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³Employee turnover´ is the term which is a big concern for many organisations in the UK and worldwide. Although there has been a lot of research and studies which were conducted on this topic, most of these studies and research focused on the causes of the labour turnover and little or no focus has been made on examining the effects and advising different strategies which can be used by the managers within their organisation to make sure that they don't loose their employee. The purpose of this research is to explore the possible reasons for the high level of labour turnover in the company X and to explore the perceptions of the managers of the company X on the strategic management of labour turnover within their organisation and also to suggest few recommendations to the managers and the organisation on how to handle this situation. Most of the theories and procedures discussed in this report will someway or the other suggests us on how to approach this situation of high labour turnover in the company X.
Organisations need labour to function and these days organisations are quickly realizing that employees are their major source of competitive advantage to succeed in this highly competitive world. This notion applies equally to almost any organisation in the world. For an organisation to succeed it has to manage it resources effectively. When an employee leaves the organisation it not only has an impact on the organisation but also on the employee and wider society (Mobley, 1982). These impacts can be both positive and negative (Mobley, 1982; Hom and Griffeth, 1995), and a greater knowledge of the evolution of labour turnover can improve the extent to which organisations and employees within organisations can control these effects (Dalton et al., 1981). These days' organisations invest a lot on their employees in terms of training and development, maintaining, and retaining them within their organisation. So, there is a need for the managers to lessen the employee turnover rates within their organisations. This research will look in to the company X, which is a part of the large retail outlet group. For the reasons of ethics the name of the company will not be revealed at any part of this report and will be referred throughout as company X.
each of the branches has a manager. The existing staff had to increase their workload during the times of training the new staff and this in turn affected the level of customer service provided by them. This was followed during the time when there was training for the new staff. but he wanted to know whether the present staff still had the same concerns. . The director of the company was consulted regarding the research study and was asked whether there were any areas of concerns within the company which he wanted researching. The North-East branches of the company X are being focused on this study. The director also wanted to know the possible ways in which these concerns could be resolved in order to retain his current staff. 8 to 10 customer service employees (depending on the location of the branch). he was in a very good position to answer to this question. The hiring and training of new staff seem to have settled this problem. high demands and high expectation creates a hard environment in the company X and which in turn will affect the employees. The company X operates in a highly competitive environment. This high competition. As the director was working there for a quite long time. The director noticed that during this period some of their staff was demoralized and were asking for time offs which would further have more impact on the other staff. The times of employee turnover resulted in longer hours for some staff members which affected the present staff both physically and psychologically because they have to now work for long hou rs. However there is some extent of discontent among the staff of company X regarding the company. and 1 director. The director was aware of the reasons why his staff was leaving.Company X is a part of large retail outlet with stores which are spread throughout the UK and worldwide. it has to continuously deal with the demands and expectations of the customers which is in turn very stressful for the employees in the company X. The business sector in which the company X is operating has a high level of competition and the company X is constantly thriving to maintain their competitive advantage in their sector and gain a huge amount of market share. The director was fully aware that the turnover levels of the company had a negative impact on his present staff. The company X has 6 branches in the North-East.
The labour turnover index is the traditional method to measure the labour turnover. The reasons may be different from one organisation to other and from one person to . 1996).There are different kinds of methods in which we can measure the labour turnover. Saks. Beck.. 1995. Too high a labour turnover rate may mean that there is something unsatisfactory about working for the organisation and that action therefore would need to be taken´. y y Literature Review Labour turnover According to Adams (1993) 'labour turnover is the rate at which staffs leave an organisation and are replaced by new employees. There has been a lot of inconsistency in the findings of the academics which may be because of the variety of employed incorporated by the academics. Kramer et al. The term ³turnover´ is defined by Prince (1997) as: the ratio of number of organisational members who have left during the period being considered divided by the average number of people in that organisation during that period. This method is a most common method because of the simplicity of usage and to understand.Aims of the Study The main aim of this research is to assess the reasons for high labour turnover in UK and particularly in the organisation which I have chosen. Research Objectives: y y What are the reasons for high labour turnover in company X? How is this issue managed and addressed by the management of the company X? What does the staff and managers think about this problem of high labour turnover in their organisation? Try to suggest solutions in order to reduce the labour turn over in the company X. 2001. Causes of labour turnover There was a lot of research carried out by academics in the past to answer the question of what makes the employees to leave organisations (for ex. There is no single or universal reason for why people leave the organisation.
