Exploration of the Problems Related with High Attrition

Exploration of the Problems Related with High Attrition
Exploration of the Problems Related with High Attrition Rate within the Organisation and Measures to Resolve Such Issues
In the existing period, the trends and practices undertaken by the business organisations have changed quite intensively. Changes in the existing business environment related problems, such as high degree of competition and dynamic nature of global economy have put some intensive amount of pressure of changing business practices over business organisations. In addition to this, from the perspective of employees also, changes in the business conditions and requirements have brought some intensive amount of workload. Owing to such critical challenges, the morale and job satisfaction level of employees has become quite lowered, which leads to some critical issues related with high attrition rate or employee turnover rate (Kim and Jogaratnam 2010).
Among other critical problems, high employee turnover rate has also proved to be one of the major challenges faced by the business organisation as it directly leads to an affect on its efficiency and productivity. High employee turnover can prove to be quite harmful for the organisation as the organisation would loose its highly trained and efficient employees. This directly affects the morale and productivity of other employees as well. In addition to this, due to high employee turnover related problems, an organisation requires to carry out recruitment related activities in the most frequent manner, which is considered as a cost occurring activity (Hsieh and Eggers 2011). In relation to the research paper, it is directed to reveal the intensity of employee turnover rate.
An employee’s attitude and behaviour plays a vital role in the development of an organisation, and the phenomenon of employee turnover in companies is always focused on by managers. The present study addresses the issues that are associated with high attrition within an organisation and also suggests certain measures to resolve these problems. In the present competitive business environment, employees are primarily responsible for providing sustainable competitive advantage to organisations. Therefore, employee retention is highly essential in the companies (Hinkin and Tracey 2008).
Presently, the attraction and retention of high quality talent is more important from the managerial perspective. It has become necessary to retain human capital because of a number of trends, such as increasing rate of technological advancement and globalisation. At present, many companies are facing the problem of high attrition. Employee turnover is caused due to a number of factors, such as availability of alternative jobs, performance of an organisation, organisational culture, unrealistic expectations, characteristics of a job, etc. For any industry or organisation, productivity is considered to be a very significant aspect, and there are several factors, on which organisational productivity mostly depends (Shaw and Onkvisit 2008).
Among them, employee turnover is considered to be one of the challenging issues in business. Moreover, human resource professionals, industrial psychologists, and the senior management give considerable attention to the impact of turnover. Furthermore, this challenge has proved to be one of the most and seemingly inflexible human resource challenges, faced by the current organisations on a global scale (Hsieh and Eggers 2011). Therefore, the main rationale of the research is to explore the actual reasons behind high attrition rate and its damaging effects on organisational productivity.
There are various reasons responsible for the occurrence of turnover. It can be observed that sometimes an employee is attracted towards a new job after leaving the old one. On the other hand, an employee is pushed to leave a job due to dissatisfaction and unpleasant working conditions in the current organisation. Another important reason for an employee to leave a job is poor relationship with the management. In addition, the main cause of voluntary turnover is lack of proper training and development. Employees always have a consideration for security of their jobs, and with the help of practicing various preventive measures, turnover can be significantly cut down by the management. The preventive steps may include, providing training to line managers for an effective supervision, facilitating security of jobs with good working environment, etc (Kim and Jogaratnam 2010).
Employee turnover makes it difficult for employers to maintain a steady and successful operation, and can prove to be exceptionally devastating for a company. Moreover, losing a single key worker can reduce investor’s confidence in the firm. Along with this, the likelihood of a project’s success is also decreased. It has been argued by many of the academic scholars that there is a correlation between job dissatisfaction and decreased organisational commitment in context with turnover rates. An employee begins to search a new job, when the one strongly feels discontented from the present job. This perspective on turnover highly affects the performance and productivity of an organisation (Hinkin and Tracey 2008). Therefore, in this research, the issue of high attrition rate among organisations will be addressed, and measures and methods will be suggested to overcome this problem.
Research Objectives and Questions
In order to set and determine a particular dimension of the entire research work, it is quite worthy to set some crucial and precise aims and objectives, which are tried to be availed with the help of entire findings of the research work. In this context, the research proposal is aimed to reflect the criticality of high employee attrition rate problem, faced by a business organisation. Moreover, providing recommendations to business organisations regarding different strategic measures, through which the related problems can be resolved in the most effective manner.
