Employee Turnover

Abstract:-

Employee turnover can have a tremendous impact on organizations; therefore it has received a considerable amount of attention from senior management, human resource professionals and many other industrial psychologists. High employee attrition is one of the most expensive and sometimes an intractable human resource challenge which most organizations face today.

In this paper, I have made an attempt to explore some of the results from a survey of 225 ex-employees of Music Broadcast Pvt Ltd (Radio City, India).

1. Introduction

There is a lot of investment that an organization makes on their employees in way of recruitment, induction, their training and development, maintaining and retaining them within their organization. It is evident that are significant costs involved in hiring, training and retaining new employees. Therefore it is extremely crucial for employers to retain their employees within the organization and prevent them from leaving and going to work for other companies. Therefore it becomes imperative that Managers must measure, control and minimize employee turnover at all costs. Also with the fact that as businesses evolve and grow the competition gets tougher and recruiting and retaining a skilled and a talented workforce in tight job market may often pose up as a great challenge for organizations. Upon review of literature in the area of employee turnover, one learns that there is no standard framework that exists which helps us to understand the employee turnover process. As cited in Ongori (2007) research paper, according to Kevin et al (2004), there are many factors that have been found useful in order to interpret why employees leave organizations. Therefore, there is a clear need to develop a better understanding of employee turnover and more specifically the sources that are key indicators of why employees leave the organization which would then have a profound impact on the strategies that managers can employ in order to reduce employee turnover within their organizations. (Kevin et al 2004). According to Meaghan et al (2002) the value of employees to an organization is a very crucial element in organizations success. This value is intangible and cannot be easily replicated therefore, it becomes very important that managers should control employee turnover for the benefit of the organization. The current literature on employee turnover is primarily divided into three groups, viz: - sources of employee attrition, effects of employee turnover and the strategies used in order to minimize turnover. Through this project, I intend to identify primary reasons for employee turnover at Music Broadcast Pvt, Ltd which is a SME based in India and make recommendations to the organization on how they can control / reduce employee turnover.

2. Aims & Objectives:-

Organizational knowledge and employee turnover have been studied extensively. High employee turnover can result into significant costs to organizations and also have a profound impact on other tangible aspects like loss of knowledge/skills. Therefore it is not an understatement to say that controlling and reducing employee turnover is of prime importance to organizations today. The objective of this research project is to identify and understand the primary reasons of employee turnover and provide information management support to various organizational functions like HR, operations and other line managers in order to help them control / minimize employee turnover within their organization. To follow up the objective of this research,

2.1 Research Questions

1) To identify current overall HR and employee retention policies and procedures at Music Broadcast Pvt Ltd (Radio City, India).
2) To determine the prime reasons why employees choose to work for this company.
3) To determine if the compensation package offered to employees are competitive.
4) To identify and determine primary reasons that cause employee turnover in the organization.
5) To determine job satisfaction level of employees.
6) To make recommendations to the management to effectively use IM support in order to help reduce employee turnover.

3. Research Methodology:-

Both quantitiave and qualitative methods were employed to understand as to why employee turnover occurs within the organization. This research was conducted on Music Broadcast Pvt Ltd (Radio City, India), which is a medium sized organization. A random stratified sample of ex-employees from all departments / locations was selected which included non-management, middle level management and senior management employees. Surveys along with a cover letter explaining the significance and the need for conducting the same were sent to all 225 ex-employees across 17 different locations across India. In order to ensure a good response rate, follow up telephonic calls were made by a HR executive at Music Broadcast Pvt Ltd in order to encourage respondents to complete and return the survey.

The survey was administered using email, with a standardized questionnaire of 17 questions. The primary reason for using an email survey technique was because of the geographical spread out of the company's ex-employees over 17 different locations in India. There were other obvious reasons of using the email survey technique over the other available techniques keeping into account the time, resources and feasibility factors into account. The advantages of using email surveys has also been cited into various literature available on business research methods; some of them being low cost, faster response times, better response to questions, and no geographical limitations which were some crucial factors that had to be taken into account in order to make this study effective.

As Bryman (1995) suggests that there are three conditions that should exist for using surveys to be an appropriate means of collecting data. These are listed as under:-

1) The research goals call for quantitative data to be collected.
2) The information to be obtained is specific and is familiar to respondents.
3) The researcher has well defined problems and has prior knowledge of the range of responses that are likely to emerge.

Bryman & Bell (2000) have mentioned that the advantage of using an email survey technique is that respondents feel more comfortable completing surveys that are administered via emails. This was another reason of choosing the email survey technique because it was significant to get honest responses from respondents.

