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CHEYENNE JASLYN WEE 53120 DipBA53B
LECTURER MR. DIPAN K. MEHTA PERSONNEL MANAGEMENT (PM)
High Employee Turnover 5. Benefits of Employee Retention • Binding: Choices in Retaining Talent a. Steps and Actions to Reduce High Employee Turnover 6. Boosting: Promotion puts people in the right jobs 4. Definition • • How to calculate Employee Turnover Rate Within the 1st Year Table 1: Average Annual Turnover Rate by Industry and Occupational Groups • • The Rising Turnover Trend The Salmon Fallacy 4 5 3 3 4 2. Offer financial inducements b.Table of Contents Page 1. Offer extrinsic inducements d. Conclusion 7. Reference 6 7 7 7 7 8 8 9 10 12 13 53120/DipBA53B 2|Page . Effects and Impacts of High Employee Turnover to Organisations 3. Offer intrinsic inducements c.
1996). and often utilized in efforts to measure relationships of employees in an organisation as they leave. Its extent was manifested by the fact that our parliament brought up the same issue.4%. 53120/DipBA53B 3|Page .1. and 2. 2000). and between the states of employment and unemployment (Abassi et al. and Taiwan. 1998).7% in Singapore. South Korea. a new employee must be hired and trained. This replacement cycle is known as turnover (Woods. Managers refer turnover as the entire process associated with filling a vacancy – either voluntarily or involuntarily. regardless of reasons. Definition Employee turnover is the rotation of workers around the labour market. 2010 [Accessed 10 February 2011] In 1995. How to calculate employee turnover rates within the first year: Source: How to calculate employee turnover cited in Payscale for Employers.9%. 1995). Price (1977) defined turnover as the ratio of the number of organisational members who have left during the period being considered divided by the average number of people in that organization during the period. between firms. respectively (Barnard & Rodgers.. 2. There was a deep concern at the national level that job-hopping was adversely affecting Singapore’s competitiveness (Straits Times. each time a position is vacated. jobs and occupations. the average monthly resignation rates were 3. Press reports in 1996 highlighting cost and disruptions associated with jobhopping continued unabated (Straits Times. 1998).
0 27.4 67.4 Turnover rates were alarmingly high though there had been a marginal decline over the three-year Source: Quarterly Reports from Ministry of Manpower.4 32.8 44.6 44.4 57.0 37.2 1996 (%) 33.net/statistics/the-rising-turnovertrend. Sales & Service Production & Transport 36.The table below shows the average annual turnover rate for selected industries and occupations in Singapore from 1995 to 1997. Table 1: Average Annual Turnover Rate by Industry and Occupational Groups 1995 (%) Manufacturing Construction Industry Retail Hotels & Restaurants Transport & Communications Banking & Finance Professional/Managerial/Technical Occupation Clerical.6 80.6 1997 (%) 30.2 22.6 48.6 25.8 21.2 21. demonstrates the significance of this trend in the past year.0 21.8 22. period. The chart below.4 22.8 22.html. (Source: http://jcsi.6 20. from the Wall Street Journal’s coverage of the story.6 74.6 25.6 54.4 33.0 27. 8 February 2011) 53120/DipBA53B 4|Page .2 75. Singapore in 1998 The Rising Turnover Trend The Bureau of Labor Statistics reported that for the first time in 15 months the number of voluntary resignations has surpassed the number of people laid off or dismissed.
compelling justification. top-heavy organisation that blurs accountability.4) Money is a convenient and sometimes. Most environmental contributors can be directly traced to management practices.Talented people who were eager to grow and looking to advance their careers but have withheld advancement plans. p. culling 20 will not enable the remaining 80 to swim any faster. The problem is the prevailing current. p. stifles initiative and achievement. The prospect of getting higher pay elsewhere is one of the most obvious contributors to turnover. drive the natural turnover. undervalued and ignored.referenceforbusiness. The turnover did not occur in the past few years due to an economic recession.duties. Sharma (2009. There is a greater risk of alienation 53120/DipBA53B 5|Page .com/encyclopedia/Eco-Ent/Employee Turnover . The natural turnover caused a backlog of people waiting for economic conditions to improve and recover so they could make a move in their careers. not the efforts and abilities of the salmon. 13 February 2011) However. expenses. Turnover tends to be higher in environment that talented employees cannot contribute to their full potential in a cluttered. or when they feel helpless or unimportant. “The salmon fallacy If 100 salmon are swimming slowly upstream. (Cited www. The focus is exclusively on the individual. 278) stated that the number one reason people leave their jobs is conflict with their bosses. to the exclusion of the context in which he or she is working. benefits. monetary benefit may not be the root cause of turnover even when an employee decides to resign. The salmon fallacy ignores the environment or organizational setting in which activity takes place.” (Drive. 2002. Turnover recurs when employees feel they are taken advantage of.
