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Tinatin Murgulia Academic Writing (MBA) February 16, 2013

Possible solutions to the problem of staff turnover

Staff turnover refers to the movement of employees in and out of a business. However, the term is commonly used to refer only to wastage or the number of employees leaving. According to IRS (Internal Revenue Service, a United States government agency responsible for the collection and enforcement of taxes) employee development bulletin1 rates of staff turnover provide a graphic illustration of the turbulence within an organization. The CIPD (The Chartered Institute of Personnel and Development) survey of recruitment2, retention and turnover found that the average rate of turnover (the number leaving as a percentage of the number employed) in the United Kingdom was considerably high, 17.3 percent. Employee turnover can be disruptive, costly and affect team morale. When people leave a firm, morale can be deeply affected. Other employees may become fearful and uncertain about their status within the company. High turnover also gives a firm and unhealthy reputation in the market place, making recruiting/recruitment difficult. As well as that, high rates of labour/labor turnover are expensive in terms of additional recruitment costs and increased costs of training replacement employees. The CIPD 2008 survey established on a small sample that the average costs per employee was 5,800, rising to 20,000 for senior managers or directors. Costs estimates are useful as means of backing up a business case for taking action to reduce turnover. Concerted action is required to retain valuable employees, but there are limits to what any organization can do. There are a number of reasons why people might want to leave the organization and seek employment elsewhere. Therefore, identifying the reasons for leaving and taking corrective measures would be the starting point in finding solution to staff turnover. Depending on the outcome of the overall assessment of reasons for leaving, the possible actions that can be taken are as follows: offering fair pay systems, encouraging employee engagement and rewarding and recognizing good performance. While it certainly takes more than money alone to attract and retain skilled professionals, it is helpful to offer competitive compensation packages. Employees who feel they are underpaid will also feel they are undervalued and are more open to even small increases from other organizations. Therefore, it is extremely important to deal with uncompetitive, inequitable or unfair pay systems. However, as Cappelli (director of the Center for Human

Hirsh, W, Pollard, E and Tamkin, P (2000) Management development IRS Employee Development Bulletin, November, pp 812 2http://www.cipd.co.uk/NR/rdonlyres/BE3C57BF-91FF-4AD0-9656FAC27E5398AA/0/recruitmentretentionturnover2008.pdf

Tinatin Murgulia Academic Writing (MBA) February 16, 2013

Resources at the Wharton School, University of Pennsylvania) points out, there is a limit to the extent to which people can be bribed to stay. Another effective solution to staff turnover is employee engagement. Employee engagement is the extent to which employees value, enjoy and believe in their jobs and their employer. Attaining engagement is the result of a strong relationship between an employee and employer. As the research3 conducted by Canadian Food Council suggests, grocery retail outlets that stand out as more engaged with employees have notably higher rates of retention. They interact frequently with staff; communicate company goals, values and culture; actively convey a commitment to health and safety, training and development; instill a fun and relaxing atmosphere; and make employees feel a part of the social culture of the workplace through team engagement, off-hours gatherings and community involvement. Employee engagement might be costly (organizing corporate events, trainings) and time-consuming, but this is the way to make the employees feel part of the company. It is also important for employees to know that their effort and hard-work would be recognized. A lack of employee recognition for a job well done is an important factor that can influence an employees decision to resign. Managers, who make an effort to recognize employees in meaningful ways and focus on creating solutions out of problems, earn great respect among their staff. Giving employees recognition for a job well done and specific feedback about their performance has a direct influence on employee confidence and job satisfaction. By rewarding and recognizing people for good performance, mangers not only affect the person being recognized, but other employees as well. However, employees have different personalities and while hard-work of some-employees can be easily recognized, it might be difficult in case of others and this can lead to dissatisfaction of those employees, whose good performance are not recognized. Possible solutions to the problem of staff turnover include: offering fair pay systems, encouraging employee engagement and rewarding and recognizing good performance. However, each of these solutions is extremely important for staff retention, employee engagement is the most effective strategy for decreasing staff turnover rate. This is the way to make the employees feel part of the company and part of the team. This is the best possible way to make sure employees choose their present job over other attractive job offers.

References A Handbook of Human Resource Management Practice, Michael Armstrong, Tenth edition 2006, pp 375-377.

Best Practices Guide for Employee Retention, Canadian Food Council (http://www.cghrc.ca/images/pdf/calculator_brochure_rev9j.pdf)

Tinatin Murgulia Academic Writing (MBA) February 16, 2013

A Market-driven Approach to Retaining Talent, Cappelli, P (2000), Harvard Business Review, January -February, pp 10311. Armstrong's Handbook of Human Resource Management Practice, Michael Armstrong, Eleventh edition 2009, pp 497, 502-505. Management Development IRS Employee Development Bulletin, Hirsh, W, Pollard, E and Tamkin, P (2000), November, pp 812. Recruitment, Retention and Turnover, The Chartered Institute of Personnel and Development, Annual survey report 2008 (http://www.cipd.co.uk/NR/rdonlyres/BE3C57BF-91FF-4AD0-9656FAC27E5398AA/0/recruitmentretentionturnover2008.pdf). Best Practices Guide for Employee Retention, Canadian Food Council (http://www.cghrc.ca/images/pdf/calculator_brochure_rev9j.pdf).