Abstract
Employee turnover is a subject of concern for managers because workers are critical to ensuring organizations’ survival on a global scale. The success of organizations relies on how well they can preserve an environment which will encourage workers to stay and work hard to reach company objectives. However, there are cases when turnover is unavoidable, thus suggesting that workers resigning is a part of the overall business environment.
Turnover can depend on the capabilities of organizations and their attitudes towards workers, which is why there is no unified solution that can resolve all turnover issues at any setting. In the further review of research literature, turnover will be explored from several angles to understand the causes behind it, factors that can either increase or decrease it, as well as solutions proposed by different scholars.
Introduction
High rates of employee turnover have an adverse impact on overall productivity and profitability, thus limiting the competitive advantage of companies. It is costly for companies to cover the expenses of losing employees and finding new ones suitable for the open positions, thus subsequently increasing the operating budget. For instance, the costs of training new personnel can amount to up to 200% of an annual employee salary. Staff turnover is defined as the rate at which workers are leaving a company and being replaced by others. Measuring turnover allows organizations to determine whether there are any Human Resource (HR) issues that require resolving.
In a competitive environment that requires companies to show the highest levels of performance, maintaining the satisfaction of workers on high levels is imperative. In this research proposal, the turnover of employees will be examined in great detail in order to reveal strategies for strengthening the team spirit and increasing retention. Specific issues for review will include the effect of turnover on organizations, their management, and customers, causes for workers leaving their jobs, the solutions to the issue of turnover, and the effect of leadership on turnover.
Review of Literature
Definition of Turnover
In order to function properly and sustain competitive advantage, organizations need an adequate supply of labor. A disproportionate number of workers leaving their jobs can lead to companies losing their potential from the business perspective. Initially, the term turnover was coined by Price to refer to the “ratio of the number of employees and the number of workers who have resigned within a specific time period” (Zulu, Chetty, & Karodia, 2017, p. 1).
Put simply, turnover is the rate at which workers leave and join a company. It is imperative to understand that turnover can depend on a range of variables, usually associated with personal choices of employees, which are hard to control on the part of organizations.
Today, the issue of turnover can be understood by the phrase that “there are no longer any jobs for life,” which suggests that the time workers spend working for companies is continuously decreasing (Ugoani, 2016, p. 1064). In the present research literature, turnover is differentiated into avoidable or unavoidable and voluntary or involuntary. Voluntary turnover implies the intentional decision of employees to leave their positions while involuntary means that workers are fired by their management.
Avoidable turnover represents a set of problems that employers can control; for instance, these can include wages, the work environment, benefits, working hours, and so on. Unavoidable turnover explains issues that employers cannot manage, such as retirement, illness, death, and, in the case of women, pregnancy (Ugoani, 2016). The inability of companies to minimize the influence of the mentioned factors leads to the increased rates of turnover and subsequent problems that limit the productivity of companies and their competitive advantage.
Causes of Turnover
A variety of studies in different contexts have been dedicated to researching the issue of staff turnover in organizations. Most of the studies aimed not only to identify the effects of high turnover rates on the productivity of organizations but also find solutions to resolving this issue. As found by Ugoani (2016), employee turnover in organizations could be associated with low pay, poor conditions in the workplace, and the unethical behaviors of the management.
This shows that there are not only economic (financial) reasons for employees leaving their positions but also environmental and psychological. Therefore, turnover in organizations increases because the management pays less attention to the issues that their employees face on a regular basis. Since people are valuable assets to all organizations, it is imperative that companies know how to manage and treat their employees fairly (Ugoani, 2016).
Reasons because of which workers leave their positions can range from one organization to another. However, there are several distinct categories of issues that lead employees to consider leaving their positions. The first category is associated with the work itself not meeting the expectations of employees. This can occur due to the misalignment of the job description and the actual duties that employees have to fulfill. When this happens, workers lose trust in their employers and may consider other things that are wrong with their positions. This category also includes the feeling of workers being under-valued, not having a balance between work and personal life, as well as the lack of effective communication with the higher management.
