Employee Retention and Turnover
Employee retention could be described as the efforts by any business or organization to develop strategies and initiatives that support current staff into remaining with the organization. Retention is “the ability to hold onto those employees you would want to keep for longer than your competition” (Johnson, 2000). Success or otherwise of an organization in retaining its employee’s is measured in terms of Employee Retention Rate (ERR) or through assessment of the Employee Turnover Rate (ETR). High employee retention rate means that employee turnover rate has been low and vice versa. Companies today are interested in retaining valuable employees and good employees are increasingly becoming more difficult
…show more content…
Similarly, Silverthorne (2004) notes that, “turnover causes significant expense to an organization,” including direct costs of replacing an employee and indirect cost related to loss of experience and lowered productivity. These costs have important implications for an organization, notes Silverthorne, and anything that can be done to reduce turnover will lead to significant benefits to an organization.
Recruiting is arguably one of the most critical roles of an HR manager (Pandey et al., 2012). Organizational performance can be credited with the identification and selection of the most talented individuals. An employee with high potential suggests that there is a future viability that is not present in the existing workforce (Yarnall, 2011). An appropriately structured recruitment strategy is essential for the future success of an organization and at times can determine whether that organization will grow or recede during a particular economic period. A successful recruiting strategy can improve recruiting effectiveness by 30% and reduce the time to fill that position by 28% (CEB, 2012). It is clear that whatever recruitment strategy is being used, the desired outcome has not been reached. This study examines recruitments strategies and their correlation on retention with the desire of finding the method
High employee turnover, where workers frequently leave and must be replaced, leads to increased spending on recruitment and training and can indicate management problems. Employees often have good reasons for moving on but if too many are leaving an organisation, can be very disruptive.
In this paper Team C has discussed the issue of poor employee retention concluding in a high employee turnover rate. This is an issue that can be common among some companies and that is a great example of
Retaining employees is one way the turnover rate can decrease, Branham (2000), focuses on retaining valuable employees by incorporating four key elements. The first key elements is, “be a company that people want to work for”. There are many companies that have been labeled as, “employers of choice”. These employers all have something in common, which is how they value their employers (Branham, 2000). They treat their employees with respect and like family. With being an “employer of choice,” people are the most valuable asset; not just customers but employees too. Many companies go above and beyond for their customers, but not for their employees, yet they wonder why they are losing valuable talent.
The retention of employees basically refers to different procedures and practices that help retain employee for a much longer period of time. The following issues should be taken under consideration if they want their employees retained for a longer time period: management, communication, salaries, decision making, perks, career development, recruitment, understanding and appreciation (Belanger and Caron, 2005).
There are two types of turnover, voluntary turnover happens when the employee makes the decision to leave and involuntary turnover is when employees has no choice in their termination (Schmitz, 2012). Every month or sooner managers experience some of their exceedingly qualified employees leave the company. After realizing that their company is becoming less profitable is when they begin to wonder why and brainstorm on ways to retain them. In Information Technology, “the cost of recruiting new staff is high and the loss of continuity when staff leave can also be very expensive” (Bott, 2005, p. 111). In IT, human resources strive to maintain their highly skilled employees while employees’
Employee retention and turnover has been identified as vital manpower planning elements for a long period of time by many organizations. This is largely because a company recruits, trains and educates its employees in order to improve its productivity and profitability. Through these methods, productivity is attained as employees are retained to meet the specific business needs of the organization. Employee retention is also a critical aspect of an organization's planning because human capital has the capability of leaving a firm freely before the expiration date unlike other physical capital of the firm. As a result, a company must invest in hiring, training, and retaining of employees to avoid the consequences of high turnover. In the recent past, technological means have been developed to help in improving the ability of a company to meet its business needs.
As mentioned before, there many possible reasons for retention in the industry. Employee benefits can impact retention. Most organization offer benefits packages to lure employees and hope to retain them for a long time based on benefits. “Depending on the business, meeting employer business goals may be highly dependent on having the right human capital and keeping workers satisfied and motivated” (Rappaport, A. M. 2013). Assuming a healthy workplace helps with cost savings and provides less professional and personal stress for employees. Making sound business investments from the employer perspective, is to provide attractive benefits packages that help with retaining valuable employees and keeping up with the current business market remaining
When accounting for the costs (both real costs, such as time taken to select and recruit a replacement, and also opportunity costs, such as lost productivity), the cost of employee turnover to for-profit organizations has been estimated to be between 30% (the figure used by the American Management Association) to upwards of 150% of the employees' remuneration package.[4] There are both direct and indirect costs. Direct costs relate to the leaving costs, replacement costs and transitions costs, and indirect costs relate to the loss of production, reduced performance levels, unnecessary overtime and low morale. The true cost of turnover is going to depend on a number of variable including ease or difficulty in filling the position and the nature of the job itself.
Workforce turnover is a complex and important issue amongst today's organisations. It is perhaps one of the most often cited cause of increased cost and decreased productivity. No wonder people management has become an important frontier to extract and create more value from company assets. On comprehending the articles, it has become evident that organisations have moved beyond the traditional approach of only investing in core business activities, to invest in employee retention strategies. Many organisations, for example St. George Bank
a good employer. Hence the employee retention rate is very low. The purpose of this report is to propose a
It is difficult to fully calculate the cost of turnover; however, industry experts often quote 25% of the average employee salary as a conservative estimate (Nobscot Corporation, 2016). The direct costs of employee turnover include advertising, recruiting, hiring and training costs. Although there is a significant financial impact to an organization the cost is based only on replacing an individual employee. Turnover can also have indirect costs, such as workplace productivity loss, workflow efficiency and the loss of organizational knowledge. When an employee leaves, they take with them valuable knowledge about the organization, the customers, the current projects and past history, sometimes taking this information to competitors (Nobscot Corporation, 2016). Not retaining the adequate numbers of employees could also lead to over-burdening employees, low employee morale, poor customer service, and more safety concerns (Jones & Gates,
Most companies view recruitment as the most important of their HR challenges, but retaining the talented people whom you already have certainly ranks higher than organic recruiting. Employee retention not only reduces the need to find new talent but also provides the raw materials for promoting people in-house to leadership positions. Focusing on retention can strengthen staff loyalty over longer periods of employment and reduce recruiting, training, orientation and operating costs.
Employee retention has always been an important focus for human resource managers. Once a company has invested time and money to recruit and train a good employee, it is in their own best interest to retain that employee, to further develop and motivate him so that he continues to provide value to the organization. But, employers must also recognize and tend to what is in the best interest of their employees, if they intend to keep them. When a company overlooks the needs of its employees and focuses only on the needs of the organization, turnover often results. Excessive turnover in an organization is a prime indicator that something is not right in the employee environment. We will look at
Employee retention has always been an important focus for human resource managers. Once a company has invested time and money to recruit and train a good employee, it is in their own best interest to retain that employee, to further develop and motivate him so that he continues to provide value to the organization. But, employers must also recognize and tend to what is in the best interest of their employees, if they intend to keep them. When a company overlooks the needs of its employees and focuses only on the needs of the organization, turnover often results. Excessive turnover in an organization is a prime indicator that something is not right in the employee environment. We will look at
Turnovers lead to hidden costs such as new hiring’s, trainings of new recruits, a sudden reduction in organizational productivity during the learning curve of new employees, supervision required is getting increases and it affects other functions such as customer satisfaction, speed of service and etc. Therefore companies need to take corrective and preventive actions in terms of employee retention in view of achieve organizational goals (Hanif, Khalid and Khan,