Employee Turnover

In this competitive world, firms are working hard to retain a competitive edge now and in the future. Long et al. argue that employee turnover and retention an issue facing human resource management owing to the shortage of labor, high economic growth, and high staff turnover (99). Employee retention is defined as measures and practices taken by an organization towards enticing employees to stick in an organization for a more extended period. Employees are the backbone of any organization, and hence high turnover significantly affects an organization’s productivity (Mathis et al. 174). High turnover affects the company’s productivity and damages the morale of the employees left in the company (Vasantham and Swarnalatha 112). Qualified employees also mentor other employees in various skills, roles, and how to attain long term success. Retaining a competitive edge requires HRM to be well equipped with different techniques and technologies that assist in facing the upcoming challenges in the 21st century (Bussin 56). Losing highly skilled staff may cause significant costs related to enrolling, promoting, re-skilling, and preparing another team. HRM should work towards introducing novel strategies to retain the most competent workforce.

Employee turnover is a significant factor in a company’s productivity, and hence companies should work towards motivating talented employees (Mathis et al. 174). In this case, retaining gifted employees requires HRM to understand their intrinsic motivators. Unfortunately, many organizations are unable to identify them. Apart from the monetary motivators, HRM should dig novel strategies to retain the most productive workforce. Because of high employee turnover, Mathis et al. (56) point out that a firm’s quality of service goes down. Besides, employee turnover leads to the loss of experienced employees that may affect an organization’s production. The number of qualified employees is reducing by the day. On the contrary, HRM is finding it hard to hire new employees and keeping them in the long run. With low employees’ turnover, an organization keeps the recruitment costs down. Additionally, the money, among other resources used in developing the new team members, is saved (Martocchio 14). 

Why do Employees Leave?

Employees leave an organization for different reasons (Vasantham and Swarnalatha 45). While some leave the organization because of unfavorable conditions, others leave because of low pay, to find a better job, and go back to school while others decide they no longer want the job. Generally, a study by Bussin (34) shows that employees will stay in an organization if they have a good salary, favorable working conditions, and have development opportunities. All the above reasons for leaving an organization can be classified into four main reasons: better alternatives, employee dissatisfaction, negative experience, and a planned change. In better alternatives, talented employees can be retained in an organization if the organization is competitive in terms of rewards and development opportunities. If an employee gets to realize that he/she has better alternatives in another organization, their chances of leaving the current one are high. For employers, being prepared to handle the external offers for valued employees is imperative.  

Employee dissatisfaction is another main reason for employee turnover, as Bussin (2) points out. Traditionally, management thought that monitoring was a good management strategy. However, over monitoring talented employees may demotivate them. Additionally, unresolved conflicts between the administration and the employees may also lead to dissatisfaction (Mathis et al. 635). Employees’ dissatisfaction is a major cause of turnover. Another primary reason for employee turnover is a planned change where employees predetermine to quit after some time. In such a case, increasing rewards and better treatment, among other strategies, may help retain a talented employee.

A negative experience is another primary reason for turnover. In some cases, talented employees may leave an organization abruptly without any plan (Silva, and Shinyashiki 39). Examples of reasons that can lead to such a decision include harassment, bullying, and inconsistent treatment by the management. A human capital theory introduced by Long et al. (100) argues that human resources as a product of deliberate investment and a distinctive feature of the economic system. There is a correlation between investing in employees and the company’s capability in addressing concerns related to HRM.

High Employee Turnover and Effects on HRM Practices, Policies and Procedures

Employee retention has a direct correlation with the firm’s culture (Mathis et al. 188). In this case, the way employees are treated within an organization determines whether they will stay or leave. Employee turnover has many impacts on both the organization in place, and the employees left. Examples of turnover costs mentioned by Mathis et al. (188) include recruitment money for replacements, administrative hiring costs, and lost working hours (productivity). In most cases, an organization may lose productivity between the time left the company and the time another he/she is replaced. Additional costs related to employee turnover would include costs of training, public relation costs, and trade secrets if the employer shared trade secrets with the employer. Indirectly, employee turnover has many damages, including loss of knowledge and skills when a talented employee leaves and costs associated with a lack of motivation before the employees left.

