Employee Turnover in Australia - Example

Introduction of turnover Turnover being persistently experienced organizational problem, all organizations inclusive of retail industry face this problem irrespective of their industrial and/ or organizational stature. Decline in both productivity and morale in public and private sectors respectively attributed to high rates of employee turnover (Hart, et al, 2006). Different types of turnover exist; some turnovers are voluntary while others are involuntary. Turnover can further be classified as functional, which involves the dismissal of underperforming employees or dysfunctional, which involve the loss of a high performing employee. Turnover can be either avoidable or unavoidable; unavoidable turnover may result for example from a move by a family (Watrous, et al, 2006). Many studies concerning employee turnover have been conducted in the past five decades. All these researches are focused on identifying antecedents of turnover in relation to employees (Peterson, 2006). It is tentatively clear among some researches that dissatisfaction is the focal point of employee turnover (Min, 2007). Some researchers argued that even though in most cases employee turnover is detrimental to an organization, employee turnover is sometimes healthy to a firm. In spite the advantages, employee turnover often is very disruptive and expensive (Costello, 2006). The costs arising from the need to recruit, select, train and develop new employees in addition to termination and advertising costs respectively, negatively affect the industrial sector. Researchers have identified that food retail industry is the most affected sector in terms of turnover, which has recorded as high as a hundred percent rates of turnover. The most common turnover element in the food retail industry is resignation from respective jobs due to poor management, low compensation and the need to improve their own lives. The aim of this paper is to discuss employee turnover in Australian retail industry. In addition, the paper also entails the reasons that are attributed to employee turnover and the importance and/ or impacts of turnover with special focus on retail industry (Steensma, Breukelen & Sturm, 2004). Moreover, we discuss the employee turnover models and the corresponding situation in other countries with China as an example, in the retail industry with reference to Employee turnover. The cost of employee turnover to an organization cannot be understated. The most prominent costs incurred by firms due to employee turnovers include recruitment costs, selection costs, training and development costs (Arnold, et al, 1985). There exists a relationship between employee turnover and the unmet employees and the employers’ expectations respectively, pre-existing intentions, and perceived injustice (Adelina, 2002). Unmet expectations results into dissatisfaction that causes the employee turnover and hence social and personal normative beliefs of employees are very crucial in the prediction of the forthcoming employee turnover based on their actions (Kacmar, et al, 2006). The organizational injustice to its employees may also increase employee turnover rates (Tian-Foreman, 2007). Employees who perceive unfair treatment by the organization are likely to quit the firm and opt for other competitive firms that have respect for their employees. High rates of employee turnover, in the retail industry, increases administrative costs concerning recruitment and training. Furthermore, such turnover reduces the retailer’s operational capabilities; there also exists low morale among the remaining employees in addition to inadequate expertise and experience (Tett & John, 1993). Employee turnover particularly in Australia retail industry The retail industry of Australia has evolved so much; currently the industry is one of the key economic forces that accounts for the largest employment opportunities. It provides a platform for innovation and entrepreneurship (Kacmar, et al, 2006). The highest number of employees in the retail industry in Australia is composed of casual workers. This is due to, and influenced by the introduction of late night shopping and five working days per week. Fluctuation in retail markets in addition for the need of flexibility among management has also attributed to hiring of workers in retail industry on part time or casual basis. In spite of this, some retail outlets such as Suzanne Grae, David Jones and Coles supermarkets have higher numbers of employees on permanent employment basis. However, approximately over 50% of Australian adult population works in retail industry; the statistics of 2006 suggested that four out of ten top managers in Australia were retailers (Zimmerman & Darnold, 2007). The Australian retail industry has a very high staff turnover. According to Australian Bureau of Statistics one in every six workers started working with a new business/employer during the year to February 2010. The same bureau reported that from the 10.5 million people working in Australia as at February 2010, 18 percent had moved from one employer to another indicating that employee turnover was above 18 percent. Among those who did not transfer from one employer to the other, 25% experienced some change in workforce. About 2.2 million people lost their jobs by the year ending February 2010, 58 per cent of which left their jobs voluntarily while the rest lost their jobs due to retrenchment and/ or their employers went out of business. The chart below shows the labor movements in Australia in the year ending February 2010. Importance of employee turnover Some researches suggest that turnover can be beneficial to an organization by improving its performance - turnover functions leading to dismissal of under performing employees in the firm (Costello, 2006). The replacement of low performing employees with high performing personnel drives an