Employees are considered as an asset of a company which makes things happen with the resources available. According to Ongori (2007), employee turnover is the number of employee movements that occurred in and out of the organization. Melissa S Cardona (2004), Described employ turnover as the discontinuation of organization membership by the person who gets monetary compensation from the organization. Another interesting definition for employee turnover was given by the research study conducted by, (Tham, 2008)where they described it as the rotation of workers around the market of labor, between organizations, within different jobs and careers. However, the most important factor is that employee turnover directly influences on employee productivity. Therefore, it leads to economic losses and it greatly reduces job efficiency. Employee turnover is costly and reduces organizational effectiveness and therefore managers have to spend more energy to recruit a new talent to replace the employees leaving the organization (Barak, 2001 )Organizations spend millions to train and develop their human resources to perform in high standards and latest technology to help the company to achieve its ultimate goals. Therefore it is important to make plans to retain the employees in your organization with proper retention strategies.
If the trained employees leave the company it not only will be a cost to the company but also the knowledge and the expertise gained through experience will be taken along with them. According to Khatri (2001), the total cost of replacing an employee is about 50% to 150% of the annual salary of that position. For managerial staff, this turnover cost can be much higher than this. Khatri (2001) Further mentioned that employee turnover cost is comprised of direct cost and indirect cost. Direct cost is the amount each time the employer has to bear when recruiting a new employee. Organizations have to bear the cost of attracting, selecting and inducting new employees. Indirect cost is the loss that occurred in the production due to the leaving organization. It can be a cost for incomplete work, disrupted work or loss of quality.
The employee turnover rate can be varied from one company to another company. Highest turnover rates can be normally seen in private sector organizations compared to public sector organizations (M Fugate, 2004). Sometimes employee turnover rates can be varied from region to region as well (Gemma Robertson-Smith, 2004). The regions where the unemployment rates are low can see high labor turnover because employees have a lot of alternative employment opportunities (Poza, 2000) Employee turnover can play an important role in long-term achievements of the organization. When the employee turnover is low it will in return positive yields to the organization. It drives the performance for the targets of the organization (Khan, 2013) Employee turnover doesn’t bring negative effects always. Sometimes employee turnover gives benefits to the organization. This happens when the poor employees leave the organization and more skillful employees enter the organization. When the turnover rate is too low, the most important fresh blood and new ideas will be lacking and the company can slowly become an aging machine. Likewise, turnover can be positive at times where the organization is able to increase productivity through better matching of employees and jobs. It also enables to adapt to the changes in the market without going for costly layoffs. So, it is better to maintain a moderate level of turnover because it keeps the organization more dynamic one compared to others (Shamuzzoha)
References
Barak, M. E. (2001 ). Antecedents to retention and turnover among child welfare, social work, and other human service employees: What can we learn from past research? ( Social Service Review, 625. ed.). A Review and Meta-Analysis:.
Gemma Robertson-Smith, C. M. (2004). Employee Engagement A review of current thinking. UK: Institute for Employment Studies.
Khan, S. A. (2013). The factors affecting employee turnover in an organization (The case of overseas Pakistanis foundation. African Journal of Business Management. ed.).
Khatri, N. &. (2001). Explaining employee turnover in an Asian context. Human Resource Management Journal,, 54-74.
Melissa S Cardona, C. E. (2004). Managing human resources in small organizations: What do we know. Human Resource Management Review.
M Fugate, A. K. (2004 ). Employability A psycho-social construct. Journal of Vocational Behavior.
Ongori, H. (2007). A review of the literature on employee turnover. Academic Journals,.
Poza, A. ( 2000). a cross-national analysis of the levels and determinants of job satisfaction. The journal of socio-economics.
Shamuzzoha, A. H. (n.d.). Employee Turnover. A Study of its causes and effects on different industries in Bangladesh.
Tham, G. Z. (2008). Turnover in information systems development projects. Pacific Asia Conference on Information Systems.
Labor turnover can be demarcated as the intentional and unintentional permanent removal from an organization (Robbins & Judge, 2007). It is very difficult to measure actual turnover behavior, but concludes that purpose to turnover is a good and reliable forecaster of actual turnover behavior. Intention to leave is the immediate pioneer of actual withdrawal behavior Lingard (2003)
ReplyDeleteIt can also be concluded from the available literature that there are significant correlations between turnover intention and demographic variables such as age, qualification designation and it was found that age ,designation and experience are negatively significantly correlated with turnover intentions(Gurpreet Randhawa,2007).
DeleteAccording to Meenakshi., Subrahmanyam. & Ravichandran. (2013), work life balance is “about creating and maintaining supportive and healthy work environments, which will enable employees to have balance between work and personal responsibilities and thus strengthen employee loyalty and productivity”.This is a major concern in an employment. If this is not met turnover will be normal for most of the employees
ReplyDeleteHi Taniya, Agreed to what you have mentioned, In addition to that there are two factors that are not good for work-life balance are work overload and technological advancement. With regard to workload, studies have repeatedly emphasized that excessive work overload or work overload is detrimental to work-life balance (Vogel, 2012).
