An organisation is a social arrangement where activities including production, distribution, logistics, and other collective goals are carried on. These collective goals are the dimensions which help in the functioning of an organisation. However, for these collective goals to be carried on there needs to be of course capital, along with another key variable. This key variable refers to manpower or labour or employees. Hence for the working and existence of any organisation requires talented employees, and retaining these key employees is the most important and challenging task performed by any organisation.
With globalisation, there are many new players in the emerging world market, and keeping employees or rather retaining employees within the organisation is a herculean task. As Phillips & Connell (2003) noted during the last decade, employee retention has become a serious and perplexing problem for all types of organisations and managing retention and keeping the turnover rate below target and industry norms is one of the most challenging issues facing businesses.
This paper seeks to explore employee retention with regards to the trends, the theoretical perspectives, the three R’s and then explores the various other aspects associated with employee retention. An examination of the theoretical perspectives including Maslow’s hierarchy theory of needs, Herzberg’s two factor model and McGregor’s X & Y theory revels that employees leave organisations with regards to the self actualisation need, the dissatisfiers and attitudes of management. An examination of the three R’s namely reward, respect and recognition indicates that employees do not expect pay alone, but also certain other non monetary benefits, which when given by the organisation, would help in retaining employees. Apart from the theoretical perspectives and the three R’s, this paper also seeks to explore the impact of employee turnover on organisation, and in order to help curtail turnover what are organisations doing to minimise this scenario. The study is a qualitative study, where views from different authors and theories have been compared.
The research reveals certain important facts that is there is a school of thought were in the argument is that turnover affects the organisations, and yet there is another school of thought which say that a considerable amount of employee turnover is beneficial for the organisation.
As David A. Hume (1998) noted, preceding to the industrial revolution of the eighteenth century, the organisation of work, and accordingly of labour, were on a small scale. Such organisations were cottage industries employing widely dispersed workers. However, with the advent of the industrial revolution, the movement of people from rural settings to the urban settings was on the increase. Hume (1998) noted that, as a result organisations were faced with new business pressures from the new industrialised world such as increasing competition, trade restrictions, and new technologies and so on. Thorne et al (2007), argue that Talent, like innovation and creativity, is highly desired, yet rarely understood or effectively nurtured within organisations. Talent is an in-demand commodity these days for almost everyone. As organisations work to recruit new employees and retain existing ones they are discovering that there are no quick and easy answers for success. Many recruitment advertisements ask for talented people, yet if organisations are lucky enough to recruit a talented individual they often experience difficulty in engaging or retaining them.
The International Market place is highly competitive. Gatewood & Field (2001) are of the opinion that in today’s competitive environment, most organisations seek to obtain and maintain high levels of success, which can be determined through various criteria’s including profits, market share and so on. However, the one common theme is that the employees’ performance plays an important role in developing a competitive advantage over rival firms noted Gatewood & Field (2001). Globalisation has opened the world market to a very large extent and there are many new emerging players in the field of business. Multinational companies or transnational companies produce and sell goods and services in an international basis, and this leads to further competition amongst firms or organizations. Raikes and Vernier (2004) are of the opinion that according to recent surveys, attracting and retaining key talent is considered as a key strategy to achieve financial success. The impact of turnover is widely considered to have direct and indirect costs on organisations, with the bill costing anywhere between 50 and 150% of an annual salary (Mercer 2004). With the increase in competition between organisations, labour turnover is also on the increase and keeping employees within the organisation is a herculean task. In slightly more than a decade (1988-2000), the eminent issue for companies was one of attracting and retaining people with the skills necessary to do the work. The situation became even more complex during 2001 as an economic downturn forced thousands companies to cut back or downsize their employee populations, noted (Reichheld, 2001). Further the author also noted that companies are now indicating that product quality is beginning to suffer; customer satisfaction is dropping and many organizations are beginning to experience a significant increase in turnover of key talent–especially amongst those individuals considered most ‘crucial’ to the downsized organization.
Phillips & Connell (2003) noted that Employee turnover continues to be one of the most unappreciated and undervalued issues facing business leaders. Jean Gordon (2002) argues that, “The challenge for corporations in the 21st Century is their ability to recruit and then retain their most valuable resource, which is their employees”.
Griffeth & Hom (2001) have stated that, “Given today’s extremely low unemployment rates and weak company loyalty, employees are increasingly “jumping ships” for better job opportunities elsewhere. Griffeth & Hom (2001) have argued that in recent times, employee retention has become one of the leading challenges for organizations. Phillips & Connell (2003) stated that Employee Retention refers to the percentage of employees remaining in the organization. Phillips & Connell (2003) argue that, the prosperity of an organization depends on the employees and keeping employees together or rather retaining employees in an organization is a very important characteristic of management. Employee Turnover can be a very costly issue to organizations. Phillips & Connell (2003) have also stated that during the last decade, employee retention has become a serious and perplexing problem for all types of organisations.
Key employee retention is critical to the long term health and success of organizations. Managers readily agree that retaining best employees ensures customer satisfaction, product sales, satisfied co-workers and reporting staff, effective succession planning and deeply imbedded organizational knowledge and learning. Employee retention matters and organizational issues such as training time and investment; lost knowledge; mourning, insecure co-workers and a costly candidate search aside, failing to retain a key employee is costly. Various estimates suggest that losing a middle manager costs an organization up to 100 percent of his salary. The loss of a senior executive is even more costly
Employee retention is critically important for a second societal reason, too. Izzo & Withers (2000, Pg 33-34) stated “three generations of workers currently dominate the halls of the work world: the baby boomers, generation X and the newest graduates from adolescence, often known as generation Y or the net generation.” Over the next few years while Baby Boomers (age 40 to 58) retire, the upcoming Generation X population numbers 44 million people (ages 25-34), compared to 76 million Baby Boomers available for work. Simply stated, there are a lot fewer people available to work. The wish list of different generations, that is from baby boomers through to generation X and generation Y, play an important role in an employee’s decision to work for an organisation. According to a CIPD (2005b) report stated that “turnover rates have remained stable in time, the demographic evolution means that the baby boomer generation will start retiring in the coming years. At the same time, demographic changes show that the number of skilled 15-29 years olds entering the job market is steadily contracting, which is increasing the strain on human resources as noted by Deloitte ( 2004). Further, Arthur (2001) draws attention to a change of attitude towards work in the younger generation. According to the author, younger people are less likely to have a sense of loyalty after having frequently seen their parents fall victims to corporate “downsizing”. As a result, they know that they have to actively manage their career. They are more interested in continuing learning and education and expect to go through numerous jobs and career changes throughout their lifetime. They are trying to balance careers and familial responsibilities, unwilling to give up either one, as noted by Arthur (2001).
To ensure organisational success, it is important to identify employees who are high performers or high potential individuals. Cohen (2001, Pg 15) stated that “there is a talent edge in every organisation. Whether you look at a rapidly growing start-up, a fortune 500 company, or any organisation in between, a minority of people in any company can be considered top performers- those who create inordinate value in the way they go about their work”. By keeping these players within the organisation, company knowledge, tradition and culture remain intact. In addition, the cost of turnover, an obvious impact the bottom line with training, employee orientation, and staffing will be reduced (Cohen 2001). Therefore, managing retention and keeping the turnover rate below target and industry norms is one of the most challenging issues facing businesses.