In order to achieve this primary aim, some crucial objectives of the research work can also be formulated, which are quite useful in enhancing the span and applicability of the research work. Some crucial objectives of the research work can be presented as below:
1. To reveal the existing state of art regarding employee job satisfaction and its impact over employee turn over rate of the organisation
2. To illustrate some basic reasons behind the emergence of high employee turnover rate within an organisation
3. To articulate the criticality of the issue related to high employee turnover rate in the context of long term sustainability of the organisation
4. To explore some general practices adopted by business organisations for the purpose of addressing the issues related with employee turnover and high attrition rate.
5. To provide some futuristic and effective recommendations to the management of business organisations to boost the morale and job satisfaction of employees so that problems of high attrition rate can be addressed.
The achievement of such crucial objective will be an indication of successful accomplishment of the research work.
Research Question
In direction to make research work well-directed and effective, there are some crucial research questions, which will be answered with the help of the findings of the research paper. Some precise research questions for this research work will be:
Question: To what extant, the problem of high employee turnover rate within an organisation can be considered highly critical and strategic in nature?
Question: What are the critical and negative impacts of high employee turnover rate of an organisation over its long term growth and sustainability within the marketplace?
Question: What are the effective measures that can be employed by business organisations for the purpose of addressing problems and issues related with high employee turnover rate?
Answers of such questions retrieved with the help of data analysis will be helpful in drawing effective conclusions regarding the research problem.
Literature Review
In order to achieve some crucial and effective secondary and descriptive data related with high employee turnover related problems faced by business organisations, the literature review methods will be taken into account. There are a number of different crucial literary sources, such as books, journal articles, and previous research papers that can be considered quite effective for the purpose of collecting data and preparing an efficient conceptual framework for the entire research process.
Inductive Literature Review:
The nature and disposition of staff turnover has been critically examined by various authors and scholars. In this regard, Armstrong (2006) has revealed that employees can be regarded as the most crucial and valuable assets of an organisation as the success of an organisation directly depend on the skills and competencies that its employees have. All the output of an organisation is heavily influenced with its efficiency and productivity. Owing to this, high degree of significance of human resources, procurement and maintenance of this asset also becomes quite essential. As per the views of the author, the role of HRM in the optimisation of the utility of an organisation’s resources becomes quite vital. In this direction, induction, maintenance, training, and retaining of employees are some of the most crucial dimensions of human resource management of the organisation that lead to controlling and minimising the high rate of employee turnover (Armstrong 2006).
Explaining the meaning of Employee or staff turnover, Ongori (2007) has stated that employee turnover can be defined as the rotation of workers and employees between organisations and labour markets. From the perspective of an individual, employee turnover can be considered as frequent rotation between the state of employment and unemployment. The author has further stated that for an organisation employee turnover rate conceives some intensive strategic importance. Low employee turnover rate restricts the way of entry of new talent within the organisation while high turnover rate leads the organisations to loose their highly efficient and productive employees (Ongori 2007).
Job satisfaction defines as to how much an individual is satisfied with his/her job. It is considered as positive behaviour, which enables an individual to perform the task at the workplace successfully and also gives mental satisfaction, which plays a vital role in minimising the employee turnover rate. Job satisfaction has different benefits towards an organisation as a satisfied employee results into a satisfied customer. In the words of Chow, Wing-chun lo, Sha and Hong (2006) and Jones (2006), there are many reasons for staff and employee turnover, which affect an organisation’s overall growth and productivity. Job satisfaction is a major reason for the same, as it is not easy for the management to identify the methods of job satisfaction, which in turn lead to staff and employee turnover.
As per Hatton et al. (2001), there are different factors that result into creating high employee turnover. It is believed that in service industry, the rate of employee turnover is high because employees have a direct contact with customers in the market. It is essential for the management to identify different causes of employee turnover so that overall business performance can be improved. As mentioned by Hatton (2001), job satisfaction is a major reason of employee turnover. Sometimes, employees are dissatisfied with their job because of role ambiguity, low status job, low pay, ineffective work life balance and more (Hatton et al 2001). This can be supported with an example, as per which if an individual is given fewer rewards against the tasks carried out, it creates a negative impact on other co-workers, which would negatively create job-dissatisfaction and ultimately, this will lead to change of job.
