Employee Turnover: Issues In Human Resources

Employee Turnover: Issues In Human Resources INTRODUCTION There has been a clear shift from the manufacturing to knowledge based industries in the last few decades across the world. Employee turnover has been one of the most broadly studied areas of interest due to its significance to labour in the knowledge based industries. Employee turnover is being treated as a critical issue in Human Resource perspective, as it can hurt the overall productivity and subsequently organisational success. A key problem for service based organisations has been attracting and retaining the high quality employees (Heskett at al, 2008). According to Hokey Min, (2007) employee turnover can generally be analyzed in the terms of demographic variables (for eg. gender, age, educational level), occupational variables (for eg. Skill level, experience, tenure, status), organisational variables (for eg. Firm size, industry, job contents, working environments) and individual variables (for eg. Pay scale, reward, advancement opportunity, job security, job involvement). D ifferent employees will have different variables affecting their jobs and these variable factors change overtime. And in some organisations employee turnover depends on persons suitability, like Autry and Daugherty (2003) as cited by Hokey Min (2007) suggested that person-organisation fit could significantly affect employee turnover, because employees whose expectations about their company and supervisor characteristics are unmet are more likely to live their companies. The recruitment of the talented and trained staff is the outmost importance today. However an important aspect is even more critical needed to be looked is the retention strategy for the current employees. If the organisation is not able to retain the trained staffs then there no means of recruiting the new staffs and training them. In this literature the researcher elaborates different theories and journals on voluntary employee turnover. According to CIPD (2000) as cited by Michael Armstrong (2003) Turnover may be a function of negative, low job satisfaction, combined with an ability to secure employment elsewhere, i.e. the state of the labour market. In other way, turnover is a normal part of organisational functioning, and while exceeding high turnover may be dysfunctional a certain level of turnover is to be expected and can be beneficial to an organization. A report from the Human Resource Benchmark Group cited in IRS, (2002a) as cited by Ian et al, (2004:167) has listed the top five factors affecting an employees decision to stay or leave an organisation as: The quality of the relationship with their supervisor or manager; An ability to balance work and home life; The amount of meaningful work they do-giving a feeling of making a difference; The level of co-operation with co-employee; The level of trust in the workplace. The existing literature review explores the employee turnover with a discussion of relevant theories, empirical study factors and the variable in this study, including intent of employees leaving, job satisfaction, organisational commitment and different reasons or factors effecting employees in turnover. The above literature was studied to know or understand the overall factors affecting employee turnover. In some cases it is reported that as much as 60 percent of all Call centres employees leave their jobs within one year of employment, costing thousands of dollars for replacing those departed employees Gooley (2001); Autry and Daugherty (2003) as cited by Hokey Min (2007). In contrast to the rich literature about employee turnover issues, research dealing with Dell employee turnover. The researcher is trying to obtain what key variable factors could affect in Dell employee turnover. TURNOVER AND ITS AFFECTS Turnover is defined by Price (1997.P15) as cited by Catherine(2002), the ratio of the number of organizational member who have left during the period being considered divided by the average number of people in that organization during the period. High turnover can be seen as synonymous with the employees of the specific company or occupational sector having a short organizational tenure when comparing to the other companies. If the organization cannot retain the employees then it will be more expensive for any organization, hence in understanding the causes behind the turnover has a significant importance in the saving and in the organizational success (Buck and Watson 2002).in a competitive business world the different wing of the organization adds competitive advantage hence the retention strategy for the companys human resource is of extreme important in gaining competitive advantage over the rivals (Pfeffer 2005). The resignation of the highly trained knowledge workers poses addi tional threat to the employees due to the fact that they often substantial knowledge in their fields creating a risk for loss of intellectual property (Lee and Maurer 1997). Shaw and Gupta(1998) has discussed the importance of differentiating the voluntary turnover and the non-voluntary turnover, in the later one the employee has no choice. Buck and Watson (2002) concluded that the main researches were done on the basis of finding the causes of employee decisions on turnover. The