Employee Retention: Issues, Controversies and Problems
One of the major obstacles encountered by businesses is retaining their employees. Research conducted in this field suggests that the prevalent issue of high turnover, particularly driven by voluntary departures, stems from a lack of alignment between employees' interests and company goals. This blog is focused on identifying the specific factors concerning both employees and companies that play crucial roles in retaining staff and diminishing turnover rates.
As per Samuel and Chipunza (2009), turnover happens when employees resign from their positions, necessitating replacements, thus incurring costs for the organization. Consequently, Khan and Aleem (2014) contend that retaining employees, particularly the highly skilled ones, has emerged as a significant managerial challenge.
These challenges will be discussed according to the following hypothesis.
H1: Ensuring equitable and competitive compensation packages is crucial for retaining employees within the company.
Bisht, Chaubey, and Thapliyal (2016) state that
the crucial point of the issue lies in connecting the factors affecting
turnover with the implementation of suitable retention tactics. Various
workplace challenges, coupled with how employees perceive the incentives and
commitments offered by the organization, contribute to the formation of what is
commonly referred to as a psychological contract. Instances of unmet
expectations frequently result in voluntary turnover, which is regarded as a
management issue, as individuals become dissatisfied due to unfulfilled career
aspirations.
Casino (2014) highlights the primary factors influencing turnover within a company, citing two main reasons for employee resignations: Firstly, the lure of higher salary offerings from other companies coupled with challenges in adapting to the current company's environment, such as schedules, workplace conditions, and hierarchical structures, followed by limited opportunities for internal advancement. Additionally, Ampomah and Cudjor (2015) discovered that turnover is predominantly associated with factors like limited promotional opportunities, job satisfaction levels, workplace safety concerns, availability of alternative job prospects outside the organization, and the alignment of work organization with the demographic characteristics of the employees.
H2: Initiatives concerning promotion policies, career progression opportunities, job rotation, and performance-driven incentives and rewards are key elements in minimizing turnover rates.
Employees are inclined to stay with companies
when they are provided with motivational perks like bonuses (Aguenza and Som,
2012). Nevertheless, compensation is not the sole factor influencing retention.
There exist other elements that might prove more impactful, such as benefit
packages, flexible working hours, equity options, training opportunities, and
the internal organizational culture.
Conversely, it is proposed that implementing reward programs is among the most efficient methods for retaining employees. These programs should be combined with other strategies, such as aligning job roles with employee expectations and offering flexible scheduling. Moreover, career advancement opportunities, acknowledgment of achievements, managerial approach, and a conducive work-life balance further contribute to conditions that minimize turnover.
H3: Positive
working conditions, the opportunity for a balanced lifestyle, and alignment
with the company's values and beliefs serve as motivating factors for employees
to remain with their respective companies.
Das and Baruah (2013) argue that mangers
need to pay attention to factors such as compensation and reward, safety at
work, training and development, supervision support, culture, work environment
and fairness in the organization. The authors consider that employee retention
factors can be divided into three dimensions such as Social, Mental, and physical.
Das and Baruah (2013) contend that managers
must focus on aspects such as compensation and rewards, workplace safety,
training and development, supervisory support, organizational culture, work
environment, and fairness. Also, they shows that factors influencing employee
retention can be categorized into three dimensions: Social, Mental, and Physical.
Moreover, they have further emphasized the significance of achieving a balance between work and personal life, as well as the engagement of employees in their work. Striking this balance alleviates stress and emotional exhaustion, thereby fostering employee retention. Similarly, when employees feel a sense of belonging and involvement in their work, retention rates increase proportionately, as they perceive themselves as integral parts of the company.
H4: The leadership approach and an open communication policy, coupled with the implementation of effective idea-sharing mechanisms, are factors that encourage employee retention.
H5: Training
initiatives and ongoing educational opportunities enhance employees' motivation
to remain with the company.
