Quality and Productivity Issue - Term Paper Example

? The Importance of Employee Retention I.D. of the The Importance of Employee Retention Introduction Employee retention is a major human resource development and management topic that has primary importance in the realm of quality and productivity issues regarding business management and administration. Globalization, which began in the early 1990s, had a profound effect on employee retention. Sheridan (1992, p. 1036) had conducted an important study, which examined “the retention rates of 904 college graduates hired in six public accounting firms over a six-year period.” According to him, “Organizational culture values varied significantly among the firms. The variation in cultural values had a significant effect on the rates at which the newly hired employees voluntarily terminated employment. The relationship between the employees’ job performance and their retention also varied significantly with organizational culture values.” (Sheridan, 1992, p. 1036) Now when the subject of organizational, or more precisely, corporate culture is included in discussing the issue of employee retention, multidimensional analysis becomes imperative. This essay is a literature research based analysis of the issue of employee retention in the global work environment. Sources from scholarly publishers have been utilized and works of reputed experts in the field have been referenced. Quality and Productivity Issue: Employee Retention The term employee retention cannot be defined in a way that does not emphasize on its multidimensional aspects. Employee retention is primarily a human resources related issue, which is an integral part of the cultural analysis of the corporate world. Here, the word culture points to the work culture of the company, which further spans over the other important topics like business organization, strategic management, organizational behavior, etc. (Garavan, 2007) According to the experts of Management Study Guide (2012), “Employee Retention refers to the techniques employed by the management to help the employees stay with the organization for a longer period of time. Employee retention strategies go a long way in motivating the employees so that they stick to the organization for the maximum time and contribute effectively.” So, sincere hard work must be done to ensure learning and growth for the employee in his/her current job assignments and help him/her to enjoy them. Contextually, Linley and Harrington (2010, p. 145) have stated that “organizational theorists interested in the “Happy/Productive Worker Thesis” almost exclusively concentrated on the role of job satisfaction in the prediction of both employee job performance and retention decisions.” In the modern competitive age of stricter labor regulations and more complex corporate cultures, employee retention thus emerges as a complicated problem. Employee Retention: Extent and Importance Employee retention and organizational culture extensively affect each other. An organization has to invest funds and time to groom an individual, make him/her ready to understand its culture, and achieve his/her professional pursuits. A new employee is totally underdone and the management truly has to effort hard so that he/she can be trained. It is an absolute wastage of funds, time and energy when the individual leaves the company all of a sudden. Consequently, the human resource department has to initiate the whole recruitment process once more for the same post, which is a sheer duplication of the employment processes requiring money for the same task repeatedly. Finding the right member of staff for a company is a wearisome job and every effort merely goes waste at the instance the employee quits. (Slugoski, 2008; Garavan, 2007) Contextually, on the basis of the research results, Slugoski (2008, p. 6) writes, “Indirect costs of replacing an experienced employee with an inexperienced employee included decreased organizational performance, potentially leading to decreased customer satisfaction. Decreased customer satisfaction could lead to increased costs to appease the customer, replacement costs of lost customers, and increased costs to restore public confidence.” Moreover, potential best performers need some time for training. Therefore, management trainee level executives become most valuable since they are groomed by the company’s managers/trainers along with necessary amount of time spent in its own specific environment. Now if they quit, financial loss due to attrition and financial overhead due to repeated recruitment both become high. Moreover, corporate secrets may be leaked. (Reichheld and Teal, 2011) Hence, employee retention becomes important to avoid unnecessary financial investment in developing human capital, maintain competitive edge, and improve the work culture of the company as a whole. Effects of Employee Retention The renowned employee retention expert Taylor (2002) holds that retaining the productive employees can bring stability to the company’s internal work environment and culture. Its growth prospects are bettered and its reputation is improved if the attrition rates are maintained at low levels. The case example of Asda (3rd largest supermarket group of UK) puts emphasis on the importance of employee retention. In 2002, Asda could boast of its better record on staff retention relative to all the other major retailers in UK. “What is more, this reduction in staff turnover has been achieved at a time when job mobility in the economy as a whole has been increasing.” (Taylor, 2002, p. 3) In this way, Asda lowered its wastage rates without revising or increasing the pay rates. Therefore, it can be understood that the main effect of employee retention on a company is better financial performance, particularly with reference to personnel management and human resource development expenditure. Next, the company’s expertise is also bettered as the staffs retained in the organization contribute to the company’s performance proportionally to their experience. It is impossible for a company to survive when all its top performers leave. Hence, the company has to retain the top performers and also the potential ones. Moreover, the company can maintain its reputation as a just and equal opportunity employer and provide the customers with regular and consistent relationship managers. Potential Solution Employee retention has emerged as a foremost concern for the corporate bodies in the contemporary scenario of any modern industry ranging from service to manufacturing. According to Management Study Guide (2012), “Individuals once being trained have a tendency to move to other organizations for better prospects. Lucrative salary, comfortable timings, better ambience, growth prospects are some of the factors which prompt an employee to look for a change.” Thus, whenever a trained employee communicates his/her eagerness to move on, the duty of the management team and the human resource department is to intervene without delay and discover the precise reasons responsible for such decision. Therefore, in order to retain the most productive employees, the company has to diagnose and utilize the four most influential factors of employee retention, viz. job satisfaction, organizational commitment, job alternatives, and job embedded attitude (Slugoski, 2008) By placing the most appropriate employees in the most suitable positions specific to their individual skills and aspirations, the company can provide them with job satisfaction. Consequently, the employees will commit to the organization. Unlike the popular belief, only salary hike or higher pay rates are not sufficient to retain the employees. They have to be provided with job alternatives like flexible timing, recreation, respect, variable roles, etc. Finally, job embedded attitude on the part of the employee has to be fostered and appreciated by the employer. The strategists must design individual specific and targeted benefit programs on the part of the company so that the most skilled employees may not leave. Conclusion The management of any company must be able to understand the very difference among a performer and a non performer from the basic perspectives regarding quality and productivity. Consequently, the employment retention policy can be modeled and implemented in such a way that the most valued employees do not leave the company. The organizational culture of a company is key factor ensuring its functional and ethical policies. If experienced employees begin to leave the company, then this organizational culture erodes rapidly. Hence, the corporate decision makers should take a macro perspective in studying human resource retention and effectively implement its recruitment policy on the basis of strictly evenhanded corporate practices. References Garavan, T.N. (2007). A strategic perspective on human resource development. Advances in Developing Human Resources, 9 (1), 11-30. Linley, P.A. and Harrington, S. (2010). Oxford Handbook of Positive Psychology and Work. Oxford: Oxford University Press. Management Study Guide. (2012). Need and Importance of Employee Retention. Retrieved February 16, 2012, from http://www.managementstudyguide.com/importance-of-employee-retention.htm Reichheld, F.F. and Teal, T. (2011). The Loyalty Effect: The Hidden Force behind Growth, Profits, and Lasting Value. Boston: Harvard Business Press. Sheridan, J.E. (1992). Organizational culture and employee retention. The Academy of Management Journal, 35 (5), 1036-1056 Slugoski, E.V. (2008). Employee Retention: Demographic Comparisons of Job Embeddedness, Job Alternatives, Job Satisfaction, and Organizational Commitment. Ann Arbor: ProQuest. Taylor, S. (2002). The Employee Retention Handbook. London: Chartered Institute of Personnel and Development. Read More