As per Currivan (2000), high employee turnover rate is considered important for employers because it affects the overall business operations of the firm, and due to its impact on the normal operations, the morale of employees deteriorates and the cost involved in selecting and training employees goes high. It becomes necessary for the employer to make employees satisfied with their job, which in turn minimises the staff turnover rate (Currivan 2000). Hence, after going through the overall views of the researchers, it can be said that high job satisfaction results into minimising the employee turnover rate, which not only boosts the morale of employees, but also results into achieving high growth and profitability at the workplace. Thus, there is a casual relationship between job satisfaction and employee turnover rate, which impacts the overall sustainability of the organisation.
As per Ingersoll and Smith (2003), there are different reasons for high employee turnover rate within an organisation, which directly affect the bottom line of the organisation. The first reason for high employee turnover rate is high pay. When employees work in an organisation, they feel that they should be presented with a better offer otherwise there might be a chance of leaving the organisation. In a competitive world, it is essential that the organisations provide comparable benefit packages, which will attract people to join the organisation and retain for a longer time period (Ingersoll and Smith 2003). If a company is not able to pay proper pay and benefit compensation to its employees, they would feel dissatisfied with their job and will not perform up to management expectations. This results into increased employee turnover rate.
The second reason for high employee turnover rate is non-engagement of employees in the work. If employees are not given encouraging and motivating tasks, they will not perform as per their capabilities, which will result into an increase in the output cost and decrease in the rate of profits (Baron, Hannan and Burton 2001). It is necessary that a company’s leadership is engaged in minimising the staff turnover rate by adopting a proactive approach towards building employee relations so that employees feel that the management considers employees as an asset and gives them tasks, which keep them engaged in work. If employees are not given the tasks as per their calibre, they will not engage themselves fully in the work assigned to them.
The third reason for high employee turnover is poor training. Baron, Hannan and Burton (2001) state that high turnover rate occurs at the workplace due to poor training given to employees. There is no more de-motivating factor than forcing employees to perform their duties and not giving them adequate training. It is necessary that every employee, no matter who has high skills and talent should be given timely and adequate training; otherwise it would result into loss of productivity. When the value of training is ignored by managers at the workplace, employees are not able to know as to what actual task they are required to perform and how. In context with this, there is a generation of lots of costs, which affect their overall performance at the workplace, and they do not feel satisfied with the workplace. This results into an increase in the rate of employee turnover.
The last reason, according to Hannan and Burton (2001) for high employee turnover rate is unreasonable expectations by the management from employees. There are, at times, many organisations or managers, who think that their staff should perform much more than they are paid to perform. The management thinks that employees should perform for longer hours and should get the work done, which creates a negative feeling in employees’ minds towards their work and the management. They are not given any rewards or positive feedback for the work carried out by them, which leads to high employee turnover rate.
In a highly competitive environment, employee turnover is a natural part of any industry, and if the turnover rate is high, the efficiency of a company decreases, which results into bearing high costs. As stated by Ingersoll (2003), there are different issues of high turnover rate including the involvement of high cost. When an employee leaves an organisation, the company has to bear huge costs in terms of selecting and recruiting a new employee. All the money invested on the ex-employee through training, education and more, walks out of the door with the employee. Also, the company has to spend more on advertising the vacancy that incurs physical and moving expenses.
Secondly, with high turnover rate, the productivity also gets affected. When employees leave the organisation on a frequent basis, the productivity at the workplace gets hampered because when new employees are hired they take time in adjustment. The new employee cannot be as compatible as the previous employee and cannot complete the task as quickly as compared to the previous employee. If there is a certain group project, which relies on a new team member, it might be possible that the work slows down and hamper the workplace productivity of the experienced employees as well. The employees leaving the organisation, affect the morale of the existing employees. McDonald’s, in spite of being a renowned company has a high labour cost, and also, the employee turnover rate is high. The main reason behind it is that the employees working there are given low salaries against the hard work done by them. McDonald’s outlet’s turnover rates reach approximately 300 percent per year (Smith 2006). This is due to the low paid workers, and also, the employment in the company is part-time, because of which the company does not pay employee benefits, overtime or increases wages for the services performed by them. Therefore, after going through the views of eminent researchers, it can be said that the above mentioned are the main reasons behind having high employee turnover rate at the workplace.