voluntary turnover is avoidable and controllable through different strategies putting together thus the organization can pay more attention in their regular operations thus gaining the competitive advantage. According to Griffeth (2000) one of the method of measuring the turnover risk to the organization is to measure the employees turnover intentions because it is most frequently recognized predictors of employee turnover. While many model on the turnover research predicts the intention as the direct antecedent of the turnover but there may still reason to find on the construct. Campbell and Allen (2007) said it is absurd to focus entirely on the predictors of turnover as it is not comparable to focusing on the actual turnover behavior, a casual relationships may exist directly between the other antecedents and turnover. It is found in their research is that the turnover behavior is directly related to the several aspects, Supporting their argument that it may be important to include not only the measure of turnover intention but also the actual turnover behaviors. Steers and Mowday(1981) suggested a model of the processes leading to the voluntary turnover that although somewhat dated make an excellent conceptualization. This model pertains the turnover is a sequential process consisting of three steps. This model suggests that employees follow a method for the turnover. According to this model the initial expectation of the job creates a employee attitude regarding their job. These job attitude influences many dimensions of employee perception and behaviors, including job performance and views of the company. The poor performance attitude of the employees can also trigger the intention to leave, which in turn influences the turnover at least two ways. It may lead to actual turnover decision without any looking after any job alternatives, or it may lead to employees searching for the alternative employment. It is found that if the employees are considering few alternative then the employee is less likely to quit the organization. Conversely if the employees are able to quit the job through finding alternative ways then the probability of turnover is remarkably increased.(Steers and ,Mowday 1981). Age and Turnover As this research is pertaining to the turnover in among this BPO industry, the demographic factors such as age and sex have extreme importance. In the field of the turnover research the age and the organizational tenure are widely used as predictors of the turnover (Van Breuklen, et al 2004). A number of research shows that these demographic variables are negatively correlated with the voluntary turnover. This shows older employees are less tempted to voluntary turnover than the young employees and employees with long employment history is less likely to turnover than the employees with relatively short period of employment service(Sturges and Guest 2001). They have also mentioned that the first year of the employment is crucial than the other and if the employer is able to retain their recruits for any substantial length of time. This shows the importance of the satisfaction of the employees in the first year in the work related aspects. When discussing the behavior and turnover intentions of the young employees, It must be also consider that the young professional may be subjected to a rather atypical occupational status and they might be in a unique situation as they do not want to follow the same path of the other employee groups (Rouse 2001).According to Niederman (2007) the information technology related professional often use internet as a tool for seeking opportunities with a minimum effort and the employees try to keep in touch with the potential employers resulting an efficient way of job search with minimal effort and time. Niederman also mentioned that if the response rate from the employers is high then the turnover rate will also be high. Niederman concludes that Theoretically, this implies that a significant number of these [turnover] decisions are likely to involve some consideration of alternatives even without dissatisfaction. Thus, we propose that satisfied IT related professionalsà ¢Ã¢â€š ¬Ã‚ ¦ regularly scan the labor market for even better jobs in terms of career opportunities, compensation, and other attributes. Then, when such jobs are found or otherwise present themselves, many professionals will often compare and accept the new job if it is judged better. (p. 336). Author Coff.( 1997) as cited by David A Foote (2004) examines employees job perceptions with regard to capacity of changing or leaving jobs and focuses on the assimilation and management of human assets. Suppose in order to reduce turnover firms must either increase employees positive perceptions of their current jobs or decrease their positive perceptions of alternative jobs.Steer Modway (1981) as cited by Robert et al, (2005) suggest that lower performing employees have an increased interest in voluntarily leaving an organisation, since they gain little job satisfaction from operating within their work environment. According to Sager et al, (1998),Fox Fallon,(2003) as cited by Everd et al,( 2007) turnover is seen as a mental division intervening between an individuals attitude regarding a job and the stay or leave division and that can be