THE IMPACT OF EMPLOYEE TURNOVER ON A CUSTOMER

BASED BUSINESS: A CLOSER LOOK AT THE

INTERSECTION OF HUMAN RESOURCE

AND ACCOUNTING

INTRODUCTION

In today’s competitive business environment, the impact of employee turnover on a

customer –based business is detrimental to success, both in financial and human terms.
Employee turnover occurs when employment relationships ends (Mayhew, 2018). The loss of
employees over time poses a serious challenge to managers: understanding the causes, the
costs associated with it and finally, institute measures to reduce it (Gray, 2018).

House of Taj, owned and managed by Manuel Luis Ogues, is a small, fashion line
customer-based business specializing in formal wear, costumes and beauty pageant coaching;
operating since 2009 in Digos City, Davao del Sur. Running on a fast-paced line of activities, it
has a high employee turnover rate and prevailing causes are low pay, career advancement,
unfit personality for the job and overall dissatisfaction. The effects are real, costly and
potentially debilitating since these determinants indicate a management control related
problem.

At first glance it appears to be a “cut-and-dried” situation: a “cause” is identified and

thereafter, a “cure” is prescribed (Wroblewski, 2018). However, the matter is more serious than
it appears to be: one wherein the alarming signs demand immediate attention and the need
point towards the cessation of Human Resource and Accounting from operating and
functioning independently. Something has to change. Traditionally, employees were often
considered an expense but changing times have shown the growing recognition of the critical
role that employees play in the financial success or failure of the business, and are now seen as
revenue- producing or profit-contributing assets.

Understanding the undeniable negative impact that employee turnover may have on a
customer-based business, is in itself, a challenging endeavour. Transforming and incorporating
Human Resource concepts into the business or “money” side of the story, where it becomes an
integral part of the whole scheme of being profitable, may prove to be an even more complex
task. Through examination of the Human Resource concepts and employee turnover, and their
corresponding factors; is needed in order to make a concise and coherent analysis of the
problem.

The sense of urgency to identify how it can connect Human Resource and Accounting,
from hiring and selection up to profit or revenue-contribution, the House of Taj is faced with
questions like: Does realigning Human Resource concepts or efforts more closely with the
financial system have something to do with employee turnover? How do we identify measure
and implement these HR efforts to successfully cause a change in the employee turnover rate
of the business? Do they have a relationship, and if they do, what are the various factors behind
them, as separate and related concepts? Is the implementation of these Human Resource
efforts an antecedent of employee turnover?

THEORITCAL AND CONCEPTUAL FRAMEWORK

This concept paper is anchored on the proposed theoretical and Conceptual Framework
of the study on Employee Turnover/Retention in Non –Profit Organizations in India by
Shodhganga, 2016; where Human Resource is recognized as the backbone of any organization
and is closely linked to employee turnover. Its emergence or utilization in dealing with
organizational problems was found to be very significant. In the context of being a counter
solution to an increasing rate of employee turnover, three determinants were identified: a
realigned company strategy with focus on Human Capital Management; the presence of
dynamic recruitment program aligned with company strategy and new measures of success and
improved retention program as effective controls.

Moreover, it was also determined that employee turnover had three determinants: job
dissatisfaction, absence of organizational commitment and no apparent career advancement
opportunities as its precipitative factors.

According to Gervasi, 2016; the goal for supply, demand and sales are only part of a
successful business strategy. A more comprehensive business plan also needs to include several
considerations traditionally thought of as HR issues: hiring strategies, employee development,
and retention programs, and efforts to ensure the right people are placed on the right teams
with strategic, aligned management. This theory presents the role that Human Resource efforts
plays in ensuring overall organizational success.
 On the other hand, employees’ turnover may serve as a warning device or indicator of
the final outcome of employee’s experience in the organization. Specifically, voluntary
employee turnover is singled out as one that implies a negative image to management, as it is
characterized by the employees voluntary decision to leave and causes are almost always
negative like low pay, job dissatisfaction, dead-end (no career advancement opportunities) and
no commitment towards the job and the company they work for (King, 2016).

The independent variable is Implementation of Human Capital Management Strategies

and has its indicators: realigned company strategy focused on HCM Strategies, dynamic
recruitment program aligned with company strategy and new measures for success and
improved retention programs.

The dependent variable is Employee Turnover and has its indicators: job dissatisfaction,
absence of organizational commitment and no career advancement opportunities.

Figure 1 shows the conceptual framework.

Implementation of HCM Employee Turnover

Strategies

 Realigned company strategy

 job dissatisfaction
with focus on HCM
 absence of organizational
 Dynamic recruitment program
commitment
 New success measures and
 no career advancement
improved relation program
opportunities

Independent Variable Dependent Variable

Fig. 1 Conceptual Framework

STATEMENT OF THE PROBLEM

This concept paper attempts to determine the magnitude of relationship between the
implementation of HCM strategies and employees turnover among former employees of House
of Taj in Digos City.

More specifically, it seeks to answer the following sub-problems:

1. What is the socio-demographic profile of former employees in terms of:

1.1 age ;
1.2 tenure;
1.3 job context; and
1.4 monthly income?

2. What is the level of the effect of implementing HCM strategies on former employees in
terms of:

2.1 realigned company strategy with focus on HCM;

2.2 dynamic recruitment program aligned with company strategy; and
2.3 new success measures and improved retention program?

3. What is the level of employee turnover of former employees in terms of:

3.1 job dissatisfaction

3.2 absence of organizational commitment; and
3.3 no career advancement opportunities?

4. Is there is a significant relationship between the implementation of HCM strategies and

employee turnover?

RESEARCH DESIGN

This concept paper will employ a descriptive-correlation research design.

According to Uzoagulu (2011) as cited by Eluka and Nwono (2014), this research design
collects, organizes, analyze and describe data as they exist without interfering with
them and emphasize the nature of this data and its relevance on the present status of
the variables in a particular situation.

Hence, the concept paper attempts to find the significant relationship between
the factors concerning the implementation of HCM strategies and employee turnover.
It will make use of the non-profitability sampling technique, specifically, the purposive
sampling. It will choose respondents who will positively respond to answer to the survey
questionnaire.
 REFERENCES

Gervasi (2016). Leadership and Career Strategy.

Gray (2018). The True Cost of Attrition.

Mayhew (2018). The Generational Workforce in the Health Care Industry.

Retrieval January 10, 2019 from
http:smallbusiness.chrome.com/employee.turnover.html

Shodhganga (2016)Study on Employee Turnover/Retention in Non-Profit Organizations

in India.

Wroblewski (2018). Bloomberg: A Record Number Of Americans are Quitting their Jobs.

Uzoagulu (2011) A Critical Review of the Effect of Working Conditions on Employee’s

Performance.