The issue of employee turnover seems to be pressuring for many companies. Usually, it is typical for businesses that require a lot of routine work to be done. While people leave, their managers are not always concerned with it, especially in regions with high unemployment rates. However, the loss of talent may seriously affect the revenues and result in a business failure. This paper analyses the case study for ABC Ltd and offers several strategies that the company’s HR department could use to improve the situation.
Employee Turnover
ABC Ltd is a publishing company based in London. It is now a part of a bigger corporation called the Publishing Group, which is the reason the company’s initial framework of employee relations has changed. The figures presented in the case study provide evidence that, despite the growth of the book market in the world, ABC Ltd shows a steady decline in the number of its workers. The modern trend of switching from the traditional forms has called for reducing the number of employees in the publishing division, as there is less work in manufacturing electronic books. Of course, the employees were offered compensation. However, the figures provided in the case study show that the number of leavers is increasing and is currently almost the double of that measured several years ago. Moreover, the total number of employees is gradually falling.
The worst situation can be seen in the distribution arm of ABC Ltd. It is understandable that this department requires more workers. However, the table shows that there are currently seventy employees less that in was in 2008, and the number of leavers is much greater compared to the data for the publishing arm. This trend is not surprising, as distribution mostly calls for routine work. People have to sort large amounts of books every shift packing them in boxes that would later go to retailers. This type of labor cannot be considered to be rewarding as workers do not receive any specialized knowledge, and the payment is not high. It is important for the employees to feel satisfied with their job, and the two primary conditions for it are the feeling of achieving satisfactory results and the high wages. It is not surprising that routine work is considered to be a field with high turnover rates.
Probably, one of the most significant reasons for high turnover rates in ABC Ltd is the fact that distribution employees are not valued by their managers. The distribution center is situated in Birmingham, which is the place with the high level of unemployment. The administration knows that there are many citizens who are searching for a job. Unemployment pushes people to look for any type of job disregarding of their specialization. This creates a situation where employees would leave the company as soon as they find an option which would offer them higher income and better labor conditions.
Options for Change
After reviewing the case, two most important factors for improving the situation with turnover rates at ABC Ltd become evident. These are the changes of wages and working conditions, and the proper attitude of managers towards their subordinates. Ensuring these two initiatives could positively affect the current state of the company.
It is evident that salary is the primary force that keeps people at work. This is the first thing they pay attention to when applying and the number one reason for working on the overall. That is why raising salaries could help to keep employees in the company. It is evident that the current economic situation in the world does not support such initiatives. As the population’s incomes fall, they are less likely to buy more books. However, the growing number of people in the world could bring more customers to the publishing industry. Besides, ABC Ltd could increase the number of electronic copies they produce and sell. This would bring more revenues to the company that could be used to pay more to its employees. The labor conditions of employees, especially those working in distribution, should be reconsidered as well. Routine work is not motivating enough, and there is currently no opportunity for career development. However, the modern development of technologies threatens to eliminate positions in such fields as distribution (Ford 3). In the scope of this situation, it would be a smart decision for ABC Ltd to provide educational courses for their workers that would be targeted at teaching them new skills which allow developing a further career in a company.
The second step lies in changing the managers’ position towards their workers. They realize that it is easy to find new employees for the posts in distribution due to the high unemployment rates. However, this is a wrong path to take as people who do not feel valued leave the company quickly. The problem can become pressuring for regions with a small population, as the company’s bad reputation can spread quickly, creating a lack of new people wishing to work for it. Changing the managerial attitude does not mean that the firm should keep everyone even if their performance is poor. However, making employees feel valued is crucial for their staying in business in the long run.
Success Factors
The success of the described initiatives highly depends on several factors. They include the level of revenues, the future strategy of ABC Ltd, and the overall economic situation in the world. It is not easy to predict how the industry will feel in the next several years but it is essential to plan the budget to implement changes to the HR management.
The level of income is crucial as it is the factor that determines whether it would be possible to pay more to employees. However, businesses do not necessarily choose to invest in their human resources. It is important that ABC Ltd decides to spend more on its specialists. Book production requires a lot of skilled specialists. People spend years in universities studying languages, design, information technologies, and other difficult disciplines to become competent for the publishing industry work. Their expectations to receive high salaries upon completion of these programs are understandable. It is possible to raise revenues through doing the better work in the marketing field. The more books are sold, the more money ABC Ltd has for increasing salaries.
The overall strategy of the company also affects the initiative of raising payments and creating proper conditions. The case study demonstrates that ABC Ltd has already transferred its production lines to Asia. The company cannot go further since other processes require workers in the local area. However, it may change the working environment by reviewing the CSR policies to support its employees. For instance, the diversity among employees would work towards the better outcomes of the business (Laroche and Yang 25). A diverse working community like people of different cultural background may result in decisions that could positively affect quality and sales of products. Creating the environment that would support the employees’ culture and provide opportunities for development would keep talented workers in ABC Ltd.
Finally, the local and global economic situation is the factor that affects the company’s revenues. Nowadays, there are fewer people who can afford to buy many books. This is especially true for countries with the developing economy. Besides, the publishing industry is one of the fields associated with the high risks (Sosale 15), as there is never a confidence that a new product would meet the demands of the audience. The possible solution regarding the current economic situation is to focus on the developed countries since their reader market shows more potential.
Calculations
Turnover Costs
The high turnover rates at ACB Ltd are associated with costs that the company has to spend on hiring new employees. The production of one book requires a lot of specialists and losing one of them leads to issuing more work to others, resulting in additional payments for staying extra hours. Besides, more money has to be paid to the HR department to recruit a new person. As recruitment and selection take time, the company keeps losing revenues. Moreover, there are expenses on advertising through the Internet and traditional media to find new workers. Finally, it takes time for a new employee to adjust to the new requirements and mechanisms. This affects both quality and quantity of the work done, which also results in the budget loss of business since newcomers receive the same salary as former workers, yet they do not perform just as well initially.
Reasons for leaving
Former workers were asked to fill out the questionnaires to explain the reasons for their actions. If the leaving was not associated with enforcement from ABC Ltd management, employees described the primary reasons to be the low payment, long working hours, and the lack of value from the administration. This was especially true for workers in the distribution arm. The described options for change answer these issues and may positively affect the situation in the future.
Implementation
This case study has demonstrated that high turnover rates are costly for businesses and should be eliminated if possible. While budget matters like increasing wages are the task of a financial department, HR managers must ensure that the corporate culture works towards supporting employees in their satisfaction level and hopes for development. An HR specialist should strive to offer employees the ways to grow, explain the importance of each of them, and build a culture of respect and recognition.
Conclusion
The case study of ABC Ltd demonstrates that people tend to leave the company due to the internal conditions that they find to be inappropriate. The company has to take action to reduce the costs associated with the turnover. This case is a good example for the future HR managers of how the working environment can be critical and affect the success of business.
Works Cited
Ford, Martin. Rise of the Robots: Technology and the Threat of a Jobless Future. Basic Books, 2015.
Laroche, Lionel, and Caroline Yang. Danger and Opportunity: Bridging Cultural Diversity for Competitive Advantage. Routledge, 2014.
Sosale, Shobhana. Educational Publishing in Global Perspective: Capacity Building and Trends. The World Bank, 1999.