organization to better productivity and overall performance. The performance proposal maybe increased if the turnover occurs among employees who have very long or very short tenure (Kacmar, et al, 2006). The quitting of employees with long tenure may help an organization to inject it new employees who come in with new innovative and inventive ideas that might be beneficial to an organization (Schlesinger & James, 1991). Since the firm put in place, plans to replace long term tenure with short term tenures and their jobs might not be vital for daily performance of an organization, the impacts of job quitting is not pronounced as that of employees who are involved in daily activities of an organization (Min, 2007). For instance, an employee hired on short-term tenure to design an information system for a retail enterprise may not have detrimental effect on the performance of the company like when a sales manger of the retail enterprise quits. In fact, the quitting may allow the firm to hire a better talented individual to accomplish the job more satisfactorily (Watrous, et al, 2006). Internal turnover of employees may increase the employee morale due to change of task and supervisor. Employees who come under supervision of a new manager, who motivates them more than their previous one, are likely to increaser their output (Maertz & Campion, 2004). Reason of employee turnover a) Intentions to quit Research indicates that there exists a relationship between attitude, behaviour and intent to leave (Zimmerman & Darnold, 2007). These researches have indicated that, often the final step that follows the actual quitting of an employee (Peterson, 2006). Behavioural intention theory of attitudes postulates that individual’s behaviour predicted and determined by performance intention and the behaviour (Peterson, 2006). Research shows that when employees are unhappy with their jobs they think of quitting in search for a better job, then finally quitting. Employees may also screen out jobs, which are inconsistent with their values and/ or goals (Arnold, et al, 1985). Employees may also enact behavioural scripts for quitting stored in memory, for example a process model that shows the attitudes of employees and the decisions that they make before deciding to quit (Tett & John, 1993). An employee may quit a job if there is an alternative or another job offer at hand. This puts an employee in a position to compare between the two jobs and keenly make a decision. Some may quit because of the specific plans they had made before even taking on the job. Others however, may quit on impulse with little or no. Employees often quit jobs based on how attached or withdrawn they feel they are to the organization. Forces such as affective forces, which trigger psychological comfort or discomfort, motivate quitting (Costello, 2006). Contractual forces, with negatively perceived agreements in an organization fulfilling certain obligations hence, cause a hindrance that leads to job quitting. Constituent forces involve the perception of employees concerning their relationships with others (Arnold, et al, 1985). Alternative forces are opportunities that attract employees and pull them from their current organization. Calculative forces based on how an employee calculates the chances of achieving his/her future goals. Normative forces are perceptions of an employee’s family or friends expectations about his remaining or quitting. Behavioural forces based on the attachments between an individual and an organization for example pension benefits. Moral forces, which are the values of an employee on quitting that indicates a weakness in character. b) Organization commitment The degree to which an employee identifies himself/herself with an organization’s goals and wishes is the organizational commitment. High organizational commitment results in to low levels of turnover. However, an organization with lacks understanding, appreciation and fostering of the needs of its employees in addition to unfair and inequitable treatment often results in chaos, confusion and conflict at workplace and eventual turnover (Mobley, 1982). This is because the employees become less committed to such organizations. Thus an organization needs to meet the psychological contract needs of the employee as they performs the duties and objectives to reduce turnover resulting from lack of the commitment of the firm to the needs of the employee (Moorman, 1991). The organization therefore, must recognize well performing employees in addition to valuing all of its employees in terms of monetary compensation and satisfaction (Kacmar, et al, 2006). If the organization is not committed to the needs of the employees, this may result in low self-esteem among employees. These often results in chaos at workplace and eventual turnover. In addition, the firm should provide the employees with resources, tools, emotional support and information, which are necessary for the employee motivation. Lack of incentives results in employees de-motivation due to conditions that are often associated with employee turnover. c) Job satisfaction Job dissatisfaction, burnout, emotional exhaustion, serving clientele with more intense needs and lack of apparent career trajectories are key indicators for high levels of employee turnover. Procedures involved in the outcome allocate will either lead to satisfaction of employees or their dissatisfaction. Dissatisfaction results from such situations where outcome procedurally leads to injustices (Sheidow, et al, 2007). The procedural injustices will make the employees feel to be unfairly treated. Unfair judgments are because of lack of trust standing and neutrality. The resulting dissatisfaction of employees leads to low commitment and employee turnover (Arnold, et al, 1985). The way the employees perceive the procedures involved in the outcome allocation may be a motivator of their