Measures To Reduce Employee Turnover
In today’s world, it can be noticed that the baby boomer generation has began to retire in the labour market, and therefore, various organisations are finding ways to retain talent in their companies. In today’s corporate environment, employee turnover is becoming a serious problem. In addition, the employment culture is transferring as well. Presently, it has become a trend to change jobs every few years, in spite of growing with one company throughout the employment life. On the other hand, the employees have also become demanding to have a balance between work and personal life (Hsieh and Eggers 2011). The financial performance of an organisation can significantly be affected as the turnover costs for many organisations are very high. Recruitment, selection and training of new people are included in direct costs. Therefore, it is required for the management to reduce the attrition rates through various ways and retain the employees to a great extent (Kim and Jogaratnam 2010).
For this purpose, it is necessary to hire the right people and continue to develop their careers. Moreover, it is significant to develop strategic compensation packages, which comprise of base and variable pay scales, bonus and gain sharing plans, long term incentive compensation. It is essential for managers to get involved in the reasons of attrition, and additionally, attention should be brought up to bottom line figures, in the manner employee turnover affects everyone. In order to understand the problems and issues of employees, it is important to execute periodic audits of job satisfaction and have strict hiring standards and constantly update the strategies in training (Hsieh and Eggers 2011).
Although it is not possible to completely mitigate employee turnover but the management should be able to effectively deal with this problem. Furthermore, it is required for the management to be better prepared to take proper actions after the occurrence of turnover event. The management should focus on managing controllable causes of turnover, maintaining employee job satisfaction, regularly assessing the workplace environment, and in addition, supporting and strengthening employees’ engagement. Employees necessitate social interaction and a reinforcing work environment along with respect and appreciation from managers, as well as a challenging position to grow and develop (Hinkin and Tracey 2008).
The managers should pay attention to employees’ personal requirements and propose more flexibility at the workplace. They should also demonstrate commitment to employees’ long-term development and support them in taking benefits of learning opportunities. The management should ensure comprehensive change management and also involve the employees in change by eradicating unexpected changes. The management should communicate the company’s vision, mission, and brand to employees so that each employee can voluntarily contribute to improve the organisation’s performance (Kim and Jogaratnam 2010).
On the other hand, customising an innovative reward program for functions and individuals helps in building commitment. Job commitment can be increased by the management through fairness, care, and concern for employees. Through team cohesion activities, the HR managers can enhance employee engagement. Employee orientation should be clearly updated to accurately reflect organisational expectations.
In order to retain employees in the organisation, the management is responsible for providing a work environment that is creative, courteous, and friendly, along with a feeling of comprehensiveness. Moreover, regular feedback to employees is the most significant part in human resource management that helps managers to increase retention rate in the organisation. Regular feedback on employees’ performance is considered to be the best possible way to persuade and acknowledge the leading performance.
Inductive Research Methodology
The research methodology section deals will deal with the requirements of research questions. This will help in conducting research in the most effective manner. The main purpose of the research methodology is to discuss the methods, which will prove to be valuable to discuss the measures to prevent high attrition rate.
Research Paradigm or Philosophy
There are two categories for research philosophy, i.e. the positivist and the interpretive approach. In this research, the interpretive research philosophy will be used, as the background of the study is subjective in nature. Interpretive philosophy of conducting research is considered to be the best suitable one, because it will aim to analyse the subjective aspects of the research question, regarding which the information can be collected with the help of viewpoints of the HR executives and managers in the organisations to decrease the turnover rates. In addition, the philosophy of interpretive research will prove to be valuable in conducting an exploratory research in order to collect information regarding the research question.
The basic aim of the research work is to analyse the factors that lead to high attrition rate. With the application of an identified research philosophy, the objective of the research can be properly analysed and achieved. It will also help in facilitating talent management practices for gaining high retention rate in the multinational organisations.