regarded as an immediate antecedent to stay, or leave INFLUENTIAL FACTORS It is to be noted that what can be done on retaining the employees in the long run of the organization. To answer this question it should be taken in to consideration those different domains of the influential factors in their choice between staying with the organization and leaving the organization. High turnover rate can be seen as the employees been dissatisfied or job related issues mainly due to the problems in the organizational side or employer side. Many research have been done to identify the factors influencing these perceptions and within these researches it has been found that the reasons are multidimensional, and it is difficult to explain the turnover with one factor. The following section presents the different factors of the employee turnover. Job satisfaction: There are many factors of that come out of the employee turnover research, and the most important one standing in top of the priority is the employee satisfaction. However this accounting for the factors creating this satisfaction is not entirely unproblematic. Job satisfaction is account to be one of the most important variable to be looked when measuring the employee turnover. Nonetheless, it is important to explicitly define the term. Oshagbemi(1999) defined the term job satisfaction as follows In generalà ¢Ã¢â€š ¬Ã‚ ¦, job satisfaction refers to an individuals positive emotional reactions to a particular job. It is an affective reaction to a job that results from the persons comparison of actual outcomes with those that are desired, anticipated or deserved. (p. 388) The job satisfaction has been analyzed in many perspectives in this literature. Job satisfaction is the often regarded as the attitudinal outcome of the numerous antecedents. To reflect the term several constructs have been analyzed. It is found that the group culture of the organization is largely depend on the job satisfaction (Moynihan and Pandey, 2007). According to Ting (1997) the relationship between the group members and supervisors are positively correlated with the job satisfaction. Kim (2002) showed that a positive relationship between the participatory management style and job satisfaction exists among the employees. According to Ellickson (2002), the evidence for the notion that departmental pride significantly and positively predicts job satisfaction, while Steijn (2004) in turn found that the organizational climate was important for predicting job satisfaction. Whether or not employees perceive that what they are doing is worthwhile, sometimes dubbed as their sense of o rganizational purpose, was recognized by Moynihan and Pandey (2007) as important for job satisfaction. On a closely related note, employee feelings of role or task clarity, generated by their organization making it clear to them what they are expected to do, is suggested to be linked to both employee job satisfactions. Whether or not the employees feel what they are doing is worthwhile is recognized by Pandey and Moynihan as important for creating the job satisfaction. On a close analysis of the employees perception of the organizational clarity of the message to be done by them is more closely related to the employee turnover and satisfaction (Allen 2006;Kowtha 2008). Hedlund (2004) mentioned that employees find the other job attractive if they able to distinguish their performance and the results out of it. According to Mynard (2006), the employees view of underutilization of their skills are negatively correlated with job satisfaction and positively correlate to the turnover intentions. Heduland (2004) found relation between the possibility of the mentally stimulating jobs appear to be important for the employee perception of their jobs. According to March Simon (1958) the exposure of employees to alternative employers affects the ease of movement. Employees present in different networking acti vities have an increased visibility and evidence have been found that these employees with larger external connections had a shorter duration of group membership. When involved in networking activities, one becomes more aware of work alternatives and working conditions in other organizations. Employees with wider contact networks are then more likely to evaluate external alternatives, and potentially leave the company. (Allen Griffeth, 1999). As said before the demographic variable such as age and the employment period have been the subject of the many researches and Ting (1997) found a positive relationship between the age and the job satisfaction. A research conducted by Ting(1997) suggests that there is a generation gap between the old employees and the young ones. The old employees seem to be more committed towards their jobs and they seem likely to be satisfied with their work (Moynihan and Pandey 2007). Hence the length of the employment is similar to the age in finding the job can correlate with job satisfaction (Kim 2002). A large number of researches on the occupational and organizational research has shown that the relationship between the job satisfaction and the employee turnover and intentions. Hom and Kinicki(2001) has investigated the field of employee job dissatisfaction, they come across a casual sequence in which the dissatisfaction