The following chapters give a clear understanding of the meaning, the importance of retaining employees and the issues related. Chapter two discusses the topic with regards to the theoretical perspectives, the three R’s and highlights the impacts of turnover on organisations. Chapter three discusses the methodology used to carry out the research. Chapter four discusses the findings and analysis of the topic of research found with the use of the suggested methods. Chapter five is in relation to the conclusion and recommendations regarding the topic of research.
The aim of this undertaken research is to give the reader a clear understanding regarding the nature, the cause and impact of labour turnover or retention of employees on organisational effectiveness.
This research aim will be developed through a serious of objectives, including:
i. Critically analyse the relevant literature and information on retention of employees in organisations.
ii. Critically analyse the theoretical perspectives, namely Maslow’s Hierarchy Needs theory, Herzberg’s two factor models and McGregor’s X and Y theory.
iii. Critically analyse the impact of employee retention on organisations.
iv. Critically analyse the three R’s namely, reward, respect and recognition.
This chapter provides a concise introduction to the context surrounding the aims and objectives and of the research. Thus giving a better insight as to how the objectives and the material will be developed throughout the following chapters.
A review of relevant literature allows the researcher to gather information and gain a further understanding on the subject matter of research. It is important to explore and consider the work that has already been done in the field of study. The topic of employee retention within an organisation is a current issue and therefore, a vast amount of data is available. The following literature review starts with the trends in relation to labour turnover, moving theoretical perspectives, the impacts, the three R’s namely reward, respect and recognition, and also the various other factors associated with employee retention within the organisation.
Firstly it is very necessary to understand the trends of employee turnover before venturing into any further investigation of the topic of research. This is useful as it would help in better understanding the research topic, and give the reader a clear view of the problem. According to CIPD report on Employee turnover and retention (2009) to calculate the crude turnover rate, the general formula used is:
The total figure includes all leavers, even people who left involuntarily due to dismissal, redundancy or retirement. It also makes no distinction between functional turnover and that which is dysfunctional. Griffeth & Hom (2001), bring to light the part of turnover that is of real concern to an organisation by differentiating between voluntary and involuntary turnover. In other words did the employee choose to leave the job or was it a decision made by the employer? The authors further distinguish the voluntary turnover as functional and dysfunctional.
The CIPD report (2009) on Employee turnover and Retention noted that turnover levels vary between industries (organisations). The highest levels of turnover (16.8%) are found in private sector organisations. Successive surveys on labour turnover show that the highest levels are typically found in retailing, hotels, catering & leisure, call centres and among other lower paid private sector services groups. The report also noted that turnover stands at 16.4% in voluntary, community and not-for-profit organisations and the public sector has an average turnover rate of 12.6%. Thus with the trends in employee or labour turnover, it can be understood that retaining employees is of prime concern to employers in an organisation.
According to a CIPD report (2009) on Employee turnover and Retention, employees resign for many different reasons. Sometimes it is the attraction of a new job or the prospect of a period outside the workforce which ‘pulls’ them. On other occasions they are ‘pushed’ (due to dissatisfaction in their present jobs) to seek alternative employment. It can also be as a result of both ‘pull’ and ‘push’ factors. Stephen Taylor (2002,Pg 243) ,noted that the ‘push factors’ are the ones resulting from dissatisfaction with contemporary jobs and the ‘pull factors’ were the positive attraction to the new employer. According to an article on Talent Management, the push factors are those issues that may repel people from their current employer include unfair treatment, poor job fit and so on, while the pull factors are those that may entice employees to other organisations including better employment conditions or better market image.
The attraction and retention of employees is dependent upon a number of variables. Every individual is different. The reason behind why an employee chooses to stay with an organisation can encompass many factors. It starts with their immediate needs. Rye (2002, Pg 3) states that “once you understand and appreciate these needs, you’ll stand a better chance of attracting and keeping outstanding people in your organisation. Psychologists have struggled for years to explain basic human needs. One of the most helpful explanations is Abraham Maslow’s Hierarchy of needs.”
McKeown (2002) noted that, in terms of Maslow’s hierarchy of needs theory which is a well accepted concept that began in psychology, spread to other areas of life, and then slowly began to make a profound impact on working life, and in particular, on the understanding of what employee retention really means. According to this theory, individual needs are arranged in a hierarchy. Rees and Porter, (2008) have argued that, the lower level needs must be satisfied first before employees concern themselves with higher level needs. According to Stephens (2000) Maslow believed that human beings aspire to become self-actualising and viewed human potential as a vastly underestimated and unexplained territory. Thus, employee retention or labour turnover can be argued when employees meet the highest level of need that is the self actualisation need. When employees realise that the present organisation does not help in achieving the highest level of need which is the need of self actualisation, then they would shift or rather move to other organisations which would help them in doing so. When the need hierarchy concept is applied to organizations, the implications for managerial actions become obvious. Steers &Porter (1983, Pg 32), have stated that “managers have the responsibility to create a proper climate in which employees can develop to their fullest potential. Failure to provide such a climate would theoretically increase employee frustration and could result in poorer performance, lower job satisfaction and increased withdrawal from the organization.”
An organization should therefore offer different incentives to workers in order to help them fulfil each need in turn and progress up the hierarchy (see below). Managers should also recognize that workers are not all motivated in the same way and do not all move up the hierarchy at the same pace. They may therefore have to offer a slightly different set of incentives from worker to worker.
*Source: Anon, (2008) MOTIVATION-THEORIES. Available from: https://tutor2u.net/business/gcse/people_motivation_theories.htm [Accessed on 13 August 2009].
However, it must be noted that the level of needs can vary from person to person.
Employee retention can also be argued in terms of Herzberg’s two factor model. Frederick Herzberg had close links with Maslow and believed in a two-factor theory of motivation. Hume (1998) noted that according to this theory, there are two important sets of influencing factors which affect employee behaviour at work. He argued that there were certain factors that the management could introduce that would directly motivate employees to work harder. These factors are called Motivators or satisfiers. These motivating factors or rather satisfires were related to the content of the job. However there were also factors that would de-motivate an employee if not present but would not in themselves actually motivate employees to work harder Hygienefactors or dissatisfiers and these dissatisfiers were related to the context of the job. Motivators are more concerned with the actual job itself. For instance how interesting the work is and how much opportunity it gives for extra responsibility, recognition and promotion. Hygiene factors are factors which ‘surround the job’ rather than the job itself. For example a worker will only turn up to work if a business has provided a reasonable level of pay and safe working conditions but these factors will not make him work harder at his job once he is there. Importantly Herzberg viewed pay as a hygiene factor which is in direct contrast to Taylor who viewed pay and piece-rate in particular.
Hume (1998) noted that Herzberg was of the opinion that the organization should motivate employees by adopting a democratic approach to management and by improving the nature and content of the actual job through certain methods. Some of the methods managers could use to achieve this included firstly, job enlargement that is, workers being given a greater variety of tasks to perform (not necessarily more challenging) which should make the work more interesting. Secondly, job enrichment which involves workers being given a wider range of more complex, interesting and challenging tasks surrounding a complete unit of work. This should give a greater sense of achievement, and thirdly, empowerment means delegating more power to employees to make their own decisions over areas of their working life. Thus employee retention or labour turnover can take place because of the dissatisfiers or hygiene factors.
