doing with their employees. In order to counter challenges relating to pay, human resource managers develop appropriate pay plans that are suitable to employees (Dessler, 2011). That is to say, such plans that motivate employees and get the most output from them. Additionally, human resource managers have to carry out employee appraisals. Currently all organizations have some sort of performance evaluation in place (Lichtman, 2007). To do so, human resource managers have to design and plan out performance evaluation system which consist of measurable metrics that reflect an employee’s performance. The metrics criteria are based on key performance indicators as known as KPIs and different performance (Lichtman, 2007). Measuring the performance of a company’s employees provides managers with all the necessary information needed to make an informed decision. It helps managers decide which employees are going to receive appraisals and which employees will not. In certain

Scholarship Essay Example | Topics and Well Written Essays - 1500 words

Scholarship - Essay Example Quite often there is nothing left after discharging my mother’s medical bills. My family’s financial struggles have put me at a disadvantage in school. We cannot afford to buy new school clothes and shoes and I am quite often wearing old and worn clothes and shoes to school and this makes me self-conscious, particularly when other school children are dressed smartly. We cannot afford a computer which puts me at a greater disadvantage. Quite often I have assignments that require the use of a computer. Although I can use the library’s computer, I can ill afford the time. Without bus fare, I have to walk home from school and using the library would cause serious delays. I quite often feel so despaired that I fear I might have a breakdown. I believe that a scholarship would greatly reduce some of the financial burdens on my family and would put my family in a better position to support my education. To begin with, I would be able to purchase a home computer and the n ecessary school supplies. With these burdens lifted I would be in a better position to focus on my education and produce at a much higher level. Part II: Counselor’s Recommendations FL is a focused student with a clear understanding of where he wants to go in life and is keenly aware of the obstacles he has to overcome to get there. He is frustrated by the obstacles, particularly the financial struggles his family faces and is aware that the solution is out of his hands. FL’s current situation is dire and if he does not obtain a resolution to his situation, it is unlikely that he will be able to remain in school. If his problems persist, it is conceivable that FL would drop out of school to help relieve his family’s financial burdens. Right now his mother’s illness appears to be the family’s number one financial priority. As a result, FL’s school needs are sorely lacking. It is therefore recommended that FL benefits from a scholarship. This is a student who is very committed to school work and academic success. He is looking ahead to the future and as a result, FL is actively engaged in college preparatory programs. In addition, he is participating in cross country running. As a dedicated and driven student, it would be a benefit to both the school community and FL if he is awarded a scholarship and therefore remains in school and able to pursue a higher education. FL’s family is struggling financially as they are living on his father’s small income. FL’s mother is suffering from diabetes and this absorbs a great part of the family’s income. As a result of the family’s financial struggles, FL is disadvantaged at school. His family cannot afford to buy a computer. He often has to walk home from school as he cannot always afford bus fare. His school clothes and shoes are used and makes him self-conscious. FL is frustrated by the obstacles to his school productivity. FL wants to go onto college. FL will likely feel better about himself and thus remain committed in school if he is granted a scholarship. EG Part I: EG’s Statement I have always aspired to attend a good university and graduate in the top 10% of my class. I am working toward achieving these goals by currently focusing on my grades and ensuring that they are good enough to get me into a good university. However, at the moment I am currently facing some financial difficulties that could interfere with my plans to get into a good

Air Astana and Alliances Dissertation Example | Topics and Well Written Essays - 14750 words

Air Astana and Alliances - Dissertation Example It has been informed and increasingly taken in to account that the airline does not have any collaboration or tie up with regards to the fleet management or route management, with any other airline in the world. Air Astana being one of the most efficient and largest operators of airlines basing out of the Kazakhstan region is increasingly taking into consideration, the relative advantages and disadvantages that the company can have in terms of forming a chain of collaboration or network for the purpose of fleet management as well as route management. The project has been approached by giving a general overview of global airline industry that is operating in every part of the globe. The next part moves on towards the process of giving a brief insight in terms of airline industry operating in UK and Kazakhstan as well as providing vital information and insights on the airline Air Astana. The next part of the project provides an analysis of the external as well internal factors pertaini ng to the macro and micro economic conditions that can propose a series of threat and benefits to the working strategies and operations of the airline company. The next parts comprises of the research methodology as well as the relevant findings and discussions in line with the research methodology.... the relative advantages and disadvantages that the company can have in terms of forming a chain of collaboration or network for the purpose of fleet management as well as route management. The project has been approached by giving a general overview of global airline industry that is operating in every part of the globe. The next part moves on towards the process of giving a brief insight in terms of airline industry operating in UK and Kazakhstan as well as providing vital information and insights on the airline Air Astana. The next part of the project provides an analysis of the external as well internal factors pertaining to the macro and micro economic conditions that can propose a series of threat and benefits to the working strategies and operations of the airline company. The next parts comprises of the research methodology as well as the relevant findings and discussions in line with the research methodology. The last comprises of the conclusions and discussions which have be en found, determined and or identified as a part of the research analysis of the project. Chapter 1: Introduction 1.1 Background of the Study 1.2 Objectives of the Study 1.3 Research Questions 1.4 Significance of the Study 1.5 Research Structure 1.1 Background of the Study Aviation is regarded as a highly important and critical management process which is followed actively in the sector of airline industry. The prime and fundamental responsibility and objective of the aviation industry is to strategically manage and overlook the entire operational performance as well as business related performances in the airline sector. The secondary objectives comprises of overlooking and encouraging necessary technological developments for the purpose of increasing of operational and business

