Impact Of Employee Turnover On Organizational Performance

Causes and Consequences of Employee Turnover

Purpose of Study

The object of the study is to distinctively outline the impact of employee turnover on the performance of an organization and how the effects of the impact can be managed.

Background and significance.

Employee turnover refers to the rate at which an organization losses employees or gains employees, and how long employees tend to join or leave the organization (Holtom, 2016). Employee turnover can be caused by factors that can stem from both the organization as well as from the employees. (Call, 2015) When employees leave an organization, the employer must of a necessity incur a certain amount of indirect or direct expenses.

According to (Dane, 2014) the most prevalence cause of high employee turnover rate in organization includes, reduced employee morale at the work place, employees not being flexible with work and family balance. Also, according to (Jopppe, n.d.), high employee turnover in organization is caused by poor leadership in the organization as well as poor pay by the organization to the employees. Another thought eloquently put forth by (Armstrong, 2012) states that high employee turnover rate in organization is caused by employees seeking to find much better working environments so as to further their professionalism.

Properly weighing all the evidences put forth by scholars and from real experiences for the organizations, it is substantial that high employee turnover in an organization has a negative (Call, 2015) impact to the overall performance of the organization. According to (Dane, 2014), a higher percentage of the organization prefer retaining they key employees to effect productivity within the organization while the organization the hire new employees tend to recruit employees which higher work experience to boost the productivity of the organization.

According to (Saridakis, 2016) the cost of employee turnover can be overwhelming as collectively the staggering amount of the expense organization would otherwise use pay its work force. Also (Holtom, 2016) clearly points out most of the companies find out that employee turnover rate can be limited when employee morale is boosted while the impact on low paying jobs cost employers less replacement of employees than the high paying jobs. This makes it worth of investigation as it will give a clear and decisive decision on how to deal with actual impact of employee turnover in the organization.

According to (Gray,2009) low employee turnover in organization leads to high productivity of the employees as the key employees will be retained in the organization and by doing the same thing over and over again the employees are more likely to get used to the daily routine of the organization, this will in effect enhance faster implementation of the organizations’ set objectives. (Call, 2015), clearly points out that reducing high employee turnover by the employer will result to tremendous success of the organization financially, productive wise and it will be more competitive in its respective area.

Benefits of Addressing Employee Turnover

One of the most un-admirable consequence of high employee turnover clearly shows that many organization has cease form operation, this was due to delay or totally ignoring the problem. According to (Jopppe, n.d.), staff turnover is costing Australia millions of Australian dollars in reduced efficiency.

The research study is supposed to distinctively outline the impact of employee turnover on the performance of an organization and how the effects of the impact can be solved.  Researchers have shown that low employee turnover to a great degree have led to improvement of organizational performance (Strain,2016), other research have concurred with them while putting forth statements, showing that by reducing high employee turnover in an organization, the productivity have shot up in a proportional manner. According to (Borysenko,2015) the efficiency of any organization has been to a larger degree threatened by huge expenditure incurred on selection and recruitment of new employees in order to replace the work force gap.

The main objectives of the study is to answer the following research questions.

To evaluate the causes of high employee turnover.

1.    To evaluate how employee turnover affects the performance of an organization.
2.     To evaluate how high employee turnover can be reduced in an organization.

What are the cause of high employee turnover in an organization?

How can high employee turnover be reduced in an organization?

How does the rate of employee turnover rate affect performance of an organization?

The research will be most prevalently applicable within Australia, it will span both small and big organizations. The key organizations being, government institutions, established private institutions, government parastatals, both private and public academic institutions, and establishing institution both in the public and private sectors.

Employees contribute to the part of valuable resources that notify, shape and provide effect to policy. Consequently, any variation in human resources takes a role on the organizational performance. As a result, the idea that the workers turnover affects the performance of an organization is widely rooted amongst managers (Armstrong, 2012) its management continues to remain a challenging issue in

Organizations plan (Call, 2015). Several researchers, academics, psychologists and consultants have widely researched about employee turnover and its subsequent effect on the performance of an organization. (Armstrong, 2012). It is a dynamic omnipresent process in organizations (Phillip, 2009) and the backgrounds of worker’s turnover and the factors causing the status quo has been widely studied (Mathis, 2009)

Given the move toward a knowledge-based economy, the extent to which changes in organizational performance are attributed to employee turnover rate is the subject of increasing interest (Dane, 2014). Various studies present different results on the consensus of the subject (Armstrong, 2012). So as to add to this bulk of research, the main aim of this work is to distinctively outline the impact of employee turnover on the performance of an organization and how the effects of the impacts can be managed.