start to cause turnover through a set of mediating factors such as turnover cognitions. A notable relationship has been found between the job satisfaction in mediating the relationship between perceived organizational support and turnover (Allen 2007). Organizational commitment: Organisational commitment plays an important role in the mindset of the employees when it comes to turnover decision. Committed employees usually have good attendance history and stay with the company in the long run as compared with the non-committed employees (Kline Peters 1991; Mowday et al. 1982; Somers 1995). There are lot more construct to the organizational commitment, the construction of the organizational commitment is evolved from the job related behavior like absenteeism, voluntary employee turnover, job satisfaction, job involvement, performance and supervisor behavior (Finegan 2000). One of the important way to build the organizational commitment is to implement a suitable organizational culture giving values and everybody in the organization is informed with organizational mission. According to Arthur (1994) there should be a strong human resource policies to build the organizational commitment instead of controlling the voluntary turnover and high productivity. These high HR management practices are distributed among the employees and portrayed by the use of information distribution. Problem solving , reduces status difference, training and development of the employees as valuable resource rather than treating them like a disposable factor of production(Wood and de Menezes 1998). The Human resource and management of the organization must try to recruit the employees with more commitment, for this the recruitment officer should concentrate in identifying the commitment factors. It is not possible to measure commitment in each of the employees but it is possible to measure and analyze the organizational commitment of the employees as a whole. The expected outcome of the employee training is the low voluntary turnover and high productivity. Greenhalgh and Mavrots mentioned that it is difficult to measure the return on investment on the human capital as the retention and period of retention but there is evidence of an inverse relationship between la bour turnover and extent of Human resource department. There are three factors of organizational commitment such as 1) Affective, 2) Continuance, 3) Normative. Meyer and Allen (1991) Affective: Affective commitment explains employee emotional attachment and identification with and involvement in the organization. In this type of commitment employees really want to stay with existing employer. Continuance: Continuance commitment refers to employee awareness regarding cost attached with leaving the organization. People dont willing to resignation because they need to stay due to certain reasons. Normative: This commitment shows a feeling of obligation to continue working in the same organization. People stay in this case because they feel that they have to stay. Above all affective commitment has mostly studied and thorough researched topic due to consistent relationship with organizational outcomes like performance, attendance and employee retention (Meyer and Allen 1997). Few studies on turnover have advocated the need to consider both individual and organisational factors in making predictions about employee attitudes and related behaviour, Porter, L.W.Steeds (1973) as cited by Rachid (1994) from the above statement it can be assumed that most of the employee turnover decisions are made basing on the individual factors and further more research by Barbara et al.,(2005) states that factors influence employee turnover by numerous internal factors and also by external factors. Overall if you see both organisations and the labour market change continue at an alarming pace. As far as the external factors are concerned, most people will leave their present work if they perceive that there are ample opportunities for acceptable alternative employers. And if we take internal factors it could be job security, independence: to do things in employees own way, unpleasant working conditions etc. Some past studies have postulated and identified different variables as being associated with turnover, satisfaction, commitment and intention to quit, have generally been accepted as important antecedents to turnover. Actual turnover is expected to increase as the intention increases and career factors are not related to turnover when turnover intention is held constant Mobley et al, (1978) as cited by Barbara et al. (2005). Turnover Birgit et al. (2007) intention can also be seen as a positive phenomenon from the employee point of view. In addition to reasons such as having received a better job offer with respect to material (for eg. benefits). Turnover intension can be a response to the need to adopt to the changing labour market, which requires more and more flexibility on the employers part Hall (1996); Van Dam (2003). As cited by Birgit et al (2007). In some cases turnover is caused basing on works repeatedness like Guests, R.H.