actions. Thus, employees who feel that the procedures are fair may be committed to the firm’s activities whereas those who feel that such procedures are unfair may decide to take actions such as resignation leading to increased turnover if more employees have such a view (Moorman, 1991). Other actions that may result in employee dissatisfaction include wrongful and unlawful dismissal lawsuits, sabotage, vengeance, theft and retaliation from the organization, which constitutes perceived injustice interaction. Such actions may make employees of such organizations to start having thoughts of leaving quitting due to dissatisfaction. The job performance intent to quit caused by job satisfaction. This belief is theoretically an expectation based, which attributes greater rewards to high and better performance that results in job satisfaction (Minor, et al, 2003). The relationship that exists between job performance and satisfaction is moderate when there is little support for causal relationship between the impacts of job performance on job satisfaction. Research has indicated that job satisfaction influences intention and behaviours of turnover. Thus, job satisfaction is an important antecedent in the process of turnover. Job satisfaction is at the core of the relationship between the intent to quit and the actual turnover behaviour. d) Characteristics of employee Many retail employees lack the necessary skills required to carry out their duties. These skills are especially in the fields of sales and customer services (Simon & Kristian, 2007). The problem compounded by the shortage of such skills in the labour market. Skills’ shortages involve the lack of persons with the relevant set of skills for uptake of the available positions (Costello, 2006). Employers may be in need of certain skills but due insufficient supply of such skills in the labour market, competition may arise for the limited persons with such skills (Hart, et al, 2006). This often leads to dysfunctional turnover where employers lose employees with better skills to other competing firms with better pay and benefit packages. The firms that lose such employees are likely to have detrimental effects in their performance (Hackman, et al, 1976). Lack of sufficient skills among employees to carry out their current duties may lead to under performance, which may eventually result in functional employee turnover. This is often the case in companies, which do not carry out training and development of their personnel force. Since the employees lack the necessary skills, their performance is affected and the company may decide to dismiss them. The limited availability of the required skills in the labour market makes the firm to incur high costs in terms of advertising, recruiting, selecting, training and eventual development of these new employees. e) Wages and conditions Insufficient pay is one of the problems faced by employees in retail industry. This in itself drives most of the employees to foster thoughts on intention to quit an organization in search for better pay (Mobley, 1982). Under paid employees often become dissatisfied and their commitment to the job is very low. Due to low commitment, they start expressing behaviour attributed to intent to quit such as poor customer services or even absenteeism. The result is that the employees may resign voluntarily or may be relieved off his or her duties due to underperformance (Adelina, 2002). Lack of recognition from both the public and the organization leads to de-motivation of such employees who go out to seek for jobs in which they with recognition. Employee turnover in this respect comes from insufficient wages and lack of other benefits (Lambert, 2006). Thus with the availability of alternative jobs, such employees are likely to quit the organization to join other organizations with both better pay and benefit packages (Simon & Kristian, 2007). Some retail jobs can be very distressful and demanding. Combined with meagre pay employees in such situations opt to quit and move to other organizations and jobs, which are less distressful and demanding with better pay. f) Training and Career Development Career advancement opportunities are factors that great affect the employee turnover. Most employees are usually satisfied with their jobs when opportunities exist for advancing their careers and hence firms with such opportunities experience low employee turnover (Lambert, 2006). Career advancement opportunities combined with diverse career path often improves the capability of a firm to retain its workforce. Research indicates that warehouses, which prioritize security of jobs during recruitment via training and development, have low turnover than those that do not emphasize on this. Thus, employees who get training and job development at workplace are more likely to remain at the firm since this assures them job security than in firms, which do not offer training and development programs to their employees. This is true to retail industry, which is often dynamic and requires new skills to survive (Lambert, 2006). Thus, retail firms, which offer training services and development of its employees is likely to retain its employees in addition to assuring its performance in the volatile market environment. Such training need also to be accompanied by promotion that results from improved performance to encourage participation in the training programs otherwise the employees will not be willing to participate in such programs just to improve the performance of the organization (Ruby, 2002). g) Moral factor Any cognitive dissonance between the employees’ behaviour and attitudes may result in turnover. This is common among top management employees faced with difficult decisions when such employees forcefully make decisions that may be inconsistence with the attitudes and behaviour hence opting to quit reducing the dissonance associated