Voluntary Turnover as a Major Problem for Organisation - Coursework Example

Voluntary turnover Name Class Unit Introduction For an organisation to function fully, it has to obtain and retain a talented and cohesive workforce. The organisation must be able to retain and nurture its employees. Voluntary turnover occurs when an employee leaves the company on their own volition. In this case, an employee makes the decision to terminate their employment relationship with the organisation. This is unlike involuntary turnover where the employer terminates the employment relationship (Shaw et al., 1998). This essay discusses voluntary turnover as a major problem for organisation. This is due to fact that voluntary turnover leads to reduction in organisation performance, loss of human capital, costs in replacement and general administration. To reduce the costs from voluntary turnover, the essay discusses strategies to prevent and predict potential turnover. This is through reinforcing social network structure between workers, recognising right attitude and intentions of applicants and lastly maintaining continuous training. Discussion Several researches show that there is a link between performance and turnover. The link is more specific in the aspects such as promotion rate and pay growth. When considering voluntary leaving the organisation, employees are highly likely to consider both internal and external conditions of the organisations. Expectancy theory shows that high performing employees expects a relationship to exist between their performance and rewards compared to lower performers when deciding to voluntary leave the organisation. According to the equity theory, employees will always compare their relative outputs and inputs to others. In this case, if an employee perceives that others are being paid more for less input, they may ask for a salary raise or reduce their inputs. Both expectancy and equity theory explains why higher performers leaves early in most cases than low performing employees (Nyberg, 2010). Employee reward and perfoamcne determines their motivation. The most vital rewards are pay growth, pay performance and promotions. When there is high pay growth, high performing employees are less like to voluntarily leave. Also, when there is low performance and low pay growth, less performing employees leaves voluntarily to organisations where there is low link between pay and performance. This shows that there is a negative relationship between performance and voluntary turnover. Equity theory shows that low pay growth for high performers, there is a weakened negative relationship between voluntary performance and voluntary turnover. When there is a salary growth, the level of voluntary turnover is reduced. This is strongest for the best performing employees (Nyberg, 2010). Promotions enhance employees’ attachment to the organisation. Also, it is important to note that promotions make the employees more visible to the external market which may make it easy for them to make voluntary movements. Promotions help a lot in increasing employees’ attachment to the organisation and are also associated with the pay growth. Low chances of promotions reduce the levels of attachment and may lead to voluntary turnover. The economy plays a major role in determining the level of voluntary turnover. This is due to fact that economy determines the level of unemployment hence alternative jobs. Also, the level of job satisfaction plays a role in voluntary turnover. Satisfaction plays a role in making the decision to leave or stay in an organisation (Nyberg, 2010). In an organisation, both voluntary and involuntary turnover and reduction in force has an impact on the organisation performance. In most cases, voluntary turnover involves a large number of employees making unexpected departures. This leads to negative impacts on the organisation since vacancies and shortages in staff leads to a reduced output. The shortage also leads to the use of the less experienced employees. The benefits associated with voluntary turnover takes time than the repercussions which includes replacement, training costs and separation. It is important to note that voluntary turnover is not limited to the poor performers. The impact of turnover on performance is based on the type of turnover in question (McElroy, Morrow & Rude, 2001). The negative impacts on the firm performance can be linked to the disruption on operations and the additional work that is left to remaining employees. The departing employees leave with tacit knowledge that has been accumulated through their experience. The departing employee also leaves with key human capital that is required by the organisation especially if they were high performers. Also, the employees left may feel demoralised. This demoralisation may be caused by losing a highly respected colleague. This affect the output of the remaining employees hence the firm overall output. A motivated workforce is dedicated to the organisation goals, has knowledge on the firm processes and is keen to maintain the relationship. This is all lost if voluntary turnover leads to demotivation among the remaining employees. Once the employees become demotivated, the organisation output goes down. Voluntary turnover thus leads to reduction in the organisation performance (McElroy et al., 2001). Additionally, turnover leads to loss of human capital which includes tacit knowledge, social