A survey was conducted on the costly phenomenon of employee turnover encompassing a few industries, but on four specific categories of employment. In this survey, it has been found that the category of Managers and Professionals have contributed to the turnover of 22% which is rather high. The essay observes some common causes for employee turnover, besides making recommendations for introducing such interventions that the turnover in these industries can be significantly reduced.
With the increase in the employee population in various sectors of the economy throughout the world, there are a number of challenges that businesses are facing, in respect of both skilled and unskilled manpower. Some of them relate to international issues and some of them are more regionally based. One of these regional issues is the rate of staff turnover and levels of difficulty in recruiting, particularly in certain occupations. This report will cover some details of turnover and their possible causes and solutions, keeping New Zealand context in mind. This will be followed be a few key recommendations.
Definition of staff turnover:
Staff turnover generally refers to the rate at which employees leave their jobs for different reasons requiring new employees to replace them, over a particular period. This calculation exercise is done annually (Oxford Dictionary, 2000).For the purposes of this report, staff turnover has been calculated in two stages. First, the total number of new staff members in six business areas and in four groups of staff categories, for the financial year ending in 2006. The turnover figure, however, includes those who voluntarily left the organizations and also those who were discharged out of redundancy. These numbers were calculated and projected as a percentage of the total number of employees in the four specific categories (Statistics New Zealand, 2006).
Survey on turnover
In the survey conducted on businesses with severe recruiting difficulty, four ccupational groups
namely, Managers and professionals, Technicians and associated professionals, Tradespersons and related workers and the rest of all other occupations were taken into consideration.(Table 1)
As can be seen from the above report, recruitment difficulty is a major concern in numerous businesses in New Zealand.
Managers and professionals in the health and community services rank first in staff turnover by accounting for 22%. Although losing staff is always part of doing business, turnover higher than 20% is wasteful. An employee leaving the organization for personal reasons is beyond the firm’s control. Never the less, the organization can do something about work related issues that cause staff to move on. (Adidam, P.T. 2006, pg 137)
Managerial turnover costs the company significantly. Common costs are separation costs, replacement costs and training costs, which would include exit interview expenses, recruitment cost for the new person and cost of preparing the successor to the right skill levels respectively. But, there are other costs that are more difficult to estimate. They include customer service disruption, emotional costs, loss of morale, loss of experience, burnout and absenteeism among remaining employees.( Adidam, P.T. 2006, pg 138)
PE, that is People fit with the environment, is an important perspective that is concerned with employee retention. On the same line of thinking People fit with the Organization (PO) has to be analyzed periodically. This may include value fit which is primarily individual’s value system agreeing with the organizational values. ( Vianen et al ,2007, pg 190)
Organizations that have successfully implemented the empowerment strategies have discovered improvements in productivity, customer service, quality, absenteeism and turnover. There are many variations of empowerment, but all boil down to the fact of vesting and delegating authority (Fiermonte & Burning, 2005, pg 29)
Employees in participative work climates are more likely to be satisfied by their work, more resistant to work strain and less likely to look for employment elsewhere. Employees who report higher participative climate perceptions will be less likely to have intentions to leave the organization. (Angermeier et al, 2009, pg 132)
Organizational restructuring and downsizing activities also cause fear and other emotional reactions among employees which cause intent to quit. ( Ugboro, I.O, 2006 pg 234)
Trust in the staff subordinate relationship plays an important role in employee staying with the organization. Transformational leadership is found to be a significant predictor of lowered intention to leave an organization. ( Connell, J et al., 2003, pg 571)
It is recommended that the organizations should conduct periodic surveys to understand the cause of people leaving the organization. Exit interviews form standard method to approach this issue. Organizations should also take appropriate steps to establish a good working environment to see that PO is maintained. This may include company policy, supervision, relationship with the boss, work conditions, salary and relationship with peers, as popularly known as Hygiene factors propounded by Frederick Herzberg in his Motivation-Hygiene theory of 1959.(NetMBA, 1 May 2009) Making a participative climate, initiating empowerment strategies and transformational leadership are also recommended to these organizations that are facing high rate of turnover as observed in the previous paragraphs.
Employee turnover leads to repeated and unnecessary recruitment is a wasteful occurrence in organizations. Besides the cost of replacement recruitment and training, there are many hidden costs such as customer dissatisfaction and reduction of employee morale. So, it must be the constant endeavor of every organization to establish such an environment and attention giving programs that the employees would tend to stay with the organization for a longer period of time.
1. Adidam, P.J. (2006). Causes and Consequences of High Turnover by Sales Professionals. Journal of American Academy of Business, Cambridge, 10(1), 137-141. Retrieved May 1, 2009, from ABI/INFORM Global database. (Document ID: 1061621011).
2. Annelies E.M. van Vianen, Irene E. De Pater, Floor Van Dijk. (2007). Work value fit and turnover intention: same-source or different-source fit. Journal of Managerial Psychology, 22(2), 188-202. Retrieved May 1, 2009, from ABI/INFORM Global database. (Document ID: 1283940991).
3. Angermeier, I, Dunford, B.D., Boss, A.D., Boss,R.W., Miller Jr. J.A. (2009). The Impact of Participative Management Perceptions on Customer Service, Medical Errors, Burnout, and Turnover Intentions/PRACTITIONER APPLICATION. Journal of Healthcare Management, 54(2), 127-141. Retrieved May 1, 2009, from ABI/INFORM Global database. (Document ID: 1673397011).
4. Connell, J., Ferres, N., Travaglione. T. (2003). Engendering trust in manager-subordinate relationships: Predictors and outcomes. Personnel Review, 32(5), 569-587,541,672-673. Retrieved May 1, 2009, from ABI/INFORM Global database. (Document ID: 941384501).
5. Fiermonte, R. V., Bruning, K (2005). THE VALUE OF HUMAN CAPITAL: SUPPORTING EMPOWERMENT STRATEGIES. Allied Academies International Conference. Academy of Organizational Culture, Communications and Conflict. Proceedings, 10(1), 29-36. Retrieved May 1, 2009, from ABI/INFORM Global database. (Document ID: 1559890411)
6. NetMBA, (01 May 2009) Management, Herzberg’s Motivation-Hygiene Theory (http://www.netmba.com/mgmt/ob/motivation/herzberg/)
7. Ugboro, I.O (2006). Organizational Commitment, Job Redesign, Employee Empowerment and Intent to Quit Among Survivors of Restructuring and Downsizing. Journal of Behavioral and Applied Management, 7(3), 232-253. Retrieved May 1, 2009, from ABI/INFORM Global database. (Document ID: 1061331241)