Employee Turnover And Its Effects On Production

Management by Objectives

Discuss about the Employee Turnover and its Effects On Production.

For an in-depth understanding of the whole research study, it is prudent that the study defines the term “employee turnover”. According to this study, it can be defined as the rate at which employees are joining and leaving organizations. According to other researchers such as (Loquercio, 2006)it is the fraction of employees leaving a given organization they used to work for prior to the maturation of the contract period. On the other hand, (Hana & Lucie , 2011) and (Harris, 2000) opine that this is the overall effect of the exit of employees and coming in of others into an organization. On another definition yet, it is the rotation of employees within the labour world, between organizations and occupations (Dess & Shaw, 2001).

Having had a clear understanding of the meaning of the term employee turnover from different perspectives, it is hoped that the rest of the literature concerning the topic will be easily comprehended. In the current business world full of competition and opportunities, employee turnover is a very common phenomenon. Employees normally leave organizations voluntarily or involuntarily but whichever the case, to a greater extent it is usually an indication of so many negative things that are happening in a particular organization which if not addressed timely can impact negatively on the affected organization ( Hom, 2001). The organization may be affected adversely since employees are one of the major factors of production in any business organization. In fact in production, it is rated one of the major challenging issues in businesses. Due to this, it has received special attention from organizations’ top stewards and human capital professionals such as human resources managers. Despite concerted efforts through research by various stakeholders, this has remained a hard nut to crack for the human resources professionals in that they have no control over this turnover yet its effects are significant. Organizations in most cases are left with the option of hiring new employees every time (Schultz, 2006). This poses financial constraints since the new employees must be trained first. It also takes time for the new employees to be productive as required.

Most researches have overwhelmingly linked employee turnover to low morale among the employees at their places of work. The low morale is as a result of various reasons such as poor remuneration, poor working environment and even availability of better opportunities in other organizations (Stovel & Bontis, 2002). In this regard, when an employee joins a given organization, he or she has set expectation. In the event he or she feels that these expectations have not been met, he will be dissatisfied with the job and eventually quit. According to (Johnson, 2000), this leads to a great problem that will have a direct negative impact on quality of goods and services and also incur a huge replacement cost. To add on, it inhibits growth of any business organization since it destroys the quality of customer service which is usually a major pillar that provides competitive advantage for the organization.

Research Questions

On the other hand, research has shown that a low employee turnover could be beneficial to an organization. It eliminates potential under performers, eliminates stagnancy and brings in new strength which comes in with new innovations (Costen & Salazar, 2011).

Gencom being a business organization that deals in the manufacturing of steel and which is situated in an industrial area where many of such manufacturing industries are located has not been left out. The rate of employee turnover has reached epic proportion to the extent that it drew concern among the management. It is for this reason that a team was selected to come up with a research plan that would unravel the causes of employee turnover and its possible effects on production.

Despite a number of studies that have been done on employee turnover, we have discovered with a lot of interest that a good number of them pay more attention on the reasons for resignation but fail to address the source of it all or even recommending mitigation strategies to be used in future to curb the problem. In this research study, an in-depth review of already done work on this topic together with a few theories will help give a deeper insight as to the actual reasons that lead to employee turnover hence affecting business operations of various organizations.

Management by objectives was put forward by Peter Drucker in 1954 in his book management by practice. This theory (MBO) argues that employees will only and have always drawn motivation from the goals together with the objectives they participated in setting. In short Peter encourages managers to minimize dictation tendencies and involve employees whenever possible in decision making especially when it comes to matters affecting them directly. He goes further to warn that failure to implement or adopt a MBO system can lead to an organization losing their most competent employees.

A study by (Catherine , 2002) who is a business consultant reveals that an employee’s feeling of satisfaction is created by the leaders. Employees will have sense of satisfaction if their supervisors extend a caring hand and respect to them. On the other hand the employees will feel less valued and ignored if they are dealing with a brusque and overly demanding manager. This will eventually kill their morale and encourage resignation leading to high employee turnover.

A retention and turnover report in 2009 (CIPD, 2010) conducted in UK, reveals that employee turnover is not the same and that it varies from one industry to the other. The survey found that the turnover level in the private sector is about 17%. Some of the businesses identified by the same survey within the private sector are hotels, call centers and leisure. In non-governmental organizations, the rate stands at 16.4% while the rate in the public sector stands at 12.6%. The main reason cited by this London survey to be the cause of employee turnover is less satisfaction.

Research Methodology

According to (Sutherland, 2002) turnover simply implies that a competitor organization has had the advantage of taking the best talent from your organization. He adds that this is catastrophic since it amounts to loss of knowledge. He explains that the factors that lead to turnover can be categorized as either internal or external. Internal factors include company’s infrastructure while external factors are salary and other fringe benefits such as promotions, salary increment and various paid leaves. He also cited that if there is no proper communication about work objectives, poor working conditions and under-utilization of skills then this can also lead to employees looking for other alternative organizations.