The second category of issues that lead to workers considering turnover is associated with organizational instability. This can include the constant reorganization of the business, changing business objectives and rules can lead to instabilities and the subsequent dissatisfaction of employees. When workers do not know what is going on in their workplace, the likelihood of them considering other positions is higher than at times of stability. In addition, when employers do not communicate the possible shifts and changes to their workers, the gaps in understanding will lead to decreased efficiency and increased turnover.
Leadership and Turnover
A strong link between employee turnover and leadership has been discussed in multiple research articles and publications (Beato, 2011). Leaders have the potential to increase the performance of workers in organizational contexts because they have the power and capacity to engage their followers into the discussion about how the environment can be improved to guarantee reduced turnover. Several leadership styles should be noted in order to understand the influence of different approaches to leadership on retention rates in organizations.
Transactional leadership (TFL) is the style that has been directly linked to better retention indicators in numerous workplace contexts. TFL is a unique approach to leadership in a sense that it is associated with guiding followers toward achievement intrinsically, which means changing the beliefs and perceptions of followers to enhance their involvement in organizational affairs. Thus, TFL is about the engagement between leaders and their followers that can enhance morality and motivational levels. The integration of TFL within the organizational context is targeted at affecting workers in such a way that they can develop trust, admiration, and respect toward the leader that guides them toward specific objectives.
In contrast to the concept of TFL, transactional leadership (TRL) implies the focus on specific work objectives and standards that guarantee the flawless operation of an organization. This means that followers are guided extrinsically – rewards are given to employees for short-term achievements rather than the accomplishment of long-term goals. Nevertheless, this style of leadership is clear about the standards and rules used for maintaining the status quo and correcting all errors that could potentially limit the success of future business endeavors.
If to consider TFL and TRL in terms of their correlation with employees’ intentions, both leadership styles imply the positive motivation of workers to reduce turnover. However, it is important to mention that leaders should adapt the style, with which they lead an organization, to the needs of a specific setting. For instance, some teams work best when they are given specific short-term tasks, which means that TRL may be more suitable. Other teams can rely more on the visionary qualities of their leaders, thus showing that TFL will be more beneficial for retaining workers in their positions.
From the social identity perspective, the relationships that leaders have with their followers have a direct influence on employees’ decisions to remain in their positions. According to Liu, Cai, Li, Shi, and Fang (2013), the integration of such leadership principles as the leader-member exchange (LMX) can be of positive influence on retention. Abu Elanain (2014) also aimed to examine the influence of LMX on the “turnover intentions of workers as well as to test the mediating effect of role conflict, job satisfaction, and organizational commitment on the LMX-turnover intentions relationship” (p. 110).
The study represents a contribution to the research literature regarding the influence of LMX on the turnover rates of workers within the context of Middle East, and particularly in the United Arab Emirates. According to the findings, managers should be proactive in establishing positive relationships with their employees. To be specific, Abu Elanain (2014) found that the perceptions of employees of the high-quality LMX will lead to a decreased number of conflicts regarding role assignment, the increased satisfaction of workers with their jobs, higher overall organizational commitment, and subsequently decreased turnover intentions (p. 123).
The research is useful for understanding that without creating strong relationships between employees and employers, organizations will be unable to prevent high turnover rates. This means that it is important for decision-makers to determine the specific gaps in those relationships for revealing the reasons behind workers considering leaving their jobs. After finding these reasons, managers will be able to enhance the experiences of their workers and thus reduce turnover intentions. It has been advised for employers to invest in regular leadership training in order to educate managers on the LMX theory as well as communicate the positive impact of strong employer-employee relationships on reducing the turnover of workers in a variety of business settings.
Effect of Turnover
Consequences of employee turnover are disruptive to organizations operating in any industry, from retail to fast food services. The results of increased employee turnover include the decreased satisfaction with their job, the dissatisfaction of customers with provided products or services, declined financial performance, the lower retention of knowledge, limited profitability and productivity, as well as lower positional distribution (Beato, 2011).