McGregor’s X and Y theory can also be used to look at employee retention in organisations. Hume (1998) noted that, Theory X is an elitist management approach where workers are treated with little or no respect, with the emphasis of control, discipline, conformity, obedience and dependence. A Theory X manager believes that his or her employees do not really want to work, that they would rather avoid responsibility and that it is the manager’s job to structure the work and energize the employee. The result of this line of thought is that Theory X managers naturally adopt a more authoritarian style of leadership and training based on the threat of punishment. Theory Y approaches management from an entirely different viewpoint. This theory emphasises on decentralisation, delegation, participation and consultation. It is believed that employees enjoy their mental and physical work activities. It is also believed that employees have the desire to be imaginative and creative in their jobs if they are given a chance. There is an opportunity for greater productivity by giving employees the freedom to be their best. A Theory Y manager believes that, given the right conditions, most people will want to do well at work and that there is a pool of unused creativity in the workforce. They believe that the satisfaction of doing a good job is a strong motivation in itself. A Theory Y manager will try to remove the barriers that prevent workers from fully actualizing their potential.
Taking McGregor’s X and Y theory into consideration, employee retention can be argued with regards to Theory X, were employees shift organisations which allow them to utilise their abilities and skills. When managers adopt a more authoritarian type or rather form of management it would result in lack of job satisfaction which would ultimately lower employee motivation to work. Thus, by looking into the ways by which employee retention takes place and identifying theories which may be the cause of employee retention, employers and mangers can take steps or rather measures in retaining their employees in their organisation. This once again can be related to the ‘Push and Pull factors’ which Stephen Taylor pointed out.
Griffeth & Hom (2001) have argued that employee turnover is assuming crisis proportions for many employers who struggle to retain people in the tightest labour market. Griffeth & Hom (2001, Pg 1) 52% of companies report that their turnover is increasing and quit rates are running high of 1.1% a month.” Turnover can be a real problem in many organisations. Companies spend a great deal of time and money recruiting and training employees and the cost of replacing staff members lost through turnover are great. The monetary cost of replacing one employee is generally estimated to range from 50 percent to 200 percent of the annual salary for the position, and may even be higher in very specialized fields. Furthermore, poor employee retention can have a negative impact on workplace productivity, job satisfaction, and also on the overall morale of the organisation. It is proven that a high turnover percentage can cost employers a great deal of financial distress. Depending on the size of the company, to many employers it can make the difference in staying or going out of business.
Phillips (2003,Pg 4) noted that, “of late employee retention has captured the attention of the business, financial, and executive community as a critically important strategic issue that can have a dramatic effect on productivity and profits.” Cascio, 2000 and Johnson,1995 cited in Griffeth & Hom, Retaining Valued Employees (2001), are of the opinion that, human resources professionals and researchers project that the cost of one turnover incidence ranges from between 93% to 200% of a leavers salary, depending on his or her skill and level of job responsibility. Labour turnover has a negative impact on the organizations. Although every manager and team member is aware of problems associated with high turnover, a review of its foremost consequences puts employee retention in the appropriate perspective.
Patricia (2002, pg 4, 5) noted that “employee turnover has a serious impact on organisations. Firstly high financial costs, which is both in terms of direct and indirect costs and the performance of companies has been inhibited in many ways by high turnover rates. Sometimes the costs alone causes turnover to become a critical strategic issue. Secondly, in terms of survival as an issue, where in a tight labour market in which the company depends on having employees with critical skills, recruiting and retaining the appropriate talent can determine the success or failure of the organisation. Thirdly in terms of productivity loses and workflow interruptions , where an employee who quits abruptly not only leaves a productivity gap but also causes problems for others on the same team and within the same flow of work. Fourthly in terms of loss of know-how especially with regards to knowledge industry, where a departing employee may have the critical knowledge and skills needed for working with specific software. This can be a negative impact at least in the short run. Fifthly, turnover can have a serious impact on the image of the organisations.” Patricia (2002) also noted that some of the other impacts of turnover on organisations may be with regards to loss of business opportunities, administrative problems, disruption of social and communication networks, and job satisfaction of remaining employees.
Patricia (2002) noted that it is important to remember that turnover can have a negative impact on the individual, particularly if an employee is leaving because of problems that could have been prevented. Furthermore, Patricia (2002) noted that a voluntary turnover because of problems that could have been avoided creates a variety of consequences such as loss of employee benefits or job seniority, financial difficulties, loss of social network, relocation costs, wasted efforts and uncompleted projects, and even more in terms of career problems.
Branham (2005) noted that employees quit because of the disengagement process and deliberation process. Branham (2005) also noted that there are 7 reasons as to why employees leave organisations. They are as follows:
1. The job or the workplace was not expected.
2. The mismatch between job and person.
3. Very little coaching and feedback.
4. Few growth and advancement opportunities.
5. Feeling devalued and unrecognised.
6. Stress from overwork and work-life imbalance.
7. Loss of trust and confidence in senior leaders.
There is no set level of employee turnover that determines at what point turnover starts to have a negative impact on an organisation’s performance. Everything depends on the type of labour markets in which you compete. Where it is relatively easy to find and train new employees quickly and at relatively little cost (that is where the labour market is loose), it is possible to sustain high quality levels of service provision despite having a high turnover rate. By contrast, where skills are relatively scarce, where recruitment is costly or where it takes several weeks to fill a vacancy, turnover is likely to be problematic for the organisation. This is especially true of situations in which you are losing staff to direct competitors or where customers have developed relationships with individual employees.
Some employee turnover positively benefits organisations. This happens when a poor performer is replaced by a more productive employee, and can happen when a senior retirement allows the promotion or acquisition of welcome ‘fresh blood’. The more valuable the employees in question the more damaging the resignation, particularly when they move on to work for competitors. Moderate levels of staff turnover can also help to reduce staff costs in organisations where business levels are unpredictable month on month. When business is slack it is straightforward to hold off filling recently created vacancies for some weeks.
Staw (1980 cited in Griffeth and Hom (2002), argues that turnover is not always bad. For instance, vacating employees or employees who quit can increase promotional opportunities for other employees or can infuse new ideas and technologies when new employees replace those who left. Dalton, Krackhardt and Porter (1981cited in Griffeth and Hom (2002), are of the opinion that certain kinds of jobs exits or quits among marginal performers are even desirable. Abelson & Bay singer (1994, cited in Griffeth and Hom (2002) that a certain quit rate might be tolerated as a cost of doing business in a particular industry. Stephen Taylor (2002, Pg 15) noted that for many HR specialists, rising staff turnover is seen as being an important organisational problem. It follows that improving retention rates should be high on the management agenda, and it is proper for resources to be devoted to achieving this aim. However a certain amount of turnover is actively welcomed by many managers. “Nonetheless, Griffeth & Hom (2001) have noticed that organisational-level research and corporate studies report that high exit rates generally worsen organisational effectiveness.
Though there are diverse opinions from various authors, and taking the above argument into consideration, it is clear that employees play a fundamental role in the success of any organisation and therefore by retaining talented or rather key employees is a very important task that the managers should undertake. Phillips & Connell (2002) noted that, some organisations do a superb job of managing retention, whereas others fail miserably. The issues are not always externally driven but often lie within the organisation.
Wingfield & Berry (2001) noted that, retaining of employees in an organization can be done by following or implementing the three R’s of employee retention namely reward, recognition and respect. To keep employees and keep satisfaction high, you (managers) need to implement each of the three R’s. When these three R’s of retention are applied it will result in increased productivity, reduced absenteeism, pleasant work environment and improved profits.
