Voluntary Employees Turnover: A Critical analysis

IRJMSH

Vol 6 Issue 12 [Year 2015]

ISSN 2277 – 9809 (0nline)

2348–9359 (Print)

Voluntary Employees Turnover: A Critical analysis Ajaya Kumar.C,H,. Research Scholar, DoSR in Social Work, Kuvempu University.

Dr. Ravindra D Gadkar Professor, DoSR in Social Work, Kuvempu University ABSTRACT: In modern days the success of most of the organisations depend more on human assets than on physical or financial assets, like building, equipments, manufacturing facilities, and technologies, all these can be readily purchased, but all these resources managed by Human resource so that Human resource plays a vital role in an organisation. Employee turnover has been a never-ending problem for most of the organization especially the developing countries like India. Employees Turnover be it voluntary or involuntary can be costly and disruptive to organization success. Voluntary employee‟s turnover affects negatively on organisations performance moreover losing a talented key employee would cost 3-4 times of his annual salary so that retaining key employees for longer period of time is very important. This study tries to analyze factors influencing on voluntary employees turnover, its impact on organisation and key strategies to Retain employees for longer period, for this purpose study uses secondary data from different books research journals, articles, important reports etc. According to study all Voluntary employees turnover is not because high salary or monetary benefits there are other factors like relationship with immediate supervisor or boss, working environment, flexibility, recognition etc, which mainly influences employee‟s decision on leaving organisation. Study suggest that to retain employees for longer period orgnisations need to concentrate on building trust, increasing employees loyalty towards organisation and improving job satisfaction, because a well satisfied and more committed employee uses to stay longer in an organisation and do his best to the development of the organisation. KEY WORDS: Voluntary Employees Turnover, Retention, job satisfaction, INTRODUCTION: In modern days the success of most of the organisations depend more on human assets than on physical or financial assets, like building, equipments, manufacturing facilities, and technologies, all these can be readily purchased, but all these resources managed by Human resource so that Human resource plays a vital role in an organisation. (Luecke, 2002) Organizations success can be mainly attributed to the people‟s factor. Since human resource is central to an organization‟s performance, the more committed and motivated a person is, the International Research Journal of Management Sociology & Humanity ( IRJMSH ) www.irjmsh.com

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more likely he uses to stay in the organisation and do his best in order to improve organisations success in terms of productivity, profit, quality and better customer orientation. Employee turnover has been a never-ending problem for most of the organization especially the developing countries like India. Employees Turnover be it voluntary or involuntary can be costly and disruptive to organization success. Cost of voluntary turnover is not easily measured but they are reflected in many ways, like in recruitment, selection, temporary staffing and training of new employees these costs can be very high, work mounts up, those remaining has to work their work plus the work of the employee who left, so stress level of these employees will become very high, quality decreases, and company loses its loyal customers. Budgets can be decimated by overtime payments, deadlines are missed, stress builds and results in increased absences, customer service can falter, resulting in an image problem for organization. Employee moral becomes low, productivity decreases and employee start looking for another job, Employee turnover affects both workers and organisations. Employees experience disruption, they need to learn new job-specific skills and find different career prospects. Organisations suffer the loss of job-specific skills, disruption in production and incur the costs of hiring and training new Employees. But incoming Employees may be better educated, more skilled and have greater initiative and enthusiasm than those who leave and also may not be, if not they need time to match the lost employees, this may be disruptive to organisations. Voluntary Employees Turnover which is initiated by Employees, it can be disruptive to the performance of the organisation so it is very necessary to retain talented employees in the organisation considering the impact of extremely talented employees leaving the organisation, Organisations would find it difficult to succeed without a talented workforce, if talented work force continues to leave, it will result in knowledge and skills deficiency this would affect the organisations ability to compete in the present globalised market. The purpose of the current study was to explore and analyze the factors that influence voluntary employee‟s turnover and the important measures to retain the key employees. This study will contribute to the existing but small body of research and help to address the gap in the literature. The importance of retaining a competent and valued workforce is of grave importance for organisations considering that voluntary turnover of key employees have direct and indirect negative consequences for the firm. Present study adopted Descriptive cum analytical Research design, and used secondary sources suc h as books, Research articles, Journals, impotent internet resources for the present study. OBJECTIVES OF THE STUDY:  To Know the factors influencing Voluntary Employees Turnover  To analyze Voluntary Employees Turnover and its impact  To analyze important Retention practices.