Impact of Employee Retention Essay Example for Free

Impact of Employee Retention Essay Griffeth Hom (2001) have argued that employee turnover is assuming crisis proportions for many employers who struggle to retain people in the tightest labour market. Griffeth Hom (2001, Pg 1) 52% of companies report that their turnover is increasing and quit rates are running high of 1.1% a month.† Turnover can be a real problem in many organisations. Companies spend a great deal of time and money recruiting and training employees and the cost of replacing staff members lost through turnover are great. The monetary cost of replacing one employee is generally estimated to range from 50 percent to 200 percent of the annual salary for the position, and may even be higher in very specialized fields. Furthermore, poor employee retention can have a negative impact on workplace productivity, job satisfaction, and also on the overall morale of the organisation. It is proven that a high turnover percentage can cost employers a great deal of financial distress. Depending on the size of the company, to many employers it can make the difference in staying or going out of business. Phillips (2003,Pg 4) noted that, â€Å"of late employee retention has captured the attention of the business, financial, and executive community as a critically important strategic issue that can have a dramatic effect on productivity and profits.† Cascio, 2000 and Johnson,1995 cited in Griffeth Hom, Retaining Valued Employees (2001), are of the opinion that, human resources professionals and researchers project that the cost of one turnover incidence ranges from between 93% to 200% of a leavers salary, depending on his or her skill and level of job responsibility. Labour turnover has a negative impact on the organizations. Although every manager and team member is aware of problems associated with high turnover, a review of its foremost consequences puts employee retention in the appropriate perspective. Patricia (2002, pg 4, 5) noted that â€Å"employee turnover has a serious impact on organisations. Firstly high financial costs, which is both in terms of direct and indirect costs and the performance of companies has been inhibited in many ways by high turnover rates. Sometimes the costs alone causes turnover to become a critical strategic issue. Secondly, in terms of survival as an issue, where in a tight labour market in which the company depends on having employees with critical skills, recruiting and retaining the appropriate talent can determine the success or failure of the organisation. Thirdly in terms of productivity loses and workflow interruptions , where an employee who quits abruptly not only leaves a productivity gap but also causes problems for others on the same team and within the same flow of work. Fourthly in terms of loss of know-how especially with regards to knowledge industry, where a departing employee may have the critical knowledge and skills needed for working with specific software. This can be a negative impact at least in the short run. Fifthly, turnover can have a serious impact on the image of the organisations.† Patricia (2002) also noted that some of the other impacts of turnover on organisations may be with regards to loss of business opportunities, administrative problems, disruption of social and communication networks, and job satisfaction of remaining employees. Patricia (2002) noted that it is important to remember that turnover can have a negative impact on the individual, particularly if an employee is leaving because of problems that could have been prevented. Furthermore, Patricia (2002) noted that a voluntary turnover because of problems that could have been avoided creates a variety of consequences such as loss of employee benefits or job seniority, financial difficulties, loss of social network, relocation costs, wasted efforts and uncompleted projects, and even more in terms of career problems. Branham (2005) noted that employees quit because of the disengagement process and deliberation process. Branham (2005) also noted that there are 7 reasons as to why employees leave organisations. They are as follows: 1. The job or the workplace was not expected. 2. The mismatch between job and person. 3. Very little coaching and feedback. 4. Few growth and advancement opportunities. 5. Feeling devalued and unrecognised. 6. Stress from overwork and work-life imbalance. 7. Loss of trust and confidence in senior leaders. There is no set level of employee turnover that determines at what point turnover starts to have a negative impact on an organisations performance. Everything depends on the type of labour markets in which you compete. Where it is relatively easy to find and train new employees quickly and at relatively little cost (that is where the labour market is loose), it is possible to sustain high quality levels of service provision despite having a high turnover rate. By contrast, where skills are relatively scarce, where recruitment is costly or where it takes several weeks to fill a vacancy, turnover is likely to be problematic for the organisation. This is especially true of situations in which you are losing staff to direct competitors or where customers have developed relationships with individual employees. Some employee turnover positively benefits organisations. This happens when a poor performer is replaced by a more productive employee, and can happen when a senior retirement allows the promotion or acquisition of welcome fresh blood. The more valuable the employees in question the more damaging the resignation, particularly when they move on to work for competitors. Moderate levels of staff turnover can also help to reduce staff costs in organisations where business levels are unpredictable month on month. When business is slack it is straightforward to hold off filling recently created vacancies for some weeks. Staw (1980 cited in Griffeth and Hom (2002), argues that turnover is not always bad. For instance, vacating employees or employees who quit can increase promotional opportunities for other employees or can infuse new ideas and technologies when new employees replace those who left. Dalton, Krackhardt and Porter (1981cited in Griffeth and Hom (2002), are of the opinion that certain kinds of jobs exits or quits among marginal perfor mers are even desirable. Abelson Bay singer (1994, cited in Griffeth and Hom (2002) that a certain quit rate might be tolerated as a cost of doing business in a particular industry. Stephen Taylor (2002, Pg 15) noted that for many HR specialists, rising staff turnover is seen as being an important organisational problem. It follows that improving retention rates should be high on the management agenda, and it is proper for resources to be devoted to achieving this aim. However a certain amount of turnover is actively welcomed by many managers. â€Å"Nonetheless, Griffeth Hom (2001) have noticed that organisational-level research and corporate studies report that high exit rates generally worsen organisational effectiveness. Though there are diverse opinions from various authors, and taking the above argument into consideration, it is clear that employees play a fundamental role in the success of any organisation and therefore by retaining talented or rather key employees is a very important task that the managers should undertake. Phillips Connell (2002) noted that, some organisations do a superb job of managing retention, whereas others fail miserably. The issues are not always externally driven but often lie within the organisation.