Participants in the study were asked to complete the survey which asked them to describe various factors like their job satisfaction, reasons for leaving the organization, management / style of supervision, compensation offered etc. Most of the questions were of a “click and choose” format, although most questions also provided the respondent with an option of providing additional comments. In addition, 2 telephonic (VOIP) interviews with the assistant HR manager and two other line managers were conducted to supplement / reduce potential gaps in relation to survey findings.

3.1 Data Collection:-

The methods of data collection is the most vital aspect in any research because inaccurate data can have an impact on the results of the study resulting into invalid results which we can say defeats the whole purpose of the study. Therefore a careful attempt was made in order to ensure that the data collected for this research would provide a meaningful insight to the purpose of this study.

This study involved collecting both primary and secondary data, primary data that was collected for this study employed both quantitative as well as qualitative methods of data collection. Primary data collection also involved collection of various policy and procedure documentation that are followed at Music Broadcast Pvt Ltd. These involved company HR policy, employee induction, employee relations, equal opportunity policies etc. These documents were collected in order to understand and build a framework of practices followed by the organization and to identify potential gaps if any in relation to theory and practice. Further, Quantitative data for this study was obtained via administering email surveys to 225 ex-employees from 17 different locations. Qualitative data was obtained by conducting in-depth interviews with the Assistant HR Manager and other front line managers. Secondary data collection involved literature review on the topic of employee turnover and studying various employee turnover and retention models and strategies. Various sources like books, online journals, review of existing research papers on the subject and internet were used for secondary data collection.

3.2 Data Analysis:-

The data obtained through responses of email surveys was collated into MS-Excel spreadsheets and compiled at first. The data obtained was categorized into different buckets and groupings. The analysis process was divided into two sections.

First, quantitative data obtained from email surveys was analyzed using descriptive statistics technique in order to summarize the data set obtained. This provided a meaningful insight of various factors like primary reasons why employees quit the organization, their job satisfaction levels, relationship with their supervisor, and satisfaction on compensation received.

Qualitative data that was obtained both from questionnaires and interviews was analyzed using the grounded theory approach; this was done to make a comparative analysis on the data collected from interviews and the survey, which helped to identify and determine potential gaps between what managers said in the interviews and the actual practices that are followed. According to Glaser & Strauss (1000), comparative analysis can be used for social units of any size and is a strategic method for generating theory.

4. Discussion:-

In this section, I have presented and discussed the main findings from the survey that was conducted. I have also made an attempt to relate the survey findings to the existing literature in order to build up the knowledge of this research and also establish a theoretical framework to this study. A total of 225 ex-employees were sent the survey out of which 108 responded to the survey, there by the response rate was 48%.

4.1 Primary Reason for Employee Turnover:-

Many researchers have made an attempt to study and determine why employees quit the organization. There are various factors that affect an individual's decision to move from one organization to another or just leave the organization. According to authors Firth et al (2004) there are a range of factors that lead to job related stress, lack of commitment towards the organization and job dissatisfaction which cause employees to quit. Apart from stress and job dissatisfaction there factors like personal reasons and locus of control that influence an individual's decision to quit. Firth et al (2004). However, Abassi et al (2000) argue that there are other factors like inefficient and poor recruitment practices, style of management, lack of recognition, work place conditions, and a lack of competitive compensation system that cause employees to quit the organization. As cited in Ongori (2007) research paper, authors Manu et al (2004) emphasize that employees quit the organization because of economic reasons. They used an economic model to demonstrate that people quit their jobs due to economic reasons that exist in the labor market.

As it can be seen availability of better career opportunities was the undoubtedly the biggest reason why employees quit the organization; the second significant reasons that arose from the survey findings was that 13% respondents said personal reasons as their reasons for leaving; however one respondent who marked his reason for leaving as personal reason mentioned salary as the reason for leaving in the additional comments. The top third reason why employees quit the organization was style of management / supervision which contributed to 7% staff turnover amongst the sample of respondents. In totality the top three reasons; viz. Better career opportunity, personal reasons and style of management / supervision have a significant impact of 61% turnover. Another interesting observation that can be made is that work conditions and lack of recognition have a 10% impact on attrition. In order to further drill down on the cause of turnover, below presented is a table of department wise attrition indicating primary reasons for attrition.

The table above provides a significant and meaningful insight of the causes and the source of turnover. Programming and Sales departments have the highest turnover with the top three buckets being better career opportunity, personal reasons and management style causing around 50% and 58% turnover within programming and sales departments respectively. We can relate these findings to the existing literature that has been reviews at the beginning of this section; for instance: Turnover due to better career opportunity is related to the economic reasons why people leave the organization. Manu et al (2004)

However, further drill down on the reasons why programming and sales departments had such high employee turnover produced a mixed set of results. One employee from the programming department mentioned “Mom is ill and alone at my home town; she needs a proper care and treatment at this moment of time” which can be categorised as a personal reason while another had to say “negativity due to the insecurity of just 2 people in the programming department” which can be categorised as turnover due to relationship with co-workers. In addition, an attempt was made to determine if there was any significant relationship between tenure of an employee and turnover.

