Human Resources Turnover - Essay Example

Human Resources Turnover In modern competitive world each organization strives to achieve a good level of performance in all areas of their operations. Employees or human resources of an organization is the most vital component that determines have effectively it can functional therefore, for fulfilling their objectives steadfast growth it has to work hard and improve its work force keep to their competence at a high quotient. This situation in a competitive work environment adds a lot of pressure on their employees also. Human Resource Turn over is making lot of impacts in an organizations work. An organizations success relies heavily on experienced and skillful workforce and there fore frequent labor turnover is a sign of organizational weakness, and it indirectly suggests bad work environment or lack of adequate compensation and performance incentives Turn over occurs when an employee leaves his position in an organization.“The primary reasons relating with the survey for labor turnover relate to the lack of career and developmental opportunities and pay.”(http://www.management-issues.com/2006/8/24/research/firms-still-ignorant-of-the-costs-of-staff-turnover.asp) “The survey also found that the occupational group with the lowest rate of staff turnover is personal and protective services, where 63 percent of organizations with employees within this category report no labor turnover at all during 2002”( http://www.management-issues.com/2006/8/24/research/firms-still-ignorant-of-the-costs-of-staff-turnover.asp) An employee expecting good financial benefits and work environment when searching a job will be satisfied with that type organization which motivates its work force make handsome salary and future benefits where he gets the opportunity for career growth. Turnover can be voluntary or involuntary, good or bad and it is inevitable, but manageable. When an employee chooses to resign for his reasons it is voluntary turnover. When the employee has no intention, such as those situations involving death, disability, mandatory retirement, employer layoffs and employer terminates the survives, it is involuntary. Employee turnover can be good or bad its good when voluntary and involuntary terminations involve non-performers whose resignation will be in the interest of the organization. It is bad when a good performer leaves the organization for some reason to begin the search for replacement. Searching of talented employees and training them for the job is very expensive for an organization. It is called turnover cost in this case employee turn over is bad for their smooth working. “The average cost of labor turnover in 2002 for the UK is £4,301 per leaver. The costs of turnover are highest for managers (£6,807), followed by professionals (£5,864). For Ireland, the average cost of staff turnover is £4,927.” (http://www.management-issues.com/2006/8/24/research/firms-still-ignorant-of-the-costs-of-staff-turnover.asp) An experienced and skilled employees can get good job easily. But loss of this type of employees is bad for an organization It is obvious that a talented and experienced employee, it not compensated well in terms of salary and career growth, will quit him position and seek another job. Therefore turn over is inevitable. In the case of voluntary turnover it is manageable. “Retention of skilled employees is expensive getting the right people in every position will increase retention expenditure.” (http://www.webfootedfriends.com/wff/ER%20Group%Turnover%20ROT20Dec02.pdf.) When labor turnover becomes good for an organization when a bad performer is sacked from the organization’s view in competitive work environment a low level performer is a liability and he needs expensive training. It involves lots of overheads to the organization. HR turnover becomes a costly affair for companies in terms of the expenditure and recruitment, training etc. It is called the turnover cost of the organization Turn over cost is also very crucial. It covers all the direct and indirect cost incurred for filling the vacant position by identifying and employing suitable personnel and comprises expenditure on interview, training etc. The main problem of labor turnover is it badly affects the performance of organization. High labor turnover is a negative sign of organizations overall performance. The labor turnover of industries like IT, Pharmaceuticals and other high professionalized sectors create a big impact on their work so they try to retain competent employees by offering high salary and better work environment they also provide them opportunity to improve their work skill and recognize them by suitable incentives. In an organization retaining of efficient employee is very important for the purpose of continuity and steady maintenance of quality. This is a crucial strategic area in a big multinational level organization but they can afford to retain their efficient employees; however smaller companies find it a hard bargain to retain employees. It is bearable for the high income companies with low availability of human resource. They want to retain their existing employees for their work by making the remuneration package attractive. Employee turnover will not be a problem in circumstances where work force is available in ample numbers and the level of skill and experience is not much too specific or high. Hiring of new employee is a strategic decision of high importance in an organization. Human Resource turnover is bearable for an organization that has enough business. It also, depends on the organizations ability to hire new work force and train them for better results. Turnover is good in the case of low performance employees but a skilled employee need more remuneration and good work environment for continuing a job. Thus an organization’s ability to retain skilled employees is very important as high labor turnover will have negative financial implications. In several sectors organizations suffer a big problem to retain their employees as they cannot bear the labor turnover due to varied disadvantages. “However the hotel, catering and leisure sector and call centers have the highest rates of staff turnover, at around 40 percent in 2002. Low rates of turnover (i.e. around 10 percent) are generally found in manufacturing, transport and storage, and paper and printing.”(http://www.management-issues.com/2006/8/24/research/firms-still-ignorant-of-the-costs-of-staff-turnover.asp). Human Resource Turnover affects organization’s strategic policy in retaining experienced employee is very important for its Human Resource capabilities. In a competitive business environment all organizations are searching for high caliber employees for their strategic areas, loss of experienced person in a reputed organization is a big opportunity for the rival organization and they can compete with that organization easily. In modern business environment it is very common to hire high experienced and skilled person for strategic areas from another organization by offering better prospects. In this situation all organization wants to give more financial and other benefit for their key employees. Switching by an employee from one organization to another within the same industry can be hampering to the original employer. The employee is only thinking about high salary and benefits but the hired organization can use this person as a strategic tool for their organization. Turn over of highly professionalized job is very crucial for organizations in both ways: one is the organization spend a lot of money for development of employees; like training and other activities. The other is: they anticipate these employees potential for their future operations but the loss of an efficient employee causes a lot of problems in an organization in terms of searching for other efficient employee which is expensive and time consuming. Thus an organization needs to curb the tendency of highly skilled and experienced workforce from their company to other companies, particularly if their line of business is the same. Works Cited Firms Still Ignorant of the Costs of Staff Turnover. Management Issues News. Retrieved February 20, 2007, from http://www.management-issues.com/2006/8/24/research/firms-still-ignorant-of-the-costs-of-staff-turnover.asp Read More