High Staff Turnover in Jeledan Company - Assignment Example

Names : xxxxxxxxxxx Institution : xxxxxxxxxxx Course : xxxxxxxxxxx Title : High Staff Turnover in Jeledan Company Tutor : xxxxxxxxxxx @2010 Abstract The paper involves the analysis of the strategic issue of high staff turnover in Jeledan Company. It involves the use of questionnaires to find what causes staff turnover. It also shows the effects of high staff turnover. It further uses the Strategic Issues Analysis (SIA) approach by King (1982: 145) to come up with motivation as a strategic approach to curb the high staff turnover problem. The method involves the application of judgment, the use of models and data collection. High Staff Turnover in Jeledan Company Introduction According to the United States of America Act; a small business is one that is independently owned and operated and one that is not dominated in its field of operation. However, the Small business Administration is authorized by the aforementioned act to develop a more detailed definition according to sales volume and the number of employees. For a business to be classified as Small Business; the following features should be met: the management is sovereign since it owns the business, capital is applied and it is thus owned by an individual or a group of individuals, the operational area is local but the market is not (Hodgetts & Kuratto 1998). Table 1.1that shows the quantitative classification of small businesses: TYPE OF BUSINESS NUMBER OF EMPLOYEES TURNOVER Manufacturing 250-1500 Wholesaling - $7.5m-$22m Retailing 100 $2m-$7.5m Service - $1.5m-$10m (Hodgetts & Kuratko 1998:6) In the United Kingdom small businesses are defined as businesses with a small share of the market, they are managed in a personalized manner by their owners or part-owners, they operate independently (Deakins & Freel, 2003:37). Table 1.2 the European Union Definition Number of Employees Size of Enterprise 0-9 Micro 12-49 Small 50-249 Medium (Deakins & Freel 2003:38) Bigolow, Fahey & Mahon (1993) define issues as developments that would affect business performance and its capacity to meet its objectives. Also, Dutton & Ottensmeyer (1987: 356) pointed out that issues are classified as strategic because they can alter the business’s feat if left unchecked. Due to the impact posed by strategic issues; their control is therefore imperative. This therefore has led to the formulation of management strategies. According to Wartick and Mahon (1994: 293) issues management is an elaborate meticulous process by which an institution is able to identify, evaluate and respond to social and political issues which may impact notably upon it. However, the working definition made use of by King (1982: 45) is that a strategic issue is a circumstance or pressure in the business that involves: possible outcomes that is vital to, or of probable high impact on the business’s general performance, controversy, in that rational people may take dissimilar positions with regard to the impact of the issue and strategic costs in that various possible outcomes implied by the issue would prescribe that different strategy should be implemented. The two types of strategic issues brought to light by Dutton & Ottensmeyer (1987:356) are: internal and external issues. Internal include issues such as employee dissatisfaction and the development of new technology. External issues include competition, political unrest and changes in regulatory regulations. Since the aforementioned issues could cripple the normal functioning of a small business, researchers have come up with ways to curb the issues. King (1982: 145) came up with the following methods of the control of strategic issues: resolution may be spearheaded by an individual or group in authority or recognized to be expert in the area, in the event the issue is formally modeled; a predictive model may be generated to predict the likelihood of major change. This mode of is only conducive for recurrent issues since models are expensive and time consuming to build. The third method involves the “issue staff study” in which an issue is posed and planning staff sets out to collect data and conduct analyses to resolve the issues. The fourth method is the Strategic Issues Analysis (SIA) approach. This method involves the application of judgment, the use of models and data collection (Dutton & Ottensmeyer 1987). Case Study of Jeledan Company Jeledan Company is a small business as it fits the aforementioned description of a small business. It has been experiencing a problem with employee turnover. It has lately experienced a high employee turnover. In light of this a small research by the use of questionnaires was used to determine the cause of the strategic issue on employee turnover and thus lead to development and choice of the ideal management strategy. Staff turnover is the rate which workers are replaced with new staff members in an organization. Turnover rate is calculated by dividing the number of resignations by number of staff in a given period of time usually a calendar year. There are two types of