The Disadvantages of Low Employee Retention - Case Study Example

Employee Retention “To very few research projects have been conducted to develop more efficient retention strategies of hourly employees and the identification of methods to reduce their turnover rate.” –Milman and Ricci, 2004 Introduction The work force of any company or organization is clearly the entity that drives any successful business and corporate endeavor. However, its behavior can be affected by a wide variety of factors that may alter the company outcome, income and the services that it offers to its consumers drastically. One of these factors, include the ability of a company to entice their work force to maintain allegiance and exhibit superior performance delivery in order to satisfy the organization’s clientele. A compromise on the latter may be equated to increased staff turnover and decreased employee retention which can, thus, rescind the organization’s services and customer care (Mohr et al., 2008). Several studies and researches have aimed to analyze the marketing impacts, causes and financial aspects that govern employee retention in order to make an accurate prediction and overall formula to help organizations maximize their human resources capital, minimize the negative feedback from the consumers of their goods or services and continually improve the quality of service that a company offers. However, despite these efforts, there may be no universal policy that can accurately predict employee turnover. In most cases, it is affected by the individual characteristics, nature and environment unique to a particular field of work and the labor environment it is subject to. Nonetheless, these researches have served as a basis for designing developing programs that can aid any human resources group to come up with a suitable plan to fit their diverse objectives and eventually execute a pioneering human resources program that benefits workers without endangering incomes (Etchings, 2005). This paper aims to consolidate the recent results of these studies and, eventually, come up with a general theme that can assess employee retention in work places. The disadvantages of low employee retention One of the major concerns of a company that elicits these kinds of researches on job retention and turnover is the balance in the expenditures incurred while maintaining new and old personnel. The reason being that low employee retention results in increased costs to the company due to the increasing costs of separation pay, job announcements, staff rehiring and employee training and upgrading. Estimated values show that these costs may be in the range $3000 to $10,000 per hourly employee according to Woods and Macauly (1989). These figures have certainly changed two decades later and is dependent on the overall nature of the organization. These expenditures also come from several aspects of hiring and rehiring and include costs on advertisements and recruitment, selection, signing bonuses, formal training and development processes, as well as those indirect overheads such as low initial efficiency and output of new employees and the effects of new hires on the performance of current employees. The costs are also increased by programs on maintenance, career enrichment, motivation programs such as spiritual, sports and leisure activities, environment enhancement, physical aesthetics of the work area, safety protocols and customer satisfaction (Milman and Ricci, 2004). The high impact on quality and costs are also reflected in the use of software, programs, hardware upgrades and other expenditures on improvements and innovation. These are also indicators of an evolving community that in the long term will benefit the company, its customers and employees altogether. In addition, another aspect of ambiguity lies in the fact that although annual worldwide employment rates are decreasing, recruitment, employee motivation and retention is continually becoming difficult and challenging. In 1996, for example, Foley reports that the turnover rate in the lodging industry was at an average of 60 to 300% per annually. This equates to a general observation that the labor market pool is decreasing (Milman and Ricci, 2004) and that the work force is continuously evolving because it currently exists to adapt to a demanding and stressful environment and world culture that presents an increasing number of material choices that can ultimately augment their wants and personal needs as well a raise the bars of an employee’s individual satisfaction levels. Factors affecting employee turnover Analysis of employee turnover in different fields reveals that the dynamic balance of the workforce is influenced largely by overall job satisfaction, contentment and the employee’s sense of purpose. These serve as an important driving force for an employee to keep a job (Boles et al., 1995). A study conducted in the lodging business shows that among the top factors affecting retention are personal satisfaction and the environmental conditions, displacing monetary rewards to a lower rank (Milman and Ricci, 2004). Although employee retention has much to do with financial benefits, many researches have also noted that an important variable in work force turnover involves the personal fulfillment that an employee acquires from his work. The value given to work by a staff is also a mirror of the meaning and sense of purpose that he gets from it. It is also a reflection of a set of core values that reflect an employee’s love for work and his commitment towards it. This is what Morrison et al. (2007) referred to as “inner life” in the work place and is an echo of the motivated and driven employee. This perhaps mirrors the difficulty of gaining personal satisfaction from work which an employee finds unreasonable or from a job which he does not enjoy and does not give him a sense of purpose. Rural communities were also found to have more difficulties in maintaining health professionals and clinic personnel (Daniels et al., 2007). It has been observed that retention in these specific areas depends on financial incentives, opportunities in the work place and environment, personal commitment, managerial practices, risk exposure, role conflicts and work and family conflicts (Stordeur and D’Hoore, 2007). Stress on more cultural work investments of an organization have also become important in these locations where the organization’s structure and practices are direct quantifiers of the service that the is received by the patients or consumers. Thus, the accountability of managing officers is important in relation to turnovers and retention. In the medical field, a research by Beck and Doig (2005) ranks the factors that greatly mediate the turnover and retention of nurses, doctors and other clinical and laboratory personnel. Topping the list of reasons for leaving their current positions include the availability of better training opportunities and new posts. This was supported by MacHatton et al. (1997) in their report on the restaurant sector that the availability of other sources of income is also a determinant in predicting employee retention. Studies have also noted that some universal principles have governed employee loyalty, commitment and retention such that those programs which were found to be helpful in improving business related industries have also been adapted by the academic and health faculties in terms of employment (Reece et al., 2008). Programs such as the Performance- based Incentive Compensation (PBIC) have been noted as an efficient instrument improving job retention