High levels of attention given to the problem of employee turnover can be attributed to the impact of losing experienced workers in companies. There is a large number of variables that influence the intentions of workers to leave their jobs, which creates a complicated business problem in any industry or setting. Difficulties associated with retaining skilled and highly performing personnel are linked to the fact that they are always on the look for better employment opportunities. Without addressing the needs of these workers, employers will be unable to retain them in their positions. Therefore, the success of an organization relies on the ability of managers to implement positive business practices, sustain profitability, and introduce strategies that enhance employee retention.
According to the article by Zulu et al. (2017), high turnover rates can decrease organizational performance, even in the context of non-profit organizations. In particular, high turnover leads to poor remuneration, the lack of satisfaction of employees with their jobs, uncertainty within the organizational setting, the wastage of important resources, the increased mental stress of employees, breaks in teamwork, as well as the decline in service provision (Zulu et al., 2017).
All of these consequences of increased turnover show that the indicator affects organizations, employees, and the services customers receive. From the organizational perspective, when workers are not satisfied with their job and choose to resign, resources are wasted because the overall productivity decreases. Subsequently, the provision of service decreases because there are not enough human resources to sustain the performance of organizations. For employees specifically, turnover means the increased workload because they have to complete assignments that have previously been done by others.
Productivity is the indicator that suffers the most when turnover decreases, and it is important to consider when it comes to organizations in general, employees in particular, and the satisfaction of customers. Higher productivity in all organizations, including non-profits, means the decreased costs companies have to pay out, the increased satisfaction of clients with services and products for which they pay (Ugoani, 2016). This means that productivity adds value to the entire economy while controlling inflation, which suggests that one of the main aims of decreasing turnover is to positively influence the economy overall.
Reducing Turnover
According to Ugoani (2016), there are several solutions that can be implemented in order to solve the problem of employee turnover and increase retention. The first step is ensuring that workers are paid fairly, and that their pay does not go against the Minimum Wage Act. Second, establishing good managerial practices in terms of supervision and support is essential for showing workers that they are considered important to the success of organizations. Third, significant efforts of the government in terms of supporting family-friendly policies in the workplace can ensure that women can balance their family and work roles without the risk of being fired (Ugoani, 2016).
Extra attention should be given to the role of technologies in improving the workplace environment. Through the automatization of basic processes that have been previously done manually, employers will give their workers more time to complete assignments that are important.
Thus, there is a variety of factors that increase the rates of employee retention in the workplace. The recommendations mentioned by the author will help managers to be more aware of employee-related issues in the workplace and enhance the existing environments that limit workers’ abilities and opportunities (Ugoani, 2016). Since the level of organizational productivity depends on the satisfaction of people in the workplace, the overall goal of turnover reduction programs is creating a set of rules and processes that will make employees’ job more productive, less stressful, and more prospective in terms of new opportunities.
The purpose of the study by Beato (2011) was exploring a range of effective strategies for reducing the rates of employee turnover with a focus on social change as the tool for improving sustainability and promoting organizational growth and profitability. The author aligned effective leadership styles with the improvement of environments in the workplace and thus the strengthening of employees’ positions. In particular, transformational leadership has been of particular interest to the researcher because of the significant support for this style both in theory and in practice. Leaders that follow this style lead their subordinates through exemplary behaviors, inspiration, and selfless conduct, all of which positively influence the productivity and the general mood of workers.
Specific strategies for increasing retention usually depend on the needs of an organization. They can include and not be limited to developmental training to challenge employees to maintain their engagement, reward programs for recognizing workers for their achievements, and contributions to the community to sustain a positive image of an organization. Based on the needs of a company, managers should implement appropriate solutions to improve the retention of skilled workers that bring a variety of benefits to an organization.
Overall, there is an increased need to recognize workers for the jobs that they do for achieving high levels of organizational performance. Such factors as competitive salaries and the attention to training will significantly improve the team spirit and reduce the likelihood of employees resigning.
