The Success of an Organization - Case Study Example

Factors that Impact Turnover Intentions Literature Review Turnover intention is described as planning, thinking, and the desire to quit a certain job voluntarily. Human resource departments do not like high turnover rates because they increase the operational cost of organizations, which comes with hiring and training new employees. Numerous studies have established that the success of an organization cannot be guaranteed when it is unable to retain its customers because increased employee turnover and low employee retention affects the quality of products or services that an organization offers. Employee turnover is a concern to all the sectors of the economy. In addition, it affects businesses and government ministries across all countries in the world. Increased competition, which has been on the rise thanks to globalization and technological advancements, has led to increased employee turnover (Ucho, Mkavga & Onyishi, 2012). Globalization has increased demands on companies and for an organization to survive these pressures; it has to follow the best practices that ensure that its human resource is nurtured well. When the human resource is satisfied, chances are high that employee turnover would be reduced. It is worth noting that organizations must aim to trim down costs at all times and these include work force training as well as technological costs. Following increased employee turnover, it is impossible to cut the labor training costs because the organization would be on the lookout for new employees at all times. To replace an employee, an organization has to spend more than a third of the new employee’s salary according to United States Department of Labor. This leads to increased costs, which could be eliminated by reducing employee turnover (Chawla & Sondhi, 2011). According to Coomber & Barriball (2007), employee turnover is not an issue that affects the private sector alone; it also affects government ministries across the world. In Britain, National Health Service reports that the number of nurses who voluntarily leave their jobs per year is worrying. In 2003, nursing staff turnover was 9.4% in the country. Nurses play a critical role in the health of the public in any given country. Following the increasing number of people with chronic diseases, long life expectancy and advance in medical technology, the number of needed nurses is increasing every day. When the turnover is high, the remaining staff members are pressurized to cover the posts left vacant by the departed colleagues and this increases stress on the remaining staff. This in the end, results in more turnover because of less job satisfaction. This implies that retention is the best method of decreasing employee turnover. Employers must find ways of replacing departed employees because the pressure might affect the other staff members (Coomber & Barriball, 2007). When employees’ morale is down, chances are high that they would leave their jobs to look for less stressful ones (Coomber & Barriball, 2007). At the same time, some jobs are very stressful and it proves to be very hard to retain employees because of the pressures that come with such occupations. Employee turnover at call centers in Pakistan is very high because of demands that lead to burnout that is associated with working at call centers. This implies that attracting employees to work in this occupation is a daunting task whereas the employee turnover is between thirty and fifty percent per year (Ahmad et al, 2010). The cost of doing business is increased because of the high turnover in this sector. It has been noted that almost thirty-three percent of the personnel working at call centers have tenures of less than a year (Ahmad et al, 2010). According Chawla & Sondhi (2011), employees with longer tenures, are more satisfied with their jobs and have reduced turnover intention. The reason why turnover is high in this sector is that the management always monitors call center personnel because they deal directly with the customers. The job description for call center representatives is to maintain current business, acquire new business, and develop future solid relationships with customers. This implies that these people are very important for the success of an organization. Human resource departments ought to understand the importance of the role that call center representatives play and thus come up with means of retaining them. The representatives have to deal with actual and expected customers and help them to create a desire of working with the organization. Call center representatives have to be motivated in order to serve the clients effectively and efficiently (Ahmad et al, 2010). It is not only the calling center representatives who need to have job satisfaction. In order for an organization to achieve its goals, all employees need to be motivated for them to perform to their potential and increase employee retention. Customers are happy when dealing with people they have met before. This is not possible when an organization cannot keep its employees for long and in most cases employees move with the customers they used to serve to the organizations they are heading to (Ucho, Mkavga & Onyishi, 2012). Employees who show full commitment to achieving the goals of the organization reveal citizenship behavior while those who do their duties unwillingly have negative attitudes and have little interest in their jobs. The latter group of employees is expected to quit their positions in the future as opposed to the former who are expected to remain loyal to the organization. The management should embrace supporting behavior because it leads to a sense of belonging and moral cohesiveness among the employees thus reducing turnover. This can be achieved by appreciating the efforts of all employees and treating them equally (Yücel, 2012) Organizational commitment could be divided into three categories, which are normative, continuous, and affective commitment. An employee who has affective commitment to an organization strongly believes in the organization’s goals and values. Such an employee has the least chances of leaving an organization because she or he believes that it is moving towards the