*Source: Wingfield, B. & Berry, J. (2001) RETAINING YOUR EMPLOYEES: Using Respect, Recognition and Reward.
Wingfield & Berry (2001) are of the opinion that, Rewards are the extra perks employer offers beyond the basics of respect and recognition that make it worth people’s while to work hard, to care, to go beyond the call of duty. While rewards represent the smallest portion of the retention equation, they are still an important one. Respect is esteem, special regard, or particular consideration given to people. Recognition and rewards will have little effect if you don’t respect employees. Recognition is defined as “special notice or attention” and “the act of perceiving clearly.” Many problems with retention and morale occur because management is not paying attention to people’s needs and reactions.
Hume (1998 Pg 62), noted that “when organisations are faced with shortage of skills it is essential that attractive and competitive compensation or rather rewards are available to attract and retain appropriately qualified and skilled employees.” McKeown (2002), states that if designed and implemented correctly, recognition programs can play an important role in retaining top employees. A strong job market means that employees have more job opportunities available to them. In order to keep top performers, retention must be a priority and individuals must be rewarded for their accomplishments.
Morale motivates the employee. For example, allowing employees to hold a hot dog feed or a potluck to raise money for a co-worker that has fallen on hard times due to a death or emergency of a family member, giving employee’s balloons on a birthday or sending flowers due to a birth of a child. These types of activities boosts morale, which in turn creates unity, which helps employees, feel as if they are part of a family rather than a part of an organization. It creates a great deal of job satisfaction, and a sense of security. Once an employee has been motivated by morale retention comes more easily.
One of many ways to motivate and retain your employees is by giving traditional rewards. The employer cannot and should not wait for the employee to come and ask for a raise or recognition; the employer should be the one to recognize employee performance and should reward good performance with monetary, benefits, and compensation incentives. Today’s organisations are stretching their boundaries of traditional benefits to retain key talent. Now creative incentives are being used to boost retention noted Christine Hirsch in her article Use Creative Incentives to Retain Talent. Offering attractive incentives as a reward for their performance and goal accomplishment can be a very effective way of boosting productivity and motivating employees. Employee incentives can be financial or non-financial. These can be a useful means of retaining employees in organizations.
Caplan and Teese, (1997) noted that employee commitment, productivity and retention issues are emerging as the most critical workforce management challenges of the immediate future, driven by employee loyalty concerns, corporate restructuring efforts and tight competition for key talent. Ambrose, (1996) is of the opinion that for many firms, “surprise” employee departures can have a significant effect on the execution of business plans and may eventually cause a parallel decline in productivity. This phenomenon is especially true in light of current economic uncertainty and following corporate downsizings when the impact of losing critical employees increases exponentially noted Noer, (1993).
Apart from the above mentioned arguments, there are a few other human resource management aspects which would help in motivating and retaining employees within organisations. These include recruitment, training and talent management. McDonald and Burton (2002) noted that, globalisation of business is forcing managers to grapple with complex issues as they seek to gain or sustain a competitive advantage. Faced with unprecedented levels of foreign competition at home and abroad, firms are beginning to recognise not only that international business is high on the list of priorities for top management but also that finding and nurturing the human resources required to implement an international or global strategy is of critical importance. McDonald and Burton (2002, Pg 319,320) also noted that “effective human resource management is essential, especially for small and medium firms.” Sturman M (2003) has argued that, recruitment plays a very important role in retaining employees. This process must given importance to the long term value of an organisation. The attraction and retention of key employees, is necessary to organisational success. The ability to achieve competitive advantage through people depends on the composition of the workforce. Retention begins at the time of recruitment. Therefore it is important to select employees for organisational and cultural fit, not merely against the technical and skills requirements of a given job. Risher H and Stoppe W (2002), argue that best practice companies have recognised this for a long time, and ensure that the selection process allows a full assessment of candidates’ abilities, interests, aspirations, and values, and a deliberate review of how well these match their organisational culture. As Beardwell and Holden (1994) emphasised "essential to a good HRM practice is recruitment and selection, which must consider correct "fit" between personnel and job in order to maximise efficiency in terms of retention and HRM strategic planning". The organisation can use the recruitment process to continue, enhance or even change the organisational culture. When a change of strategic direction is required, recruiting the right candidates is an important factor to increase the chance of success.
Sigler K (1999) is of the opinion that, recruitment of the right candidate is tricky, the skill of the recruiter is vital to appointing a successful candidate. Insufficient information about employees’ performance can result in adverse selection by Managers. This arises from when managers do not have the information and the candidate does not know what to provide. Therefore, productive workers cannot distinguish themselves from non productive candidates. Organisations need to respond to a rapidly changing global environment. Continued success is thus dependent on attracting and retaining high-quality individuals, who respond effectively to this changing environment. Thus, as noted by McDonald and Burton (2002) having the right people in the right place at the right time is a key aspect to a company’s international growth. Hence, recruiting the right people would help in retaining employees.
As mentioned earlier by Braham (2005), that lack of training is one of the reasons as to why employees leave organisations; managers may consider proper training especially after recruiting or selection of new employees. Pritchard (2006 Pg 150, 151) noted that “training and development are vital to successful employee retention efforts. Training and development initiatives are an investment in the employee retention.” According to an article “training aids retention worldwide”, 73% of employers believe that training is the best way to boost staff retention. According to a survey conducted by the Learning and Skills Council, employees choose to improve jobs rather than apply for new ones. Thus, training and development of employees would help in retaining talented employees. Training especially a newly recruited employee would help in terms of motivation, and this in turn would be effective with regards to organisational commitment of the employee.
Employee retention can also be understood with regards to talent management. Phillips and Edwards (2008, Pg 2, 3) noted that, “talent management is one of the most important strategic objectives of organisations today. Talent management is needed for success, efficiency, and consistency. It is a key factor in maintaining competitive advantage.” M. Armstrong (2003, Pg387) defined talent management “as the process of ensuring that the organisation attracts, retains, motives and develops the talented people it needs.” Tony Davis (2007) defined talent management as a “strategy which is a deliberate and corporate approach to the recruitment, retention and development of talented individuals (employees) within the organisation who consistently deliver superior performance.” Phillips and Edwards (2008, Pg 3) noted that, talent management programs enable a person, new graduate or existing employees to work for different managers in different functions. Sharon Daniels in her article Retaining Top Employees Is Critical in a Recession states that “talent management programs must address rapid turnover effectively and efficiently so that attrition doesn’t negatively impact an organisation.” One of the key objectives of a talent management strategy is to break the survival model and stimulate an achieving mentality noted Tony Davis (2007). This concept can once again be linked to the “self-actualisation” feature give by Maslow in the hierarchy theory of needs. With the right people the implementation of practice and the process will deliver performance improvements noted Tony Davis (2007). Thus talent management is a crucial aspect in employee retention. There are also various other tasks or rather responsibilities which organisations are taking in order to retain employees. Nelson (1998) has given certain examples to support this argument. *(please refer to chapter four, under findings and analysis).