turnover namely voluntary and involuntary. Involuntary is when the staff are forced to leave the organization by factors beyond their control such as transfer of a husband from one region might force the wife who was a nurse to leave her job. Voluntary turnover is when an individual staff decides independently to leave the job, this is mostly due to influence of intrinsic and extrinsic factors (Luthans, 2000). Extrinsic factors are conditions surrounding the job and intrinsic are conditions directly relating to the job. Employees’ induction process reduces the likelihood. Staff turnover can lead to an organization gaining new ideas and skills but too high a level turnover can damage the infrastructure of the organization. This can either be voluntary or involuntary. Every staff that leaves a job creates an opening that must be filled which brings the organization face to face with the other fact of the same problem, staff shortage. The actual cost of staff turnover is difficult to estimate. However, given the numerous expenses incurred in hiring a new staff (e.g. recruiting, selection, orientation on the job training and temporary replacement) the costs are certainly sizeable (Armstrong 2001, pp.23). The keeping of employees entails the use of numerous various methods. Most managers who have ever suggested increasing employee training, developing formal job descriptions, establishing comprehensive performance reviews, implementing exit interviews for departing employees, or establishing more vigorous search and screen procedures which all cost money. Staff turnover is costly. This advocates for training and the use of better systems. The dilemma knows how much to spend to ensure one getting an adequate return on investment in people (Paul 2000, pp. 128). According to Garcia (2005), the cost of an employee turnover is equal to the employee's annual compensation. However, these calculations can easily reach 150% of the employee's annual compensation figure. Managerial and sales positions could cost around 200% to 250% of yearly compensation. For example if the annual salary of employees in a company is around $50,000. Taking the average individual cost of staff turnover at 100% of salary, the cost of turnover is then $50,000.per employee who leaves the organization. For small and middle sized companies with about 500 employees with a 10% yearly turnover, the turnover cost could be as much as $2.5 million, this figure is considered conservative and could easily go up to 150% of salary, or $75,000 per employee that leaves (Nzuve 1999). The high cost and impact that unnecessary turnovers have on running of the organization, is clearly defined and designed to keep good employees. To determine the costs it is necessary to have the hourly and weekly cost of fully loaded payroll costs (i.e. salary plus benefits) of the vacant position, the management staff, the recruitment staff and others as outlined. The loss in productivity and time are just as important as the cost of advertising, recruiting or temporary staff services. These hidden costs are all very real to the employer and hit where it hurts most, the bottom line of profitability (Deakins & Freel 2003). Motivation as a Strategic Management of staff turnover One of the solution strategies in place is the motivation of employees. Motivation is an important factor on which organizational efficiency depends. It is the channeling of behavior in a given direction. It involves developing the behavior and nurturing it as required. It therefore determines the different levels of work done by different employees. In turnover Management, staffs require to be motivated so as to; generate quality work, be efficient and kick absenteeism and turnover (Bigelow, Fahey, & Mahon, J1993). Motivation is determined by; individual needs, need for affiliation and the job design. Individual needs are vital since they determine a person’s level of interest in the job. The significant individual needs are: power and achievement. The want for power leads to the desire to make staff work and therefore enable them get leadership positions The drive for achievement leads to the zest to do something better or thoroughly than others. It therefore follows that people who derive pleasure in achievement have a strong zest for success and fear of failure. Training and orientation refresher course increase this need. It is prudent to allow staff working in a given niche a chance to attend new courses related to their respective niche (Marx & Rooyen 2001). The intense desire for affiliation: a number of people get joy from being loved by others. These type of people are inclined to avoid the pain experienced by the rejection of a certain social group. They enjoy social relationships, intimacy, empathize and help others in trouble. In order to satisfy the employees, a manger can also use Maslow's Motivation Theory in these ways: Improving physical working conditions to satisfy needs e.g. grilled door and escorts to secure the staff at night, providing rest rooms for lunch and dinner. The use of more training to