Solutions for Reducing Employee Turnover

Significance of the study. 

According to (Call, 2015) there is a necessity to examine the impact of worker’s turnover in an Organization. The aim of this work is to enlighten managers to distinguish between increased employee turnover that causes a problem and the level of employee turnover that is optimal in an organization. This work seeks to make employee turnover rate a self-determining variable rather than a determinant variable.

Voluntary employee 

This occurs when a member of an organization willingly abandons the organization. If the employer dismisses the employment contract, employees leave an organization involuntarily. (Armstrong, 2012) Emphasizes on the need to differentiate between voluntary and the involuntary turnover as the sources, consequences and regulators of decisions that affect turnover. Alternatively, reasons that the effects of lack of retention of employees in an organization is the same. Moreover, replaceable turnover that has functional employee originates from termination as a result of replaceable or substandard employee performance whereas dysfunctional turnover arises from disappearance of workers with unique skills (Gartenstein, 2018 ).

Turnover leads to dysfunctional organizations. (Saridakis, 2016) As a result of interfering with operational developments and giving unwarranted responsibilities on other remaining members. According to the research done on human resources point of view, aggregate workers turnover reduces organization-specific human resource, which then affects the production method. 

Micromanagement.

This is one of the main reason why worthy employees abandon their jobs. Large turnover rate is normally experienced when managers don’t permit employees to do their work.in this scenario, managers control almost everything that happens in their section because they don’t believe that employees can handle their responsibilities without supervision. Consequently, worthy employees quit their jobs after having a feeling that their careers are subdued by micromanagement

Communication

Employees need to be given periodic feedback from their managers after performance review. This enables them to improve over time. Lack of feedback causes workers to search elsewhere for occupational opportunity where they feel the chances of growth is greater (Hollingsworth, 2009).

Leadership.

Employees shift into administrative positions because they execute their work well. This does not mean that a promoted employee has the administrative skills to manage and motivate other employees (Ledlow, 2011). When employees abandon their jobs at the same time may be a sign that workers aren’t getting along with a new leader. Regular meetings between managers and employees to discuss duties and the work environment could ease conflicts and help companies retain employees

Factors Affecting Employee Turnover

Salaries

Workers usually anticipate to share in their organization’s successes, often when increased productivity upturns profits. Employees appreciate remuneration increases (Lal, 2009), but increases won’t accomplish greatly if significant supervision problems continue. For instance, managers who expect workers to work great extents of overtime might only chase away worthy workers who desire more subjective time.

Recognize employees who accomplish their work

Reward employees with the amount of remuneration that they deserve

Help employees to Learn and Develop as they work in the organization by providing helpful feedback after performance review.

Give employee more room and flexibility for them to finish their tasks. Instil confidence in them and build your (managerial) trust in their abilities

Effect of turnover on performance

Most researchers see turnover to be bad and hence treats it as a dependent variable and think it ought to be reduced (Robert, n.d.). However, Rajbhandari 2016 suggested looking Turnover as a self-determining variable and suggested a theoretical test to the idea that the entire organizational turnover is not functioning well. (Spell, 2014). The relationship between turnover and performance of an organization is a U-shaped inverted curve. Low -moderate levels of turnover overly increases the performance of an organization by introducing fresh blood and better trained workers. However, such advantages reduce as turnover grows. Any additional turnover beyond certain turnover limits increases the cost than the advantages hence negatively affecting the performance of an organization.

The tentative implication of the (Argote, 2013) argument is that the connection between turnover and organizational performance is that of a U–shaped inverted Curve. Low- moderate limits of turnover bring overall bene?ts to organizational more so in terms of performance by bringing in fresh blood and better-skilled employees. Above some level of turnover, any additional turnover imposes more costs than bene?ts and thus detrimentally affects performance (Kokemuller, 2017).

Introduction 

This section describes the research design adopted by this study during data collection, techniques and sample methods that were used.