Edwards & Ferner (2005) noted that the growth of Multinational Corporations has been one of the key features of Globalisation. As a result of Globalisation, there is the opening up of markets and outsourcing of jobs. With the outsourcing of jobs, employment opportunities are also on the rise. India is a very good example of such a phenomenon, the reason being that there are India is home to several million highly educated knowledge workers. Cavusgil et al (2008) noted that the number of people working in outsourced information technology (IT) services surpassed one million. With the rise in MNC’s, the task of retaining highly skilled employees is also a very important Human Resource Strategy. Managers introduce new benefit schemes such a holiday pay, bonuses etc to retain their key or valuable employees. However, according to a survey conducted by Talent Drain, an employee engagement and retention consultancy which examines the impact of staff turnover on organisational performance, HR attitudes towards retention in 316 organisations states that 93% have implemented retention initiatives over the past year, yet nearly half (47%) still admit that they have a problem retaining staff and two-thirds (65%) say they want to reduce their employee turnover. The question with regards to the three R’s that is reward, respect and recognition becomes questionable. The self actualisation need of employees in terms of Maslow’s Hierarchy Theory of needs is a very important factor that determines employee retention. The notion of “employee-by-choice” once again is debatable. Hence Employee retention is a very important factor in today’s modern business environment.
This chapter brings into light the various arguments put forward by a number of authors on the topic of research that is employee retention. It also brings into contrast the impacts of employee retention on organisations, and the various strategies used by managers and employers to minimise employee turnover such as the three R’s, incentives and so on. Thus it provides to the reader a better understanding of the research topic.
Research methodology in simple words refers to the techniques used in carrying out the research work. Research methodology is of two kinds namely quantitative research methods and qualitative research methods. Rudestam & Newton are of the opinion that, quantitative research makes use of statistics, tables and graphs. Emphasis is placed on precise measurement and controlling error. qualitative research methods are usually linked to a constructivist theory of knowledge.
This chapter outlines and evaluates the chosen research methodology, explaining the research paradigm, why the research methods were adopted, as well as discussing the limitations within the research.
“You can never empirically or logically determine the best approach. This can only be done reflectively by considering a situation to be studied and your own opinion of life. This also means that even if you believe that one approach is more interesting or rewarding another, we…..do not want to rank one approach above another. The only thing we can do is to try to make explicit the special characteristics on which the various approaches are based” (cited by Arbnor and Bjerke, (1997) in Blaxter, Hughes & Tight (2006).
There are different approaches to doing a research. Clough & Nutbrown (2002) are of the opinion that, in the context of an academic study the purpose of research may not be to “prove things but to investigate questions and explore issues” and it is best to adopt a research approach that is appropriate to our work”.
Creswell (2003) noted that the research approach plays an important role in any kind of research. Research approaches provide a framework for different kind of approaches that may contribute to or limit the research. Creswell (2003) also noted there are two types of approach, namely, inductive approach and deductive approach.
Marcoulides (1998) stated deductive approach as “testing theories. With the deductive approach, the researcher begins with thinking of a theory of interest and on theory basis forms the hypotheses and conducts tests.” A deductive approach involves the development of a theory or hypothesis, before designing a highly structured strategy to test a theory. As Sanders and Lewis et al (2003) discuss, a deductive approach is more appropriate to conducting scientific research, where there is an emphasis on collecting quantitative data and a need to generalize.
However in contrast, an inductive approach involves the collection of data from which a theory or conclusion will be developed. An inductive approach is more appropriate to gaining a descriptive understanding and lessons the need to make generalizations, as discussed by Sanders and Lewis et al (2003). Marcoulides (1998) stated that “inductive approach is moving from specific observations to broader empirical data, and on this basis of data forms theories and concepts. This approach is also called as bottom-up approach.”
Consequently, an inductive research approach has been adopted and was thought to be more appropriate within chapter two. This is due to the qualitative nature of the objectives set within chapter one and the exploratory research aim to examine the reasons for employee retention in organisation. Thus, allowing a conclusion to be drawn from the collection of data.
*Source: Denzin, K. & Lincoln, S (2000) HANDBOOK OF QUALITATIVE RESEARCH, 2nd edition.
The figure above shows as to how deductive and inductive approach is carried on. With these forms of approach a researcher can carry out research in the desired field of study.
The research method or rather the data collection method chosen to carry out the dissertation was basically Qualitative Research approach. Denzin & Lincoln (2000, Pg 3) have defined Qualitative Research as “a situated activity that locates the observer in the world.” Clive Seale et al (2007) noted that Qualitative research is a particular form of research enterprise against the backdrop of a range of issues that arise when conducting an evaluation. Qualitative research is a field of inquiry applicable to many disciplines and subject matters. Qualitative researchers aim to gather an in-depth understanding of human behaviour and the reasons that govern such actions. Clive Seale et al (2007) are of the opinion that the qualitative method investigates the why and how of decision making, not just what, where, and when. Denzin & Lincoln (2000, Pg 3, 4) are of the opinion that “qualitative research involves the studied use of a variety of empirical materials such as case study, personal experience, introspection, life story, interviews artifacts, cultural texts and so on….Accordingly, qualitative researchers deploy a wide range of interconnected interpretive practices, hoping always to get a better understanding of the subject matter at hand.” Palys (1997) referred qualitative research as a “human-centered approach.” Palys has also noted that a research method should be grounded in the day-to-day realities of the people being studied and a further understanding of the many ‘truths’ of their reality. A form of qualitative research and the primary methodology for this project used are action research and exploratory method of research.
Miles & Huberman (1994) have identified a few characteristics of qualitative research method. One major feature is that they focus on naturally occurring, ordinary events in natural settings, so that the researcher has a strong handle on what real life is like. Another feature of qualitative data is their richness and holism, with strong potential for revealing complexities.
The main reason to choose this approach is that as there is a lot of previous research on the topic which has been collected through qualitative methods and any advancement in knowledge will be based on this previous knowledge.
Blaxter et al (2006) have identified four strategies to research in social sciences that are not exclusive or definitive: action research, case studies, experiments and surveys. According to them, these strategies can be used to conduct small-scale research projects and can be a combination of one or more strategy. Taking into consideration the research topic, where the focus is on employee retention, action research and exploratory method of secondary data was thought to be most appropriate. Merriam (1995, Pg 125) states that “action research process is one of analyzing, getting facts, identifying the problem, planning and taking action on the problem, the repeating the cycle as new concepts and information results from the process”. McCutcheon G & Jung B (1990) have noted that action research is a systematic form of enquiry that is collective, collaborative, self-reflective, critical and undertaken by the participants of the inquiry. Action research, sometimes called "practitioner research," is a reflective investigation of a personal interest, problem or challenge. The process begins with the development of questions, which may be answered by the collection of data. Action implies that the practitioner will be acting as the collector of data, the analyst, and the interpreter of results. Exploratory methods including sources from the internet, peer-viewed journals and articles, and also various books on employee retention is used appropriately. Stebbins (2001) asserts that qualitative and quantitative techniques maybe used in an exploratory research because the focus is on producing generalizations on the group or situation under study where the researcher has little or no previous knowledge. Also the exploratory approach is appropriate to study the employment market which is often subject to change in accordance with factors such as economic, demographic etc. “Exploration is an important approach for social research in the Information Age, no in the least because this age generates rapid and widespread change”
The research strategy used to carry out this dissertation is the adoption of an action research and the use of exploratory method. Since the research conducted is a qualitative research, were secondary data from various sources is compared and contrasted to the theoretical concepts. Hence the research is structured with the use of an action research along including an exploratory form.
Four basic social research techniques pointed out by Blaxter et al (2006) are study of documents, interviews, observations and questionnaires. As mentioned previously, the use of secondary data through the study of various articles, peer-reviewed journals, and books on employee retention as a form of action research and exploratory approach or technique were used. As the research was qualitative in nature, the mentioned research techniques were thought to be more appropriate for the field of study.