Muir and Li (2014) highlighted factors such as
the average age of employees, ownership structure, proportion of female
employees, and involvement in diverse work projects as contributors to
increased retention. They suggest that employers should offer opportunities for
employees to take on new responsibilities as a means of enhancing retention.
H6: Age,
gender, and marital status are determinants that influence the retention of
employees.
H7: The
level of experience, qualifications, and eagerness for career advancement are
essential factors in retaining employees within the company.
H8: Factors
like distance of the company to employees' residences, transportation options,
and the status of the profession are significant for retaining employees within
the company.
The researchers speculated that retaining
competent and skilled employees serves as a source of competitive advantage.
Consequently, companies striving for success must adopt policies aimed at
incentivizing employees to remain within the organization for extended durations.
Conclusion
The primary challenge for managers is to reduce
turnover and, crucially, to retain the top talent within the organization. This
becomes even more challenging during economic crises, as skilled individuals
are often targeted by competitors with attractive financial offers. To counter
this, organizations must create appealing compensation packages, offer
additional benefits, recognize innovative ideas, promote work-life balance, and
establish structured human resource management systems tailored to the ideals
and requirements of their employees.
References
Aguenza, B.B., and Som, A.P.M.
(2012, November/December) Motivational Factors of Employee Retention and
Engagement in Organization. International Journal of Advance in Management
and Economics., 1(6), 88-95. Available from: http://www.managementjournal.info [
Ampomah, P., and Cudjor, S.K.
(2015) The Effect of Employee Turnover on Organizations (Case Study of
Electricity Company of Ghana, Cape Coast). Asian Journal of Social Sciences
and Management Studies, 2(1), 21-24.
Bisht, S., Chaubey, D.S., and Thapliyal, S.P. (2016) Analytical Study of Psychological contract and its
Impact on Employees Retention. Pacific Business Review International,
8(11).
Cassino, W.T. (2014). Fatores determinantes
do turnover em uma empresa de locacao de veiculos: estudo de caso. Universidad
UMA. Dissertacao de mestrado. Belo Horizonte: UMA.
Das, B.L., and Baruah, M.
(2013) Employee Retention: A Review of Literature. Journal of Business and Management,
14 (2), 8-16.
Khan, A.H., and Aleem, M.
(2014) Impact of job satisfaction on Employee Turnover: An Emprical Study of Autonomous
Medical Institution of Pakistan. Journal of International Studies, 7(1),
122-132. Doi: 10.14254/2071-8330.2014/7-1/11.
Muir, M.R., and Li, L. (2014) What
are the Top Factors that Drive Employee Retention and are there Demographic
(Gender, Generation, Ethnicity, Geography etc.) Differences in these Factors?
Cornell University. ILR school. Available from: http://digitalcommons.ilr.cornell.edu/student/59 [
Samuel, M. O., and Chipunza, C.
(2009) Employee Retention and Turnover: Using Motivational variables as a Panacea.
African Journal of Business management, 3(8), 410-415. Available from: http://www.academicjournais.org/AJBM [
Silva, M.R. A., Carvalho, J. C. D. A., and Dias, A.L. (2019) Determinants of Employee Retention: A study of reality in Brazil. Available from: https://www.researchgate.net/publication/330326214_Determinants_of_Employee_Retention [Accessed on 3 April 2024].
Yes according to the research Bisht, Chaubey, and Thapliyal (2016) emphasize the importance of addressing factors affecting turnover and implementing effective retention strategies. Workplace challenges and employee perceptions contribute to a psychological contract, leading to voluntary turnover. Factors influencing turnover include higher salary offers, adapting to the company's environment, and limited opportunities for internal advancement this also includes Other factors include job satisfaction, safety concerns, alternative job prospects, and organizational alignment with employee demographics.
ReplyDeleteThank you for sharing the insightful research findings! Employee retention issues arise from a combination of factors such as inadequate compensation, lack of career growth opportunities, poor workplace culture, and insufficient recognition, which collectively undermine employee satisfaction and loyalty.