meet the self-esteem needs e.g. uniform, leave facilities, vacation to staff. Self-esteem is instilled if training facilities are available. It is also noted that the presence of congenial social group fulfills affiliation needs. Placing the person in position, which match their self-concept to fulfill the self-actualization need. Job design is also a motivator to be fulfilled as it signifies the value accorded to employees and encourages their good performance. A study of 126 employees was conducted by Koul & Jyoti. The study was geared to find the level of employee job satisfaction. It discovered that around eight percent of the employees were satisfied. High satisfaction rates were reported for the work itself and proficiency of supervision. It was also noted that staff were more satisfied when they were highly rewarded and when they felt the need to produce better. It was also reported that the more experienced, older people were gratified with their jobs. There are many conditions in the environment, which could possibly effect the motivation of staff. It is seen by Behavior Modification Theorist that employees perform positively if environment is favorable which is made by pay/ reward policies, democratic leadership style, peer group interaction etc. To effect the performance of employees, their input e.g. efforts, training, experience, skill, education, seniority) should be equitable to their output e.g. pay, rights, benefits, job-status, status symbol's (vacation, clothing, satisfactory superior. The following motivational techniques can be used to generate motivation. Herzerberg two-factor theory of motivation Herzerberg two-factor theory of motivation follows Maslow Hierarchy of needs theorist major concepts. The two theorists attempted to identify factors motivating individuals to satisfy their needs. Herzerberg theory of motivation postulates that the phenomenon of job satisfaction or dissatisfaction is the function of two need systems. Hygiene factors known as satisfiers and motivation factors known as motivators. These two factors imply needs to avoid unpleasant situation, discomfort and the need for personal development (King 1982). According to Robins (1996), herzerbergs maintained that individual attitudes towards work can determine his or her success or failures in fulfilling specific roles. He studied what people want from their jobs. The following figure depicts the major concepts comprising Herzerbergs two factor theory, motivators and hygiene factors that influence people level of job satisfaction. Figure 2.1: Motivational Influence on Job Satisfaction (Marinner 1996) Conclusion The result of the study is that the problem of high staff turnover has dire consequences and therefore strategic measures need to be undertaken to ensure that it is put in check. This is in line with the findings of Pearce & Robinson (1997: 128) who noted that small businesses face issues of strategic importance to their future survival and growth. Therefore, the motivation strategy is vital for any company to stay afloat. Bibliography Armstrong, M., 2001, A Handbook of Human Resources Management Practice. 10th ed. U.S A: Kogan Ltd. Bigelow, B., Fahey, L. & Mahon, J., 1993, A Typology of Issue Evolution International Association of Business and Society. pp 18-28 Deakins, D. & Freel, M., 2003, Entrepreneurship and Small Firms. McGraw Hill, Borkshire. Dutton, J.E., & Ottensmeyer, E., 1987,Strategic issues management systems: forms, functions and context. Academy of management review. Vol. 12 No.2.pp 355-365 Hodgetts, R.M. & Kuratto, D.F. (1998), Effective small business management. Dryden Press Orlando. King, W.R., 1982, Using strategic issue analysis. Long range planning. Vol. 15 No. 4. pp 45-49 Marx, S., & Rooyen V., 2001, Business Management. Van Schaik, Pretoria. Megginson, L.C., Bryd, M.J. & Megginson, B., 2003, Small business management: an entreprenuer’s guidebook. McGraw Hill, Boston. Nzuwe, S.N.M., 1999, Elements of Organizational Behavior. 1st ed Nairobi: Downtown printing works ltd. Paul, S.H, 2000, Labour turnover. 5th ed. Johnston Publishers, Nairobi. Wartis, S.L. & Mahon, J.F., 1994, Towards a substantive definition of the corporate issue construct: A review and synthesis of the literature: Business and society. Vol. 33 No.3 pp.293-311 APPENDIX Results The causes of high staff turnover The causes of high staff turnover are represented below: From the above bar graph it is seen that cause that ranks the highest is training and development followed by remuneration, job satisfaction, recruitment and selection and lastly motivation. Figure 1.3 Representation of the staff affected by turnover From the above bar graph it is seen that the mostly affected staff during staff turnover is top management followed by middle level management and lastly junior staff. This is due to the bid of small businesses trying to stay afloat in the highly competitive business by obtaining the best strategic managers. This is facilitated by top managers hence their high demand. Figure 1.4 Representation of effects of staff turnover   Read More