Research approach and justification 

The research adopted the descriptive research design as the research intends to gather qualitative as well as quantitative data that will best outline in depth the factors that lead to management problem, the worth of conducting an investigation on management problem, the benefits expected when the management problem is ultimately solved and the consequence that the organization has to incur if the management problem is not properly addressed. Descriptive research according to (Holtom, 2016) includes fact finding enquires and also the surveys, the major objective of descriptive research is to obtain in details the state of affair as it really exists at the present time in a given organization. According to (Call, 2015), descriptive research design refers to design for obtaining data concerning the current states of affairs that best describe how things really are with respects to the condition and the respective variables.

Effects of Employee Turnover on Organizational Performance

Data collection methods.

The research will adopt questioning methods in data collection. Questioning method aid in collecting more reliable and more accurate data since the questions will be answered by the respondent freely without being influenced, according to (Mathis, 2009).

The researcher will collect secondary data as well as primary data. The primary data will be collected at the source while the secondary data will be obtained from references that have been published as journals and reports.

Research Objective	Data Collection Method/ Technique	Specific research questions or sources
RO1: To evaluate how employee turnover can be reduced effectively in an organization	The researcher will conduct a survey in two organizations where certain participants will be the employees of the two respective organizations will be selected at random, this will aid to establish the root cause of employees quitting the respective organizations.	RQ2:   How can high employee turnover be reduced in an organization?
RO2: To evaluate the causes of high employee turnover.	The researcher will conduct a primary research on the two organization, where the mangers of the respective organizations will be interviewed. The researcher will also select some more participants form the employees at random for short interview, this will enable the final findings to have both perspectives form the employees and the managers. Additional research material primarily published literatures such the journal and reports will be thoroughly review to get more credibility to the final findings.	RQ1:  What are the cause of high employee turnover in an organization?
RO3: To evaluate how employee turnover affects the performance of an organization.	The researcher will conduct a primary research on the two organizations so as to establish the correlation of the final data. The managers of the respective organizations will be interviewed to ascertain the actual effect findings. Additional secondary research will be done by reviewing different literatures to strongly establish the final findings.	RQ3:    How does the rate of employee turnover rate affect performance of an organization?

Table 1: Timeline for Data Collection

Task	Start Date	Complete Days	End Date
Collecting data from first organization	05/21/18	3	05/23/18
Collecting data from second organization	05/24/18	3	05/26/18

 

In this section both Qualitative data and quantitative data are generated. A descriptive statistic s data analysis method will be used to analyse the information collected using closed questions. A software called Statistical package for Social Sciences (SPSS) will be used to produce data that will be used for the next scrutiny of data.

 Version 17 of SPSS Version has descriptive features that help in variable reply comparison and produces a flawless indication of reply frequencies. The information will be prepared, coded, classified for all the variables of examination and then scrutinized by the use of descriptive method e.g. percentage mean and Standard deviation. The relationship between the research variables. Will be carried out using Pearson correlation method. Presentation of outcome will be done using tables due to their user friendliness, ability to show response frequencies and percentages of the replier’s’ views on the effects of employee turnover on an organizations’ efficiency. A case study of a company of choice will be done .A qualitative data scrutiny will be executed on the information gathered using open ended interrogation techniques where personal opinions on the impact of employee turnover on the organizations’ efficiency are given by the respondents.

Table 2: Age of respondents

Column1	Frequency	Percentage (%)
18-20 yrs.	5	8
31-40 yrs.	25	43
41-50 yrs.	16	32
51 yrs. and above	6	17
Total	52	100

 

The figure above confirms that majority (43%) were in the middle of 31-40 years, 32% ranged in ages 41-50 years, 8 % between 18-30 years & 17 % of the respondents were within the age bracket of 51 years and over. This demonstrated that many of the interviewee were old & had remained in the company for a greater time period hence they knew the problems that made majority of the workers to abandon the organization.

Table 3: Work Experience

	WORK EXPERIENCE	% frequency
	16 yrs. & above	21
	11-15 yrs.	24
	6-10yrs &	26
	less than 5 yrs.	29

       

The figure confirms that many employees (29%) had a working experience of less than 5 years, 26% had 6-10 years,24 % had 11-15 years, 21 % had 16 years & above . This proves that most of the interviewees had great work experience & indeed they had experienced the effects of workers turnover on the company’s performance.

Research Objectives

References

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