relations. According to the human capital theory, a firm performance is determined by its accumulation of the valuable human capital. The human capital is the main contributor to the firm performance. Voluntary turnover reduces the firm human capital hence weakening productivity. Through voluntary turnover, the firm loses the organisation return on their investment in employees. This is especially in the cases where the firm loses a productive worker. The firm production reduces based on the lost workers skills. The loss is high in cases where human capital lost is firm specific. From the human capital theory, it is possible to derive a negative relationship between the level of productivity and turnover (Dess & Shaw 2001). Voluntary turnover leads to loss of social capital. Social capital is the social relation that exists within an organisation based on collective goals and shared trust. Social capital is very vital in the functioning of organisations. In knowledge based organisation, social capital losses have a more damaging result on performance than loss of human capital. Social capital is created through combination and leveraging of resources. This makes it to give exponential performance benefits and increases risks in case anything goes wrong such as voluntary turnover. In an organisation, social capital leads to sharing of ideas and those who excel in it are very valuable to the organisation. Voluntary turnover creates a huge gap in knowledge sharing and generating activities in an organisation (Dess & Shaw 2001). This problem is amplified by departures of other social network members in an organisation. Workers in long standing groups have a shared memory phenomenon for encoding and keeping the information in their social group. Employees cultivate an external memory and information help through others. This makes them to become members of a large social system. Voluntary turnover destroys this transactive memory since it is based on relative knowledge of others. When individuals who have been successful in creating social capital through the networks leave, the organisation suffers. The problem more commonly happens when gender difference is involved. Research shows that contrary to believe that female managers’ voluntary turnover is high; it is lightly lower than that of male counterparts. This is based on factors such as promotion and duration of promotion. The research shows that voluntary turnover is also gender based and this has a negative impact on the organisation performance (Lyness & Judiesch 2001). In order to reduce the cost from voluntary turnover, organisations apply strategies aimed at predicting and preventing turnover. One of the strategies is reinforcing the social network structure between the co-workers which helps in building belongingness. In an organisation, resources are able to flow to the workers based on their relationship with the rest in their network. Having more connections with other employees makes individuals highly likely to stay in an organisation. The network structure also has an influence on the turnover. When employees have high network reputation in an organisation, they are more likely to stay. The level of brokerage and reputation resources in an organisation network is highly valued and plays part in the employee decision to stay. These are considered to be at risk if the employee leaves the organisation voluntarily. Both brokerage and reputation cannot be transferred from one firm to another. The organisation leaders are thus encouraged to make alterations in their talent programs. This is through changing them from on-boarding to leadership development. This helps the employees to build networks on dimensions which are vital for their success. Project staffing, succession planning and rotation programs are also used to enhance diverse networks. Organisations investing in time and efforts are also capable in reducing voluntary turnover (Ballinger, Cross & Holtom, 2015). The study on the low wage/low skill employees shows positive results. For organisations that employ low wage/ low skill employees, they face high voluntary turnover which in some cases exceeds 50%. This makes these organisations to face a challenge of training new employees on a continuous basis. The outcome is strained resources, high replacement costs, low productivity and compromised customer satisfaction. Due to the job characteristics which include low pay, limited advancement opportunities and monotony, the high voluntary turnover is not a surprise (Ellingson, Tews & Dachner, 2015). Organisations can also reduce turnover rate at the beginning of the recruitment by recognising the right attitude and intention of the applicants. Research shows that it is possible to identify employees with high turnover probability before they enter into organisation. Through bio data, it is possible to have good predictors of turnover. Through bio data, it is possible to determine whether the employee was referred to job by current employees, family member or friends. For the applicants who have contacts in an organisation, they have a better job understanding. This may act to prevent voluntary turnover since there is low chances of dissatisfaction. Also, employees who refer an applicant are less likely to refer someone who has low capability or those who cannot fit into the organisation. Having friends or family members in an organisation also reduces the chance