Impact Of Employee Attrition On Production Of Car Manufacturing Companies

Types of Employee Attrition

Question:

Discuss about the  Impact of Employee attrition on Production of Car Manufacturing Companies.

This is a study, which depicts the impact of employee attrition on car manufacturing companies. The organization chosen for the study is Holden which is automobile manufacturing company in Australia. The company has its head quarter in Port Melbourne and is one of the subsidiaries for the United States giants named General Motors. Employee attrition has a significant role to play in the performance of the organization. Employee attrition can have positive impact on the performance of the organization. However, this study deals with the positive and the negative impact of the attrition on an organization. Holden is one of the top manufacturing companies in Australia and the effect of attrition on the employees can be determined in this study.

There are various reasons which are attached to the attrition rate of the employees in an organization. The turnover classifications show the different types of classification schemes such as voluntary and involuntary. The voluntary attrition can be divided in to functional and dysfunctional attrition. The dysfunctional attrition can be divide in to avoidable and unavoidable attrition (Podsakoff et al., 2009). According to Ton &Huckman, (2008), attrition is act of leaving an organization by an employee on its own choice or forcibly is known as attrition. Voluntary turnover is the act where an employee leaves the company on its own accord whereas involuntary turnover is the attrition when company forces an employee to leave the organization (Shaw, Gupta & Delery, 2005). When high performers in an organization leave it is considered dysfunctional turnover whereas when low performers in an organization leaves it is known as functional turnover. When the organization can influence any environment related to work is known as avoidable attrition where as when the organization does not have any control over the environment of the organization it is known as unavoidable attrition (Ongori, 2007).

Voluntary turnover has been considered as the most critical component of the organization as it plays an important in bridging the gap between the micro behaviour and the macro strategies in an organization. Voluntary turnover can help in ensuring stability and at the same time connects the individual experiences on a regular basis to measure the factors of success in an organization. According to Meier & Hicklin, (2007), leaving an organization for an employee is one of the toughest decisions as the employees will have to invest significant amount of time and energy to find a new job. Moreover, it is quite stressful for employee to leave their interpersonal bonding and the daily routines. Thus, the time intervention from an organization can prevent the voluntary attrition. There are various factors, which are attached to the attrition of the employees that can be external and internal. Organizational size, location, payment, industry, supervisory level, promotion and benefits (Zimmerman & Darnold, 2009). The other factors that are related to the employee attrition are the integrative variables like job satisfaction, demographic variables and working conditions. The family related variables are the non-work related with the attrition of an employee.

Voluntary Turnover and Its Importance

According to Park & Shaw, (2013), organization should only focus on the voluntary turnover as it is in control of the organization. The employees who have high level of performance are the ones with lots of opportunities and can easily change jobs which is harmful for an organization as it disrupts the performance level. When an employee leaves a job then the company faces loss, the amount is twice the salary of any individual, and it may be even more depending on the industry of the organization. Whenever an employee leaves a job it disrupts the level of production in the manufacturing industry. The dynamics, operations and the overall performance of the employees cause a disruption and this increases the overall cost of production (O’Connell & Kung, 2007). Thus, it can be seen that effect of attrition on the manufacturing industry is quite high as workforce is required for maintaining the continuous level of production.

There have been lots of companies who have lost billions for high attrition rate. The amount of money they spent on the growth the employees have to gone to a waste. Moreover, they have to spent more amount of money for replacing the employees so this can be considered as wastage of resources (Heavey, Holwerda&Hausknecht, 2013). Holden is facing similar problems with the high attrition rate in the company and their production rate is getting hampered due to the increase in the turnover of the employees. This study will make sure that the existing theories that have been established will be confirmed and some hidden facts which is specific to the organization will be released

Main activities/ stages	Week1	Week2	Week3	Week4	Week 5	Week 6
Topic Selection	ü
Data collection from secondary sources	ü	ü
Framing layout of the research		ü
Literature review		ü	ü	ü
Formation of the research Plan			ü	ü
Selection of the Appropriate Research Techniques				ü	ü
Primary data collection					ü	ü
Analysis & Interpretation of Data Collection					ü	ü
Conclusion of the Study						ü
Formation of Rough Draft						ü
Submission of Final Work						ü

The study is demarcated with the assistance of the research methodology and lot of complications are tangled in the validation process. Research methodology deliverspath to the research paper and Positivism is castoff as the viewpoint of the research. The prevailing marketing concepts will be authenticated with the aid of Positivism and so this is the precise method for the research paper. There are evidences that are concealed and cannot be acknowledged easily, the exploration will help to recognise these veiled facts and formulate the possibility for applying descriptive study (Flick, 2015). The construction of the hypothesis will be executed with the assistance of the Positivism method.

