Bolg 06 - Effects of Employee Turnover
Effects of Employee Turnover
Employee turnover is
another topic discussed widely in the global business milieu. Managing the
employee turnover helps in ways to overcome a vast variety of challenges in the
business. Employee turnover has been given views by various authors. According
to Lim and Parker (2020), refers to the amount or proportion of workers who
leave a business and are replaced by new employees. It has always been one of
the most difficult issues for a company. As one might claim that employee
turnover has a negative impact, others can argue the opposite.
Table: Positive and Negative impact of turnover rate (Firdous, 2020)
An organization's employee turnover rate can be either harmful or
beneficial. According to Teng et al. (2019), employee turnover has a negative
impact on morale, productivity, quality, and income. A high turnover rate
indicates that the business loses personnel, which necessitates fresh
recruitments, training, and growth at an additional expense to the firm.
Employee turnover can lower morale among existing employees, and experienced
highly motivated employees will not want to work with more workload, while new
recruits will be demotivated by workload and pressure, resulting in low
productivity and service performance if the organization is a service provider.
If an organization has above mentioned features, it is clear sign of a problem with the organization culture. The best remedy is to adhere to the matter and develop a strong standing organization culture.
According to Hurley (2015), the staff turnover rate may have a beneficial influence on businesses since it allows for growth, creativity, and diversity, which in turn helps a company produce more income through new ideas and inventions. If the company is in a bad financial situation, turnover can help to maintain a minimum required rate of employees, which can lead to promotions and new recruitments, and the company can expect an increase in moral and job satisfaction, as new employees with new creative ideas will help to increase the quality and productivity of the products or services.
It concludes that the
Employee turnover effects the company positively and negatively, where for
a striving company it can be a negative effect since the turnover rate
demotivate employees and it is a cost for a company and where a
struggling company can turn the turnover rate to a positive effect since
the new recruitments means new idea and the existing employees will be
motivated with the promotions which can be offered to full fill the vacant
positions of the company due to turnover rate. Highly motivated workforce and
new ideas is an asset for an organization. Furthermore it concludes that the
negative and positive effects directly contributes towards the Return on
investment of the company by increasing it or decreasing it.
Reference
Firdous, T. (2020) the
Effects of Employee Engagement on Employee Turnover: A Case Study from the UAE DOI: 10.1007/978-3-030-42211-0_5
Hurley, R.F. (2015) An
Exploratory Study of the Effect of Employee Turnover on Customer Satisfaction DOI: 10.1007/978-3-319-13141-2_109
Lim, P., Parker, A. (2020) Employee Turnover. DOI: 10.1108/978-1-78973-483-620201006
Teng, M., Zhu, H., Liu, C., Zhu, C., Xiong, H. (2019) Exploiting the Contagious Effect for Employee Turnover Prediction. DOI: 10.1609/aaai.v33i01.33011166
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ReplyDeleteJob satisfaction refers to an employee's feelings toward their job. Employees who are dissatisfied with their jobs are more likely to leave the company. Furthermore, job dissatisfaction can lead to employees looking for other opportunities. Employees who are dissatisfied with their jobs may intend to leave the organization, leading them to seek employment with other organizations. If an employee leaves the firm owing to turnover, the assurance of strong employee quality is threatened, and considerable amounts are spent on the selection and training of new employees, ultimately leading to the company's destruction (Al-Suraihi et al. 2021).
ReplyDeleteThank you Virosha. agree with you. Job satisfaction also lead towards employee turnover. high performing employee can not be replaced. but turnover is important for continuation and growth of any organization. According to Teng et al.(2019) Functional turnover occurs when low-performing employees leave the organization, so it can save the organization from having to make tough decisions and, often, improves productivity levels. Dysfunctional turnover, on the other hand, hurts the organization. When top performers or other highly skilled employees leave, replacing them can be difficult and potentially costly from a quality standpoint.
