Causes of Employee Turnover Page 13

Causes of Employee Turnover Page | 13

RESEARCH PROPOSAL

ON

CAUSES OF EMPLOYEE TURNOVER

ABSTRACT

This proposal is aimed at conducting a study to investigate the causes of employee turnover. Proposed study will use different research articles to develop a model which shows that employee satisfaction, employee motivation and employee involvement has an impact on employee turnover.

Introduction to

Proposed Research Title

CAUSES OF EMPLOYEE TURNOVER:

Background of Study

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.

Five reasons due to which employees leave organizations:

1. 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.
2. 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.
3. 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.
4. 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 grow further. However, this is not a factor for everyone. There are those who are satisfied to do the same thing even after ten years.
5. 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[1].

MODEL

TOPIC

Dependent Variable Employee Turnover

VARIABLES

Independent Variable Employee Satisfaction

Employee Motivation

Employee Involvement

EXPLANATION OF MODEL

Employee Turnover (Dependent Variable):

Employee turnover is the difference in the rate of employees leaving a company and new employees filling up their positions. While for building a model employee turnover is specified as dependent variable.

Employee Satisfaction (Independent Variable):

Employee satisfaction describes how satisfied an individual is with his or her job. According to my perspective happier people are more satisfied with their jobs. And is used as independent variable for research proposal.

Employee Motivation (Independent Variable):

Motivation refers to the beginning, direction, intensity and determination of human behavior. And treated as independent variable for employee turnover.

Employee Involvement (Independent Variable):

Employee involvement means how much employees are showing their interest towards organization. Job involvement is defined as the extent to which the individual identifies psychologically with his/her job (Blau, 1985b) and is used as independent variable in this proposed study.

LITERATURE REVIEW

To understand the nature of employee turnover it is necessary to first define the terminology. While

there are many definitions of employee turnover for the purpose of this paper turnover is defined as “the movement of workers 1 in and out of employment with respect to a given company” (Nature). This

movement is usually considered voluntary however involuntary separations are also of concern, but will not be the focus of this research.

According to the article “The Nature of Employee Turnover” there is four distinct categories of

turnover that a company must consider:

• Voluntary separations: Termination of the employment relationship initiated by the employee.

• Layoffs: Suspensions from payroll that are initiated by the employer due to an economic slow down.

• Discharges: Permanent termination of employment for disciplinary reasons.

• Other: Retirement, death, and permanent disability[2].

When calculating a company’s turnover rate it should first be determined what employee separations will be included in the calculation. Many times unavoidable separations, or separations that the company could not control, will not be included in the rate. Unavoidable separations are very different from voluntary separations in which the company does play a role in retaining the employee. Examples of unavoidable separations include: retirement, death, permanent disability, or a spouse changing jobs to a different community[3]. Since employee turnover generally focuses on the motivation of employees to maintain the employment relationship, these unavoidable terminations are not always factored into the employee turnover rate and will be excluded for this study.

Employee turnover is a concern for any organization due to the major impact it has on the bottom line.

However, turnover does not always bring on negative consequences to the organization; there are positive aspects of turnover for both the organization and the exiting employee. Whether employee turnover impacts the organization in either a positive or negative way depends on the type of turnover that is experienced, either functional or dysfunctional. Functional turnover occurs when poor performers leave and good performers stay. This instance often occurs when the organization terminates the employment relationship. When good performer’s leave and poor performers stay, the organization experiences dysfunctional turnover. When looking to reduce turnover, a company focuses on dysfunctional turnover due to its negative impact on the organization. The most pressing and often overlooked impact of turnover is the loss of productivity experienced immediately after the loss of an employee. Service firms recognize that delivery of services and customer loyalty decline when employees leave, and that overall firm productivity decreases significantly due to the lack of manpower to accomplish the constant or increasing workload. Employee turnover has a large impact on the organization not only in the form of direct monetary costs, but also in lost productivity. It is for these reasons that it is essential for organizations to understand the causes of turnover and work to correct them[4].

Employee turnover is a much studied phenomenon (Shaw, Delery, Jenkins and Gupta 1998:511). However, there is no universally accepted account for why people choose to leave organizations (Lee and Mitchell 1994), even though it is primarily instances where the employee makes the decision Voluntary turnover is of interest because in most cases, this represents the bulk of turnover within an organization. Such instances of turnover also represent a significant cost, both in terms of direct costs (replacement, recruitment and selection, temporary staff, management time) and in terms of indirect costs (morale, pressure on remaining staff, costs of learning, product/service quality, organizational memory) and the loss of social capital (Dess and Shaw 2001). Although there is currently no accepted framework for understanding the turnover process as a whole, a wide range of factors have been found useful when it comes to interpreting employee turnover, and these have been employed to model turnover in a range of different organizational and occupational settings. These include: job satisfaction (Hom and Kinicki 2001); labor market variables (Kirschenbaum and Mano-Negrin 1999); various forms of commitment (see Meyer 2001 for a review); equity (Aquino, Griffeth, Allen and Hom 1997); psychological contract (Morrison and Robinson 1997) and many others (see Morrell, Loan- Clarke and Wilkinson 2001 for a review).

