Understanding Employee Turnover and Learning to Measure and Control it

UnderstandingEmployee Turnover and Learning to Measure and Control it

UnderstandingEmployee Turnover and Learning to Measure and Control it

Abstract

Employeeturnover forms a metric that is essential to organizations’workforce strategy and planning (Saridakis &amp Cooper, 2016). Theimpact of employee turnover on an organization has receivedsignificant attention from human resource professionals, seniormanagement, and researchers in business-related fields. Research hasshown that turnover affects the organization’s operating costs andproductivity. Furthermore, it affects the company’s futureretention rates, job satisfaction, and the ability to attract thebest talent and skills (Saridakis &amp Cooper, 2016). This paperwill explore employee turnover by examining its causes, effects, andstrategies to reduce the turnover rates. The article willspecifically consider how job satisfaction, which is directly relatedto salary, benefits, the opportunity for career development, and workenvironment affects employee turnover rates.

Globalizationand technological advancements have enabled businesses to conducttheir activities worldwide. On the other hand, businesses have toremain competitive and keep pace with the changes, which is onlypossible using the strategies created by a workforce with robustknowledge of the organization. Therefore, employee retention issignificant to organization’s performance and competitivecapabilities. Employee turnover is the extent of how long theemployees stay in an organization and how often the business takes toreplace them (Hom &amp Griffeth, 1994). Today, it is common forpeople to change jobs every few years rather than work in one companythroughout an employment life. The job culture is changing, andincreased numbers of baby boomers are retiring as well as employeesdemanding a balance between family and work life. Accordingly, theworkers can leave their current employer due to varied personal orwork-related reasons (Saridakis &amp Cooper, 2016). A turnover ratebetween three and five percent should not cause much anxiety, but amuch higher rate causes detrimental effects to the organization. Assuch, most leaders pay attention to turnover when it starts to havenegative implications on the organization (Hom &amp Griffeth, 1994).In today’s competitive business, it is imperative to manageemployee turnover to ensure it does not have negative impacts on theorganization’s productivity and performance. Turnover can alsodrain the organization its essential tactic information (Saridakis &ampCooper, 2016). Nonetheless, many organizations are finding itchallenging to control employee turnover despite the improvement inthe economy and the job market. Everybusiness experiences some level of turnover due to unavoidable andpersonal reasons, but the lack of job satisfaction due to low salaryand poor work environments is the leading cause of high employeeturnover. Nonetheless, turnover can be managed by improving the workenvironment through open communication, providing the opportunity forgrowth, and better salary packages.

Causesof employee turnover

Determiningthe causes of employee turnover is the first step in learning how toreduce it. Turnover can be either voluntary or involuntary dependingon the reasons behind the employee’s decision to leave. A workermay decide to leave voluntarily based on personal reasons whileinvoluntary occurs due firing, retirement, or death (Saridakis &ampCooper, 2016). However, research shows that the real causes ofturnover are usually connected to the problems within theorganization.

Oneof the primary reasons for a high employee turnover rates is jobsatisfaction, which can occur due to organizational factors such aslow salary, lack of benefits or incentives, an opportunity for careerdevelopment, and unfavorable work environment. Salaries and benefitsare some of the leading factors that attract employees to aparticular company and determine their satisfaction level in the job(Saridakis &amp Cooper, 2016). Economic recovery is making itpossible for employees to find alternative jobs. Surveys show that 50percent of the employees are waiting for the full economic recoveryso that they level their current employment. Hence, every employee islooking for a job that offers competitive salaries and wagesdepending on the industry averages. It is also common for someworkers take jobs they do not like as they look for a better payingone (Saridakis &amp Cooper, 2016). For example, if the competitorsare willing to pay more, the workers with the best qualification,experiences, and skills will most likely leave their currentemployer.

Moreover,employees can leave a job because they receive little performanceappraisals or do not get any incentives (Saridakis &amp Cooper,2016). The workers want to achieve the company goals and objectivesby doing a good job. As such, these employees need recognition andappreciation for their work. Additionally, different wage structuremay also cause high rates of employee turnover. For example, when twoor more employees have similar qualifications, experience, andundertake the same tasks, they should be within the same salaryrange. Otherwise, it may influence the employees who are paid less toleave because they would feel unappreciated. The working conditionscan also make employees decide to leave an organization. For example,the employees may be using substandard facilities such as therestrooms and furniture. These workers may be unwilling to put upwith these conditions for long and instead, look for jobs in thecompeting companies (Saridakis &amp Cooper, 2016).

