Assignment Human Resource Management

Employee Turnover Its Causes and Remedies

Submitted to: Prof. Sudhir Sharma Submitted by: Sayeda Jan Class : MA Semester-III Dept: Public Administration Date:

Introduction
Employees are important in any running of a business; without them the business would be unsuccessful. However, more and more employers today are finding that employees remain for approximately 23 to 24 months, according to the 2006 Bureau of Labor Statistics. Corporations with a high employee churn rate face expensive recruitment/training costs, loss of productivity, and a remaining workforce that ends up overworked and therefore more likely to quit. Recognizing the most common causes of employee turnover allows a company to take steps to hire and retain qualified personnel.

Labour turnover is the cause and effect of instability of employment, apart from being a measure of the morale and efficiency or otherwise of workers. The most common reasons individuals give for leaving are that they have been offered more money, better benefits, or an opportunity for career advancement elsewhere. While this information uncovered in exit interviews is crucial, there are usually additional factors involved. Most employees make their decision to leave over a lengthy consideration period lasting months - or even years. This means you have time to implement positive changes and retain these workers.

Employee Turnover is the number of permanent employees leaving the company within the reported period versus the number of actual Active Permanent employees on the last day of the previous reported period (physical headcount). The number of leavers, that are included in Employee Turnover, only includes natural turnover (resignations, termination, retirement etc); it does not reflect any redundancies. Planned redundancies are reported and explained separately if relevant for Employee Turnover.

Meaning and Definition

Employee or Labour turnover, is the rate of change in the number of employees of a concern during a definite period or in other words. In a human resources context, turnover or staff turnover or labour turnover is the rate at which an employer gains and loses employees. Simple ways to describe it are "how long employees tend to stay" or "the rate of traffic through the revolving door." According to Frederick J Gaudet, Just as the high reading on a clinical thermometer is sign to the physician that something is seriously wrong with the human organism, so is a high index of labour turnover rate a warning to management that something is wrong with the health of the organization. But just as the clinical thermometer merely indicates that something is wrong- not what is wrong so does the turnover rate merely warn, not diagnose. A high turnover rate may mean poor personnel practices, poor supervisory practices, poor company policies. Nor should we forget that too low rate of turnover, like a below normal reading on the thermometer, can also be a danger signal.

It should be kept in mind that labour turnover not only costs a company or corporation in human resource term but also in money terms. It, besides indicating that something is wrong with the organization also involves costs in money as well as human resource value. According to Pigors and Myers, Labour turnover involves costs not only in human values but also in money. These include: Costs incurred in hiring and training each new employee. Costs of overtime work required from regular workers in order to maintain the required levels of production until the new employee can do his share.

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Loss of production in the interval between separation of the former employee and the time when his replacement is fully broken in. Expense in equipment or facilities not being fully utilized during the training period.

Causes of Employees Turnover

The most common reasons individuals give for leaving are that they have been offered more money, better benefits, or an opportunity for career advancement elsewhere. Labour turnover is the outcome of resignations and dismissals. Labour turnover also occurs as a result of illness, accident, death, retirement, marriage, etc. While this information uncovered in exit interviews is crucial, there are usually additional factors involved. Most employees make their decision to leave over a lengthy consideration period lasting months - or even years. This means you have time to implement positive changes and retain these workers. High turnover rate can do a lot of damage to your organization than overworking your employees. One of which is the turnover cost. When you lose an employee, you need to look for someone new to fill the post. Although the person is qualified, you still need to train the person, consider a few errors during the operation, and go through the adjustment period. Apart from the cost you incurred, it will also give you a bad image in the public.

In order to address this issue properly, you have to identify the reasons why there are employees who leave their jobs. Here are five of them:

The most common reason why employees leave a certain organization is that they see better opportunity elsewhere. Man has a growing desire to own more things and better pay can give them this. Apart from that, they are compelled to look for better pay because of financial needs.

