"Employee Turnover (leaving an organization) is a major organizational phenomenon. Employee Turnover is important to organizations, individuals, and society. From the organizational perspective, employee turnover can represent a significant cost in terms of recruiting, training, socialization, and disruption, as well as a variety of indirect costs. Given the significance of turnover, it is important for the manager and prospective manager to be able to analyze, understand, and effectively manage employee turnover." (Mobley, 1982)
Employee Turnover is not a new issue. It is relevant today and its importance will be even greater in the future. Many analysts believe that there will be 20 million jobs unfilled by the end of 2008.
The concept of employer-of-choice has intensified in the last decade. Employees want to work for the best employers. Organizations strive to be the "best company to work for" because the statement states directly into lower rates of turnover. Most organizations now view that becoming an employer-of-choice is a strategic advantage.
Like any other organization Beau Rivage also is not indifferent from the problem of employee turnover. Therefore, during the course of my report, I will relate my findings and interview with the Human Resource Manager with the literature review.
According to the HR manager of Beau Rivage, Employee Turnover is a serious problem particularly in the hotel industry. Experience is important but if a person is changing his job, the latter will have to adapt to the standards and style of service of that organization. This is because each organization has a different culture. Also, Employee Turnover is likely to increase in the Mauritian hotels because there is a limited trained resources on the island.Definition
Mathis and Jackson (2006) defines employee turnover as the process in which employees leave an organisation and have to be replaced.
It is a well known fact that in many service industries, the turnover rates and costs are very high.
CIPD (2000) commented:
Turnover may be a function of negative job attitudes, low job satisfaction, combined with an ability to secure employment elsewhere, i.e. the state of the labour market. On the other hand, turnover is a normal part of organisational functioning, and while excessively high turnover may be dysfunctional, a certain level of turnover is to be expected and can be beneficial to an organisation. (Armstrong, 2001)
As stated by the CIPD (2000), turnover can be functional and dysfunctional at the same time. Mathis and Jackson (2006) define these 2 types of turnover.Functional Turnover
It occurs when lower performing or disruptive employees leave. Thus, it can be said that some workforce losses are desirable and beneficial for the organisation.Dysfunctional Turnover
It occurs when the key individuals and high performers leave at critical times. It is as well true that replacing these individuals is not an easy task which often leads to the problem of attrition.
Causes of Employee Turnover
According to Taylor (2002), the major causes of employee turnover can be classified in four categories. They are:
- Pull-type causes;
- Push-type causes;
- Unavoidable causes and;
- Situations in which the departure is initiated by the organisation rather than the employee.
Pull type resignations occur when the major cause is the positive attraction of alternative employment. It is well supported that the saying that there are greener pastures elsewhere. The employee concerned may be fully satisfied with his or her existing job. Despite that he or she decides to move in search for something better. This may be in terms of better pay, more valued benefits package, more job security, better long term career opportunities, opportunities to work overseas.
Seeking to reduce quite rates by improving pull type factors will be effective in the short term only. There is a need to find out what employees really value to avoid turnover.Push-type causes
The major underlying cause of resignations have is the perception that something is wrong with the existing employer. The person concerned may move in order to secure a "better job", but he or she is as less likely to join another organisation without knowing a great deal about it just because he or she no longer enjoys the current one.
A range of different push factors can be identified, ranging from a dislike of the prevailing organisational culture to disapproval of changed structures and straightforward personality clashes with colleagues. Perceptions of unfairness and bored with day to day work are also forms of push type factors.Unavoidable turnover
The reasons for unavoidable turnover are wholly outside the control of the organisation. It does not occur because of dissatisfaction with the job or perceived opportunities provided elsewhere, but for reasons that are unconnected to work in any direct sense. The most common is retirement which affects almost everyone at same stage, but there are others too like
- Illness of employee or a relative for whom he or she has caring responsibilities,
- Maternity - women often preferring not to return to the same job after they leave, or either take a break from work or in order to secure a job that makes it easier for them to combine work with childcare arrangements,
- Relocation- usually in order to follow or join up with a spouse or partner,
- Career break, or re-enter full time education.
Organisations often conclude that nothing can be done to reduce turnover of this kind. This is only partly true, because in many situations the employee who leaves for an "unavoidable reason" could choose to combine working in the same job if he or she really wanted to.Involuntary turnover
Involuntary turnover occurs in situations where departure is initiated by the organisation rather than the employee.
The employee would have remained employed had he or she not been asked or required to leave. Redundancy clearly falls into this category, along with short term layoffs, the ending of fixed term contracts and other dismissals of one kind or another.
Many resignations are also in fact largely involuntary because people often prefer to "jump before they are pushed". Someone who knows he or she is to be made redundant in a few months therefore seeks alternative employment ahead of time while a colleague who believe his employment will soon be terminated on grounds of poor performance secures a job before being formally dismissed.Costs related to employee turnover
Mathis and Jackson (2006) give a list of costs associated with employee turnover. They are as follows:
- Separation costs- include HR staff and supervisor time and salaries to prevent separations, exit interview time, unemployment expenses, legal fees for separations challenged, accrued vacations, continued benefits among others.
- Replacement costs- include recruiting and advertising expenses, search fees, HR interviewer ad staff time and salaried, employee referral fees, relocation and moving costs, supervisor and managerial time and salaries, employment testing costs, reference checking fees, pre-employment medical expenses among others.
- Training costs- include paid orientation time, training staff time and salaries, cost of training materials, supervisors' and managers' time and salaries, co-workers "coaching" time and salaries among others.
- Hidden costs- include costs not obvious but that affect lost productivity, decreased customer service, other employee turnover, missed deadlines among others.
Employee turnover may particularly be harmful when departures may involve expertise being transferred to competing companies.
CIPD (2009) stipulates
Where skills are relatively scarce, where recruitment is costly or where it takes several weeks to fill a vacancy, turnover is likely to be problematic for the organisation. This is especially true of situations in which you are losing staff to direct competitors or where customers have developed relationships with individual employees.
Such departures can put the survival of the organisation at risk as these talented people are often the drivers of profits of organisations (Goffee and Gareth).
This can in turn lead to the "war for talent", the perspective of which is based on the assumption that workers are lost to competitors (Somaya and Williamson). Traditionally, companies choose two strategies when employees move to competitors and they are defensive and retaliatory approaches. The aim of both these strategies is to reduce employee turnover. The retaliatory approach is focused mainly on a threatening approach in order to discourage employees from moving to competitors like litigation. However, it adds to the costs of the employer.
The defensive approach, on the other hand, is aimed at enhancing benefits so that employees gain by staying at the organisation. One such initiative can be done by improving the Employee Values Proposition of the employees. Relating to these, the company may adopt good retention strategies in order to avoid or minimise employee turnover.