Thus, the research technique adopted to carry out this dissertation was based on articles, peer-reviewed journals, and books on employee retention.
During the conduct of the research a number of difficulties and limitations were identified. Firstly, there was difficulty in choosing the right or correct method to carry out the research. As mentioned earlier, there is no one single method to do research; hence, it was quite difficult to choose the right research technique.
Secondly, when considering which data collection methods to adopt, telephone interviews, focus groups and questionnaires were also considered, but were ruled out as a viable option for various reasons.
Telephone interviews were ruled out, as it was perceived by the researcher as not being an appropriate method for engaging interviewees in a potentially lengthy exploratory discussion. There was also the issue of trust, where the interviewee may not have felt as comfortable discussing issues over the phone.
Focus groups and Questionnaires were also omitted, as it were perceived to be time consuming. With regards to questionnaires, the interviewee would not have felt comfortable to answer certain questions with regards to the organization and so on.
Thirdly, with regards to qualitative data, since there is a vast amount of information available it was quite difficult to narrow down to the topic of discussion.
This chapter has evaluated the data collection method and provided a platform behind the reasoning as to why the methodology was selected or rather adopted. Therefore a relevant research design has been created, providing rich qualitative data contributing to the exploratory objectives set within chapter one.
This chapter analyses the information retrieved through the research conducted within chapter three. This analysis of findings is presented and discussed using key topics, which are based on the issues discussed in the main issues that appear apparent within the research.
As Gatewood and Field (2001) in chapter one noted that in today’s competitive environment, most organisations seek to obtain and maintain high levels of success. While the success of the organisations can be determined through various criteria such as profits, markets share and so on, the one common theme is that the employee’s performance plays a big role in developing a competitive advantage over rival firms. Therefore the question to be asked is, “Why should firms be concerned about retaining employees?” People are an essential organisational resource and the key to achieving superior performance argues Mitchell et al (2001). There is a strong body of research indicating that employee turnover can be very costly (Griffith and Hom, 2001). Dess & Shaw (2001) noted that potential costs can include both “direct” costs such as separation, replacement, training and general administration costs, and “indirect” costs such as lower productivity and reduced customer loyalty. Therefore, without hardworking, competent employees, the likelihood of success is greatly diminished.
“When a valuable employee leaves, it’s a signal that something in the system may need fixing.”
Since employees play a big role in the organisations success, one of the key objectives is to hire the right employee for each job. Having “right” employees would mean having suitable people for each job. Going back to the chapter two of the research that is the literature review, the findings point out that, employee retention begins at the time of recruitment. Branham (2001) stated that “Today’s hiring mistakes are tomorrow’s turnovers-it’s as simple as that. Bad hires are the reason that 20 percent or more of the workforce are poor or marginal performers. Failure to select the right people in the first place is why only 50 percent of new hires last six months on the job.” As discussed by Pilbeam & Corbridge (2006) effective human resource planning can predict HR gaps and promote a focus on recruiting the right people to deliver the organisations objectives. The authors also argue that the recruitment and selection of workers (employees) is fundamental to the functioning of an organisation. Good recruitment and selection is important because well-thought-out, agreed and communicated policies, procedures and practices can significantly contribute to effective organisational performance, good employee relations and to a positive public image. Pilbeam & Corbridge (2006) have also stated that “ineffectiveness in recruitment and selection can lead to poor work performance, unacceptable conduct, internal conflict, low morale and job satisfaction and more over can lead to labour turnover.” Philips & Connell (2003) noted that organisations use a variety of recruitment initiatives and try to stay on the leading edge by taking advantage of new technologies. Standard recruitment solutions include newspaper advertisements, internal employee referrals, open houses, college recruiting efforts and so on. The authors also state that “employee referrals are a highly effective means for attracting and keeping employees”.
If organisations want to prevent themselves from employee turnover, emphasis must be or rather emphasis must be given to hire the right employees (Boyens, 2007). It is easy for the interviewer to switch from interviewing the person to trying to hire the person, and this often happen due to lack of time. Depending on the size of the company (organization) it is important to always look for good talent and once hired, the company must work hard to retain the employees according to Miodonski (2005). Many companies today are using employment agencies to fast get help to find suitable employees. This might be a good solution in the short-term but this type of hiring can be questionable in the long-term. Organizations can face difficult situations when key employees retire. Replacing retiring workers is a big challenge with the unemployment rate hovering nationwide (McCrea, 2001). Therefore recruitment of the right employees in the first place has a central role in retaining them. However, according to Pittinsky of Harvard University & Shih of University of Michigan in their article argue that turnover is a symptom, and not a problem. The authors have argued to change the idea from “attract and retain the best employees” to “attract and re-recruit the best employees”. By recruiting employees you build their commitment. Retention will follow, when appropriate. However, one problem is that while organisations spend a lot of money developing superior selection and recruiting processes, these efforts are futile if the organisation is unable to retain the high quality employees they hire. Organisations need to look beyond finding and hiring good employees and focus on how to keep these employees. An important factor contributing to employees’ decisions to leave or stay with an organisation is “organisational commitment”. Shepherd and Mathews (2000) noted that whereas organisations once focused on increasing employees’ compliance to organisational rules and regulations, employers are now aiming higher by attempting to obtain voluntary organisational commitment from their employers. According to Farnham & Pimlott (1990), the aim of employers no longer appears to be containment and compliance, but competence and commitment. According to Allen & Meyer (1990), employees possessing a strong sense of commitment are those who are least likely to leave the organisation. In addition, highly committed employees may perform better than less committed employees. Therefore, emphasis should be placed on developing ways to increase employees’ commitment to the organisation.
Referring back to the theoretical perspectives in chapter two, especially Herzberg’s two factor model, were employee retention can be argued with regards to the hygiene factors or the disatisfiers, it has been identified that the work environment also has its part to play in employee retention. Employees spend a great deal of time within their work environment throughout their entire life and this seems to be increasing. Izzo & Withers (2000, Pg 55) have stated that the “time spent on the job given in a year has increased by 163 hours in the last twenty years, translating into about an extra month of work time while leisure has declined by one-third.” With that said, the environment needs to be a place that an employee enjoys being part of day in and day out. The work environment for employees consists of several components, both tangible and intangible. The corporate surroundings such as the building, the personal space including the desk, cubicle or an office and all the people that work at that company can impact the employee’s ability to contribute to the organisation. The intangibles include corporate culture, values, communications and morale. These have an impact on the employees as well. Izzo & Withers (2000, Pg 76) have stated that “workers today want their work to be about something deeper that the bottom line. They want a sense of sweating for more than a profit, making a meaningful difference in customers’ lives or, if their work itself can have no such connection, a strong belief that their organisation takes its community and global citizenship seriously. If they are going to work longer hours at more complex jobs than previous generations, with less community-oriented time, they need more than a money motive to ignite their enthusiasm and loyalty.”