in the academe and medical fields. This program is based on the premise that the individual compensation of employees reflects their teaching, clinical, research and educational outputs. Crucial to this program, however, is the presence of an effective evaluating and monitoring tool to assigning points to varied disciplines. In a study by Susskind et al. (2000), the effect of administration and organizational maintenance on the work satisfaction and loyalty of employees to the companies were investigated. The study reveals the strong correlation of these aforementioned factors on the commitment and retention of workers in their industries and is directly related to the performance of employees and their tendencies to look for other jobs. Mohr et al. (2008) stresses the importance of a teamwork culture in the rates of resignation. In the medical field, for example, surveys show that nurses and clinical personnel exhibit low resignation rates when the work environment is characterized by teamwork and support due to the hectic schedule and levels of unpredictable emotional events that the medical and healthcare staff experience. In addition, it has been emphasized that the effect of unfailing customer service on the commitment of employees to their jobs is critical and is a reflection of their own personal satisfaction. Impeccable service provision to a clientele is similar to promotion incentives which trigger a sense of purpose in an employee and presents him with challenges that allow him to aim for a criterion in order to achieve a goal. Environmental, health and safety programs such as smoke-free work areas especially in medical and health institutions also ranks top among employee concerns (Wheeler et al., 2007). Bell and Grushecky (2006) notes that related training on safety have been under evaluated in logging industries and in some instances these safety related training hardly ever has an effect on the safety of the employees. Thus, despite trainings and safety protocols higher injury rates continue and effective solutions to these problems must be evaluated and soon addressed. Milman (2003) also reports that in the amusements parks industry recruits and staff that experienced consistent working hours reflect positive behavior towards their jobs meet satisfactory evaluations and have received positive performance outputs. These are important criteria to earn longer tenure with the employers and earn a close working relationship with them. Travel times and home and work proximity can also directly affect employee retention. In fact, the distance of the workplace is directly related to the tardiness which is a mirror of the job performance of an employee (Pizam and Thornburg, 2000). The importance of work force diversity The diversity of age groups in a work force may also be seen as an important determinant of an employee retention program since replacement is usually mandatory upon reaching the retiring age. Thus, a diverse set of employees prevents the danger of multiple resignations at a single time. Certain age groups can also be associated with changes in the employees’ career paths and the younger generation can be predicted as a more volatile set of work force due to the varied opportunities that are present for them and the lower levels of responsibilities of single employees compared to married ones who are more concerned with job stability. Moreover, a research by Beck and Doig (2005) also notes that for the medical profession, in general, personnel who have stayed long in the institution or company usually leave the work place due to retirement. In addition, Kempeneers (1992) also reports that a woman’s tendency to change her career is also related to age-related probabilities of having children and getting married. Many career changes have also be a result of imperative occurrences and social factors. Such as the increase in turnover rates of employees which occur as a result of family responsibilities or those career change decisions which involve family members. For example, when couples decide to move to a different area because of new job opportunities, one of them has to sacrifice their jobs in order to give way to the other. The prediction of the rates of employee retention by a particular program and management is slowly becoming accurate due to its complexity. In fact, the realms of this phenomenon may quite be complicated for analysis, thus, computer modeling studies have been explored in order to make predictions scientific. A software for aiding human resources personnel in calculating turnover and re-hiring expenditure has been developed by Hinkin and Tracy (2000). Several factors have been incorporated into the development of this program in order to provide accurate calculations and assist in budget related matters and plans for rehiring. Other factors Crisis and important historical events have shown direct effects on the behavior of the work pool. For example, current situations of global terrorism and economic depression have been shown to create negative effects on businesses and the number of available jobs for staffs and have resulted in mass lay-offs globally. Those industries which have taken a direct hit are travel services industries, lodging businesses which exhibited a loss of 46,000 jobs, car rental services and parking which mirrored the loss of 13,000 jobs and mainly in travel-related businesses which exhibit a loss of 111,000 jobs as of 2001 (US Department of Labor). Meanwhile, the improvements in technology and connectivity have created various pathways for the expansion of companies, businesses and even schools. These have and are expected to create another ripple in the various professions that will allow even more factors that will either increase or decrease the effects on work stability. Conclusion The list of variables that are associated with employee retention come from diverse aspects of employee life and should prompt management and human resources personnel to construct a program based on factors that they could manipulate. Personal satisfaction and internal values that mirror responsibility and loyalty to a company and its clienteles, work environment, financial benefits, effective safety training and team culture are consequences of well planned and studied agenda that can help improve the well-being of the work force. On the other hand, family related and mandatory factors such as age and physical limits are some boundaries that human resources programs have to contend with and should be subject to reasonable guidelines that reflect company responsibility and benefit the employees, the organization and the customers that they serve. Long term researches receive varied responses from employees and management and also aid in the improvement of human resources programs. In addition, current world situations have presented different cultural phenomena that has and will continue to affect work situations, thus, social awareness is inevitably a useful tool for predicting global trends. References Beck, S. and Doig, K. 2005. Laboratory manager’s views on attrition and retention of laboratory personnel. Clin. Lab. Sci. 18(4): 238-2347. Bell, JL and Grushecky, ST. 2006. Evaluating the effectiveness of a logger safety training program. J. Safety Res. 37(1):53-61. Boles, J.S., Ross, L.E., Johnson, J.T., 1995. Reducing employee turnover through the use of preemployment application demographics. Hospitality Research Journal 19 (2), 19–2030. Foley, R.T., 1996. US Lodging Industry: The Next Ten Years. 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