Rationale of the Study and Hypotheses
In this section, the importance of the chosen topic for the research will be explored. The current research aims to study the issue of high rates of staff turnover with the purpose of discovering the reasons behind it, studying best practices, and formulating solutions for overcoming the problem. Studying turnover is important because the dissatisfaction of workers with their job and the subsequent leaving of their positions presents some major challenges to organizations, both in terms of performance and finance complications. In a highly integrated business environment, human resources offer companies the power to perform at higher levels possible, and when there are not enough of them or when they are not efficient enough, some issues in terms of competitive advantage can occur.
The study acknowledges the fact that the concept of turnover is a complicated subject that implies a range of variables. Because of its complexity, it can be hypothesized that there is no one way in which all turnover problems will be resolved. However, despite the complex nature of turnover as a subject, it has an adverse influence on the performance and effectiveness of companies and can only be mitigated when organizations pay attention to the needs of their workers, maintain a positive environment, and follow effective leadership strategies that guarantee positive relationships between leaders and followers. The image below (Figure 1) is a schematic representation of the research hypothesis:
Research Questions Hierarchy
In the study, several problems associated with employee turnover will be discussed. First, the effect of turnover on organizations, management, and customers will be explored. Second, the impact of turnover on companies’ performance will be determined in order to find solutions to increase retention and helping companies overcome the problem. Third, the causes of employee turnover will be evaluated, including leadership issues and other categories.
Dilemma for the management: what are the reasons for the occurrence of turnover in organizations?
Management questions hierarchy:
- What is staff turnover and what impact does it have on organizations, customers, and higher management?
- How can staff turnover influence the performance of organizations?
- What are the causes behind high turnover rates in organizations?
- What solutions can be proposed in terms of dealing with high turnover rates?
Methodology
Model of Research
As identified in the exploration of literature, turnover is a variable that depends on a variety of factors, which is why it will be considered a dependent variable in the current proposal. Independent variables that impact turnover will include the needs of workers, leadership approaches (including TFL, TRL), relationships between employers and employees, and a positive work environment. The causal-explanatory relationships will be the focus of the proposed study, which implies reporting a problem in the beginning and finding solutions for resolving it at the end of the research. The issue of turnover will be described in detail to enhance the understanding of it. The research model (Figure 2) that will be distributed among the scholars involved in the present study is presented below:
Participants
In order to test the hypothesis, the participation of real employees is necessary. It is proposed to contact several local companies and ask their managers whether they will agree to participate in the research. Overall, the sample of 100 employees and managers will be enough for studying the impact of turnover on companies and solutions to improving retention in the workplace.
It is essential that workers at different levels (including high management) participate in the study to see whether there are any differences in the perception of turnover among them. Gender and age differences among study participants. In addition, an important indicator to consider will include the time which employees have worked for a particular company. It is important for understanding the perceptions of workers about turnover in terms of their experience working in a business setting.
Study Design
A qualitative design will fit the purpose of the current study. The participants will be interviewed on their experiences with turnover, and the thematic analysis of those interviews will reveal the attitudes of workers toward the problem. Thematic analysis is among the most common methods of evaluating qualitative data present in interviews. It can be useful for identifying, analyzing, and reporting patterns (themes) within the data. The reason behind choosing thematic analysis as the analysis method for the present study is associated with the opportunity to present insightful information to answer the identified research questions.
In addition to this, the chosen approach will benefit the study from the data-driven perspective as well as from the research question perspective that allows for determining whether the interviews gave sufficient information to answer the questions posed for the study.
The qualitative study design along with thematic analysis will be beneficial for the current study because the identification of themes during the exploration will reveal potential topics for future studies. On the downside, thematic analysis is limiting in terms of time and efforts it takes to review all interview transcripts and identify common themes. In the research, it will be essential to account for these limitations and conduct thematic analysis effectively.
Measures
Interview questions represented the key items in the proposed research. These questions will be developed for the purpose of asking participants about their opinions on turnover. Three categories of questions will be included in the final version of the interviews. The first category of questions will pertain to the participants’ understanding of turnover and how they view the issue in general. Specifically, interviewees may be asked the following: “What is your experience in terms of finding and quitting jobs?” “Have you ever worked in a high turnover organization?” “How important is turnover to you as an employee?”