Research Approach
Basically, there are two approaches used in conducting the research, i.e. the inductive and deductive approach. In this research, inductive approach will be used as it helps in facilitating generalised conclusions. The research topic is associated with the exploration of problems related with high attrition rate within an organisation and measures to address such issues. For this purpose, the data will be gathered in a generalised format and no specific organisation will be selected for retrieving the data. Furthermore, the results of the process will help in reflecting the specific usage and significance in managing the turnover rates. Therefore, inductive research approach will be virtually justified in this research work.
Inductive approach will be used in this research, as it will facilitate assistance to the researcher regarding the assessment of specific information related to role of HR management in their operational practises to decrease high attrition rates and practice certain measures that resolve this issue. In order to accomplish the objectives of the research, this approach will prove to be beneficial as it comprises of study and analysis of subjective factors. On the other hand, this approach will well-coordinate with the interpretative research philosophy for collecting the required information regarding the factors that lead to high turnover rates in the organisations and identifying certain management practices to control employee turnover in firms.
The inductive approach will help to have a wider range of data and information, in this reference of the research question, this will be prove helpful in answering the research question with most appropriate information, and therefore it will justify the topic of the research in an effective manner with useful data. In this dissertation, inductive approach is necessitated because the research topic is of a comprehensive nature and it involves collection of different types of data in order to give proper explanation for the topic. Hence, using inductive approach in this research will prove to be favourable and advantageous for the research results and derive most valid conclusion.
Research design
In order to complete the research in a successful manner, there are essentially three types of research designs i.e. exploratory, diagnostic and deductive research design. The exploratory research design will be used in this research, as this will facilitate the researcher in examining the causes behind the particular action. In order to understand the reason of opting the research and proper justification, the exploratory research is further separated into three parts, i.e. literature survey, experience survey and real life case survey (Bryman and Bell 2007). The literature survey and experience survey will be used in this research for the purpose of colleting pertinent information and data. As discussed in the previous section, the literature review will be advantageous in gathering the information for interpretation and will help in deriving effective conclusions for the research work (Bergh and Ketchen 2009).
Moreover, the experience survey will be used in the research, which is applied to collect the hand information with the help of questionnaires. As a consequence, both the primary and the secondary research methods will be used through the exploratory research design and the essential information will be collected regarding the research topic by the use of various resources (Shaw and Onkvisit 2008). Furthermore, using multiple resources will completely justify the research question by accumulating wide range information that will lead the researcher to derive at valuable conclusions and make the research more valid and reliable (Cavusgil 2009).
Data Collection Methods
While conducting the research, it is essential to collect the data from authentic sources, so that effective and reliable conclusions can be derived from the research work. A variety of research methods are accessible, and it depends on the requirement and suitability of the method to be used in the research, with regard to the research question. In order to gather the data for addressing the research question, both primary and secondary research methods will be used in this research (Beri 2007).
Primary Data Collection Method
In order to collect first hand information, primary data collection methods are considered to be very useful. A variety of tools are used in primary data collection method, such as, surveys, questionnaires, interviews, etc. In this research, wide and practical information is required, and quantified data is needed to make the research more authentic and reliable. For this purpose, a method is required, which helps in collecting a lot of quantitative information in an efficient way. Therefore, survey though questionnaire will be used in this context because a large population can be surveyed successfully with the help of this method and the quantitative responses of respondents can be collected without any difficulty (Cummings and Worley 2008).
In order to extract the information, survey through questionnaire method will be used for asking questions regarding the reasons of high attrition rates in organisations. For collecting first hand information, the managers will be very helpful for providing appropriate information with the help of their experience. In order to collect the primary data, the survey will consider 50 HR managers from different organisations. The managers will be highly experienced, skilled and knowledgeable, and will respond to questions in an unbiased manner (Gratton and Jones 2010).
These managers will be selected on a random basis. This will help in reducing turnover rates and implementing talent management practices to attain high retention rate. A broad range of people are considered in the research, and therefore, the approach will be applicable to the masses (Pring 2004). In order to conduct the research question in the most effective manner, this will prove very helpful in dealing. As discussed above, the primary research will work best in the fulfilment of the research philosophy and research design. The results of the research can be generalised without any difficulty, as they cover a wide range of population (Jackson 2010).
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