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CHEYENNE JASLYN WEE 53120 DipBA53B
LECTURER MR. DIPAN K. MEHTA PERSONNEL MANAGEMENT (PM)
High Employee Turnover 5. Boosting: Promotion puts people in the right jobs 4. 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.Table of Contents Page 1. Benefits of Employee Retention • Binding: Choices in Retaining Talent a. Offer financial inducements b. Offer extrinsic inducements d. 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. Steps and Actions to Reduce High Employee Turnover 6. Conclusion 7. Offer intrinsic inducements c.
and 2. 2010 [Accessed 10 February 2011] In 1995. 1996). Definition Employee turnover is the rotation of workers around the labour market.1. 2. each time a position is vacated. the average monthly resignation rates were 3. Managers refer turnover as the entire process associated with filling a vacancy – either voluntarily or involuntarily. There was a deep concern at the national level that job-hopping was adversely affecting Singapore’s competitiveness (Straits Times.. respectively (Barnard & Rodgers. 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. jobs and occupations. 1998). This replacement cycle is known as turnover (Woods. regardless of reasons. 2000). and Taiwan.4%. 1995).7% in Singapore. Press reports in 1996 highlighting cost and disruptions associated with jobhopping continued unabated (Straits Times. How to calculate employee turnover rates within the first year: Source: How to calculate employee turnover cited in Payscale for Employers.9%. 1998). between firms. Its extent was manifested by the fact that our parliament brought up the same issue. and between the states of employment and unemployment (Abassi et al. a new employee must be hired and trained. 53120/DipBA53B 3|Page . and often utilized in efforts to measure relationships of employees in an organisation as they leave. South Korea.
6 1997 (%) 30.8 44. 8 February 2011) 53120/DipBA53B 4|Page .8 22.0 27.8 21.4 67. (Source: http://jcsi.2 21.0 27.6 20.4 22.4 Turnover rates were alarmingly high though there had been a marginal decline over the three-year Source: Quarterly Reports from Ministry of Manpower.4 57.0 21. 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.0 37.6 74.2 75.html.The table below shows the average annual turnover rate for selected industries and occupations in Singapore from 1995 to 1997.2 22. Sales & Service Production & Transport 36.net/statistics/the-rising-turnovertrend.4 33.6 48.8 22.6 25.6 44.6 80. from the Wall Street Journal’s coverage of the story.6 54.4 32. 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.2 1996 (%) 33. period. The chart below. demonstrates the significance of this trend in the past year.6 25.
p.” (Drive. Turnover tends to be higher in environment that talented employees cannot contribute to their full potential in a cluttered. 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. 278) stated that the number one reason people leave their jobs is conflict with their bosses. not the efforts and abilities of the salmon. Sharma (2009. undervalued and ignored. There is a greater risk of alienation 53120/DipBA53B 5|Page .Talented people who were eager to grow and looking to advance their careers but have withheld advancement plans. 13 February 2011) However. (Cited www.4) Money is a convenient and sometimes. culling 20 will not enable the remaining 80 to swim any faster. p. drive the natural turnover. monetary benefit may not be the root cause of turnover even when an employee decides to resign. stifles initiative and achievement. The problem is the prevailing current. expenses.com/encyclopedia/Eco-Ent/Employee Turnover . to the exclusion of the context in which he or she is working. 2002. “The salmon fallacy If 100 salmon are swimming slowly upstream.duties.referenceforbusiness. The prospect of getting higher pay elsewhere is one of the most obvious contributors to turnover. benefits. compelling justification. Most environmental contributors can be directly traced to management practices. top-heavy organisation that blurs accountability. The focus is exclusively on the individual. Turnover recurs when employees feel they are taken advantage of. The turnover did not occur in the past few years due to an economic recession. The salmon fallacy ignores the environment or organizational setting in which activity takes place. or when they feel helpless or unimportant.
productivity loss and low employee morale is highly evident. even beyond how well the work is done when staff is available. and demanding. 2009. “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. arbitrary. 2. Effects and Impacts of High Employee Turnover to Organisations The organisational setting and climate affect individual and group performance In 1998. 65) Existence of a strong and inseparable co-relationship in high employee turnover.000 to $100. For service-oriented professions such as management consulting and accounting management.000 a year. Major companies often spend millions of dollars on turnoverrelated costs. p. more than two-thirds of the organisations in Singapore indicated a productivity loss of greater than 10% due to high employee turnover. Moreover. High turnover can be a serious obstacle to productivity. high employee turnover was found to be the major contributor of poor morale in many organisations. For the smallest firms. 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 poor quality in product and services. (National Productivity Board. quality and profitability to companies of all sizes.and turnover if managers are impersonal. 1998) The survey reported high recruitment cost.000 after calculating the executive recruiter’s fees and the cost of advertising and training. in addition to low productivity. and Stern. If an employee earns $75. Singapore.” (Taylor. critically. high employee turnover can also lead to customer dissatisfaction as clients feel little attachment to a revolving contact. More importantly. replacing that person sets the employer back $75. 53120/DipBA53B 6|Page . and dips in the quality of service each time their representative changes. Jr. having sufficient staff to fulfil daily functions is a challenge.