(Armstrong , 2010) and (Woods, 2006) come in to shed some light on two dimensions of turnover. This is very important for this study to understand. The two researchers categorize turnover into two that is; voluntary turnover and secondly involuntary turnover. These two divisions are based on whether the employee left the job on a personal decision or employer’s decision. They go on to explain the two. They further divide voluntary turnover into those who leave due to under performance and those who leave but are high performers. They also add another category subdivision of unavoidable resignation. This is where the resignation of the employee is beyond employer’s control. This happens for example when one resigns due to sickness or family relocation. All in all whichever the type of turnover, the affected company or organization usually suffers a lot.

The following are the main research questions for the research study.

• What are the key factors causing the employees of Gencom Company to resign?
• Does this resignation have effect on production in Gencom Company?
• Does this resignation influence the morale of the remaining employees?
• Are there mitigation strategies being developed by management of Gencom Company to contain the situation?

Research projects mostly employ both qualitative and quantitative research design. Quantitative research design deals with data which is countable while qualitative research design deal with data which is non- numerical. Qualitative data are mostly based on opinions, perceptions or judgments and so on. Due to the nature of this research study, qualitative research design would be appropriate. This because this study would dwell much on attributes and finding facts thus numerical values may not form a bigger part of the study.

Therefore it would mean that a qualitative design would be employed in order to complete this study. The interest of this study is to bring out the views of the employees as well as those of the management or employers of Gencom Company in a bid to unravel where the problem of employee turnover emanates and how it can be handled. The research study would also use a descriptive study design complemented with survey design. Since questionnaires are best suited to collect quantitative characteristics, this study would collect data through the use of direct interviews and focused group discussions (FGD) and less of questionnaires will be used.

Findings

Data would be collected from participants through primary methods of focused group discussions, face to face interviews and questionnaires. Top company management who are considered as key informants would be supplied with questionnaires to fill. This due to the fact that the management are perceived to be literate and therefore and read, understand and answer questions in the questionnaire appropriately. Some of the questions that would be contained in the questionnaire, “ what is your leadership style”, “ what do you think is the top most reason your employees are resigning” and “ have you implemented any strategy to handle the situation?” among others. With these kinds of questions, this study will be in a good position to hear management side of the story as far as employee turnover in this organization is concerned. The employees would be subjected to face to face interviews and focused group discussion. Focused group discussion will help the study get much information from employees as it creates a condusive environment that sets every employee free to share what he or she has in mind. In face to face interview, the employees would be asked questions pertaining job satisfaction and major reasons why people resign from the organization among others.

In order to collect full and elaborate information, this study would employ both probability and non-probability sampling. Probability sampling refers to where no trick is used to pick a participant. In other words everyone has a n equal chance of being selected. On the other hand, non-probability sampling is where a participant is picked because of a particular attribute that is important for the collection of data. In this case, the top managers would be selected through purposive sampling which is a non-probability sampling since they are of interest in this research; they have the right information that the study requires. The rest of the employees would be chosen through systematic sampling.

Since most of the data collected would be qualitative, coding will be done first before analyzing the data using Statistical Package for Social Sciences (SPSS). Demographic data will be analyzed through descriptive statistics. In this case measures of central tendencies would be used. Summary of the data will be done using tables and graphs. Inferential statistics such as t-test will be used to determine whether there is a significant difference between the opinion of management and those of employees concerning the reasons as to why there is a high employee turnover in the organization.

Before data collection, the participants would be briefed on the objective of the research study after which they will be given a consent form to read and sign at the end. Signing the consent form would mean that they accept all the terms and conditions of the survey. Information collected from each participant would be held in top secret and only released on authority of the information giver. Lastly, after the study, the information would be destroyed.

References

Hom, P. W. (2001). Retaining Valued Employees, . Sage, Thousand Oaks, CA.

Armstrong , M. (2010). A Hand Book to Human Resource Management Practice (10 ed.). London and Philadelphia.

Catherine , M. (2002). “Staff turnover: Retention”. International j. contemp. Hosp. manages., 106-110.

Costen, W., & Salazar, J. (2011). The impact of training and development on employee job satisfaction, loyalty, and intent to stay in the lodging industry. Journal of Human Resources in Hospitality & Tourism, 273-284.

Dess , G. D., & Shaw, J. D. (2001). “Voluntary turnover, social capital, and organizational performance”. Acad. Manage.

Hana , U., & Lucie , L. (2011). Journal of Competitiveness.

Harris, M. (2000). Human Resource Management : A Practical Approach. ((2nd edn.) ed.). Orlando: Harcourt College Publishers.

Johnson, J. (2000). “Factors discrimination functional and dysfunctional sales force turnover”,. 399-415.

Loquercio, D. (2006). Turnover and retention: General summary prepared; for People in Aid.

Schultz, S. E. (2006). An introduction to industrial and organizational psychology,. Psychology and work today.

Solomon, A. (2007). The Case of Ethiopian Roads Authority. Skilled Manpower Turnover and Its Management:.

Stovel , M., & Bontis, N. (2002). Knowledge management-friend or foe?. Voluntary turnover, 303-322.

Sutherland, J. (2002). “Job-to-job turnover and job to-non- employ- ment movement”.

Woods, R. (2006). Turnover, Discipline, and Exits. Managing Hospitality Human Resources, 431.