(1955) as cited by Rachid (1994) early comparative study of assembly and non-assembly workers to reaction to the jobs suggests that the greater job-repetitiveness led to increased turnover. And for instance Guests study appears that potential moderating have been ignored which affects that personality variables may have no such impact. Work Environment / Supervisor Behavior Working condition has an important role in the job satisfaction and organizational commitment among the employees. The work environment includes the all the facilities and features for employees (Dawson 1986). Supervisor behavior and related views of the employees have a direct impact on the employee turnover regardless of the views on the management and attitude itself, emphasizing the importance of relationship with their supervisors or leaders.(Maertz at al 2007). However the influence of the of the supervisors communication are not limited to a specific supervisor. But it can be taken in other way as well, since supervisors are often seen by the employees as representatives of the organization and their behaviors can influence the employees perception of the organization as a whole.(Van Vuuren et al 2007). Employees normally keeps a common beliefs about to what extent the organization values their contributions and cares about their well being. These believes of the employees are commonly referred as the employees perceived organizational support (Hutchison and Sowa 1986). The organizational support theory states that the relationship between the employees and the organization can be made firm through exchange of some positive outcomes. This means if an employee is receiving favorable treatment from the organization then the individual is committed to return this by avoiding behaviors that would harm the organization. This can be viewed as an employee with high level of perceived organizational support will view the things that are harmful to the organization as a violation to the relationship with the organization. Such employees will try to remain in their work and perform their responsibilities as an obligatory way (Eisenberger at al 1986). Eisenberger (1986) found an inverse correlation between perceived organizational support and voluntary withdrawal signs such as absenteeism and tardiness. A recent study conducted by him concluded that When individuals feels that their organization cares about their well-being and values their contributions, they are less likely to remain from their usual work obligations, even when such behaviors are encouraged through the high levels of withdrawal displayed by coworkers (Eder Eisenberger). Employees perceptions of support from the organization are vital not only for inducing or reducing general withdrawal behavior, but also with regards to turnover. Lots of recent studies have found significant relationships between perception of the organizational support and turnover intentions (Allen et al., 2003) or actual turnover ( Eisenberger, et al., 2007). These findings reveal that Perceived organizational support may have a more broad effect on turnover than historically in the past tho ught, as highlighted by Maertz Jr. et al. (2007) who pointed out that perceived organizational support can influence turnover cognitions and behavior through other mechanisms besides improving global affect-loaded work attitudes. Specifically, perceived organizational support can generate obligations in the worker to reciprocate through remaining with the organization. These obligations to stay may cause a worker to have fewer turnover cognitions and dismiss them more quickly. Employees perceptions of organizational and supervisory support and communication influence numerous other attitudes and outcomes apart from withdrawal behaviors and turnover. One of these other outcomes is organizational dedication. This term is lacking a uniform definition, but usually organizational dedication can be defined usually as a psychological link between the worker and his or her organization that makes it less likely that the worker will voluntarily leave the organization (Allen Meyer, 1996). In the earlier literatures (Reichers, 1985) the organization recognizes two dimensions of commitment, one is called attitudinal commitment and the other is called behavioral commitment. The attitudinal commitment focuses on the acceptance of the organization goals and attitudes on the employees and a strong desire to be a part of the team or organization. Thus this employee will be more attached to the organization. the behavioral commitment focuses on the continuing membership and compliance to the company rules. The behavior commitment keeps the employ to be committed to certain course of action rather than the organization itself (Reichers 1985). According to brown(1996) the two concepts of commitment can be merged in to a single one. according to him, Commitment to a particular entity is a distinct phenomenon, albeit a complex one, that may differ depending upon how certain factors, pertinent to all commitments, are perceived and evaluated by an individual (Brown 1996, p.232). It is to be noted that the concept of commitment is the multidimensional construct and the antecedents, correlates and the correlates, and consequences of commitment may vary across these interrelated dimensions. Because of this there are a number of models on this subject. Allan and Mayer (1990) provided a much more familiar construct on the organizational commitment, he mentioned three