right direction. On the other hand, continuous commitment is an employee’s attachment to an organization based on the cost of leaving the job. In normative commitment, employees demonstrate their individual behavior towards the organization because they believe that it is morally right to work for the organization (Chawla & Sondhi, 2011). Employees who have high levels of organizational commitment have lower chances of turnover intention as opposed to those who are not committed. This is because such employees have high morale while performing their duties. Employees decide to quit a job long before they take the real action. This implies that employees’ turnover intention must not lead to actual quitting of the job (Chawla & Sondhi, 2011). Several studies have revealed that job satisfaction is one of the main factors why employees quit their jobs. Employees who exhibit signs of low job satisfaction have higher chances of retiring early or becoming chronic absentees. Although the unemployment rate in Nigeria is very high, it has been established that there are numerous employees who have turnover intentions despite the fact that finding a job is very hard. Studies have revealed that employees in the civil services who are dissatisfied by their jobs have high turnover intentions than those who feel that their jobs are satisfying. This implies that employers and human resource managers should research about the needs of their employees in order to ensure that they are satisfied with their jobs (Ucho, Mkavga & Onyishi, 2012). Multi-unit or “chain” restaurants, which have the largest market share of the five hundred and thirty seven billion dollar American foodservice industry is faced with enormous task of keeping employees. In 2002, the turnover rate in the restaurant industry in the United States stood at 113%. On the contrary, as the check average rises, employee turnover starts to go down because employees in this sector earn more. Quick service, which has the least check average, reported the highest employee turnover rate, whereas the fine dining reported the least turnover rate (Murphy et al, 2009). In the United States, multi-unit manager restaurants form about fifty percent of the restaurant industry and have been growing at a faster rate than the restaurant industry in general. The human resource requires additional tools for hiring and retaining multi-unit managers because they are employed by between two and fifteen restaurants. The number of restaurants is on the rise and this means the demand of multi-unit managers would continue to rise. This is good news for the labor market but it has to be understood that organizations, which are in a position to create an environment that retains employees and reduces turnover, would have a competitive edge. The foodservice industry is in need of qualified and motivated workforce than any other sector. This can be attributed to the fact these people deal directly with customers and the needs of the customers must be met at all times for a restaurant to remain in the market. Employees with high levels of turnover intention are not in a position to serve their customers efficiently, and as a result, the restaurant would lose clients (Murphy et al, 2009). The availability of job vacancies in the foodservice industry is the main reason why employees have turnover intentions while others actually quit their jobs. Majority of restaurant companies have noticed this trend and are working towards the retention of the existing managers (Murphy et al, 2009). As noted by Ucho, Mkavga & Onyishi (2012), job satisfaction is directly linked to turnover intention. In order to reduce the turnover rates in the foodservice industry, organizations are coming up with incentives that would ensure that their managers are satisfied at their workplaces. Some of the incentives are severance awards, 401K plans, stock options, profit sharing, cash sign-on bonuses, incentive bonuses, commitment contacts, and work or life accommodations. These incentives ensure that the managers feel that the organizations they are working for, value them, and as a result, they do not see the reason for quitting their jobs (Murphy et al, 2009). Compensation plays a critical role in determining the employees interested in working in an organization, and the number of employees who would be willing to continue working for the organization. Traditionally compensation was about the amount, but over the recent years, it has evolved in terms of type. In the past, restaurants’ general managers were offered a basic pay and a bonus upon meeting certain organizational goals. Employee turnover is very expensive and it exceeds the amount of bonuses that could be paid in a year. This implies that it would be cheaper to increase bonuses for they would reduce turnover (Murphy et al, 2009). Coomber & Barriball (2007) acknowledge that burnout, which refers to leaving a certain industry for good is associated with work related stress resulting from overworking and low compensation. In the foodservice industry, failure to increase compensation, reduce long hour shifts, and reward high performance play a critical role in increasing turnover intentions among employees. As noted earlier, turnover intention leads to actual job quitting. Majority of employees find it hard to resist opportunities that offer better quality life even when they have affective commitment to the organizations they are working for. This is the reason why restaurants companies are finding it difficult to deny their managers and employees the right to a quality life (Murphy et al, 2009). This does not mean that it is the only aspect that employees consider before they quit their jobs. Several other factors play a critical role in determining employee retention. Job tenure, marital status, gender, and age are some of the demographics that affect employee turnover. Development theories and career stages have established that older people are more satisfied with their occupations and thus have lower chances of quitting. Young employees have higher turnover intentions as they try to look for more challenging opportunities. Employees with elongated job tenures tend to make socio-professional attachments, which reduce their desire