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Literature Review: Turnovers and Retention

Overview

It is widely contended that retention of employees plays a critical role in enabling an organization to achieve its financial goals and objectives. Indeed, the implications of employee turnover negatively impacts on the functioning of the organization and undermines its overall production. Retention of employees on the other hand has increasingly become an intractable challenge to various human resource managers, industrial psychologists and senior management of the organizations. Recent statistics indicate that the rate of turnover at the national level has remained stable over time. This is contributed to by numerous factors that are intricate and mutually reinforcing. Addressing them is imperative for increased production and ultimate organizational success.

As indicated earlier, employee turnover has adverse effects on retention of customers. However, CIPD (2005) points out that not all turnover incidences are likely to culminate in negative effects. Arguably, replacement of non productive employees with more reductive ones and acquisition of new employees that are energetic and more productive after retirement of older employees can be beneficial to an organization. Furthermore, economists ascertain that moderate turnover can yield positive results especially during hard economic times. Nonetheless, in most instances, employee turnover has had negative implications because of the relative costs. These range from recruitment, training, supervisory to associated administrative costs and loss of productivity. This becomes especially critical in instances where there is scarcity of relevant skills, when there is a close relationship between the employees and the customers, in instances of excessive turnover rates, when the cost of recruitment is very high and when the process of employment is expected to take considerably lengthy periods of time.

In his review, Arthur (2001) ascertains that employee turnover is influenced by various factors. From a broad point of view, he indicates that some employees leave the organizations because of prospective opportunities offered by other organizations in the particular field. However, others leave because of the high level of dissatisfaction with their current employment. Yet others are influenced by a mixture if all these factors as well as domestic circumstances that may be beyond the employer’s control.

In particular, Hinkin and Tracy (2000) indicate that the performance of the respective organizations greatly inspires the retention of employees. In this respect, it is argued that an organization that is considered to be experiencing economic difficulties has a more likelihood of laying off the workers than its counterpart that may be economically stable. According to CIPD’s (2005) view, workers in such instances find it rational to leave and seek for alternative forms of employment. In his review regarding the role of organizational management in turnover, Arthur (2001) ascertain that the culture of the organization also influences employee turnover in various ways. Specifically, the aspects of employee reward, level of commitment to the organization and an inherent sense of shared responsibility with regard to attainment of organizational goals and objectives have been implicated for affecting the rate of turnover. This is because of the fact that these factors play fundamental roles in determining the level of personal as well as job satisfaction of the employees.

Further, Heilmann, Bell and McDonald (2009) postulate that the status of the particular job as well as its relative characteristics also influences employee turnover. In this regard, they argue that jobs that are considered attractive are more likely to retain the employees and vice versa. Attraction according to them is defined by its characteristic challenges, perceived dangers, repetitiveness and ability to elicit desirable feelings of accomplishment. Further, Arthur (2001) cites that in some instances, job applicants tend to have unrealistic expectations about the job. These are usually wide and varied and may range from salary concerns to job environments. When such applicants are recruited and realize that their numerous expectations are not met, they tend to get disillusioned and in most cases quit the jobs prematurely.

Further, Heilmann et al (2009) implicates various personal and behavioral constraints as well as biological reasons for job turnover. Also, it is argued that lifestyle patterns that relate to the employment history of individuals and there health concerns also influence job turnover. Specifically, he points out that health practices such as smoking tend to affect that employment of an individual and contribute significantly to employee turnover. Behavioral constraints that have been associated with employee turnover include absenteeism, theft and loafing amongst others. Lastly, it is indicated that there are various aspects that specifically relate to the employee and influence turnover rates. Examples in this regard include the employee desire to further his or her studies in order to attain more skills, family issues such as transfers on employee partners and unsolicited job offers.

At this juncture, it is certain that the issue of employee turnover is multifaceted in nature. Notably, it is contributed to by various factors that can be both contextual and/or non contextual in nature. It can not be disputed that the effects of this to an organization can be far reaching. As such, Hinkin and Tracy (2000) assert that it is imperative for any efforts towards addressing this to be sustainable in nature. Various measures have been increasingly been proposed by various authors to counter this scenario and enhance employee retention.

To begin with, Gray, Phillips and Normand (2005) indicate that the organization needs to review the reasons that make staff to stay or decide to leave an organization. Normally, this is achieved through exit interviews. However, they note that this is usually undertaken during the last stage and is likely to be less beneficial because of the fact that the respective employee would have already quit the organization. In this respect, it is worth acknowledging the fact that some reasons for turnover tend to be personal. Therefore, they suggest that frequent employee surveys need to be carried out to determine underlying factors for turnover. The information collected can then be employed in developing a viable and informed retention policy. In order to enhance sustainability, Arthur (2001) posits that this needs to be updated frequently in order to reflect the emergent needs of the employees.

Then, CIPD (2005) shows that development of a strategy for human resources management can be instrumental in addressing the inadequacies related to the same. In this regard, it is indicated that most of the turnover rates are related to managerial problems. Therefore, specific organizations need to review their systems of management and ensure that the same are competent. This according to Hinkin and Tracy (2000) would then enhance participation of staff in management and vital strategic planning. In order to achieve this, the organization needs to put in place its structural wellbeing and ensure that vital resources are availed for the same.

Further, it would also be necessary to ensure that various policies and practices that are related to the employees and their enforcement are reviewed accordingly. In this regard, Heilmann et al (2009) argues that in most instances, unfair enforcement of policies contributes significantly to incidences of voluntary resignations. In particular, issues related to rewards and salary concerns are pertinent and need to be accorded necessary attention. In addition, there needs to be effective mode of communication between the employee and employer to ensure that various concerns are addressed accordingly and in a timely manner. In general, these policies should seek to enhance the relationship between the employee and the staff (Arthur, 2001; CIPD, 2005).

Further, Hinkin and Tracy (2000) assert that recruitment of employees needs to emphasize on diversification of skills as opposed to specialization. This according to them is important because of the fact that it would enhance continued production in instances of unexpected turnovers. Further, Arthur (2001) indicates that it is important for an organization to enhance career development of employees through training and development of skills. This is critical in employee motivation as well as retention. Finally, CIPD (2005) posits that the organizations need to enhance the safety and security of employees by providing vital health services.

Summary

From the review, it can be contended that employee turnover has far reaching implications on the wellbeing of an organization. These are related to the costs that the organization experiences as a result of the same. Causes of the turnover have also been cited to be wide and varied and perpetuated by various factors. Seemingly, it is for this reason that the proposed employee retention efforts are also relatively complex. Employment of a combination of these is instrumental in enhancing the sustainability of any employee retention model.

References

Arthur, D. (2001). Recruiting and Retaining Employees. USA: Amacom Books.

CIPD (2005).Managing Knowledge Workers. Retrieved 24th January, 2010, from: HYPERLINK “http://www.cipd.co.uk/subjects/corpstrtgy/knowman/managknowlworkers.htm?IsSrchRes=1” www.cipd.co.uk/subjects/corpstrtgy/knowman/managknowlworkers.htm?IsSrchRes=1.

Gray, A., Phillips, V. & Normand, C. (2005). Addressing Employee Turnover. Cambridge: University Press.

Heilmann, S., Bell, J., & McDonald, G.. (2009). Work – Home Conflict: Analyzing Military Officer Turnover. Journal of Leadership & Organizational Studies, 16(1), 84-6.

Hinkin, T. & Tracy, B. (2000). The Implications of Turnover. Administration Quarterly, 41 (2), 13-25.