Employers can explore the following choices to retain talents in their companies. Offer intrinsic inducements 53120/DipBA53B 7|Page .High turnover sometimes may be perceived as useful. Poor interviewers may fail to discover that new hires are poor performers until after they have been on payroll for several weeks. 106) Often referred as “A” players. Performance incentives and retention bonuses e. Benefits of Employee Retention “Binding: Choices in Retaining Talent Retention – binding existing talent to your firm – matters at all levels. p. senior managers with vision and competence are critical to a firm’s success. 3. Employee turnover is almost inevitable in every organization. 2005. it is alike to injecting new blood – creating synergy among new hires and existing employees. some firms may rely on turnover to weed out the bad hires. Offer financial inducements Money may not be the dominant motivator when people leave but a factor influencing the decision to stay. cash or stock options for employees who stay a designated length of time can help keep top talent from moving. high turnover is less significant in this instance. If turnover is low and kept at a healthy level. b. 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.g.” (Ulrich and Brockbank. a. and infusing new ideas into an organisation.
family support. It is an amazingly simple but profound gesture of letting top performers knows they are valued. c. Gather different points of views about the potential candidate from multiple assessors. if any. translate strategy into specific expectations enable employers to evaluate candidates against an accepted standard. • Allow volunteers – Thorough and candid career discussions help employers to evaluate whether the candidate is ready and able to take a promotion. d. and other measures help bind employees to their jobs particularly when they choose the mix that suits their needs. Customers and shareholders benefit by having employees face greater challenges of meeting customer needs or reducing hidden costs. Flexible work arrangements.Identify opportunity to undertake high-value and challenging work is the biggest inducement to stay. to strike work-life balance. • 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. Everyone wins. and make adjustments. 53120/DipBA53B 8|Page . Offer extrinsic inducements Assure top performers that their employers value their contributions. Boosting: Promotion puts people in the right jobs • Establish criteria for the new job – Define clear requirements. and people who feel motivated and valued are likely to reciprocate. The firm gets greater value per compensation dollar and keeps employees happier on the job.
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. If the management/supervisors do not spell out employee roles clearly. 1990). This causes uncertainties about what our role should be. Firth 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 . Role ambiguity refers to the differences between what people expect of us on the job and what we feel we should do.. 1983). Large organisations can provide employees with better advancement and higher wages hence ensure organisational attachment (Idson and Feaster. It is pertinent for employers to be creative in thinking as many options as possible to retaining employees and at the same time. the range factors that lead to stressors. (2004) argue that employees quit from organisations due to economic reasons.• Support new jobholders – Throw full support behind the selected candidate. (2004) and Manu et al. Job related stress (job stress). and job dissatisfaction make employees to quit (Firth et al. Some factors are beyond management control such as employee’s death or incapacity.. It is likely two or more candidates could do the job well and the winner will be only marginally preferable. This clearly indicates that these are individual decisions that made one to resign. lack of commitment in the organisation. Role stressors also lead to employee turnover. 2004). Good local labour market conditions improve organisational stability (Schervish. 1997). Less committed employees will eventually display a propensity to leave the organisation (Tor et al. this would accelerate the degree of employees quitting. Trevor (2001) argues that local unemployment rates interact with job satisfaction to predict turnover in the market. securing their trust and loyalty so that they are less likely to leave in the future. Today. 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. 4.
(2000) noted that pay and pay-related variables have a modest effect on turnover. Organisational instability showed a high degree of high turnover. 1994) is noted. motivation and 53120/DipBA53B 10 | P a g e . establishing accountability and making good hiring choices would retain employees in their organisation... and optimise employee value hinge on how well jobs are designed.. 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. 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. The approaches could be avoided if managers increase organisational competitiveness in this globalised environment. 2002). employees tend to leave for stable organisations. They would be able to predict their career advancement in stable organisations.. it is more likely employees remain with the organisation. The importance of gaining better understanding of factors related to recruitment. Griffeth et al. Adopting a cost-oriented approach to employment costs increases labour turnover (Simon et al. 2007). Workforce optimisation – an organisation’s success in optimising employee performance by establishing essential processes for getting work done.company policies create chance for such staff to continue to work on a more flexible basis (Simon et al. and the commitment and support to employee would motivate them to stay in organisation’s knowledge accessibility. Steps and Actions to Reduce High Employee Turnover Organisation’s capacity to engage. Therefore. retain. high staff turnover (Alexander et al. how employees' time is used. 5. If jobs provide adequate financial incentives. 2007). in situations where organizations are unstable. providing good working conditions.
1988. and organisational commitment are related but distinguishable attitudes (Brooke and Price. selection. returns on investments on the employees would be achieved. 1989. Workers with greater variety of tasks tend to stay in their jobs. and organisational commitment reflect a positive attitude towards the organisation. Job and career satisfaction. In long run. Parden. empowers and compensates employees properly. 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. open book management. 1989). training. task significance and identity. 1988. Sherman.retention of employees is further underscored by rising personnel costs and high employee turnover (Badawy. Garden. Task characteristics are found to be potential determinants of turnover among employees (Couger. 1989). 6. Management should encourage job redesigntask autonomy. 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. Garden. thus having a direct influence on employee turnover intentions. Employee empowerment helps to enhance the continuity of employees in organisations. and retention of good employees. 1980. Job satisfaction and involvement. In long run. in turn perform up to the superior’s expectations (Keller and Dansereau. and employee empowerment. Couger and Kawasaki. examine sources of employee turnover and recommend the best approach to fill the gap so that 53120/DipBA53B 11 | P a g e . 1986). Therefore. The degree of commitment and loyalty can be achieved if management enriches jobs. With increased competitiveness in globalisations. 1995). Managers should execute recruitment and selection scientifically with the objective of retaining employees. managers in many organisations are experiencing greater pressure from top management to improve recruitment. it would encourage employees to stay in organisations. Conclusion Employees are the backbone of any business success. Basta and Johnson. 1981.
monitored with due care. Employees are liquid assets that help This asset needs to be Management should If these were put in organisation to withstand the globalisation waves. 53120/DipBA53B 12 | P a g e . Griffeth et al. compensate employees based on their performance. place. (2000) noted pay and pay-related variables have a great effect on employee turnover. they would minimise employee turnover.they retain employees in their organisation to enhance their competitiveness in the this world of globalisation.
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