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Employee Turnover and Impact to the company





Employee Turnover has more definitions which explained by many authors, but all the way ‘it is the rotation of workers around the labor market; between firms, jobs and occupations; and between the states of employment and unemployment’ (Abassi et al. 2000 cited in Ongori,2017, p.049).

There are two types of Employee Turnover which can be happened in an organization. (Ongori, 2017).

Voluntary Turnover occurs when an employee decides to leave the company for a personal reason. These personal reasons can be (Ongori, 2017).

  • Obtaining a better job with good career development
  • Company culture change
  • Bad Supervision
  • Bad Management decision making.
  • Low salary
  • Poor working condition / benefits etc.

Involuntary Turnover occurs when management decides to terminate an employee due to economic necessity or a poor fit (Ongori, 2017).

Today, most of companies are facing this situation which is losing staff due to many reasons as explained above. Ongori (2007), said ‘Companies are investing a lot on their employees in terms of Induction and Training, Developing, maintaining, and retaining them in their companies’. Therefore, it is the responsibility of whole company and as a Manager/CEO/MD to support to minimize employee turnover.

Mercer, 2002 cited in Snell & Bohalnder, 2012 explains employee turnover costs further as below.  

Separation cost

  • Exit Interview
  • Admin & record keeping action

Replacement cost

  • Advertisement for Job opening
  • Preemployment admin function and record keeping actions
  • Selection interview
  • Employment tests
  • Meeting to discuss with candidates (salary and benefits)

Training cost

  • Booklets, Manuals, and reports
  • Education
  • Once to one coaching
  • Salary and benefits of new employee until he or she get up to par

There is an exchange relationship between an organization and its employees where both parties bring something to table to satisfy other needs and wants (IPM, 2010) There are many factors affecting that is going to discuss further in this blog which are affecting this organization-employee relationship. These factors can lead an employee to stay with or leave the organization. The major factor that the organization needs to identify is losing High performers since it has a big impact to business performance (IPM, 2010).

References.

Bohlander G W & Snell S A. (2012) Principles of Human Resource Management. 16th Edition. South-Western: Cengage Learning.

Certificate Course in HRM, (2010) Sri Lanka: IPM.

Hendry Ongori, (2007) A review of the literature on employee turnover, African Journal of Business Management, pp. 049-054 [online]. Available online http://www.academicjournals.org/ajbm. Accessed on 03rd April 2022.


Comments

  1. Ashanthi RajapakseMay 5, 2022 at 7:08 PM

    Hello Dulanjana. I agree with the above post. As stated in the post, their is an exchange relationship between the organisation and employees. However, employees also have a direct impact on customers and the relationship between employees and customers is a key element for a company's success ( Coetzee & Pauw, 2013).

    ReplyDelete
    Replies
    1. Dulanjana Hashali PeirisMay 5, 2022 at 8:32 PM

      Hi, Yes. I totally agreed what you have commented above. If there is no any relationship between Organization and employees, there will be no customer satisfaction as well. Therefore more attention should be paid to managing customer satisfaction through managing turnover since both factors have a positive relationship. (Hurley & Estelami, 2007)

      Delete
  2. Ashanthi RajapakseMay 6, 2022 at 8:45 PM

    Hi Dulanjana. Interesting topic on the types of turnover and the costs. To further add to voluntary turnover, employee turnover is frequently caused by factors beyond the employer's control such as employee's personal life that have an impact on their performance at work. This includes relocation, family issues, and chemical misuse are examples of these. Even though these factors are beyond the employer's control, some organizations have sponsored events such as employee support programs ( Hammerberg, 2002 ).

    ReplyDelete
    Replies
    1. Dulanjana Hashali PeirisMay 7, 2022 at 3:55 AM

      Hello. Yes very correct. An Employee Assistance Program (EAP) is a confidential counselling service offered by employers to their employees to support their well-being in the workplace and in their personal lives. Depending on the employer’s arrangement, EAP may also extend to immediate family members. This is one of people focus strategy that any company can use to retain staff. (Swayze and Burke, 2013)

      Delete
  3. Maheshani Priyankara Weerarathne (Maheshi)May 6, 2022 at 9:00 PM

    This comment has been removed by the author.

    ReplyDelete
  4. Maheshani Priyankara Weerarathne (Maheshi)May 6, 2022 at 9:04 PM

    Yes Agreed with you Dulanjana , The impact of turnover has received considerable attention from senior management, human resources professionals and industrial psychologists (Raj and Arokiasamy ,2013 ).

    ReplyDelete
    Replies
    1. Dulanjana Hashali PeirisMay 7, 2022 at 3:59 AM

      Hello Dear, Yes Correct. There is a separate role for Manager, HR and Employees to play to control employee turnover in any organization. (IPM, 2010).

      Delete
  5. ManjulaMay 13, 2022 at 5:25 AM

    Hi Dulanjana, I have a different view on this, Leadership can play a major role in reducing the employee turnover. Employee turnover is one of the most challenging dilemmas organizations have to deal with. A considerable amount of research indicates that turnover is mainly a result of a negative relationship between the leaders and managers in the workplace and their followers.
    (Alkhawaja.2017)

    ReplyDelete

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