An employee is given pay or rather salary for the work he or she carries out. However, it is not just the pay package the employee looks out for. There are also other factors that employees can be given. Taking a look at chapter two, with regards to the three R’s namely respect, reward and recognition, retaining employees can be dealt with. Bernthal & Wellins, in their article Retaining Talent: A Benchmarking Study, have noted that employees want recognition for a job well done. Special bonuses or rewards can help employees feel proud of their work and let them know that their efforts are acknowledged. It helps if pay and recognition are linked in some way to performance because employees know there are consequences for their action. In addition to salary and similar compensation, people appreciate and respond to alternative forms of acknowledgement, such as dinners, awards, comp time and so on. To be effective, such recognition should be clearly tied to achievement, and encourage the desired behaviour in individuals. Wingfield & Berry (2001) have noted that when respect is absent, being at work feels uncomfortable. The authors also noted that without respect, even best efforts to improve the workplace will have little effect. Wingfield & Berry (2001) are of the opinion that by implementing the three R’s approach, employers can reduce turnover, and this in turn will increase productivity, reduce absenteeism, induce a pleasant working environment and ultimately increase profits of the organisation in the long run. Furthermore, according to Wingfield & Berry (2001) an employer who implements the three R’s will create a hard-to-leave workplace, one known as having more to offer employees than other employers.
Leigh Braham (2005), in chapter two noted that lack of training was one of the reasons as to why employees leave organisations. Taking this into consideration and analysing the authors view further, Susan Cumming (2004) noted that at a minimum, training is needed to give employees the information and skills they need to perform their jobs. However, successful organisations go well beyond this and train to help attract, motivate, and retain good employees. According to the International workplace survey conducted by recruitment specialists Robert half international, globally, 73% of employers believe training is the best way to boost staff retention. A further 37% view career development programmes as a key retainer, while 31% rate financial compensation. Training courses are most favoured in Switzerland where 93% of the respondents view it as the key retaining talent.
A new survey conducted on behalf of the Learning and Skills Council has found that employees would choose to improve their jobs rather than apply for new ones. The survey reveals that more than half (54%) of respondents would rather improve their current role compared to just 16% preferring to start afresh. Despite this, less than half (40%) of those surveyed were likely to ask their employers for training to help develop their roles. Findings reveal 46% of employees surveyed said training would make them more likely to stay with the company.
A report by the Department for Education and Skills states employers are overlooking the benefits that training can bring to staff retention, which found that less than 1% of employers would increase training to encourage staff retention or morale. Of those who did train their staff, four in ten employers reported an increase in staff retention. This is also reflected in employees’ views of work-based training, as 45% of employees surveyed would feel more valued, and 46% more motivated if their organisation invested in their skills.
Jaine Clarke, Director of Skills for Employers at the Learning and Skills Council with regard to the above report commented, “This research reveals a clear need for employers to change their attitude to training if they are to reduce staff turnover and boost morale. We would also encourage employees to take their future into their own hands and ask their employers about training before taking the step of finding a new job.” Thus, considering the findings and analysing the views of various authors, it can be noted that training is a key aspect which would help organisations to retain their employees, not only in ordinary times but also in times such as the present economic condition, as noted by Pritchard (2006 Pg 150, 151) in chapter two. Hence managers have to take into consideration training as an important aspect which would help in retaining key employees within the organisation.
Talent management is another important aspect and a relatively new concept in retaining employees. As discussed in chapter two by M. Armstrong (2003) & Tony (2007), talent management is another key area in employee retention. Further analysing this point, M. Armstrong (2003 Pg 388) gives certain key talent management processes such as, developing the organisation as an ‘employer of choice’, using selection and recruitment procedures that ensure that good quality people are recruited who are likely to thrive in the organisation and stay with it for a reasonable length of time, designing jobs and developing roles which give employees opportunities to apply and grow their skills and provide them with autonomy, interest and challenge and so on which when applied to an organisation will ensure attracting and retaining employees. The author is also of the opinion that recruiting, developing and retaining talented people are the objectives of a talent management strategy. Retaining individuals (employees) within the organisation while they develop is therefore a key issue as analysed by Tony Davis (2007). Nancy R. Lockwood (2006) in her article Talent Management: driver for organisational success noted that effective talent management policies and practices that demonstrate commitment to human capital result in more engaged employees and lower turnover. Consequently, employee engagement has a substantial impact on employee productivity and employee retention. Hence after further analysing the above author’s views from chapter two it can be understood that “talent management” is yet another important aspect with regards to employee retention and employers must give priority to the issue, as it is sometimes assumed that talent management is only concerned with key people- the high flyers. But everyone in an organisation has talent, and talent management processes should not be limited to the favoured few, although they are likely to focus most on those with scarce skills and high potential noted M. Armstrong (2003).
Certain organisations are taking the time to find out what their employees want. The following examples would help in better understanding of what organisations do in order to retain their employees. Nelson (1998) noted that employees at Meredith Publishing in Des Moines, Iowa, must work the ‘core hours’ that is between 10 a.m. and 3 p.m. However, they are allowed to set their own starting and ending schedules so long as they adhere to the core hour requirement. This allows workers to arrive as early as 6 a.m. or as late as 10 a.m. and leave as early as 3 p.m. or as late as 6 p.m. the author also noted that management at American Honda Motor Co. Inc. In Marysville, Ohio creates energising opportunities for its employees’ by assigning them high risk, high-rewarded projects. Cecil Hill, corporate manager of improvement programs at Hughes Aircraft Company stated, “I have found that certain aspects of the cash rewards approach would be counterproductive. Often, cash rewards would reduce teamwork as employees would concentrate primarily on individual cash gains. We have also found instances where ‘pay’ for certain types of intellectual performance tends to denigrate performance.”
Employers like Apple Computer and others exhibit clear support for employee attempts at self-improvement. By taking a risk of losing good workers, the employers energise their work force by showing that their first concern is the overall welfare of their employees. In turn, it is up to the executives of the organisation to take the first step to stimulate employee retention, discusses Nelson (1998). Management, at Novartis based in Basel, Switzerland, lets its employees know that it does not consider them disloyal for considering career paths that lead them out of the organisation. Novartis believes that offering employees ways to enhance their future employability alleviates the anxiety connected with job loss and demonstrates that the firm truly cares about them as people, argues Nelson (1998). Thus organisations in the preset market scenario not only provide monetary and non-monetary benefits, but also have a better understanding of their employees and their needs. Flexi-timings is a very good example that companies or rather firms use especially multinational corporations to help their employees. Such strategy not only help in retaining employees, but also increase their productivity, profitability of the organisation and also decreases absenteeism to a large extent.
As organizations grow and prosper, the need of loyal long-term employees become very essential. This is why it is important that employers train their supervisors, managers and employees themselves to learn to motivate each other. Retention management and retending employees is about relationships noted Taylor (2001). Supervisors must know their employees; they must ask and research what is important to their employees, what they want to accomplish, and what their goals are. This will help supervisors know how to motivate employees and how to get the most out of them. It is important to review organizational practices to see if we are meeting the expectations of our employees. The labour market continues to tighten and there are less and less available skilled, loyal, and motivated employees.
Research shows that the working population can be divided into several categories namely, people who are engaged (loyal and productive), those who are not engaged (just putting in time), and those who are actively disengaged (unhappy and spreading their discontent). Thus, as noted by Buckingham & Coffman (1999), even in the “best of times”, only 26 per cent of the working population is fully engaged in their work. The rest of the population is either “not engaged” (55 per cent) or “actively disengaged” (26 per cent). Productivity and retention rates generally fall further as employees become distracted, confused and preoccupied with potential outcomes immediately following an organizational transition such as a major restructuring, corporate downsizing, merger, acquisition, or even rapid growth spurt noted Cartwright and Cooper (1999).