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IRJMSH

Vol 6 Issue 12 [Year 2015]

ISSN 2277 – 9809 (0nline)

2348–9359 (Print)

LITERATURE REVIEW: Chandramohan, (2011), says that Human Resource is considered to be the most valuable asset in an Organization. It continues to play, even in the computer age, when everybody feels that men have a little role to play. It is true that computer, to some extent, does play a role, but programming and feeding such programme require manual operations. In other words, the application of manpower has no substitute and therefore, it has a continuous role to play. The main problem against the manpower development is attrition. The rate of attrition is increasing every day so that production and profit decrease. Noteworthy is the continuously growing rate of attrition among the IT, ITES and other companies. This has made the companies to take up research studies based on their employees, especially to identify the factors of Attrition. (Chandra Mohan & vasanthikumari, 2011) Abelson, M.A (2012) conducted a study on “Examination of avoidable and unavoidable turnover” with the objective of study about turnover. In this article, the author holds that this approach excludes some involuntary departures from analysis, while treating all people who leave voluntarily as being similar. The key finding from this research is that unavoidable departures and retentions did not significantly differ on four variables: Commitment, satisfaction, job tension, and withdrawal cognitions. These findings suggest that researchers should consider the circumstances of job quits when analysing the causes of employee turnover. Nausheen Shakeel and Sahar but (2015) discussed about factors influencing on Employees Retention, This paper reveals that if organizations are not pa ying well than they cannot retain employees. Although it is at number five or six of importance overall but still when employees have an equal or competitive pay package to the other organizations than the significance of pay as a retention factor reduces and other nonfinancial factors take its place. So to retain the employees you don‟t want to lose your organization must be paying them better than the market. Nonfinancial factors are found to be even more significant than the financial factors. Organizations these days differentiate for employees greatly on nonfinancial factors. (Shakeel & Sahar, 2015) Mathura, Sanjeev kumar gupta (2012) argues that employees quit from organization due to economic reasons. Using economic model they showed that people quit from organization due to economic reasons and these can be used to predict the labour turnover in the market. (Mathur & Gupta, 2012) Haskel and Martin (2001) stated that a large hiring cost results where there is difficult in filling vacancies, they used variables that indicates whether managers report that the establishment experienced difficulty in hiring workers in the preceding years as a simple measure of hiring costs. To represent training costs, Haskel and Martin (2001) used a measure whether workers who have done similar work before receive training that last for 7 days or longer when they joined the establishment. This can indicate establishment where workers require specific skills and thus where training costs are higher. (C, Josiah, Ogungbenle, & Akpeti, 2012) International Research Journal of Management Sociology & Humanity ( IRJMSH ) www.irjmsh.com

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David G Allen and Phil Bryant (2012) argues that employees feel comfortable to stay longer, in positions where they are involved in some level of the decision- making process. That is employees should fully understand about issues that affect their working atmosphere. (Allen & Bryant, 2012) CONCEPTUAL FRAME WORK Employee Turnover: Employee turnover which occur in any organization, this might be either voluntary or involuntary. Employee turnover can be defined as when an employee ceases to work for an organization. On a wider level, it is defined, as the proportion of employees leaving an organization during a given period of time, usually one year (Armstrong, 2006), Employee Turnover can be classified in to two types  Involuntary Turnover  Voluntary Turnover Employees who leave the organisation at the organisations request, employee separation initiated by organisation it may be Layoff, dismissal, cost cutting etc are called Involuntary employees Turnover Involuntary Employees turnovers are because of the decision of management, while involuntary turnover will not negatively affect the organisation because it is a management‟s planned decision for example cost cutting, dismissal, termination for gross miss conduct. Voluntary turnover refers to termination initiated by employees while involuntary turnover is the one in which employee has no choice, Voluntary Employees Turno ver which is initiated by Employees, it is employee‟s decision to leave the organisation against the will of the organisation. In general, all resignations not formally initiated by employers are voluntary turnover (Loquercio et al., 2006).This study mainly concentrates on Voluntary employees Turnover, since Voluntary turnover has more negative consequences on the organisation, this study mainly concentrates on Voluntary Employees Turnover. Common beliefs about Voluntary Employee Turnove r: There are some common believes about voluntary Employee turnover and Retention in the organisations and HR departments, some of these beliefs are true and some are false, it is very need of the day to critically analyze these beliefs which extent they are true or not.  People who join for Money leave for money: For some extent it is true that people join for money but it is not always true that they leave only for money, there are other reasons which lead employees look for other organisations.  People join companies and leave Bosses: Most of the time it is true that People join Organisations based on the reputation of the organisation, but they leave the organisation because bad supervisors or Bosses.