000 to $100. High turnover can be a serious obstacle to productivity. 53120/DipBA53B 6|Page .000 a year. arbitrary. For the smallest firms. and dips in the quality of service each time their representative changes. more than two-thirds of the organisations in Singapore indicated a productivity loss of greater than 10% due to high employee turnover. If an employee earns $75.000 after calculating the executive recruiter’s fees and the cost of advertising and training.and turnover if managers are impersonal. quality and profitability to companies of all sizes. Effects and Impacts of High Employee Turnover to Organisations The organisational setting and climate affect individual and group performance In 1998. the employer loses productivity and often suffers a decline in morale as colleagues wonder why they are staying and whether the grass is more appealing elsewhere. and Stern. and demanding. in addition to low productivity. critically. “A 2008 article in HR Management magazine noted that replacing a worker cost on average 100 to 125 percent of an employee’s annual salary. More importantly. productivity loss and low employee morale is highly evident. 1998) The survey reported high recruitment cost. (National Productivity Board. even beyond how well the work is done when staff is available. replacing that person sets the employer back $75. p. Singapore. Moreover. 65) Existence of a strong and inseparable co-relationship in high employee turnover. and poor quality in product and services. Jr.” (Taylor. 2009. high employee turnover can also lead to customer dissatisfaction as clients feel little attachment to a revolving contact. having sufficient staff to fulfil daily functions is a challenge. For service-oriented professions such as management consulting and accounting management. 2. high employee turnover was found to be the major contributor of poor morale in many organisations. Major companies often spend millions of dollars on turnoverrelated costs.
Benefits of Employee Retention “Binding: Choices in Retaining Talent Retention – binding existing talent to your firm – matters at all levels. Offer intrinsic inducements 53120/DipBA53B 7|Page . cash or stock options for employees who stay a designated length of time can help keep top talent from moving.g. 2005. b.” (Ulrich and Brockbank. p. 106) Often referred as “A” players. and infusing new ideas into an organisation. Offer financial inducements Money may not be the dominant motivator when people leave but a factor influencing the decision to stay. a. senior managers with vision and competence are critical to a firm’s success. high turnover is less significant in this instance. it is alike to injecting new blood – creating synergy among new hires and existing employees.High turnover sometimes may be perceived as useful. some firms may rely on turnover to weed out the bad hires. Employee turnover is almost inevitable in every organization. When the learning curve is small and consequences of having inexperienced staff are minimal. Rather than going through the hassle of documenting dismissals of underperforming employees. Poor interviewers may fail to discover that new hires are poor performers until after they have been on payroll for several weeks. If turnover is low and kept at a healthy level. 3. Performance incentives and retention bonuses e. Employers can explore the following choices to retain talents in their companies.
d. 53120/DipBA53B 8|Page . The firm gets greater value per compensation dollar and keeps employees happier on the job. and make adjustments. Gather different points of views about the potential candidate from multiple assessors. translate strategy into specific expectations enable employers to evaluate candidates against an accepted standard. and other measures help bind employees to their jobs particularly when they choose the mix that suits their needs. and people who feel motivated and valued are likely to reciprocate. if any. Customers and shareholders benefit by having employees face greater challenges of meeting customer needs or reducing hidden costs. Flexible work arrangements. It is an amazingly simple but profound gesture of letting top performers knows they are valued. to strike work-life balance. • Allow volunteers – Thorough and candid career discussions help employers to evaluate whether the candidate is ready and able to take a promotion. Boosting: Promotion puts people in the right jobs • Establish criteria for the new job – Define clear requirements. family support. • Evaluate candidate potential – Assess candidate’s capacity to grow into the job that requires willingness to learn and try new things but be aware of what resulted in high performance in the present job may not necessarily be needed in the next job. c.Identify opportunity to undertake high-value and challenging work is the biggest inducement to stay. Offer extrinsic inducements Assure top performers that their employers value their contributions. Everyone wins.