The hypothesis shall authenticate the prevailing theories that are valid to this perception. The method of the study will be deductive, the prevailing concepts and hypothesis testing can be done with the assistance of the deductive method. The deductive method is the apt approach, as it will aid to proof the theories. The critical analysis of the information has to be done with the assistance of the secondary data. The secondary data will entail of both qualitative and the quantitative data (Panneerselvam, 2014). The secondary data will be collected from various journals and research papers including the annual report of Holden. The data will show the effect of employee attrition on employees and will consist of various charts, graphs and figures.

Factors Affecting Employee Attrition

Figure 1

(Source: O’Connell & Kung, 2007)

 

Figure 2

(Source: Heavey, Holwerda & Hausknecht, 2013)

 

Figure 3

(Source: Ongori, 2007)

Figure 4

(Source: Podsakoff et al., 2009)

The recommendation that can be drawn from this critical analysis is that the organization sin the manufacturing industry should focus on retention of employees. The workforce required for the manufacturing industry is huge and continuous attrition of employees hampers then production rate of the companies. The overall cost of production for any company increases with the increase in the attrition rate of the employees so the companies will have control the voluntary turnover and especially for those employees who have high level of performance. It is tough to find good employees in this industry and moreover, there are large number of employees who does not prefer working in the manufacturing sector. The human resource team will have to efficient so that they bring about changes in the workforce of the organization, the organization culture plays an important role in the motivation of the employees. The employees should be kept motivated so that they are happy and loyal to the organization.

Thus, it can be concluded form the critical analysis of the topic that the existing theories suggest that employee attrition has a negative impact on the performance of an organization and especially for the manufacturing industry where the overall work is related to the workforce of the organization. Holden is very much effected due to the high level of attrition in the company and they need to identify the hidden causes which is causing the increase the attrition rate of the organization. Thus, the final conclusion that can be drawn from the study is that the employee has a negative impact on the performance of any organization and it is essential for organization to improve the work quality in an organization to improve the retention rate.

References

Flick, U. (2015). Introducing research methodology: A beginner’s guide to doing a research project. Sage.

Heavey, A. L., Holwerda, J. A., &Hausknecht, J. P. (2013). Causes and consequences of collective turnover: a meta-analytic review.

Marais, H. C., & Pienaar-Marais, M. (2016, June). Analysis of Research Methodology in Business and Management Studies as Reflected in the ECRM 2015 Proceedings. In European Conference on Research Methodology for Business and Management Studies (p. 167). Academic Conferences International Limited.

Meier, K. J., & Hicklin, A. (2007). Employee turnover and organizational performance: Testing a hypothesis from classical public administration. Journal of Public Administration Research and Theory, 18(4), 573-590.

O’Connell, M., & Kung, M. C. (2007). The Cost of Employee Turnover. Industrial Management, 49(1).

Ongori, H. (2007). A review of the literature on employee turnover.

Panneerselvam, R. (2014). Research methodology. PHI Learning Pvt.Ltd..

Park, T. Y., & Shaw, J. D. (2013). Turnover rates and organizational performance: a meta-analysis.

Podsakoff, N. P., Whiting, S. W., Podsakoff, P. M., & Blume, B. D. (2009). Individual-and organizational-level consequences of organizational citizenship behaviors: A meta-analysis.

Shaw, J. D., Gupta, N., & Delery, J. E. (2005). Alternative conceptualizations of the relationship between voluntary turnover and organizational performance. Academy of management journal, 48(1), 50-68.

Ton, Z., &Huckman, R. S. (2008). Managing the impact of employee turnover on performance: The role of process conformance. Organization Science, 19(1), 56-68.

Zimmerman, R. D., &Darnold, T. C. (2009). The impact of job performance on employee turnover intentions and the voluntary turnover process: A meta-analysis and path model. Personnel Review, 38(2), 142-158.