Buckingham & Coffman (1999) noted that recent studies have shown that the manager, whether a front-line supervisor, a project leader, team ‘captain’, or senior manager, actually has more power than anyone else to reduce unwanted turnover. Why? Because the factors that drive employee satisfaction and commitment are largely within the direct manager’s control discusses Kaye & Jordan-Evans (1999). These include providing recognition and feedback, the opportunity to learn and grow, fair compensation reflecting an employee’s contributions and value to the organization, a good work environment, and above all, recognition and respect for the uniqueness of each person’s competencies, needs, desires and style. In turbulent times, the role of the manager becomes more important than ever because managers play a vital and distinct role, different from anyone else in the organization. That role is as a catalyst—someone who can “reach inside each employee and release his or her unique talents and convert them into performance” noted Buckingham & Coffman, (1999).
The main purpose of this chapter was to evaluate key findings from the previous chapters found through the methodology used to carry out this research. This chapter gives the reader a clear understanding of the key issues in employee retention, and what the organisations as a whole would have to do to retain their most talented and experienced employees.
By looking back at the previous research chapters within the research it is understood and realised that employees are an integral part of an organisation. For the success of any organisation, managers or employers must give prior importance to their employees. Studies have shown that one of the major concerns of any organisation in a high-growth business is employee retention (Peterson, 2005). This is because the human resource is the most valuable asset in any organisation. So, for the goals and objectives of any organisation to be achieved, the importance of effective implementation of adequate employee retention strategies must be emphasised. However, referring back to chapter two, there are also authors who have argued that turnover does not always have a negative effect on the organisation. Therefore suggesting an appropriate retention strategy would be very difficult. Most retention strategies have room for improvement, but they are especially difficult to formulate noted Bernthal & Wellins in their article Retaining Talent: A Benchmarking Study.
Form the research conducted certain general conclusions can be made. Firstly, turnover is prevalent and will probably increase. Trends in employee turnover (refer to chapter two) suggest that employee turnover is prevalent in retailing, hotels, catering and leisure, call centres and among other lower paid private sector service groups. Secondly, with regards to the theoretical perspective, were in terms of Maslow’s theory of needs, employee turnover can take place with regards to the self actualising needs, with regards to Herzberg’s two factor model that is in terms of the satisfiers and dissatisfiers, and with regards to McGregor’s X and Y theory. Thirdly, employee turnover can also prove costly to the organisation that is it can have direct and indirect costs on organisations. Fourthly, employees do not only look for pay or rather salary. They look for certain extra benefits, which include certain rewards, benefits and incentives. Hence, employee turnover can take place when organisations do not offer certain forms of benefits and incentives.
In chapter two, Christine Hirsch in her article refers to creative incentives which organisations are offering in order to retain key talent. Based on this argument, the author notes and makes certain recommendations. Incentives that appeal to workers of all walks are work or life benefits. Thus by offering creative incentives such as flexible working hours, telecommunicating options, expanded healthcare programs and employee assistance programs employers can retain employees within organisations.
Branham (2001, Pg 5) stated that “turnover, like property, will always be with us.” Achieving zero turnovers is neither realistic nor desirable. People move on for a variety of unpreventable reasons including more money, better benefits, the appearance of greener pastures, partner relocation, the desire to be a full-time parent, to retire, to return to college, and so on noted Branham (2001). The author also noted that spending energy and trying equally hard to keep everyone is not a realistic solution. The wiser route for most organisations is to focus on keeping those who cannot be afforded to be lost discusses Branham (2001). However referring back to chapter four, where in the findings and analysis, there are certain key aspects such as recruitment, incentives and so on for retaining employees within organisations, there are a few other recommendations which would help in keeping valuable and key employees in organisations. Branham (2001) has highlighted four key important aspects, which would help in retaining employees. Firstly, to be a company that people want to work for. One of the ways that organisations can attract talent is by becoming an “employer of choice”, and one way of doing this is focusing on developing its employer brand. Increasingly individuals are thinking far more seriously about aligning their values to an organisations value, and so at recruitment they will also look at what an organisation can offer then as well as what they can offer an organisation. The messages given through recruitment advertising and the recruitment process often have lasting effects on how an individual might view an organisation noted Thorne and Pellant (2007). Secondly, select the right people in the first place. Branham (2001) noted that selecting the right person is the job of the one individual who has the most to lose if the wrong person is selected that is the manager. The author is also of the opinion that the organisation can take a number of steps or actions that will facilitate the search for the right person for the job. Organisations can provide training in state-of-the-art recruiting and interview techniques. Branham (2001) also noted that organisations can assist all managers in recruiting, as companies such as Hewlett-Packard and Cisco Systems have done, by involving their employees in the process, either by making them “scouts”, or information resources for potential applicants, or by rewarding the for direct referrals of new hires. Thirdly, get them off to great start which would include the provision of key written material such as an employee handbook and other relevant documents, arrange for office furnishings and supplies ahead of time so that the employee is not bogged down by these concerns during the first week noted Branham (2001). And fourthly, coach and reward to sustain commitment. Branham (2001, Pg 175) stated that “it is one thing to gain an employee’s initial commitment, but it is more difficult to sustain the employee’s commitment over the long haul”. Sustaining employee commitment is demanding, unglamorous work. It means paying attention to employees’ performance, following through to checks and monitor results and so on noted Branham (2001).
Job satisfaction is an important factor which would ultimately lead to employee motivation. From the theoretical perspectives, especially with regards to Herzberg’s two factor model, it has been found that employee turnover takes places because of the extrinsic factors which act as de-motivators. Hence focusing on reducing the de-motivators, that is bureaucratic company policies and administration, poor supervision, and poor relationship with the supervisors and so on would ultimately lead to the motivating factors. Therefore, when employers consider these factors, there will be job satisfaction, which would lead to motivation, and hence leading to organisational commitment.
Apart from the mentioned recommendations, there are also a few other recommendations. According to a report by CIPD (2009) on Employee Turnover and Retention, these include:
* Job previews which is done at the recruitment stage.
* Make line managers accountable for the turnover in their teams.
* Career development and progression.
* Consult employees, were in to ensure where ever possible that employees have a voice through consultative bodies, regular appraisals, attitude surveys and grievance systems.
* Be flexible.
* Avoid the development of a culture of ‘presenteesim’, that is where employees feel obligated to work longer hours than are necessary simply to impress management. Evaluation of individual commitment should be based on results achieved and not on hours put in.
* Job security. By doing this employees feel much more confident to work in the organisation.
* Treat people fairly.
After looking at the various perspectives and importance of retaining valuable employees, the argument which formulates is that “do organisations and employers really need to worry about the issue, and take serious consideration on it, or rather ignore the issue”. Most organisations and most managers are not committed to reducing unwanted turnover. They know the price they would have to pay that is mostly the time they would have to invest in coaching, developing, motivating, and listening to their employees. Branham (2001, Pg 9) stated that “ultimately, it comes down to this question: Which is more expensive, the cost of doing the things necessary to retain your most valuable people, or the cost of losing and replacing those people?” Thus, the causes of retention and practices to improve retention can vary dramatically over time and across jobs, geographic locations and industries. Hence, depending on the organisation, a high retention rate can be positive or negative. For example, a low retention rate can be desirable for organizations that want to keep only their best employees, not necessarily those they consider poor hiring choices. A lower retention rate also might be acceptable if the organization is downsizing or redefining job roles that would ultimately require new talent.
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