Thenagain, organizational culture also affects job satisfaction giventhat instability has been proven to contribute to high employeeturnover. Businesses with high inefficiency levels create a sense ofjob insecurity, which may influence their decision to leave and lookfor more stable employment. Besides, unfair practices in theorganization can contribute to job dissatisfaction (Saridakis &ampCooper, 2016). For example, when the management gives theirsubordinates more tasks and projects, it can be interpreted asmisusing their authority. Therefore, these employees may decide toleave and look for alternative employment where their skills will bereasonably utilized. However, this is mainly caused by a mismatchbetween a job and the worker’s skills, which also contributes todissatisfaction (Hom &amp Griffeth, 1994). For example, an employeemay be given tasks that are too difficult to complete or sometimestoo simple where their skills are underutilized. Furthermore, anorganizational culture that does not promote growth or careeradvancement may discourage workers from staying in the job. Somecompanies do not offer the employees an opportunity to advance theircareers either through merit, skills, or hard work. Hence, theemployees can leave to find jobs in companies that have a clearpromotion and career advancement strategy (Saridakis &amp Cooper,2016).

Effectsof employee turnover on an organization

Theimpacts of employee turnover are based on various factors such as thelevel of training required for new hires, difficult in finding thespecific skills for the position, and costs incurred duringadvertisements, hiring, and training. However, the issues ofproductivity, time, and money are similar impacts across allindustries.

Surveysshow that turnover affects the productivity levels, which are crucialfor every organization aiming to make profits and surpass thecompetitors. Employee turnover is one of the challenges that mayhinder productivity in business today (Huckman &amp Ton, 2008).Organizations invest a lot on their workers in developing, training,and retaining them. Consequently, a constant change in the workforceinterrupts the continuous workflow, which reduces the overallproductivity and competence. The employees are also distracted fromtheir regular responsibilities because they have to take up theduties of the former colleagues (Saridakis &amp Cooper, 2016). Forexample, once an employee leaves, the employer has to ensure theremaining workers take up the additional workload on a temporarybasis before hiring replacement workers.

Evenafter hiring new employees, the productivity levels in theorganization may continue to deteriorate before the new workers canlearn to carry out all the assigned tasks efficiently. It requirestime and money to train new workers on their new duties and for themto become efficient. Accordingly, the low-efficiency levels of newemployees eventually result in increased cost of production. Forinstance, new workers are inexperienced and may have difficultieshandling tools and machinery, which can cause breakdown resulting infast depreciation of machinery, and tools further hindering efficientproduction (Huckman &amp Ton, 2008).

Onthe other hand, employee turnover has negative effects on thecompany’s financial performance. Replacing an employee is estimatedto cost the business more than paying one worker’s annual salary.It also increases the monetary costs associated with new hiring andrecruiting new workers. Moreover, it leads to a waste of time inadvertising and interviewing to get replacement employees. Thus,turnover denies the organization the benefits attained aftertraining, developing, and retaining employees (Saridakis &ampCooper, 2016).

Nevertheless,employee turnover can sometimes be helpful to an organization becausethe exit of low-performing workers gives the employer the opportunityto replace them with more qualified and skilled employees. The newstaff brings in new attitudes and keeps the organization up to datewith fresh ideas in the market (Saridakis &amp Cooper, 2016).

Learningto measure and control turnover

Itis crucial for the management or employers to assess the situation inthe organization. Subsequently, they should measure the cost ofturnover and develop retention strategies. The turnover rates aremeasured by the number of employees leaving the organization eitherbecause they quit, are laid off, due to retirement or death (Huckman&amp Ton, 2008). Large organizations use technical methods whenmeasuring employee turnover rates. These organizations have a largenumber of employees, which means that some will be leaving andreplacements hired constantly. Thus, the results from these surveysare usually numerical without many explanations as to why theemployees decided to leave. On the other hand, small businesses trackthe employees’ behavior such as absenteeism to recognize the trendsand potential problems that may contribute to turnover. For example,a small business owner keeps records of the employees that leave, thelength of their employment, their skills, responsibilities, and thereasons they left. Overall, the high turnover in an organization canbe used as an estimate of the labor turnover in the market.