Upon the review of literature, not much clarity was found on the relationship between an employee's tenure and turnover in organizations. According to (Mobley, 1977) tenure of an employee is one of the best measures that can be used to predict turnover. Author (Wanous, 1992) states that new employees often leave the organization because their expectations are not met which results into a violation of their psychological contract resulting into turnover. However, Louis (1980) argues that this happens because new employees compare their actual experience with their past work experiences. Hence, past work experience has a significant influence on an individual's decision to quit in case his/her expectations are not met. The table below shows turnover categorised by employee tenure.

Employee's tenure was divided into 4 groups as seen above. The table above highlights when exactly turnover occurs in relation to an employee's tenure. As seen in the table above, maximum turnover occurs when the employee is less than 6 months old in the organization and then when the employee's tenure is greater than one year and less than two years. We can relate these findings to the existing literature; and it may to right to say that these employees quit the organization because of unmatched expectations and violation in their psychological contract.

However, further drill down on the tenure wise attrition provides a meaningful insight to identify potential gaps between the policies and procedures practices by the company and what actually may be happening. The table below shows primary reasons for turnover categorized by employee tenure.
Primary Reasons for Turnover Categorized by Tenure

The table above provides a snapshot of the primary reasons for turnover categorized by employee tenure. I have highlighted the findings that I believe are potential gaps between the policy and procedure documentation and the actual practices in the company. According to the recruitment policy at Music Broadcast Pvt Ltd, recruitment executives need to ensure and identify candidate's attitude; this also covers probing the candidate well enough to ensure stability. However, the survey findings show that 10.34% employees that Quit the company within 6 months of employment specify personal reason as their reason for leaving; in practice there may be a possibility that these candidates are not probed good enough to learn any personal circumstances that might trigger an intention for turnover.

Another area of concern that is obvious from the table above is that Quality of supervision / Style of management is a factor that has consistently contributed to the fact of employees leaving the organization. These findings clearly demonstrate an area of opportunity for the company to provide support / trainings to their managers to better manage their work force. In addition to these, the review of literature on interpersonal theories of leadership like leader-member exchange (LMX) theory also have concluded to find that employees usually develop positive attitudes and experience higher levels of motivation when they receive help and support from their managers/supervisors. (Gerstner & Day, 1997)

Since quality of supervision /style of management was the second high impact factor that contributed to employee turnover, it becomes necessary to diagnose if managers treated all employees fairly and equally. It becomes more so important because any turnover resulting from inequality could also have legal implication on the organization. According to the policy and procedures at Music Broadcast Pvt Ltd, the organization encourages and promotes Zero discrimination against any of its employees. The pie chart below demonstrated the results from responses that employees gave if their managers treated them fairly and practiced equal treatment with all their employees.

The findings on the above clearly would raise concerns for the organization. Responses from survey findings show that only 47% managers treated their employees equally at all times. Responses show that an alarming 18% and 6% category of managers never or infrequently treated their employees equally. These findings clearly indicate that there are leadership challenges that exist within the organization and the senior management along with other organizational managers should work to address and fix them. In addition, these findings also demonstrate a relationship with the job satisfaction levels of employees.

Further, several models of employee turnover have been proposed in literature. According to authors (Horn & Griffeth, 1995) several investigations in the past have revealed that organizational commitment and job satisfaction are crucial factors that influence turnover intention. Job satisfaction according to (Locke, 1976) is the feeling of positive emotions an employee has towards his job; Organizational commitment has been defined as the extent to which employees feel loyal towards their jobs (Price, 1997). Many studies have been conducted to examine the relationship between organizational commitment, job satisfaction and turnover (Currivan, 1999). Authors (Hammer, 2000; Marini, 2000; Denton, 2000) stated that individuals who are satisfied and happy with their jobs are more dedicated and perform better than others. Many researchers have made an attempt to determine factors that influence job satisfaction; we can find several theories and models in literature that explain and attempt to identify determinants of job satisfaction. One such researcher Frederick Hertzberg conducted a study to understand attitudes of employees and their motivation. According to the two factor theory of Hertzberg (1996) there are two groups of factors that determine an employee's satisfaction or dissatisfaction. In his two factor theory of Hertzberg (1996) states that only job-content related factors like achievement, responsibility and the actual work itself lead to satisfaction. Conversely job context related factors like pay, security, supervision, work conditions lead to dissatisfaction. Therefore it is significant to study job satisfaction as it is one of the crucial indicators of turnover. The pie chart below shows the job satisfaction level of the ex-employees from our survey. In total 106 respondents responded to this question and 2 respondents left the answer field to this question blank.

