Employee retention

Tatenda Emma Matika / Posted On: 23 February 2021 / Updated On: 5 October 2022 / Human Resources General / 1,004

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Employee retention



Employees are the life of any organization. Nowadays, the world is fast-paced and there are various opportunities available on the job market. This has resulted in stiff competition for employees. One challenge that organizations are facing is how to retain workers (Das and Baruah, 2013). Companies need to retain skilled employees as their knowledge brings value and increases the company’s competitive advantage. Chiboiwa et al (2010) quote the definition of employee retention by Chaminade (2007) as a voluntary move by an organization to create an environment that engages employees for the long term.  


In Zimbabwe, the hostile economic environment has made it difficult for organizations to formulate realistic retention strategies. Factors affecting employee retention are likely to vary between countries with different economic environments. Chiboiwa et al (2010) state reward systems as a factor affecting employee retention. Rewards can be in form of salaries, promotions, bonuses, and other incentives. When employees are poorly rewarded, employee retention will be low. Other studies state hiring practices, management style, lack of recognition, lack of competitive compensation system, toxic workplace environment as factors. Others include lack of interesting work, lack of job security, lack of promotion, and inadequate training and development opportunities (Abassi and Hollman, 2000), (Hewitts Associates, 2006), (Sherman et al, 2006).

 

The following table is a summary of the causes of low employee retention as shown in the paper by Ramlall (2004).

 

Literature

Causes of Employee Turnover

Job analysis The appropriate skills and competencies are not included in the job description. Incumbents do not have a realistic job preview of the position before starting. The critical success factors of the position are not fully defined.
Recruitment & selection Candidates only possess the skills that are needed to perform effectively but may lack the attitudes, personality traits, and behaviours that ensure organizational “fit” and promote commitment. Some organizations are not using behavioural-based practices that ask for examples from the candidates about their work history and how they behaved in previous job situations. Advertising is limited to traditional sources such as newspapers, and not fully utilizing technology and sources more accessible to women and people of colour.
Compensation & benefits Pay is not tied to performance. Compensation philosophy does not support the mission and culture of the organization. The benefits offered do not appeal to and meet the needs of the various categories of employees.
Career planning & development Employees do not understand what skills are required to grow professionally and to be rewarded based on performance.  Promotions are not based on performance. Career planning and development efforts are not tied to the organization’s business objectives. 
Training & Development There is no systematic approach to T&D T&D efforts are not assessed. A demonstrated lack of commitment to the employee’s long-term development results in a lack of commitment from the employees. 
Effective supervision & management  Command and control style of management is resisted by employees in today’s workforce.  Managers not functioning as coaches and facilitators. Manager perceived to be unfair.
Diversity management & initiatives  Communication, decisions, strategic planning, and other forms of decision making that do not acknowledge differences such as age, colour, religion, gender, or sexual.  Little or no diversity training designed to change the myths of diversity, to educate participants about the realities of diversity, and to offer ways to respond to the challenges of valuing and managing diversity.  Workforce population does not reflect the demographics of the geographic area of the organization. 
Flexible work arrangements The organization does not allow and promote flexible work schedules. A lack of respect for an employee trying to balance work, career, education, and community. The organization not making short-term investments to meet the needs of the employees as far as telecommuting and job-sharing. 
Exit interviews No exit interviews are conducted. Confidentiality is not assured. No analysis is done or not utilizing the data collected in the interviews. 

 

Das and Baruah (2013) give a summary of factors affecting employee motivation and the authors of the research that discusses these factors.

 

Factors Authors Year
Compensation C.O.  Trevor, B.   Gerhart, J.W. Boudreau. 1997
  D.Davies, R. Taylor, C. Savery. 2001
  DG   Gardner, L Van, Dyne, JL Pierce. 2004
  GM Milkovich, JM Newman. 2004
  E  Moncraz,., J.Zhao and C.Kay. 2009
Reward and Recognition N.C. Agarwal 1998
  J.W. Walker 2001
  L.T. Silbert 2005
Promotion and opportunity for Growth M.  R.   Pergamit,  and  J. R.Veum. 1999
  Meyer, John, Laryssa, Topolnytsky,, HenrykKrajewski and Ian Gelltly 2003
  B.J. Prince. 2005
  L. Eyster,  R Johnson and E. Toder . 2008
Participation in Decision Making P.Hewitt 2002
  Y. Noah 2008
Work-Life  balance J. Hyman and J. Summers 2004
Work environment N. Miller,  A.  Erickson & B. Yust. 2001
  M.Wells & L. Thelen. 2002
  S. Ramlall 2003
Training and development M. Messmer 2000
  A. Tomlinson 2002
  P. Garg & R. Rastongi 2006
  L.W. Handy 2008
Leadership R.Eisenberger, P. Fasolo, &  V. Davis-LaMastro 1990
  McNeese- D.Smith 1995
  Y.   Brunetto,    R. Farr-Wharton 2002
  Chung-Hsiung  Fang,  Sue-TingChang,Guan-Li Chen 2009
Job-Security J.C.Abegglen 1958
  S.  Ashford,  C. Lee,   & P. Bobko 1989
  J.  Davy,   A.  Kinicki,  C. Scheck 1991
  Z. Rosenblatt, A. Ruvio 1996

 

Statistics and facts from various studies

A study by Chiboiwa et al (2010) on nationwide employees of a company in Zimbabwe showed that employee retention is low among non-managerial employees

Poor reward systems, poor working conditions, and job insecurity cause employee turnover (Chiboiwa et al, 2010)

Salaries are an important factor for countries with bad economic environments such as Zimbabwe (Chiboiwa et al, 2010). 