DeleteCorrect. By proactively tackling these issues and controversies, organizations can mitigate turnover risks and cultivate a loyal and motivated workforce poised for long-term success.
ReplyDeleteYes, Organizations not only mitigates turnover risks but also cultivates a loyal and motivated workforce, laying a solid foundation for sustained success and growth.
DeleteThis is a good one. According to Denton (2000) employees who are happy and satisfied with their jobs are more dedicated towards their work and always put their effort to improve their organizational customer’s satisfaction. Additionally, ” According to Olowu and Adamolekun (2005), it is becoming more essential to secure and manage competent human resource as the most valuable resource of any organization, because of the need for effective and efficient delivery of goods and services by organizations, whether in public or private sector.
ReplyDeleteYes, Employees' job satisfaction directly correlates with their dedication and commitment to enhancing organizational customer satisfaction, highlighting the critical link between employee happiness, productivity, and customer experience.
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ReplyDeleteGood Article !Retaining top talent amidst economic crises is indeed a major challenge for managers. To counter turnover, organizations must craft enticing compensation packages, provide extra benefits, acknowledge innovation, prioritize work-life balance, and implement HR systems tailored to employee needs
Thank you for your comment! Your insight into retaining top talent during economic crises underscores the importance of a comprehensive approach.
DeleteAlong with incentivizing the performance, employees require recognition and appreciation as well to have some sort of satisfaction. Among all the other rewarding mechanisms, a positive work environment would promote good mental health resulting employees being more comfortable and attached towards the company. Nicely explained!
ReplyDeleteThank you for your insightful comment; indeed, they are crucial for promoting employee satisfaction, mental well-being, and attachment to the company.
DeleteThis is an excellent point! The references to Denton (2000) and Olowu and Adamolekun (2005) provide valuable insights into the relationship between employee satisfaction and organizational success. It's clear that happy and satisfied employees are not only more dedicated to their work but also play a significant role in enhancing customer satisfaction. Additionally, recognizing the importance of competent human resources underscores the critical need for organizations to prioritize the management and development of their workforce. Thank you for sharing these insightful perspectives!
ReplyDeleteYes, Acknowledging the pivotal role of skilled human resources underscores the urgent necessity for organizations to prioritize both the management and continuous development of their workforce.
DeleteIt's evident that retaining top talent is crucial for organizational success, and your exploration of various factors influencing turnover rates is insightful. Your proposed hypotheses offer valuable insights into the multifaceted nature of employee retention, and it's clear that addressing these factors requires a holistic approach that considers both individual and organizational needs. Overall, your article provides a thorough analysis of this important topic in HR management.
ReplyDeleteThank you for your thoughtful feedback; I'm glad you found the exploration of factors influencing turnover rates insightful, and I agree that addressing these aspects necessitates a holistic approach encompassing individual and organizational considerations, ultimately contributing to a comprehensive understanding of employee retention in HR management.
DeleteAbsolutely. It is important to identify the challenges in employee retention and provide solutions. If an organization doubt employee retention is a big deal, According to a Gallup report, employee turnover costs United States companies a staggering $1 trillion (that’s trillion with a “T”) each year. This high cost is due to all the time and effort put into recruiting, onboarding, and training employees only for the organization’s investment to walk out the door shortly after.
ReplyDeleteReplacing an employee can cost anywhere between 50-60% of that employee’s salary while the overall costs can mount from a frightening 90% to an absolutely chilling 200%. Any company that wants to be profitable and successful simply can’t ignore turnover rates. The higher they are, the more organization lose in terms of productivity, human capital and brand value. This article is truly important. Thanks
Yes, I agree with you. That's why retention is important.
Deletegreat article, most of the reasons employees quit are things that employers can address head on. Competitive salary, job security, development opportunities, and frequent feedback are all things that managers can have a hand in to improve the overall employee experience (Workleap,2023).
ReplyDeleteThank you for your feedback; indeed, employers have the opportunity to directly address key factors influencing employee turnover.
ReplyDelete