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Vol 6 Issue 12 [Year 2015]

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Employees are free to do what he/she may think: It is not possible to organisations to force to stay in the organisation, it is employees will to be or not to be with the organisation Losing an Employee leads to costs 1-2 of his/her annual salary: some time if Employee highly talented. Performing key role in the organisatio n his cost would be 4-5 times higher than his annual salary. The strongest are the first to leave the organisation: Most talented and strong persons are in greater demand in every organisation, so that competitors may lure these employees with offering higher benefits. Happy employees are preferred to stay in the organisation: Most committed employees are those who are more satisfied with the organisation, so that employee job satisfaction and motivation is very important to retain them in longer period. To a certain extent Turnover is Good for the organisation: If less performing employees leave the organisation it will help the organisation to bring fresh and new talent to the organisation.  Reduction of Turnover costs  Committed & Motivated Employees  Improved Productivity

Figure 1: Conceptual Frame work Reasons for Voluntary Employee Turnover

Employee Retained 

Organizational Factors  Company policy administration  Supervision  Working condition  Interpersonal relations  Salary status and security  Incentive  Personal life

and

Individual Factors  Achievement  Recognition for achievement  Interest in the task  Responsibility  Growth and achievement to higher level tasks  Challenging Job

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Responsibility

Retention Strategies Employed

Voluntary T urnover Intention

No Retention Strategies Employed

Continued Voluntary T urnover Intention

Actual Voluntary T urnover Organizational Turnover Consequences: Ex:  Reduced productivity  Loss of skill and knowledge

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Increased replacement costs

Source: Synthesized from Review of Literature.

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ISSN 2277 – 9809 (0nline)

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The Factors influencing on Voluntary Employee Turnover: The factors causing employee turnover have been studied by different researchers from time to time and have been classified into different groups. Thus for instance, Susan E. Jackson and Randall S.Schuler have classified the factors leading to employee turnover into 1. Low Job Satisfaction Dislike the job itself, Work overload, Difficulties with supervisor or peers, Unfair HR practices, and Lack of flexible scheduling II. Insufficient incentives – and Rewards

Low compensation, little recognition. Lack of career development opportunities. Slow advancements. Low Job security.

III. Poor Job Performance -

Lack of skills and competencies, Low motivation, Inappropriate performance, and Lack of resources.

IV. Labor Market Conditions -

Low unemployment rates, Better opportunities available elsewhere, and Aggressive Recruitment by competitors.

V. Other Role Commitments -

Family and Time Conflicts Leisure and Community. Individually

All these factors sometime jointly and sometimes separately cause low commitment in the employee leading to his withdrawal. He goes in search of new or alternate jobs, weighing the alternate job opportunities, Another list of reasons as to why employees leave their jobs is produced by Martyn Carruthers: absence of internal networking, absence of performance goals leading to the absence of an atmosphere of collaboration and cooperation, lack of encouragement to self learning and development, absence of transparent reward policy, absence of pay equality or parity among colleagues, unrealistic goals to explore the latent talent of the individuals and to leverage their competencies for the benefit of the organization, absence of a succession plan, absence of regular communication of employee benefits, and absence of career paths to the employees. He, however, summarizes all these reasons into two factors:  Compensation: If the compensation is not maintained and managed in relation to the employees KSAs (Knowledge, Skills and Attitude), people may leave without giving any notice. International Research Journal of Management Sociology & Humanity ( IRJMSH ) www.irjmsh.com