75% of employees actively seek a different job (Society for Human Resource Management SHRM, 2004). 

43% want a new job to receive better compensation (Society for Human Resource Management SHRM, 2004). 

32% want a new job for better career opportunities (Society for Human Resource Management SHRM, 2004). 

22% are dissatisfied with opportunities at their current job (Society for Human Resource Management SHRM, 2004). 

In 1997, studies show that it cost a company approximately $1 million with every 10 managerial and professional employees who left the organization (Fitz-enz, 1997) in the USA.

Enander and Cardoso (2020) show that in the last 15 years, 40% of reviewed studies stated employee engagement and commitment, right personal selection and talent attraction, talent management, and relationships within the organization as causes of employee retention.

Career opportunities, fear of material losses when leaving, flexible workdays, performance evaluation techniques, promotion, strong communication, training and development opportunities, and work-life balance were in 20% of studies on employee retention in the last 15 years (Enander and Cardoso, 2020)

Lee et al (2018) state that according to Gallup (2017), 35% of United States workers had changed their jobs in the 3 previous years

60% of employees say that the opportunity to do what they do best in a role is important for employee retention (Lee et al, 2018)

51% of employees would change jobs to one that has flexible working hours (Lee et al, 2018)

Millennials may not plan to stay long in a particular job even if it is satisfying (Lee et al, 2018)

Millennials may not plan to stay long in a particular job if it threatens other life goals (Lee et al, 2018)

 

Some Employee Retention Practices Used by Organizations 

Champagne & McAfee in their book Motivating Strategies for Performance and Productivity: A Guide to Human Resource Development listed some potential ways of satisfying employee needs to improve retention:

 

Needs (Maslow, 1943)            Examples
Physiological Cafeterias, Vending machines, Drinking fountains
Security

Economic:  Wages and salaries, Fringe benefits, Retirement benefits, Medical benefits:

  • Psychological: Provide job descriptions, Give praise/awards, Avoid abrupt changes, Solve employee’s problems
  • Physical: Working conditions, Heating, and ventilation, Rest periods
Affiliation Encourage social interaction, Create team spirit, Facilitate outside social activities, Use periodic praise, Allow participation
Esteem Design challenging jobs, Use praise and awards, Delegate responsibilities, Give training, Encourage participation
Self-actualization Give training, Provide challenges, Encourage creativity

 

 

Chiboiwa et al (2010) mention sponsoring students for studies as a method of employee retention. The students are required to work for the organization for a specified period after graduating from school. 

 

Cloutier et al (2015) state that employee retention can be achieved through four strategies:

  • Effective communication – Organizations should promote communication that engages and promotes employee commitment to the vision and values of the organization
  • Hiring a diverse workforce 
  • Hiring appropriately skilled people - To retain good employees, managers need to begin the hiring process with a search for the right employee. Employees are not always looking for a job for life, therefore organizations should look at a few imperative points to extend the tenure of employees. One size does not fit all, therefore they should tailor the practices to their employees.
  • Offering employees development and training programs

 

Conclusion

Addressing the issues discussed here will be good for organizations intending to improve employee retention. Maslow’s hierarchy of basic needs are physiological, safety, love, esteem, and self-actualization (Maslow, 1943). Satisfying these needs for employees will likely improve employee retention. It is important to note that organizations should look at a few imperative points to extend the tenure of employees. One size does not fit all - different people require different motivations due to different types of work and also due to their different personal characteristics.

 

Main References

Chiboiwa, M.W., Samuel, M.O. and Chipunza, C., 2010. An examination of employee retention strategy in a private organisation in Zimbabwe. African journal of business management4(10), pp.2103-2109.

Cloutier, O., Felusiak, L., Hill, C. and Pemberton-Jones, E.J., 2015. The Importance of Developing Strategies for Employee Retention. Journal of Leadership, Accountability & Ethics12(2).

Das, B.L. and Baruah, M., 2013. Employee retention: A review of literature. Journal of business and management14(2), pp.8-16.

Enander, A. and Cardoso, J., 2020. How is employee turnover related the  employee retention? A systematic review of two sets of meta-analyses.

Lee, T.W., Hom, P., Eberly, M. and Li, J., 2018. Managing employee retention and turnover with 21st-century ideas. Organizational Dynamics, 47(2), pp.88-98.

Ramlall, S., 2004. A review of employee motivation theories and their implications for employee retention within organizations. Journal of American academy of business5(1/2), pp.52-63.


Tatenda Emma Matika
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