The Concept of Employee Retention

Employee retention and especially in big organizations, involve taking measures in encouraging employees to work in a company for a maximum period. In such a case, hiring knowledgeable employees is an excellent decision for employers. However, the above exploration indicates that retaining employees is even better comparing to hiring. In this 21st century, many age groups, especially millennials, who are the largest segment of workers in the US, may lack patience in working in one organization for years. Such an attitude has led to many cases of turnover that affect many firms. Employee turnover mostly costs a company in terms of hiring and administrative costs, among other indirect damages. As will be explored below, employee retention involves systematic efforts and strategies by organizations to create an environment that addresses various employees’ needs. When employees’ needs are met, staying in a company for the maximum period is possible and vice versa.

In turnover, there are two types, including the voluntary and involuntary turnover (Silva, and Shinyashiki 41). When it comes to voluntary turnover, an employer initiates the process because of different reasons. In most cases, voluntary turnover can be predicted and even solved by HRM. Examples of the causes of voluntary employee turnover include a poor match between the employee’s skill and the job description. When a poor match arises, it can be frustrating to the employee and the manager and may even affect the management’s procedures in human resource management. Another major cause of voluntary turnover is slow career growth (Silva and Shinyashiki 41).

In some cases, the stuck feeling employees experience may make them leave a company. In such a case, the employer or the company’s HRM should have a training plan and developing a clear path towards employee’s growth. Other reasons for voluntary turnover are workload, difficulty dealing with management, conflicts with the administration, and feeling unappreciated. On the other hand, involuntary turnover occurs when the employee has no choice regarding the choice of termination (Silva and Shinyashiki 41). In this case, an employer may initiate turnover and argue that the employee has not been performing (Long et al. 102). 

Recommendations to Reduce High Employee Turnover

Organizations that fail to maintain skilled employees risk retaining a competitive edge in the marketplace. As discussed above, recruiting, selecting, and training new employees can hurt an organization’s bottom-line and high cost. In reducing employee turnover, only the employee initiated turnovers can be negated through the below techniques, including employee training and development, compensation and rewards, performance appraisal, deliberate motivation plans, well-planned recruitment, employee engagement (Bussin 13). 

Well Planned Recruitment

Firstly, participating in well-planned recruitment minimizes the turnover cases. In this case, applicants are presented with a realistic job preview during the recruitment process. Through this activity, the applicants get to know what is expected of them. Bussin (9), in his work, argues that such action reduces new employees’ high turnover. 

Compensation and Rewards

Compensation refers to various rewards that employees get from the company for their services (Silva and Shinyashiki 41). In most cases, individuals view compensation only in terms of monetary value. When employees feel they receive excellent pay, chances of leaving are reduced and vice versa. In his work, Bussin (23) notes that pay levels are one of the modest predictors why employees decide to leave an organization. There are three main strategies that a company can take towards the same, including leading the market in terms of compensation and rewards and tailoring rewards to individual requirements. This strategy works in an individual-based pay structure. The third strategy a company can take towards the same includes explicitly linking rewards to retention. This strategy can work through relating vacation hours to seniority and offering retention bonuses, among others.

Apart from monetary rewards, employees can be motivated to stay longer through other elements, including a comfortable office, engagement during decision making, and preferable growth opportunism, among others. Rewards, on the other hand, has a compensatory function. In this case, they refer to an exchange of the service employee’s offers or retributions for the work done to the company (Vasantham and Swarnalatha 81).

Deliberate Motivation Plans

Motivated employees tend to work hard compared to demotivated ones. HRM should learn about their employees’ motivators. According to the hierarchy of needs theory by Maslow, human beings have various needs classified into five dynamics. These needs include self-actualization needs, esteem, social, safety, and physiological needs. The first one is the physical needs and advances into self-improvement needs and vocational advances. According to the Maslow hierarchy of needs theory, an individual has to pass the lower level before entering a more elevated one. Neglecting the employees’ needs at various levels may make them trying satisfying them on their own (Bussin 45). Later, they may find an organization that satisfies their needs and desires. 