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Employee Relations Management: Employee relations management is most important function, which has to help the people to concentrate more on their task on hand and to become result oriented. It may be noted that many factors are under the control of the employers. For instance, unfair HR or labor practices. Employers can often offer better pay and benefits. They can create opportunities for employee advancement and promotions. If the employers want can take measures to arrest the factors that are often employee oriented and reduce employee turnover. Employee Retention Employee retention means keeping the employee in and with the organization in lay man‟s language. It involves taking actions that motivate and tempt employees to stay with the organization for the maximum period of time. It is a planned and organized effort. Which should result in catering the diverse needs of employees so that they remain employed in the organization. It may be defined retention as a continuous and planned effort of taking all actions by the organization to retain the knowledgeable, skilled and competent employees selected. (Shakeel & Sahar, 2015) Employee retention also includes various policies and practices which lead the employees stick to an organization for a longer period of time. Retention is a challenge faced by many of the world‟s most admired organisations, lack of human talent is a serious constraint on future growt h of the organisation. Zubeen Mody,Senior V.P., Indusland says “ Employees retention is of utmost importance, at the each level, each individual brings a unique set of skills, where talent is already rare and people with requisite skills and experience are difficult to find, so Retention becomes a critical component of organisation building.” (panigrahy, Rajib Lochan;Kumar sahu, Anil, 2010, pp. 141-147) Why Retention matters Retention is not simply a „feel good‟ issue. The Retention of good employees matters for three important reasons. (Luecke, 2002, pp. 60-65)  The importance of intellectual capital: During the Industrial Age, a firms Physical assets- such as machinery, plants, and even land determined how strongly it could compete. In the present “Knowledge Era” intellectual capital is what defines a company‟s competitive edge. Intellectual capital is unique Knowledge and skills that a organisations work force possesses. Today‟s successful businesses win with innovative new ideas and top products and quality services – all of which originate in the knowledge and skill of Employees. Whenever employees leave, the organisation loses their hard won knowledge and (often expensively) acquired skills. When those employees go to a competitor, the loss is compounded. Not only the organisation deprived of an important part of its knowledge

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base, the competitors gain it- without having to invest the time and money in training that earlier organisation that may have invested. 

Retention and customer satisfaction: Everyone understands that customer satisfaction is one of the most important in business survival and growth. This is another reason that retention is so critical. Simply stated As reported in land mark Harvard Business Review article, a study that involved eight hundred company stores found that “Employees who are satisfied with their work and their company are more likely to create satisfied customers.”  Negative employees attitude and behavior adversely affect the satisfaction of customers,  High employee turnover reduces customer satisfaction and organisation profit  The extent to which organisation employees understood their jobs and organisations strategic objectives had a direct bearing on their attitudes and behaviors.

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The cost of Turnover: The high price of turnover is the third major reason that Retention matters. Employee turnover involves three types of costs  Direct expenses, including the cost of recruiting, interviewing, and training replacements  Indirect costs, such as the effect on workload, morale, and customer satisfaction,  Opportunity costs, including lost knowledge and work that does not get done while managers and other employees focus on filling the vacant position and bringing the replacement up to speed. Factors influencing on Employee Retention (Luecke, 2002)  Selecting right person: Hiring and Retention are two sides of the same coin. They complement each other, if both are done well they produce what every organisation desperately needs: first –class human assets. Hiring suitable person for a job is a good start and also should begin with a new employee orientation that makes them feel welcomed and part of the group.  Creation great environment: The atmosphere in the department or in unit is more important to individual employee, the relationship between immediate supervisor and employee determines the employee productivity.  Free communication: Freely dispensing information about the business, about the financial performance , about strategies and plans- tells employees that you trust them, that they are important partners, and that yo u respect their ability to understand and contribute to the business as a whole  Giving autonomy to e mployees : Many people enjoy working with minimum of supervision, so giving employees as much as autonomy as they can handle , doing so International Research Journal of Management Sociology & Humanity ( IRJMSH ) www.irjmsh.com