The second category of questions will relate to the employees’ perceptions about the reasons for high turnover rates in companies. This is important for determining the events and problems that workers see as contributing to turnover. Specifically, the impact of leadership, work environments, relationships with managers, and other factors should be considered when asking employees questions about turnover. Themes such as “What aspects do you consider detrimental to decreasing employee turnover?” “Did your relationships with managers impact your decisions to resign?” “Did the environment in the workplace impact your decision to resign?” can be explored during interviews.
The last category of questions that participants will be asked will be associated with discovering the perceptions of employees about resolving the problem of high turnover rates in organizations. Asking questions regarding this topic is essential for understanding how employees perceive the solutions to the issues of high rates of turnover. This category of questions will be the most challenging because it is likely that workers of different ranks will have different opinions on how companies can resolve the problem of high turnover rates.
To be specific, the following questions can be asked: “What solutions can you propose in order to decrease turnover in organizations?” “Did you have any positive experiences with companies overcoming high turnover rates?” “Are you aware of any best practices that notable organizations implemented to increase staff retention?”
Procedure
The research will be divided into three large stages: the selection of the study sample and its recruitment, the collection of data, and the analysis of interviews. The Human Resource managers of local companies specializing in different services will be contacted with inquiries about the proposed study. In those companies that agree to participate, simple random sampling will be performed for choosing the potential participants who will be interviewed. After the sample is chosen, the participants will be contacted at the best times to conduct interviews. For those of them who will be unable to meet in person, interview questions will be e-mailed in a Word document and asked to answer the question in a free form.
Data Analysis
When the data is collected, the thematic analysis of the interviews will be performed to find specific answers to the study questions formulated at the beginning of the research. In the study, the statistical relationship between employee turnover and environmental factors that occur in workplace settings will be measured. It is expected to find a statistically significant relationship between the dependent and dependent variables: increased employee turnover will be the result of poor environments in the workplace, unfair payment and treatment of workers, insufficient leadership, the lack of communication between workers and managers, and other limiting factors.
With the help of interviews and their thematic analysis, it is expected to find that workers will report a negative attitude toward turnover and the factors that lead to the high likelihood of workers leaving their jobs to seek better professional opportunities.
Possible Results
Based on the review of the available literature on the topic of staff turnover, it is possible to forecast some results that the present study can reveal. It is expected that the interviews will reveal the negative attitude of workers toward the problem. Their prior experience with turnover may show that the issue limits their productivity and decreases profitability. Organizational problems that exasperate turnover are expected to include conflicts, the lack of attention to workers’ issues, unfair pay and compensation, and many others. Possible recommendations workers may have can include the improved communication between managers and workers, increased pay, training programs, and coaching sessions.
Conclusions
The issue of employee turnover has shown to be extremely complex due to the variety of independent variables influencing its occurrence. Researching the reasons behind high turnover rates will bring scholars closer to formulating a set of potentially successful interventions to decrease the number of workers leaving their positions in companies. The present research proposes to investigate the issue with the help of interviews with employees of companies operating in different industries. The proposed study can be replicated in different contexts because turnover is an issue that can occur in a variety of organizational contexts.
The issue is of high importance because the competitive advantage of companies is at stake when it comes to high turnover rates, and many organizations suffer because customers show dissatisfaction with the quality of products and services they receive.
References
Abu Elanain, H. M. (2014). Leader-member exchange and intent to turnover: Testing a mediated-effects model in a high turnover work environment. Management Research Review, 37(2), 110-129.
Beato, A. (2011). Effective strategies employed by retail store to reduce employee turnover. Web.
Liu, Z., Cai, Z., Li, J., Shi, S., & Fang, Y. (2013). Leadership style and employee turnover intentions: A social identity perspective. Career Development International, 18(3), 305-324.
Ugoani, J. N. N. (2016). Employee turnover and productivity among small business entities in Nigeria. Independent Journal of Management & Production, 7(4), 1063-1082.
Zulu, K., Chetty, N., & Karodia, A. M. (2017). The impact of staff turnover on organizational performance: A case of the three non-profit organisations in Verulam (Republic of South Africa). Arabian Journal of Business and Management Review, 6(11), 1-31.