Another reason could be that the employees are not happy with the organization. There are cases when employees leave the company even if they offer competitive salaries. This is because of the organization itself. The employee does not approve of the management style and they are unhappy with the culture of the organization. These factors can cause employees to say goodbye to the organization.

There are also cases when the employees leave because of their fellow employees or his superiors. Clashes of personalities are common in the workplace. When an employee can no longer stand the tension in the workplace, he may opt to leave the organization. It does not matter if he finally got his dream job or receiving a generous paycheck. If he no longer has peace of mind, he will look for another job.

It is man's nature to seek for growth. If he feels that there is no room for him to grow in a certain organization, he will look for a place where he can. However, this is not a factor for everyone. There are those who are contented to do the same thing even after ten years.

The condition of the organization could also be a factor. If it is unstable, the employees will surely look for a more stable organization. They would not want to stay long in an organization that could close any time.

Apart from the five common causes for the employee turnover there are a number of other causes as well, such as:

Salary
Ensure your pay rates are comparable to those of other companies in your industry. If you are at the low end of the compensation scale, you will always be scraping the bottom of the barrel for talented and committed people.

Benefits
Make a point of helping your staff take advantage of all benefits that are available to them. Many employees are not aware of the full value of their compensation package. Reduce red tape as much as possible so accessing benefits is not stressful and difficult.

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Opportunity
Have a clear structure in place for evaluation and advancement. Recruit for senior positions from within the existing workforce whenever possible.

Training
Provide comprehensive initial training and follow up with ongoing sessions throughout the employees term of service. If an individual has learned everything there is to know about a job, recruit him/her to help you improve your existing training program.

Raises
Always complete reviews and implement pay raises on schedule. Delaying reviews because you dont have time is rightly perceived as an insult to the value of your employees time.

Favoritism

Train your HR department to handle legitimate employee complaints promptly and decisively. Your workforce must be able to trust Personnel to take them seriously. If not, employees will just give up on the prospect of things getting better where they are and start looking for another job.

Safety & Health

Comply with OSHA regulations at all times. Hiring a consultant is a good way to get this started, but you will need to have a team on staff that is responsible for ongoing review and implementation.

Harassment
Enforce your zero tolerance policy for workplace harassment and provide training so everyone knows what is considered unacceptable. Your HR staff should be instructed on how to gather effective evidence and testimony so that terminations for violation of this policy can actually take place.

Morale
Recognize and reward good job performance publicly and frequently. Sincere verbal praise is a no-cost way to improve morale and keep your employees coming back for more.

Schedule
Review your shift and departmental quotas frequently to ensure mandatory overtime is not excessive. Consider hiring a few part-time employees who can be on-call for emergencies.

Stress
Rotate employees into and out of particularly stressful work assignments to avoid burnout. This will also provide cross training and the opportunity to learn new skills.

When Is It Out Of Your Control?

Involuntary turnover occurs due to circumstances not within the employees control. This includes military duty, long term illness, or significant changes in the family (i.e. a spouse is assigned to a job in a different city). These reasons for leaving cant

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generally be affected by the employer either. Termination for cause, on the other hand, can be drastically reduced by instituting better interviewing processes.

Measures to Reduce Employee Turnover

Organizations do not want to deal will employee turnover. It drags the operation down. When a key employee leaves the organization, it slows down the entire operation. Other employees have to work double. They have to attend to their tasks and the tasks of the person who left, which would lead to frustration in other employees as well, which is a danger for the company. A high rate of labour turnover is bad for both the workers as well as the organization. Hence, efforts should be made to reduce it. Unfortunately, the majority of employers ignores the effects of labour turnover and prefers to play off one labourer against the other with a view to obtaining cheap labour, many of them prefer a constant change of labour force if it gives them an opportunity to reduce their wage bill. They do not realize that new workers are less efficient than the old workers. Hence efforts should be made to reduce the rate of turnover. The following actions may be taken to reduce labour turnover:

Don't hire out of desperation. Do not just hire an employee because you needed someone to fill the position yesterday. That is what temporary employees are for. If you are looking for someone to fill the position long term, it is best to take some time to do your research. Gather as much information as you can about a job applicant. Information you would need is contact information for personal and business references, a list of past and present employers, social security number, birth date and more. These items will help you complete reference checks and to perform background checks to find out about any past criminal activity. Call on a reference. You are never too busy for that. 1. 2

Offer skill testing. If you want to decrease employee turn-around, you can perform skill tests on your job applicants. You can either do this directly through your human resource department or you can contract this responsibility out to a job placement agency. This is one of the tools that will help you determine whether you have found the best fit for each position your company has open. Not only that, but it also cuts down on your new applicant recruitment costs. Every company has some form of testing or verification. Have a competition with it or an incentive. 2. 3

Profile for Temperament. Each job description should include a consideration of the social aspects of the job. Is the job task oriented or people oriented? Does the job require much interaction with the public? With other coworkers? Temperament profiles can predict which people are best suited for different types of work. Placing people with the right temperament for a particular job can go a long way toward creating stability. 3. 4

Pay competitive. If you've gone through the trouble of finding great candidates, you want to make sure you can persuade them to come on board and have them stay. Money is not the number one reason people come to a company or leave a company. 4. 5

Show appreciation. Many employees almost always know when they are doing a job wrong. However, these same employees very rarely ever hear from their employers when they are doing their job right. Encourage your

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employees by saying kind words to them, and telling how much of a good job they are doing. If you do that, they will be more likely to accept any words of advice on how to improve their work later on. 5. 6

Level the workload. Employees often leave companies because they feel overworked. It's frequently less expensive to hire an additional person, even part-time, than it is to replace a seasoned staff member. Often we complain about an individuals performance but no action is taken. That hurts existing employee morale as well. 6. 7

Hold regular review sessions. When employees are closely attached to their management team, they are more likely to feel involved. More involved employees tend to perform at a higher level and are more likely to achieve longer tenure. Talk to your employees. Keep them informed of new policies and procedures. Don't keep secrets. An informed and educated employee is much more effective. 7. 8

Do exit interviews. Labor laws suggest that we cannot hold a person from leaving. When an employee goes, he/she just has to go. It will be very beneficial to know the cause of why the employee chose to leave. Possible factors may be: a better job offer, pursuit for growth, poor colleague relationships, below average compensation, dislike for the nature of work, etc. Knowing what problems to address, and taking action on them, will eventually lessen turnover rates in the future.

Conclusion
To sum up we can say that employee is one of the most critical factors of production, others being money and material. For a company to be successful, should keep its employees happy and keep them for longer time. Employee turnover is defined as employees who voluntarily leave their jobs and must then be replaced. Turnover is shown as an annual percentage, so if 25 people leave a company with 100 people, that is 25 percent turnover a year. Employees often leave companies for higher pay elsewhere, but many other factors contribute as well, and the negative effects of employee turnover should motivate managers to increase retention. High turnover rate can do a lot of damage to your organization than overworking your employees. One of which is the turnover cost. When you lose an employee, you need to look for someone new to fill the post. Although the person is qualified, you still need to train the person, consider a few errors during the operation, and go through the adjustment period. Thus if the management doesnt keep in mind the consequences of the high turnover rate it would lead to losses to the company.

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Notes and References

1. Ashwathappa K., Factory Organization and Management, Himalaya Publishing House, Mumbai (1990) 2. http://www.articledashboard.com/Article/Five-Common-Causes-of-EmployeeTurnover/976138 3. http://www.workplace-communication.com/causes-employee-turnover.html 4. http://deborah-s-hildebrand.suite101.com/employee-turnover-a22993 5. http://www.ehow.com/facts_4866742_effects-employee-turnover.html