Abstract

In a highly competitive market today, the one factor which differentiates an organization from
others is the Human Resource Factor. Humans, which have been considered as only
mechanistic according to classical theories, are now, a knowledge and talent centre. An
organization spends a considerable amount in training such human resources, which is why
they ensure that such valuable employees stay in the organization for the longest period of
time. This calls for a high employee retention strategy, a topic which has been continuously
studied for long. But is such a strategy all roses and flowers? This study is done to critically
explore the Employee Retention and developed a more balanced view-point which is more
sustainable and feasible for an organization in the long run.

Introduction
This descriptive study of ‘Employee Retention’ is done to provide a broad perspective on this
topic in contrast to the narrow perspective of several authors who regard ‘Employee
Retention’ as beneficial only without shedding a light on its downsides. Going through
scholarly works, I found that most of the literature is focused towards advocating of
Employee Retention and developing of correlation between different organisational and
external factors.

Objectives
 To explore and understand the concept of Employee Retention
 To develop a broad perspective towards Employee Retention

Literature Review
Employee Retention is defined by Das, Bidisha. (2013). [1] as “encouraging employees to
remain in the organization for a long period of time.” Cutler (2001) [2] stated that keeping the
vital and dynamic human resources motivated and dedicated is one of the important demands
in management today. More attention should be paid to the one who is to be kept in the firm
rather than the ones who are hired.

There are a number of factors which affect Employee Retention. A lot of authors have studied
such factors individually with statistical results. Sheridan, J. E. (1992) stated that
organizational culture values influence the retention rates in one of his hypotheses. In another
hypothesis, he mentioned that the interaction of an employee’s job performance with the
organizational culture values influences the retention rates. A difference is observed of
retention rates of competent and non-competent employees depending on cultural values of
the organization. Spencer, D. G. (1986) did a study on 111 general care hospitals and
established that if there are greater number of voice mechanisms to voice dissatisfaction and
grievances, more is the retention rate of employees. Brown, W.A. and Yoshioka, C.F. (2003)
discussed the relevance of mission attachment as a factor influencing employee retention
through a study conducted on a non-profit organization. The findings suggested that mission
attachment, to some extent, influenced the employees to stay however it was superseded by
other factors like compensation and career prospects. Panoch, A. (2001) studied that there is a
potential negative relationship between diversity and employee retention, as diversity causes
differences between individuals, many individuals in the study felt left out and had no
incentives to stay. Tanwar, K., & Prasad, A. (2016) explored the relation of Employer
Branding with existing workforce, as opposed to the potential workforce which has already
been studied by numerous authors. A direct relationship between Employer Branding and
Existing Workforce was found.

Employee Retention is considered to be a cost-efficient strategy as the costs of replacing the

employees is saved by low turnover. However, this is not necessarily true. In the article
“What's Wrong With Amazon’s Low-Retention HR Strategy?” by James Heskett (2015), it is
discussed that low-retention strategy works just as well as high-retention strategy. It does not
create any major difference. Some companies like McDonalds, Amazon, Sam’s Club, as
mentioned in the article, are examples for this.

Moreover, the available literature has focused primarily on increasing employee retention and
developing relationships of employee retention with other factors. There is minimal number
of literatures which sheds a light on the downsides of Employee Retention. Some of the
downsides are that it can lead to stagnation, that is, a lack of new blood in the organization
potentially losing some fresh perspectives and techniques in the organization which could be
game changing. Moreover, even if such techniques are introduced, employees who have been
in the organization for a long time might resist such changes, further adding to the problem.
Another big issue with retaining employees is that they might become complacent and less
productive due to the feeling of job security.
Conclusion
A full-proof Employee Retention Strategy is impractical today, considering how technology
and AI are replacing jobs through automation. Downsizing is one of the common challenges
organizations faces today, as it is difficult to fire your existing employees but it is inevitable.
An organization today needs to be as dynamic as possible, even if it means laying off some of
your employees. Rather than simply focusing on retention, an organization should focus on a
replacement strategy of employees in case of critical situation. An organization should not
pull all their eggs in one basket. Also, an organization can make the process of laying off
employees more reasonable by giving them referrals or recommending them to other
employers.

Limitations
A very crucial limitation in this study was the lack of statistical evidence. Most of the studies
have not focused on the possible limitations of Employee Retention, although they are
frequently experienced by organizations. Therefore, it is difficult to make any such claims
without proper study. This also leaves a huge scope of exploring this dimension of Employee
Retention and form a more balanced view. Studies can be conducted on how employee
retention isn’t always beneficial and the employees could in turn, becomes less productive
due to reverse psychology.

Another limitation in this study is that it is largely biased towards US organizations as most
of these studies are geared towards US only. Regional variances might produce different
results as employee behaviour is largely dependent on how they are brought up and their
cultural values. So reverse psychology effects of Employee Retention might even vary from
place to place.