with such decisions. This can be argumentative due to lack of compensation for such decisions by the firm. Thus, managers should be involved in identifying external sources of dissonance and provide rewards to the employees to compensate for dissonance otherwise, employees may opt to quit such firm. In addition, managers should be involved in activities, which result in generation of positive attitudes that reduce absenteeism and turnover in the retail industry (Min, 2007). Models of employee turnover Due to vast research works in the turnover of employees, many models of employee turnover recently devised. The first devised model was the Process Model of Turnover by March and Simon in 1958 (Skabelund, 2008). Some of employee turnover models published include Met Expectation Model, Causal Model of Turnover, Intermediate Linkages Model, and Alternative Linkages Model for Labour Turnover, Turnover Model, Cusp Catastrophe Model of Employee Turnover, Integrated Process Model, Unfolding Model of Voluntary Employee Turnover, Referent Cognition Model and Job Embeddedness Model. These models indicate process models of turnover and content models of turnover (Testa, 2008). The focus of process models of turnover is how people quit while the content models focus on why people quit. Most of process models of turnover have been involved in the study of voluntary employee turnover. Thus, provides vast literature on the process of quitting (Moorman, 1991). These models provide an explanation as to how employees finally decide to quit a certain job. On the other hand, content models try to establish reasons as to why individuals may leave an organization (Simon & Kristian, 2007). Some recent models of employee turnover try to integrate both process and content based models to establish how and why an individual may reach a decision to quit an organization. In spite of specific turnover paths, research in process models of employee turnover indicates that individuals have varied experiences when they leave an organization (Adelina, 2002). Thus, the difficulties involved in linking motivation behind these experiences and the decisions made by the employee to leave the firm is still a paradox among researchers (Minor, et al, 2003). The relationship between different motives involved in job quitting in an organization and the final decision to leave is yet to be established. Since turnover motives initiate processes of turnover decision of the employees, researchers have argued that certain motives may result in frequent occurrence of certain process as compared to others (Peterson, 2006). For instance, an employee who is attracted to another job may stimulate his or her rational comparative process while hatred of a harsh supervisor may initiate a non-rational process, which is reflective. Employee turnover in other countries (China) Employee turnover vary from one country to the other. In addition, the reasons behind the turnover also vary from country to country (Williams & Potts, 2010). For instance, in Chinese retail industry, research shows that there is a strong relationship between job satisfaction and employee turnover intention. Another factor that has been associated with job satisfaction, employee turnover intention and job satisfaction turnover relationship is the occupation. These findings indicated that management employees have lower intentions to quit their positions as compared to frontline employees in the retail industry. The established link between job satisfaction and employee turnover in China is negative (Watrous, et al, 2006). Most dissatisfaction among top management in the Chinese retail industry has been due to poor pay. This is a common factor identified in many countries to influence employee turnover, eagerly awaits better paying jobs with attractive benefit packages (James, 2004). In spite of this, the intention of these employees to quit their current jobs is very low as compared to those holding non-managerial jobs. Conclusion Just like in any other business industries, employee turnover in retail industry is significant and has several causes. These causes include job satisfaction, intentions to quit, organization commitment, characteristics of employee, wages and conditions, training and career development and moral factor. These factors can be instrumental in informing retail industries to make necessary readjustment to reduce rates of employee turnover and reap from the reduced costs of recruiting and training new workforce. Good understanding of the causative factors can aid in strategic planning by a retail firm on how to address the causes and reduces the rates of turnover. Even though there are numerous causative factors, it is inherent for an organisation to address the most common causes. From the discussion above, cause of turnover, vary from country to country although some factors like pay and benefit packages are of high priority across different nations. Thus, retailers need to understand the environment in which they are operating to be able to make informed decision on the possible factors that affect employee turnover and make necessary re-adjustment to retain their workforce. It is also apparent that the causes of turnover vary in accordance to occupation and hence the firm need to understand the different needs of its management teams and that of non-management teams to be able to address their specific needs. Turnover is a factor that not every industry and sector places into consideration, in one sector turnover is that much expensive compared to other sectors. It is expensive in those industries that require training and where consumers create business relationship with their employees. Since retail industry is within this segment means that it should formulate and implement conclusively strategies that reduces chances of employee turnover. 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