a variety of aspects that advance to job associated strain. in the same way an employee working for a long t ime within an organisation might expect a pay rise and will be demoralized and downsized if he couldn't manage to get a pay rise and this might in turn lead to turnover.. (2004) argues that economi c factors may be one of the reasons why employees leave organisations. (2004). people may quit organisation because they might not be getting what they were expecting from the organisation or they might leave the organisation because of personal reasons such as family responsibilities or problems in personal relationships. absence of dedication with in the organisations. and absence of agreement on job duties may cause staff to feel less involved and less satisfied with their jobs. uncertainty of performance evaluation procedures. This apparently marks that these are particular decisions which makes an individual to leave the organisation. so there is high possibility that an employee might thin k about the chances of getting promoted and getting high pay. Manu et al. this in turn would lead to the high level of labour turnover within the organisation. 2007). and ultimately exhibit a tendency to quit the organisation. These factors may include demise or inability of the employee . According to Firth et al. (1997).. According to Tor et al. less committed to their organisation. and job related frustrations make employee to quit the organisations. in part. nevertheless. If the employees ar e not sure of their job role and responsibilities. These days there are few jobs which are very stressful such as customer service jobs or a sales job which involves the employees to work both physically and mentally and this will have an adverse impact on the employee which might lead to turnover. inadequate data on how to perform a specified job. One other reason for the labour turnover might be expectation of promotion or advancement of wages within the employee (Ongori. obscure anticipation of managers. job roles and are spread throughout the country. (1990). They further argued that economic model can be used to predict the labour turnover in the market. and if these roles and responsibilities are not clearly mentioned by the management of the organisation. all these factors have an impact on the employee and the organisation in which he is working. the strain associated with job. Sometimes there arise some factors which are. According to Feaster et al.another (Ongori. 2004). supervisors and peers. mas sive job related burdens.. Employees working within an organisation might expect a promotion and might be demoralized if he couldn't manage to get a promotion and might lead to turnover. outside the jurisdiction of the management. It is evident that huge organisations have many operations. to guarantee organisational commitment well built organisations can provide employees with enhanced option of progression and higher wages..
2004). Employees are normal human beings and they do grow. In companies where there exists a high level of inefficiency there was also high level of labour turnover (Alexander et al. These days many organisations in UK are providing return to work training for employees who went out for long leaves (for ex such as maternity leave or higher education). or to continue their current work through flexible working or work at home concept. It is obvious as a human being when an employee suspects that his organisation is not stable anymore or if he suspects that there is going to redundancy within the organisation he might leave the job due to the feeling of insecurity on the other hand when the employee feels like that the organisation is stable he would not bother about quitting his present job. So. There is a high amount of probability that employees stay within an organisation when there is a foreseeable work environment and vice versa. Sometimes due to some internal or external factors highly skilled employees do loose their ability and interest to work. and die. Many organisations these days do provide rehabilitation centers and counseling centers for their employees to take care of their employees. Employees do have family and children and often they tend to get deviated from work responsibilities because they are more concerned with their family and children. Therefore. These factors fall under Voluntar y turnover. these kind of factors are inevitable and out of control organisations. . The employees might even have elderly parent and relatives whom they want to take care of and this might lead to shift of concentration from work and might lead to turnover. mature. it is inevitable to control these natural factors. 1994).. (2007) argue that these days such factors should not be considered as involuntary turnover because both the regulations of the government and policies of the companies create the opportunities for such staff to return back to their work. This training does help the employee to cope up with the current changes in the organisation and make them ready for work. Zuber (2001) argues that the level of instability of the organisations has an impact on the degree of high turnover.(Ongori.. employees are more likely to leave the organisation and try to join the more stable organisation. Other factors have been classified as involuntary turnover factors by Ongori (2004) such as necessity to provide attention to offspring or elderly relatives. because people normally think that more stable organisations will provide them with more opportunity to advance in their ca reer. On the other hand Simon et al. in the cases of unstable organisations. These counseling centers are responsible for handling the psychological aspects of the employee and make sure that they are in good state to work.