. It is likely two or more candidates could do the job well and the winner will be only marginally preferable. 1983). Large organisations can provide employees with better advancement and higher wages hence ensure organisational attachment (Idson and Feaster. securing their trust and loyalty so that they are less likely to leave in the future. 2004). Some factors are beyond management control such as employee’s death or incapacity. this would accelerate the degree of employees quitting. 1997).• Support new jobholders – Throw full support behind the selected candidate. This causes uncertainties about what our role should be. 1990). and job dissatisfaction make employees to quit (Firth et al. This clearly indicates that these are individual decisions that made one to resign. Role stressors also lead to employee turnover. the range factors that lead to stressors. Firth et al. Today. It is pertinent for employers to be creative in thinking as many options as possible to retaining employees and at the same time. (2004) argue that employees quit from organisations due to economic reasons. Job related stress (job stress). 4. Good local labour market conditions improve organisational stability (Schervish. They used economic model to show employees quit from organisation due to economic reasons and these can be used to predict the labour turnover in the market. If the management/supervisors do not spell out employee roles clearly. Trevor (2001) argues that local unemployment rates interact with job satisfaction to predict turnover in the market. Less committed employees will eventually display a propensity to leave the organisation (Tor et al. Role ambiguity refers to the differences between what people expect of us on the job and what we feel we should do. (2004) and Manu et al. the need to provide care for children or aged relatives should not be seen as involuntary turnover as both government regulations and 53120/DipBA53B 9|Page . High Employee Turnover: Voluntary or Induced by Organisational Factors There are several reasons why employees quit from one organisation to another or leave the organisation. lack of commitment in the organisation..
Adopting a cost-oriented approach to employment costs increases labour turnover (Simon et al. (2000) noted that pay and pay-related variables have a modest effect on turnover. 1994) is noted. The approaches could be avoided if managers increase organisational competitiveness in this globalised environment. retain. 5. 2002). providing good working conditions. and the commitment and support to employee would motivate them to stay in organisation’s knowledge accessibility. If jobs provide adequate financial incentives. Therefore. 2007). Workforce optimisation – an organisation’s success in optimising employee performance by establishing essential processes for getting work done. it is more likely employees remain with the organisation.. and optimise employee value hinge on how well jobs are designed. motivation and 53120/DipBA53B 10 | P a g e . 2007).. how employees' time is used. They would be able to predict their career advancement in stable organisations. Griffeth et al. Sharing and accessibility of information at all levels of management would lead to strong performance from employees and creating strong corporate culture (Meaghan et al. Steps and Actions to Reduce High Employee Turnover Organisation’s capacity to engage.company policies create chance for such staff to continue to work on a more flexible basis (Simon et al. in situations where organizations are unstable. high staff turnover (Alexander et al. establishing accountability and making good hiring choices would retain employees in their organisation.. The importance of gaining better understanding of factors related to recruitment.. The extent of organisation’s “collaborative-ness” and its capacity in making knowledge and ideas widely available to employees would make them to stay in the organisation. In organisations with high level of inefficiency. employees tend to leave for stable organisations. Organisational instability showed a high degree of high turnover.
and retention of good employees. examine sources of employee turnover and recommend the best approach to fill the gap so that 53120/DipBA53B 11 | P a g e . 1989. 1995). In long run. 1980. Parden. 1988. training. selection. open book management. 1981. Management should encourage job redesigntask autonomy. empowers and compensates employees properly. Task characteristics are found to be potential determinants of turnover among employees (Couger. 1989. and employee empowerment. in turn perform up to the superior’s expectations (Keller and Dansereau. Workers with greater variety of tasks tend to stay in their jobs. Managers should execute recruitment and selection scientifically with the objective of retaining employees. Job and career satisfaction. Basta and Johnson. managers in many organisations are experiencing greater pressure from top management to improve recruitment. In long run. 1989). Superiors empowering subordinates by delegating responsibilities to them leads to subordinates who are more satisfied with their leaders and consider them to be fair. 6. returns on investments on the employees would be achieved. and organisational commitment reflect a positive attitude towards the organisation. Conclusion Employees are the backbone of any business success. Job satisfaction and involvement. it would encourage employees to stay in organisations. they need to be motivated and maintained in organisation at all cost to aid the organisation to be globally competitive in terms of providing quality products and services to the society. 1986).retention of employees is further underscored by rising personnel costs and high employee turnover (Badawy. Couger and Kawasaki. task significance and identity. and organisational commitment are related but distinguishable attitudes (Brooke and Price. 1989). With increased competitiveness in globalisations. 1988. thus having a direct influence on employee turnover intentions. The degree of commitment and loyalty can be achieved if management enriches jobs. Garden. Therefore. Garden. Sherman. Employee empowerment helps to enhance the continuity of employees in organisations.
Griffeth et al. Employees are liquid assets that help This asset needs to be Management should If these were put in organisation to withstand the globalisation waves. they would minimise employee turnover.they retain employees in their organisation to enhance their competitiveness in the this world of globalisation. 53120/DipBA53B 12 | P a g e . compensate employees based on their performance. monitored with due care. (2000) noted pay and pay-related variables have a great effect on employee turnover. place.
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