to move to other organizations or careers. Family responsibilities grow with age and thus, older employees find it hard to move from one place to another (Ahmad et al, 2010). Some studies have revealed that women are faced with many constraints of growing their careers and thus majority of them have higher turnover intentions. On the contrary, other studies establish that females’ intention to move is lower because of the limited job opportunities. Married people have less desires of moving because of financial commitments that they have. A married person’s movement is limited because of the commitment that she or he has in the family. One has to consider the number of people she or he is going to move and as a result, decide to stay at the organization she or he is working. On the other hand, unmarried people have higher turnover intentions because they would not disrupt the life of any other person even when they decide to move to a different town (Ahmad et al, 2010). Some of the other factors that reduce or increase turnover intentions are related to the organization. Role ambiguity and conflict is a leading cause of intention to quit. Most employees want well-defined roles in order to enable them know that they are the ones who are supposed to perform certain duties and no one else would do that duty. This raises employees’ morale because they are able to plan their work and execute it accordingly. Employees with well-defined roles have lower chances of quitting because they have higher chances of finding job satisfaction. Role overload is another factor that affects job satisfaction. Employees need a well-balanced work and family life for them to find satisfaction in their jobs. Employees who feel that they are being overworked have higher chances of finding employment opportunities in other organizations or switching careers. This implies that managers should come up with a formula that ensures that employees’ duties are balanced for them to feel that biasness does not exist in the organization (Ahmad et al, 2010). Employees would either dislike or like their roles in organizations and this means that some unique conditions would lead either to the retention or to quitting of a given employee. Humanitarian approach in the study of job satisfaction suggests that all human beings ought to be treated appropriately or fairly. The level of employee’s dissatisfaction or satisfaction reveals the extent as to which the employee feels that the treatment she or he is receiving from the organization is bad or good. According to the utilitarian perspective, the organization performance determines the levels of dissatisfaction or satisfaction among the employees. If the performance of the organization is high for instance, it is a sign of employee satisfaction. On the other hand, sabotage and absenteeism are signs of dissatisfaction among the employees (De Tienne et al, 2012). Employees would always have stresses at the work and they range from lack of coworker’s or supervisor’s support to family stresses that the employee carried from home to the workplace. Surveys have established that many adults would rather work in ethical organizations than receive a higher pay in an unethical one. Stress is higher in unethical organizations and this leads to higher turnover intention, low organizational commitment, job performance and job satisfaction. Moral stress results when an individual realizes that she or he does not have the required resources to fulfill a certain task. Ethical demands of an organization and the available ethical behaviors are main causes of moral stress among employees. Ethical behavior is determined by the degree of control that employees have in a given organization (De Tienne et al, 2012). Many scholars have agreed that turnover intention and the actual quitting of jobs has detrimental effects on the performance of an organization. This is the main reason why human resource departments have been researching and coming up with the best practices that would enable them to keep their employees. It is very costly to hire and train employees when compared to keeping the existing ones. Globalization has made the labor market to become very competitive because people are in a position of working in foreign countries as expatriates. This implies that companies with the best policies, attract the best-qualified personnel and as a result, they increase their performance. Such organizations have a competitive edge over the others because of the ability to hire and retain the best minds in the labor market. References Ahmad, S., Shahzad, K., Shams-ur-Rehman., Khan, Nadeem, A. & Shad, I. U. (2010). "Impact of Organizational Commitment and Organizational Citizenship Behavior on Turnover Intentions of Call Center Personnel in Pakistan." European Journal of Social Science, 17(4): 585-591. Chawla, D. & Sondhi, N. (2011). "Assessing the role of organizational and personal factors in predicting turn-over intentions: A case of school teachers and BPO employees." Decision, 38(2): 5-33. Coomber, B. & Barriball, K. L. (2007). "Impact of job satisfaction components on intent to leave and turnover for hospital-based nurses: A review of the research literature." International Journal of Nursing Studies, 44: 297–314. De Tienne, K., Agle, B. R., Phillips, J. C. & Ingerson, M. (2012). "The Impact of Moral Stress Compared to Other Stressors on Employee Fatigue, Job Satisfaction, and Turnover: An Empirical Investigation." Journal of Business Ethics, 110(3): 377-391. Murphy, K. S., Dipietro, R. B., Rivera, M. & Muller, C. C. (2009). "An Exploratory Case Study of Factors That Impact the Turnover Intentions and Job Satisfaction of Multi-Unit Managers in the Casual Theme Segment of the U.S. Restaurant Industry." Journal of Foodservice Business Research, 12(3): 200-218. Ucho, A., Mkavga, T. & Onyishi, I. E. (2012). "Job Satisfaction, Gender, Tenure, and Turnover Intentions among Civil Servants in Benue State." Interdisciplinary Journal of Contemporary Research in Business, 3(11): 378-387. Yücel, İ. (2012). "Examining the Relationships among Job Satisfaction, Organizational Commitment, and Turnover Intention: An Empirical Study." International Journal of Business & Management, 7(20): 44-58. Read More