Herzberg Two-Factor motivation theory is another great motivation theory where employees are motivated by different elements (Vasantham, and Swarnalatha 44). The satisfying elements are the motivators, and the dissatisfying aspects are the hygienic factors. The theory presented six motivating factors that work achievement, recognition, responsibility, work itself, advancement, and growth. Hygiene factors, on the other hand, includes company policies, supervisor, work environment, salary, and connections with peers (Mathis et al. 167). Wise employees tend to minimize the hygiene factors while improving the motivation factors (Vasantham, and Swarnalatha 54). For example, salary is a hygiene factor. In this case, an employee expects fair pay for the services offered. However, the theory argues that fair pay does not motivate employees to do an excellent job. On the contrary, the theory would consider programs to develop staff, for example, management training programs as a motivating factor (Bussin 107). 

Performance Appraisal

Performance appraisal refers to the process of inspecting and evaluating employee’s performance in their duty towards facilitating career development (Vasantham and Swarnalatha 113). In performance appraisal, the employees’ overall contribution is assessed against their job description. The process should take place within an organization where the performance is continuously monitored, employees are held accountable, poor performance is confronted, and the employees’ capacity is assessed. The firm’s high performers mostly stay in an organization because of advancement opportunities, job satisfaction, and organizational justice and prestige (Mathis et al. 391). A fair organizational appraisal system is crucial in any firm since it works towards retaining valuable employees. Such a system enables employees to understand their job descriptions and responsibilities and direct them towards individual growth.

Training and Development

Employees may also leave an organization if they feel stuck. Giving employees opportunities to update their skills largely contributes to their retention (Mathis et al. 293). In many organizations, training and development are crucial with the growing work complexity, organization’s rapid changes, and technological advancement, among many other changes. Through training and development, employees get knowledge and skills to handle their responsibility effectively (Vasantham and Swarnalatha 66). In case employees feel inadequate in the way they handle their jobs, they may be demotivated and may leave the organization (Silva and Shinyashiki 39).

Employee Engagement

Engaging employees in various organization’s decisions may work towards retaining them. In most cases, engaged employees tend to enjoy their work, are satisfied, take pride in their company, and have faith in their organization’s values and contributions. In a study that Bussin (78) conducted, highly engaged employees are less likely to quit compared to them, which are less engaged. 

In conclusion, today’s business is highly competitive, and organizations should do everything possible to avoid negative impacts that may occur from time to time as a result of different reasons. Losing talented employees costs organizations in many ways. Organizations may lose loyal clients; it also leads to team disruptions, affects productivity, and it might also influence other employees to leave the company. In some instances, the employee may leave and open a similar business creating competition with the former employee. With this in mind, organizations must work toward employee retention. Other cons of employee turnover include costs related to recruiting, hiring, and training replacements for them that left. Organizations can reduce employee turnover through training and development, compensation and rewards, performance appraisal, deliberate motivation plans, well-planned recruitment, employee engagement, among others. If a company successfully maintains talented employees, this increases productivity, enhances teamwork, among other benefits that assist the company in maintaining a competitive edge. The bottom line is that employee turnover, and especially losing a talented employee is costly to organizations while retaining them contributes to an organization’s productivity.

Works Cited

Bussin, Mark. Retention Strategies: The Key to Attracting and Retaining Excellent Employees. , 2018. Print.

Long, Choi Sang et al. “Addressing The Issues On Employees’ Turnover Intention In The Perspective Of HRM Practices In SME.” Procedia – Social And Behavioral Sciences, vol 129, 2014, pp. 99-104. Elsevier BV, doi:10.1016/j.sbspro.2014.03.653.

Martocchio, Joseph J, and R W. Mondy. Human Resource Management. , 2019. Print.

Mathis, Robert L, John H. Jackson, Sean Valentine, and Patricia A. Meglich. Human Resource Management. , 2017. Internet resource.

Silva, Marlize Paulo da, and Gilberto Tadeu Shinyashiki. “Human Resource Management Can Reduce Turnover?” Journal of Management Research, vol 6, no. 2, 2014, p. 39. Macrothink Institute, Inc., doi:10.5296/jmr.v6i2.4997.

Vasantham, Tephillah. Swarnalatha, C. Need and Importance of Employee Retention in Organization Related to Human Resource Management. , 2017. Print.