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makes them happy and makes manager job easier, and it will gives freedom them to introduce innovative ideas in the work.  Challenging job: Most people – particularly one the most talented employees enjoy a challenge and feeling that organisation entrusted them with bigger responsibility than they had a right to expect, it helps them to enhance their potentials.  Flexibility: Flexible work arrangements are highly successful in retaining employees. Flexible schedule helps employees to achieve work – life balance and also it allows individual employees to work something other than usual 9 to 5, 40 hours, 6 day week, this creates opportunities for people to work even as they accommodate the needs of young children, infirm relatives, and so forth.  Design jobs to encourage retention: Nothing is more soul deadening for an intelligent contributor than a job that is too repetitive, too isolated, insufficiently challenging or downright, unpleasant. So if there is an unacceptable high turnover in a critical job category, it may be able to cure the turnover problem through job redesign, adding variety to a respective job, engaging isolated employees in occasional team projects , adding the job challenge.  Identifying potential defectors early: Identifying and eliminating potential defectors early will prevent spillover effects. If an organization takes care of above said Retention Factors it effectively prevent the High Voluntary Turnover, it is not merely Financial returns which satisfies Employees, There are Other factors Which Makes an Employee emotionally attached and more committed with the organisation who generally use to stay longer period in the organisation. Instead of conducting Exit interview organisations need to conduct “stay interview” by asking people how they feel about their assignments, company policies, and working environment, individual goals, weather they feel included or excluded by corporate culture , and what would keep them with organisation. Using 360 degree feedback will help organisations to check effectives of retention measures. DATA ANALYSIS AND FINDINGS In this study reviewed concepts are Employees Turnover, Voluntary and Involuntary employees Turnover, Common beliefs about Turnover, Factors influencing on Voluntary employees turnover, Retention of employees, why Retention is important, what factors important to retain employees, these concepts studied and analyzed in this study. All literature reviewed in this study accepts that Human resource plays a vital role in the organisation development, it is Human Resource who controls other resources in the organisations so it is very essential to give more focus on the development and keep motivating the Human resource. Because a well motivated and committed employees improves organisations efficiency in terms profit, good productivity, better customer orientation etc. This paper revels that all the reviewed literature says that Voluntary employee‟s turnover affects the growth of the organisation In modern times most of the organisations facing common International Research Journal of Management Sociology & Humanity ( IRJMSH ) www.irjmsh.com

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problem is arresting the ever increasing Voluntary employees Turnover Rate, Losing talented key employees of an organisation hinders its development process it affects the productivity, customer loyalty, organisation may lose the key knowledge which it invested heavily. According to study Important factors influencing Voluntary employees turnover are low job satisfaction it may be because of overload of work, monotones job, insufficient incentives, lack of career development, less advancement, lack of good working conditions, rigid working plans, these are important factors making employees look for another organisations. Losing an talented employee cost as high as 3 to 4 times of his annual salary to organisations, this study analyses major impact of Voluntary Turnover these are losing talented intellectual capital, losing customer satisfaction, disruption in production process, cost of replacing the lost employees, and also this study analyses some of the Employees Retention practices which helps to keep key employees in the organisation for longer time, these are selecting the right person for right job in the organisation, creating good working condition, free communication, giving autonomy to employees, recognition, flexible working conditions, eliminating potential defectors to prevent spillover effect on other well performing employees. CONCLUSION: Organisations facing Voluntary Employees Turnover only recently begun to pay attention to Employee retention. Organisations which are affected by High Voluntary employees Turnover rate have to understand only higher salary and other monetary benefits are not the only decisive factors for employees to leave the present organisatio n, there are many other factors, recognition, work environment, relationship with boss, communication, Challenge in the job, career growth these are some of the important reasons which makes employees look for another organisation, to retain these employees organisations need to check and maintain the system to keep the faith of the employees. Enabling working atmosphere, free communication, recognition of work done by employees, flexible working condition, these factors improves employee‟s commitment towards organisation. Instable human resource proves to be a disadvantage for the organisations losing cost of a talented employee may be 3-4 times higher than his annual salary, organisations need to be implement effective Retention measures to prevent Voluntary employee‟s turnover, and this is how a win- win situation for both organisations and employees can be achieved.

References Allen, D. G., & Bryant, P. (2012). Managing Employee Turnover. (S. Gully, & J. Philips, Eds.) New York: Business expert press, LLC. Anbuoli, P. (2014, April). AN EMPIRICAL INVESTIGATION ON FACTORS THAT INFLUENCE THE EMPLOYEE ATTRITION OF IT SMES IN MADURAI. International Multy disciplinary research journa . Armstrong, M. (2006). A Hand boookof Human Resource Management practice. USA: Kogan Page.

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