Further on they revealed that turnover process based on theory of decision making. The underlying premise of the model is that people leave organizations in different ways, and it outlines five pathways describing various decision processes any one of which a leaver may go through before finally quitting. If turnover has increased as a result of the implementation of change, and this turnover is mainly unavoidable (i.e. the organization could not influence it because the change has happened), these leavers represent the well-known eggs in the omelets.

Second, if turnover has increased as a result of the implementation of change, and the levels of avoidable and unavoidable turnover are approximately equal, then it will be beneficial to look more closely at the phenomenon and uncover those areas where involvement will result in lower levels of avoidable turnover. This represents a mid-point, where the internal impact of change is difficult to understand, but signaling significant room for improvement.

Third, if turnover has increased as a result of the implementation of change and it is

for the most part avoidable, then this implies that the process is being mismanaged, and that an

Organization is passing up on the chance.

However it was found strong support that shocks play an important part in some people’s decisions to leave voluntarily. According to me there is little research specifically exploring the link between organizational change and turnover and suggest that this is a gap in the literature. No-one would seriously challenge the idea that mismanaging organizational change can result in people choosing to leave. Indeed, the above article focuses on impact of organization change on employee turnover[5].

Disappointed employees may choose to withdraw from the organization in at least four ways, viz., psychological withdrawal, lateness, absenteeism, and turnover. There are reasons for assuming that these different forms of withdrawal may be interrelated either negatively or positively. This study attempts

to determine the direction and strength of the relationships among the various forms of withdrawal. Most of the previous research in this area has focused only on the relationship between absenteeism and turnover (e.g., Kerr, Koppelmeir & Sullivan, 1951; Hill & Trist, 1955; Argyle, Gardner, & Cioffi, 1958).

Lyons' (1972) review concluded that the relationship between these two forms of withdrawal was positive and that there was unsure support for the notion that there is a progression of withdrawal, absenteeism being the lesser, and turnover the more serious, form. The present study extends the previous research in two ways: (1) The definition of withdrawal is expanded to include a wider array of variables. A fruitful line of future research on this topic would focus on the nature of these relationships over time. Obviously, turnover is the final withdrawal response, but it would be beneficial to examine whether the other forms of withdrawal follow a sequential pattern[6].

However we have conducted the proposed research to highlight the causes of employee turnover. Which are employee satisfaction, employee motivation and employee involvement which impacts employee turnover. Employee withdrawal from an organization can take many behavioral forms, including turnover, absenteeism, and lateness. But according to occupational variables employee satisfaction, employee motivation and employee involvement are included in this study.

However study[7] conducted determinants of excess labour turnover (churning) in the Luxembourg labour market using a rich employer-employee matched data set. In this study, we have investigated the dynamics of the Luxembourg labour market over the last decade. Several findings are worth pointing out. In line with a small but growing literature for other countries and regions, we find that churning rates are both considerable and persistent. While churning rates vary across sectors, some of these

differences can be directly explained by worker- and establishment-specific features. Furthermore, the dynamics of churning are very similar between commuting and non-commuting workers. In general, just as with previous studies, we finds that the reallocation of workers across establishments in excess of employment changes is a natural feature of labour markets and not merely just the result of unfortunate mismatches.

However another study[8] identify key variables that affect warehouse employee turnover. These

variables include: occupational variables (e.g. skills, years of experiences); organizational variables

(e.g. firm size, industry); individual variables (e.g. pay scale, job security). This study also develops a

conceptual model for linking the aforementioned variables reflecting job alternatives and job

satisfaction to warehouse employee turnover.

The above study conducted experimental analysis to determine which variables significantly influence warehouse employee turnover. The empirical analysis is based on data obtained from the questionnaire survey intended for various industries such as manufacturing, third-party logistics providers, wholesalers, and retailers which get actively involved in warehousing operations. The survey data was analyzed using a series of regression analyses to identify variables significantly influencing warehouse employee turnover. However it was found that Job security turned out to be one of the most important factors for recruiting and retaining warehouse employees, whereas monetary incentives have little or nothing to do with warehouse employee turnover. The larger the warehouse, the higher the employee turnover. That is to say, a lack of personal attention paid to warehouse employees may have the adverse impact on their retention. More experienced warehouse workers are less liable to give up on their current

jobs than less experienced warehouse workers, probably because the former is more familiar to warehouse working environments.

Employee turnover can often be conceptualized in terms of demographic (e.g. gender, age, educational level), occupational (e.g. skill level, experience, tenure, status), organizational (e.g. firm size, industry, job contents, working environments), and individual (e.g. pay scale, reward, advancement opportunity, job security, job involvement). As such, a majority of the past literature about employee turnover

attempted to examine the influence of certain demographic, occupational, organizational and individual variables on turnover rates (see, e.g. Mobley et al., 1979 and Reichers, 1985 for excellent reviews of turnover literature). The turnover literature in the logistics field (especially studies dealing with truck driver turnover) seems no different from the pattern established in this prior research. For instance,