if the employee is not handled properly or not . no grievance procedures in place and thus employees decides to quit. All these factors tend to heavy labour turnover in th e sense that there is no acceptable management practices and policies on personnel matters hence employees are not recruited scientifically. In the same way people always compare what they get with other people of the same position and if they sense that they are not being paid well or under paid they might leave their current job for a better paid job. or lack of motivation. They concluded that when high performers are not handled and rewarded properly. this is the result of lack o f competitive compensation system within the organisation. managerial style. fruitless grievance procedures. so when an employee is not sure about what's going on within his organisation he might be in a panic state and might lead to turnover. a person's performance and turnover. unfavorable supervisory practices. When there is no level of empowerment involved in the organisation for an employee. Griffeth et al. knowledge and skill it is more likely that this person would quit or would be sacked from his job because of the inability and inefficiency. If jobs provide sufficient financial incentives then employees are more likely to remain within the organisation and vice versa. organisations with a good communication system have lower or less labour turnover because employees have a strong need to be informed. When a person with less or no competencies is hired for a job which require a higher level of competency.According to Labov (1997). Costly et al. this is a result of poor recruitment strategy or poor hiring practices. promotions of employees are not based on spelled out policies. Their analysis also included studies that examined the relationship between pay. There are also other factors which make employees to quit fro m organisations and these are poor hiring practices. (1987) argues that a heavy labour turnover may mean down -and-out personnel policies. bad recruitment policies.. in positions where they are involved in some level of decision making process that is employees should fully understand about the issues that affect their working atmosphere. (1996) observed that employees feel at ease to stay longer. lack of competitive compensation system in the organisation and toxic workplace environment (Abassi et al. 2000). if the employee has always nee to follow the written rules and never has given an opportunity to think beyond his job he might be demoralized and might lead to turnover. The management style plays a crucial role in turnover. they quit. (2000) noted that pay and pay -related aspects have a decent effect on turnover. Magner et al. The employees are always eager to know what's going on within their organisation and a good communication system will keep them informed continuously so that they know what's going on in the organisation. lack of recognition.
some people prefer to stick to one job and one company many people try to move from one company to other in search of better jobs and opportunities. According to CIPD (2007) the main reason why people leave their present job is that they look for high paying job or for a chance of promotion. so if an organisation fails to provide them then they might be attracted to the competition and lead to turnover.e.1% which is almost the same. i. Taylor (2000) tried to explore whether there is a relationship between pension scheme and turnover.3% and in 2007 was 18. He states that the relationship between turnover and pension scheme is not high. The survey also stated that 38% of employees quit their job for a change of career and other reasons included family commitments. it is interesting to compare the findings of 2005 and 2007. however. turnover is not under control and is affecting the organisations at the same pace. The survey conducted by CIPD states that this was the reason for 68% of the employees leaving organisations. and difficulties with their colleagues at work place. better pay and better position. even though with the introduction of the minimum wage rule employees are still not satisfied with their wages because this minimum wage rule is only applicable for those jobs which are to paid hourly and not for the jobs which are paid annually.7 and in 2007 it was 18. it is on the later that most attention has been focused in public research'. According to CIPD (2007) survey labour turnover rates and the cost of labour turnover are at an all time high. These days it is evident that people are mostly looking for transferable skills that they can apply in other jobs.managed properly the employee may not give his best and in turn will be demoralized and might quit his job. The surveys states that the labour turnover rate in 2006 was 18. so we can observe that there is a rapid growth in the labour turnover rates which is alarming to the UK . health problems. However. It is evident f rom the survey findings that people continuously look for better opportunities. amount of work load. Now-a-days people are not expecting a job for life unlike olden days.1%. timings. Labour turnover in UK The big issue the organisations within UK are facing these days is labour turnover. It is evident that a lot of people leave because of unsatisfactory pay levels. he also stated that 'While pension schemes are frequently perceived to play a role both in the attraction of staff to an organisation and in reducing employee turnover.. where in 2005 the labour turnover rate was 15.
The figure is almost doubled and it is alarming to the organisations. Looking at the graph clearly states that there has been an increase in labour turnover of the administrative jobs during the year 2000. So it is evident that the empirical studies and the views of academics do match when it comes to the reasons for why employees leave organisations. operative and sales jobs are very encouraging as it shows that the turnover rates are gradually decreasing year by year from 1998 to 2000. because these kinds of job roles have less or few opportunities to change careers and get promoted outside the organisation. Alexander et al (2004). but it would cause some sort of disruptions and would also cost for the organisations to replace them. However it is noticeable that replacing these types of jobs would be easy when compared to that of managerial position and administrative jobs. This is may be due to the reason that employees working in these positions are getting used to their work environment and are less likely to leave their present job. level of pay (39%) and lack of career development opportunities (39%). and Labov (1 997) who continuously argued these reasons for the turnover of employees. this was in the year 2004. This is alarming because it is hard and costly to find and replace a managerial position (IPD. The survey conducted by CIPD in 2000 stated that 'the wholesale and retail trade has the highest turnover in the UK ± at 56% the wholesale and retail trade lead the turnover table'. The survey also reported that the private se ctor had a highest rate of labour turnover which was around 22. Other reasons included promotion outside the organisations (47%).6%.750 pounds per job leaver. Costs for organisations The Charted institute of personnel management (CIPD) stated that it would cost around 3500 pounds per employee every time someone leaves the organisation.organisations. Simon et al (2007). which is broken down by the occupational class. . The findings of routine. 1997). Around 52% of turnover was due to change of career. The following is a graph which shows the turnover figures in the retail industry in UK during the year 1998-2000. In 2006 the costs of labour turnover was around 7. These survey findings strongly support the views of the academics like Zuber (2001). The CIPD (2007) survey shows that change of career was deemed to be the most common reason for voluntary turnover. Even though the findings of sales jobs are encouraging it is observed that turnover rate of managers is the same during the year 1998 and 2000.