As we can see from the findings on job satisfaction level of employees, results are an indicator that overall satisfaction level of employees who left the organization was decent however; there is a clear area of opportunity for Music Broadcast Pvt Ltd. Overall 47% of employees that responded to the survey said that their level of satisfaction in relation to their job was good. However, this clearly shows that there is ample area of opportunity for MBPL to work on the satisfaction level of their employees. In order to further drill down, the table below shows the responses on job satisfaction categorized by departments.
Job Satisfaction categorized by department (Number of Replies)

We can see that the maximum turnover occurs in the programming and sales departments. Out of the dissatisfied employees nearly 10% employees are from programming and sales departments. Employees from technology and infrastructure, activation and digital media and new business are the three departments that have not reported any dissatisfaction from their job.

As mentioned before, since the survey covered respondents from 17 different geographical locations spread across India, the section below shows employee turnover categorized by location. The Bar chart below shows employee turnover by location.

The location wise turnover shows that Banglore, Mumbai, Pune and Hyderabad have high turnover which contributes to a total of 42% of the total employee's that leave the organization. In order to understand the cause of high turnover in these locations, I categorized employee's tenure by their location of see if any pattern existed in turnover depending upon the location of employees. The table below highlights location wise turnover categorized by employee tenure.

The figures above clearly indicate that one area of concern for the organization on the whole is the number of employees leaving within six months of their tenure in the organization, with Bangalore, Mumbai & Hyderabad having the highest number of employees leaving the organization within six months of their service. The second important and high impact area is the employee attrition that occurs between first and second year of an employee's service with the organization, Pune had the highest number of employees leaving the organization in this category. However, these figures show that there may be potential gaps between the policy and procedures that the organization has in place with what actually happens in real. A high number of employees leaving the organization within six months of service demonstrate a need to fix potential gaps that may exist between the recruitment policy of the organization and real time operations. A similar need is clearly identified in relation to the organizations employee relations policy to keep employees from leaving the organization.

5. Conclusion:-

Through this project, I have made an attempt to understand primary reasons of employee turnover at Music Broadcast Pvt Ltd; a combination of quantitative and qualitative research methods was used to conduct this study which used data collection techniques like email surveys and in-depth interviews. Both quantitative and qualitative data collected were analysed by employing analysis techniques like descriptive statistics and grounded theory approach; consequently the findings from the survey and the interviews have been presented.

(Recommendations yet to be completed)

6. References:-

1) Ongori, H. (2007), “A review of the literature on employee turnover”, African Journal of Business Management, pp. 49-54, ISSN 1993-8233.

2) Kevin MM, Joan LC, Adrian JW (2004). “Organizational change and employee turnover” Personnel Rev. 33 (2):161-166.

3) Meaghan Stovel, Nick Bontis (2002), Voluntary turnover: knowledge management-friend or foe? J. intellect. Cap. 3 (3): 303-322.

4) Byrman, A. & Bell, E. (2000), “Business Research Methods, 2nd Edition, Oxford press.

5) Bryman, A. (1995), "Quantitative and qualitative research: further reflections on their Integration", in Brannen, J. (Eds), Mixing Methods: Qualitative and Quantitative Research, Avebury, Aldershot.

6) Firth L, David J Mellor, Kathleen A Moore & Claude Loquet (2007). “How can managers reduce employee intention to quit?” J. manage.Psychol. 19 (2): 170-187.

7) Abassi SM, Hollman KW (2000). "Turnover: the real bottom line", Public Personnel Management, 2 (3):333-342.

8) TBD - Manu et al.

9) Mobley, W.H. (1977), "Intermediate linkages in the relationship between job satisfaction and employee turnover", Journal of Applied Psychology, Vol. 62 No.2, pp.237-40.

10) Wanous, J.P. (1992), Organizational Entry: Recruitment, Selection, Orientation and Socialization of Newcomers, Addison-Wesley Publishing Company, Reading, MA.

11) Louis, M.R. (1980), "Surprise and sense-making: what newcomers experience in entering unfamiliar organizational settings", Administrative Science Quarterly, Vol. 25 No.2, pp.226-51.

12) Gerstner, C. R., & Day, D. V. (1997). Meta-analytic review of leader-member exchange theory: Correlates and construct issues. Journal of Applied Psychology, 82, 827-844.

13) Hom P.W., Griffeth R.W. (1995). Employee turnover, South Western college publishing , Cincinnati, OH pp. 200-340

14) Locke E (1976). “The nature and causes of job satisfaction", in Dunnette. MD (Eds). Handbook of Industrial and Organizational Psychology, Rand McNally, Chicago, IL, pp. 1297-1349.

15) Price, J.L (1977).The study of turnover, 1st edition, Iowa state university press, IA pp10-25.

16) Herzberg, F. (1966), Work and the Nature of Man, World Publishing Co., Cleveland, OH.

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