Althoughthe employers may not have any control over the external factorscausing employee turnover, they can improve the internal aspects tominimize the chance of employees leaving. The strategy is possible ifthe employer identifies and emphasizes the aspects that attractworkers to the organization (Huckman &amp Ton, 2008). First, themanagement should create favorable work environments, offercompetitive salaries, and reasonable benefits to retain their mostproductive employees. Employees are more likely to stay in anorganization if they feel a sense of success and pride in their work(Huckman &amp Ton, 2008). The employers should also develop anoverall strategic compensation package. The strategy should includelong-term incentive compensation, bonuses, and benefits to cover thewelfare and health issues. For example, the management has to ensurethat they offer fair and consistent compensation even for the newemployees (Dibble, 1999).

Additionally,the employers can minimize the turnover rates by investing in theirstaff using strategies that involve more than just financialcompensation. It requires spending the time to train, mentor, andoffer career growth and advancement opportunities (Hom &ampGriffeth, 1994). One of the reasons most employees look foralternative employment is out of frustration with the status quo thathinders future development in their current jobs. The employersshould create an environment where they encourage new ideas andreward good work by allowing employees to take up newresponsibilities in the organization (Dibble, 1999). Besides, theopportunity for career development will attract most employees tostay with their current employers. Therefore, making sure theemployees are appreciated is one way to ensure job satisfaction andreduce the turnover rates. The employers should also create a workenvironment that encourages colleagues to be supportive. Mostemployees prefer a job environment that promotes social interactionwith colleagues and supervisors, which will eventually add to jobsatisfaction (Dibble, 1999).

Developingan employee-oriented culture is another important step in controllingthe turnover rate. Employees are an essential part of theorganization, which means they have a strong need to be informed ofsignificant changes in the company. Consequently, an organizationwith robust and well-organized communication systems experience lowerturnover rates (Hom &amp Griffeth, 1994). The staff feelscomfortable when the senior management informs them of expectedchanges and involves them in the decision-making process. Thus, theemployees will fully understand the issues that influence their workenvironment. The management should also seek input from the employeesand involve them in the decision-making process that affects theirwork practices (Dibble, 1999). The employees must believe that themanagement recognizes their contributions. Open communication alsogives the management warnings if some of the workers are happy, whichgives the employer time to correct the problems because the employeesget to a point where they decide to leave (Huckman &amp Ton, 2008).

Furthermore,challenging the employees to engage in new creative tasks or projectsis the best way to give them an opportunity to grow bothprofessionally and personally. Besides, providing regular feedback isimportant to show that the management recognizes the employees’success and appreciate their input into the organization (Huckman &ampTon, 2008). Besides, research shows that the employees who feel asense of success and pride in their work are more likely to stay withtheir current employer. It is also crucial to consider the employeespersonal requirements such as the need to balance the work and familylife. Accordingly, the management should consider an alternativeoption such as flexible work schedules to eliminate complaints anddissatisfaction (Huckman &amp Ton, 2008).

Conclusion

Globalizationand advanced technology have heightened competition, and theemployers have realized that workers are major contributors to ensurethat the organization is successful. The employees are vital to theorganization since they are intangible and not easy to replace. Thatis why for the past few decades, the issue of employee retention hasattracted the attention of employers and researchers in variousfields. Today, it is common for people to change jobs every few yearsrather than stay in one organization. Consequently, dissatisfactionis one of the reasons employees can decide to leave the company.There are many reasons associated with job satisfaction such assalary benefits, an opportunity for career development, favorableworking environment, and organizational culture. Nevertheless, it isimpossible to control what the competitors are doing regarding thepay or the benefits they are offering, but the employer can takesteps to improve the internal work environment. The employers have toensure that the workers are content with their work conditions sincethe business incurs money every time an employee decides to leave.Moreover, the management should practice an open door policy andavoid making crucial decisions that may facilitate major changeswithout consulting the employees. Turnover also affects theorganization’s productivity and performance. Thus, the businesswill incur more resources to get the company back to the previouslevel of performance or productivity. Therefore, paying attention tothe turnover rate and making efforts to retain the best employees andcontrol the turnover rate has a positive connection to surpassingother businesses in the market since more satisfied employees areless likely to look for alternative jobs.

References

Dibble,S. (1999). Keepingyour valuable employees: Retention strategies for your organization`smost important resource.New York: Wiley.

Hom,P. W., &amp Griffeth, R. W. (1994). Employeeturnover.Cincinnati, Ohio: South-Western College Publishing.

Huckman,R. S., &amp Ton, Z. (2008). Managing the impact of employee turnoveron performance: the role of process conformance. OrganizationScience,19(1), 56-68.

Saridakis,G., &amp Cooper, C. L. (2016). Researchhandbook on employee turnover.Northampton, Massachusetts: Edward Elgar Publishing