and it costs around 3. together with the cost of associated management and supervisory time. These management problems have actually been identified as one of the reasons why employees were leaving the company X. because of the staff leaving the organisation there will a loss of customer service and this results in hiring new employees and training them who are having less experience. The survey states that it would take around 13 weeks for an organisation to find and replace a managerial position and would cost around 5. The survey done by IPD (Institute of Personnel Development) in 1997 estimated that it takes an average of 10 weeks for an organisation to fill up a sales vacancy.640 pounds for the organisation to find and replace each sales person who left the organisation. they cost much more to replace.008 pounds per person. 1979) states that employees who are less suitable for a particular job quit the job earlier and hence there is a notion that labour turnover does improve organisation performance as employees of poor worker job matches l eaves and that vacancy can be filled by a employee with good worker job matches and this will in turn increase the organisations performance.5% of organisations experienced minor negative effects of labour turnover. long-term worker becoming unsettled and leaving. recruiting and training. damage to the organisations local reputation'. It also states that higher costs can be incurred through 'unnecessarily high staffing level and overtime payment. scrap levels and risk of accidents to inexperienced workers.8% of organisations have experienced a positive effect due to the labour turnover. around 26. low morale resulting low productivity. However. and the actual costs are very difficult to estimate. increased production costs. The survey also mentioned that though people at managerial positions are less likely to quit an organisation. However. And during this period t he organisation has to compromise on a lot of aspects of it functions.Organisations with high labour turnover rat es not only suffer financially but also psychologically. There might be also an increase in the level of risk of accidents in organisations where work is involved in risky areas. They further stated that the costs also add up the expenses of advertising. ACAS states that 'if labour turnover is excessive it can indicate management problems'. some research findings oppose the statement that labour turnover has a negative impact for organisations.9% of organisations experienced no effect at all and around 4. . Some academics (for ex Jovanovic. interruptions to flow of work. lost or delayed production. This statement can further be supported by the survey which is done by CIPD in 2000 which states that around 55. ACAS does agree that high labour turnover can be expensive.
but it is questionable whether these data collected is used to their full potential. 2004). Ongori (2004) suggest that in order to reduce turnover organisations need to provide empowerment to employees. So it is evident that organisations need to identify voluntary turnover within their organisations and take necessary actions to manage turnov er. Research does suggest that it is crucial for an organisation to look and analyze both the quantitative and qualitative information relating to turnover within their organisation (IDS. 1987) stated that for an organisation to completely understand the reasons for turnover it needs to differ entiate avoidable and unavoidable turnover. Quantitative information is required because it will help the organisation to record. Accordin g to CIPD (2004). These might include an employee moving from current location to another location. But on the other hand this approach is not applicable to all . So it is crucial for an organisation to have established methods to investigate why people are leaving. it crucial that organisations have an understanding of their turnover rates and how it would affect its performance and effectiveness. or leaving to fulfill family responsibilities. Avoidable reasons might include employees leaving their current job to find a better job with better pay and working conditions else where. (1987) (Cited in Abelson. This approach would motivate employee and the employee feels as a part of the organisation and would not quit his job because of the responsibilities. Dalton et al. 2004). This is because the reasons vary from person to person and organisation to organisation (Ongori. So it is evident that in order to reduce the turnover the organisations first need to understand turnover..Different strategies and approaches to control and minimize turnover There is no one strategy or approach which when used by an organisation can reduce or control the turnover rate. Qualitative information is also important because with this the organisations can understand the reasons why the employees left the organisations and take measures to overcome them. It is evident from the graph that most of the organisations (90%) use exit interviews to investigate why people are leaving. Unavoidable reasons are not under organisations control. The following is a graph which shows the various methods used by the organisations to investigate why people are leaving. Armstrong (2001) states that in order for organisations to improve their retention rates they need to analyze the number of employees who are leaving and the reasons why they leave. measure and compare its turnover levels.
types of jobs. This approach might work in managerial and administrative jobs but may not hold good for routine and sales jobs. .
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