DeleteYes Aruna, Cole (2002) is of the view that when organizations are able to find and employ qualified employees who are consequently able to fit in their roles and are competent, the organization will be able to take advantage of opportunities and take care of threats and competition from its operating environments that other organizations who are constantly battling with building and maintaining their workforce.
ReplyDeleteThank you Isuri. good point. agree with you. employee poaching may have return effect on the employer as well. according to Fitch (2020) those who been poached or headhunted employees may come in to the organizations to collect trade secrets and tack ticks. Then they return to their previous employee to demolish the business. Employer need to be tactful in that case.
DeleteHi Aruna, Employee turnover is worker rotation on the labor market; between companies, jobs and professions; and between countries employment and unemployment according to Abassi et al (2000). The term "turnover" was defined by Price (1977) as the ratio of the number of organizational members who left during the period being considered divided by the average number of people in that organization during the period.
ReplyDeleteThank you Reshan. Good definition. According to Lim and parker (2020) Turnover measures separations—employees who leave a company—within a certain time period. Separations include everyone who is no longer with the company, regardless of the reason.
DeleteTurnover is broken down into two types: voluntary, where people leave of their own volition, and involuntary, where people have been terminated or were part of a seasonal layoff or reduction in force.
Employees who voluntarily leave their jobs are often seeking more money and better benefits, career progress, a more optimal work/life balance, or to escape an ineffective or toxic manager.
Turnover is expensive: Gallup pegs the cost at between one-half to two times the salary of the employee being replaced.
Manu et al. (2004) argue that employees quit from organization due economic reasons. The most common reason for employee turnover rate being so high is the salary scale because employees are usually in search of jobs that pay well.
ReplyDeleteThank you Larry. Good comment. Even though monetary compensation is appreciated by a certain group some appreciate the non monetary compensation as well. according to Hurley (2015) They’re more cost efficient because the recognition itself is the focus, and the value from the employee’s point of view is derived from the act of recognition.
DeleteNon-monetary rewards also make an immediate impact. Rewarding employees with things like bonuses or pay rises can take time, meaning it loses some of its impact. The best way to reward an employee is to do it straight away.
They’re also better for retention. An employee that stays with you because you’ve given them a pay-rise can easily be lured away by another company. However, non-monetary rewards help you build a relationship with employees, which they won’t get at other companies.
Traditionally, employee turnover has been assumed to create substantial losses for organizations due to human and social capital depletion, and operational disruptions. It would therefore affect organizational performance negatively (Hancock, Allen, Bosco, McDaniel & Pierce, 2013; Shaw, 2011)
ReplyDeleteWithout human resources, also known as human assets, no organization can prosper (Shukla and Sinha, 2013). The human resources of an organization determine its success (Shukla and Sinha, 2013). More specifically, because every firm is vying with one another to acquire talent with more incentives, talent retention has become the most important issue of concern in the globalized world (Shukla and Sinha, 2013). Strategic planning and execution must be done to ensure that organizational requirements and human resource expectations are properly combined for the organization's benefit (Shukla and Sinha, 2013).
ReplyDeleteThank you Nimshi. Agree with you. Human capital is the most important asset in any organizational context. but the organization can not totally depend on the human capital. According to Hurley (2015) if employer totally rely on human capital, the organization wont prosper. some automation needs to be there to have that balance.
DeleteWell Explained Aruna, However, Alatawi (2017) emphasizes that low employee turnover should be a priority for any organization. because when recruiting new employees there will be an additional cost for advertising, Training and etc.
ReplyDeleteThank you for the comment Udaya. agree with you. but turnover it an inevitable scenario of any organization. any employer can not have 100% turnover free ratio. According to Firdous (2020) Lack of Growth and Progression, Being Overworked, Lack of Feedback and Recognition, Little Opportunity for Decision-Making cause employee turnover. turnover Isn't always effect badly towards the organization. it provides new opportunities for growth both employee and employer
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