DeleteHi Vianlo,
ReplyDeleteAgree with you as an employee’s main source of income is the salary and the employees are to be informed of their salary and any change to same should be informed by written confirmation. Accordingly the relevant grading on employees should be indicated in the employee contract, there by providing transparent communication between employer and employee which will lead to retention of the employees in the organization (A T G Educational, 2008)
According to Adams (1965), managers must consider that employees will make situational comparisons between themselves and their coworkers. If an employee finds an inequity during this comparison it can impact their motivation significantly. Equity theory states that a person should be concerned about the way rewards are distributed in a group (Lane et al., 1971).
DeleteIt is necessary to measure employee turnover and calculate its costs to divine future losses for planning purposes and to identify the reasons that people leave the organization. Plans can then be made to attack the problems causing unnecessary
ReplyDeleteturnover and to reduce costs. (Armstrong,2014)
Agreed, Employee turnover maybe costly for organizations as 80% or more of turnover costs are hidden expenses such as recruitment, training and relocation costs (Phillips, 1990). When an employee leaves, organizations incur hiring, orientation, and decreased productivity costs as well as temporary replacement cost (Kovner, Brewer, Greene, & Fairchild, 2009)
DeleteAgreed, Training and learning opportunities will also have a significant impact on the institution's employees. If institutions are not offered the chance to learn by the company, employees can not improve their skills. In other words, employees are most unlikely to get self realization so that they can not continue to grow in the company. As a result, employees may tend to give up the job (Liu et al, 2006).
ReplyDeleteOf cause it may happen, Asma Mehmood (2012) argue that training influence on organization commitment and retention towards the performance of employee.
DeleteThe business would have the capacity to get in a dynamic situation by. Regarding their employees as one of their assets which Human Resources Management, needs a lot of consideration. Employees are the backbone of any organization,( Arokiasamy 2013)
ReplyDeleteYes of cause, It embraces management aspects beyond the normal human resource management functions and roles to take on board all macro concerns and strategies for organisational excellence such as quality management, organisational commitment, managing culture, organisational change and development (Agarwala 2009)
DeleteLLOYD (2017) confronted that compensation are important though, the key for staff retention is to train them well.
ReplyDeleteHi Dishan, Majority of the respondents felt that remuneration practices affect staff motivation hence retention in organizations. This is consistent with the findings of (Bergiel et al. 2009) who noted that research findings suggest that there is a significant and positive relationship between compensation and job embededness.
DeleteIt is necessary to measure employee turnover and calculate its costs to divine future losses for planning purposes and to identify the reasons that people leave the organization. Plans can then be made to attack the problems causing unnecessary
ReplyDeleteturnover and to reduce costs. (Armstrong,2014)
Agreed, Employee turnover maybe costly for organizations as 80% or more of turnover costs are hidden expenses such as recruitment, training and relocation costs (Phillips, 1990). When an employee leaves, organizations incur hiring, orientation, and decreased productivity costs as well as temporary replacement cost (Kovner, Brewer, Greene, & Fairchild, 2009)
DeleteAccording to Ongori, H ( 2007), excessive employee turnover will heavily impact the bottom line. Replacement cost begins with advertising, screening and interviewing candidates, training new hires. If a professional and a management staff tenders resignation, replacement cost will increase further due to the loss of expertise.
ReplyDeleteHi Chandrika, When considering the cost factor, William et al (2006) break these costs down to include: Separation costs, which include cost of exit interview’s time, cost of terminating employee’s time, cost of administrative functions related to termination, separation pay and increase in unemployment tax. There also Vacancy costs, which include cost of additional overtime, cost of additional temporary help and wages and benefits saved due to vacancy.
DeleteAccording to Mitchell et al (2001), employee turnover imposes extensive cost both the individual and the organisation level. At individual level, it does not matter if the person leaves voluntarily to another job or is forced to leave and take a personal toll. For organisation level, the problem arises when leaving employees take their valuable knowledge and expertise gained through experience with them.
ReplyDeleteThere is no universally accepted account for why people choose to leave organisations (Lee and Mitchell 1994)
DeleteLeeetal’s(1999)‘unfolding model’of voluntary turnover
represents a divergence from traditional thinking (Hom and Griffeth 1995), By focusing more on the decisional aspect of the phenomenon, and indeed it is based on a theory of decision making (Beach 1990), One means of diagnosing the amount of influence organisations have over turnover, is to look at the extent to which decisions to leave are described as‘avoidable’ by leavers (Campion 1991; Morrell et al 2001).
The turnover of key employees can have a disproportionate impact on the business. The people that organizations wish to retain are often the ones most likely to leave( Amstrong,2014). Therefore, action is required to retain talented people, according to Stairs and Galpin (2010) high levels of engagement have been shown to relate to:
ReplyDelete●● lower absenteeism and higher employee
retention;
●● increased employee effort and productivity;
●● improved quality and reduced error rates;
●● increased sales;
●● higher profitability, earnings per share and
shareholder returns;
●● enhanced customer satisfaction and loyalty;
●● faster business growth; and
●● higher likelihood of business success.
Of cause, Companies may also focus on employees with high potential who might have the ability to take on a higher(executive) function in the future (Dries and Pepermans 2008; Pepermans et al. 2003).The increasing global competition for the ‘best’employees brought about by the shortfall in new workforce entrants in many advanced industrial economies makes essential companies’ability to ensure that their employees will keep on working for them in order to maintain their competitive advantage.
Delete