Tuesday, May 21, 2019
Impact of Employee Retention Essay
Griffeth & Hom (2001) have argued that employee disturbance is assuming crisis proportions for many a(prenominal) employers who struggle to retain people in the tightest labour market. Griffeth & Hom (2001, Pg 1) 52% of companies report that their turnover is increasing and quit rates atomic number 18 running high of 1.1% a month. Turnover squirt be a real problem in many validations. Companies spend a great deal of time and money recruiting and training employees and the address of replacing staff members lost through turnover are great. The pecuniary cost of replacing one employee is generally estimated to range from 50 percent to 200 percent of the annual salary for the position, and may even be high in very specialized fields. Furthermore, poor employee retention can have a negative impact on workplace productivity, job satisfaction, and to a fault on the overall morale of the organisation.It is proven that a high turnover percentage can cost employers a great deal of fin ancial distress. Depending on the coat of the company, to many employers it can make the difference in staying or going out of business. Phillips (2003,Pg 4) noted that, of late employee retention has captured the attention of the business, financial, and executive community as a critically important strategic issue that can have a dramatic effect on productivity and profits. Cascio, 2000 and Johnson,1995 cited in Griffeth & Hom, Retaining Valued Employees (2001), are of the opinion that, human resources professionals and researchers project that the cost of one turnover incidence ranges from between 93% to 200% of a leavers salary, depending on his or her skill and take of job responsibility.Labour turnover has a negative impact on the organizations. Although every manager and team member is aware of problems associated with high turnover, a examine of its foremost consequences puts employee retention in the appropriate perspective. Patricia (2002, pg 4, 5) noted that employee t urnover has a serious impact on organisations. Firstly high financial cost, which is both in terms of direct and indirect costs and the performance of companies has been inhibited in many ways by high turnover rates. Sometimes the costs just causes turnover to become a critical strategic issue. Secondly, in terms of survival as an issue, where in a tight labour market in which the company depends on having employees with critical skills, recruiting and retaining the appropriate talent can determine the success or failure of the organisation.Thirdly in terms of productivity loses and work geological period interruptions , where an employee who quits abruptly not only leaves a productivity gap but also causes problems for others on the same team and within the same flow of work. Fourthly in terms of waiver of know-how especially with regards to knowledge industry, where a departing employee may have the critical knowledge and skills needed for working with specific software. This c an be a negative impact at least in the short run. Fifthly, turnover can have a serious impact on the image of the organisations. Patricia (2002) also noted that some of the other impacts of turnover on organisations may be with regards to loss of business opportunities, administrative problems, disruption of social and confabulation networks, and job satisfaction of remaining employees.Patricia (2002) noted that it is important to remember that turnover can have a negative impact on the individual, particularly if an employee is divergence because of problems that could have been prevented. Furthermore, Patricia (2002) noted that a voluntary turnover because of problems that could have been avoided creates a variety of consequences such as loss of employee benefits or job seniority, financial difficulties, loss of social network, relocation costs, wasted efforts and uncompleted projects, and even more in terms of career problems. Branham (2005) noted that employees quit because o f the disengagement process and deliberation process. Branham (2005) also noted that there are 7 reasons as to why employees leave organisations. They are as follows1. The job or the workplace was not expected.2. The mismatch between job and person.3. Very little coaching and feedback.4. Few growth and advancement opportunities.5. Feeling devalued and unrecognised.6. Stress from overwork and work-life imbalance.7. Loss of trust and confidence in senior leaders.There is no set level of employee turnover that determines at what point turnover starts to have a negative impact on an organisations performance. Everything depends on the type of labour markets in which you compete. Where it is comparatively easy to find and train new employees quickly and at relatively little cost (that is where the labour market is loose), it is possible to sustain high quality levels of service provision despite having a high turnover rate. By contrast, where skills are relatively scarce, where recruitme nt is costly or where it takes several weeks to fill a vacancy, turnover is likely to be problematic for the organisation. This is especially true of situations in which you are losing staff to direct competitors or where customers have developed relationships with individual employees. Some employee turnover positively benefits organisations.This happens when a poor performer is fill ind by a more fat employee, and can happen when a senior retirement allows the promotion or acquisition of welcome fresh blood. The more valuable the employees in psyche the more damaging the resignation, particularly when they move on to work for competitors. Moderate levels of staff turnover can also help to reduce staff costs in organisations where business levels are unpredictable month on month. When business is slack it is straightforward to hold off filling recently created vacancies for some weeks. Staw (1980 cited in Griffeth and Hom (2002), argues that turnover is not always bad. For insta nce, vacating employees or employees who quit can increase promotional opportunities for other employees or can infuse new ideas and technologies when new employees replace those who left. Dalton, Krackhardt and Porter (1981cited in Griffeth and Hom (2002), are of the opinion that received kinds of jobs effects or quits among marginal performers are even desirable.Abelson & Bay singer (1994, cited in Griffeth and Hom (2002) that a certain quit rate might be tolerated as a cost of doing business in a particular industry. Stephen Taylor (2002, Pg 15) noted that for many HR specialists, uprise staff turnover is seen as being an important organisational problem. It follows that improving retention rates should be high on the management agenda, and it is proper for resources to be addicted to achieving this aim. However a certain amount of turnover is actively welcomed by many managers. Nonetheless, Griffeth & Hom (2001) have noticed that organisational-level research and corporate s tudies report that high exit rates generally worsen organisational effectiveness.Though there are diverse opinions from various authors, and taking the above argument into consideration, it is clear that employees play a primordial role in the success of any organisation and therefore by retaining talented or rather key employees is a very important depute that the managers should undertake. Phillips & Connell (2002) noted that, some organisations do a superb job of managing retention, whereas others fail miserably. The issues are not always externally driven but often double-dealing within the organisation.