attitude related topics related to the concept of organizational commitment. These are desire, perceived costs and obligation. Each of these topics corresponds to a component in a three-dimensional model of commitment. The model contains the following components Affective commitment refers to an employees positive emotional attachment to, identification with, and involvement in the organization. The affectively committed individual identifies with the goals of the organization, and desires to remain a part of the organization. Employees with strong affective commitment remain with an organization because they want to, and because they like the organization. Continuance commitment is based on the costs that the employee associates with leaving the organization. An individual thus have strong continuance commitment if they perceive that high economic or social costs would result from losing organizational membership. These employees remain with an organization because they feel that they would not be able to get a better job elsewhere. Normative commitment refers to the employees feelings of obligation to remain with the organization. The normatively committed individual remains with an organization because of feelings of debt, and stay out of a sense of loyalty. (Allen Meyer, 1990). Apart from looking what organizational commitment means as a construct, it is important to discuss what the causes are leading in to it. Eisenberg et al (1986) mentioned that if the company want their employees to be committed then they must give supportive work environment as a means of mutual commitment. This is similar to the Rousseaus statement. He mentioned that in order to strengthen the bond between the employees and employers the employers must reinforce the perception of the employees and the employers should demonstrate the care, support and concern over the employee well being (Rousseau 1998). It is observed in many researches that the existence of a well supported supervision and communication can assist increase the organizational commitment among employees (Gaertner et al 1999). Also it has been found in one of the research is that employee perception of the organizational support have a similar effect; showing a strong positive relationship between the perceived organi zational satisfaction and organizational commitment.(Mayer and Stanley 2002). Rhoades and Eisenberger (2002) noted in a large review of perceived organizational support research that employees with high levels of perceived organizational support were not only reported as being more invested in their organization and demonstrating increased affective organizational commitment; they were also reported to view their jobs more optimistically and to demonstrate increased levels of job satisfaction The field of organizational commitment has been the study subject for many in the last few years. It is analyzed not only as the predictor of outcomes such as turnover, intention to leave, job satisfaction, job involvement, work motivation, absenteeism, and performance (Labatmediene et al., 2007). Earlier research consistently show that individuals highly committed to their organization are less likely to leave it, implying that it is possible for employers to retain employees by increasing levels of organizational commitment. (Tremblay, 2000; Buck Watson, 2002; Vandenberghe Tremblay, 2008). The impact of organizational commitment on turnover intentions is suggested to be stronger among employees in the early years of their careers, while their commitment is still being developed (Sturges Guest, 2001). Regardless of how the employees perceive the organization there are additional aspects about the supervisors and general working situations. Maertz and Griffeth (2004) mentioned different motivational aspects involved in the turnover decisions, including calculative forces which are described below. Rational calculation of the probability of attaining important values and goals in the future through continued membership. Favorable calculation of future value/goal attainment at the current organization motivates staying. Unfavorable calculation of future value/goal attainment motivates quitting. (Maertz Jr. Griffeth, 2004, p. 669) The calculative forces are based on rational self interest. And can be the outcome of the many different types of goals. An individual would like to spend more time with his family or residence (Maertz Jr. Griffeth, 2004). An employees long term and short term goals can lead to the employee turnover. Because of the possibility of such goals, an employees reluctance to stay with his or her employer does not depend only upon the qualities of the employing organization: Situations may exist in which an employee would not wish to remain with his or her employer regardless of any actions taken by said employer. According to Aronsson et al. (2000) locked-in employees remain in an unwanted employment because of situations are outside their control, and emphasize the impact of a weak labor market. This is in accordance with Maertz Jr. and Griffeth (2004) who used the term alternative forces to describe the turnover motivating mechanism that concerns an employees self-efficacy beliefs about alternative jobs or roles. Berntson (2008) found several aspects to be positively conne