of employee leaving. Employees can also check on the job attitudes and bahavorial intentions. Research shows that employees are capable of developing attitudes on the job they are applying. Those with high job desires should be chosen since they are less likely to quit. Also, organisations can choose employees who have higher level of self-confidence since they are more likely to stay than those with low self-confidence. The same happens to employees who are highly decisive since they are more likely to stay than those who are indecisive (Barrick & Zimmerman 2005). Research indicates that self-monitoring and risk aversion can moderate the intentions to leave. This shows that by studying the individual differences such as personality, it is possible to reduce cases of voluntary turnover. The employees’ personality traits moderate their intentions to make quitting decisions. The organisation is thus supposed to study the individual differences in employees when hiring. Some of the employees are more capable of making a decision to quit than others based on their personalities. This includes locus of control, self-monitoring and proactive personality (Allen, Weeks & Moffitt, 2005). Lastly, continuous training could maintain management level employees working enthusiasm. Training acts as a form of investment where it is recovered later in form of higher productivity. Training increases the employees’ attachment to the organisation. For the management, their job satisfaction and commitment is increased with high training. Training is used as an effective practice to retain and enhance loyalty among the management hence avoiding voluntary turnover. Highly trained employees are a resource that is hard to imitate hence also contributes to firm competitive advantage. Despite this, the firm must not be ignorant of the manger intention once they are trained since it may limit the ability to recover the investment in training. Research shows that untrained employees leave jobs more easily. This makes it prudent to have trained employees since they shows high degree of attachment to their organisation. Trained employees also contribute more to the organisation increasing chances of pay growth and job satisfaction (Landera, Barrutia & Hoyos, 2009). Also, it is an expectation by the employee that the organisation will be able to provide training. Employee may feel that the organisation has breached a psychological contract if they fail to train the employees. They may perceive this as being disloyal and feel obliged to leave the organisation. To avoid breaching the psychological contract between the firm and employee, it is advisable to provide the employees with continuous training to make them more loyal and avoid instances of voluntary turnover (Glance, Hogg & Huberman, 1997). Conclusion To sum up, voluntary turnover is a major problem facing many organisations. Research shows that performance is directly related to turnover. This link is more specific when looking at the aspects such as promotion rate and pay growth. In an organisation, both voluntary and involuntary turnover leads to a reduction in organisation performance. Turnover is a way of losing human capital. Human capital is the most vital resource in an organisation. This involves losing tacit knowledge and social relation. This problem is made more severe when there is gender difference involved. To reduce voluntary turnover, the organisation can applies strategies aimed at predicting and preventing potential turnover. The first strategy involves reinforcing social network structure between co-workers which creates sense of belonging. The second strategy involves recognising attitude and intention of the applicants during the recruitment process. Through studying the individual difference, it is possible to highly reduce voluntary turnover. Lastly, offering continuous training could maintain management level employees working enthusiasm and increase their engagement. References Allen, D.G., Weeks, K.P. & Moffitt, K.R. 2005, ‘Turnover Intentions of Voluntary Turnover: The Moderating Roles of Self-Monitoring, Locus of Control, Proactive Personality, and Risk Aversion’, Journal of Applied Psychology, vol. 90, no. 5, pp. 980-990. Available from: [http://web.b.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=8f1f2242- e455-4906-8b5d-f881891432c7%40sessionmgr198&vid=1&hid=125] Ballinger, G.A., Cross, R., & Holtom, B.C. 2015, ‘The Right Friends in the Right Places: Understanding Network Structure as a Predictor of Voluntary Turnover’, Journal of Applied Psychology. Available from: [http://dx.doi.org/10.1037/apl0000061] Barrick, M.R. & Zemmerman, R.D. 2005, ‘Reducing Voluntary, Avoidable Turnover Through Selection’, Journal of Applied Psychology, vol. 90, no. 1, pp. 159-166. Available from: [http://web.b.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=ecf372f9-e297-4d1b-b33b- 5b6532acba8e%40sessionmgr110&vid=1&hid=125] Dess, G.G. & Shaw, J.D. 2001, ‘Voluntary Turnover, Social Capital, and Organizational Performance’, Academy of Management Review, vol. 26, no. 3, pp. 446-456. Available from: [http://web.b.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=9bdbbb25-048e-40ca- 9d65-41552c76ceb1%40sessionmgr114&vid=1&hid=125] Ellingson, J.E., Tews, M.J., & Dachner, A.M. 2015, ‘Constituent Attachment and Voluntary Turnover in Low-Wage/Low-Skill Service Work’, Journal of Applied Psychology. Available from: [http://dx.doi.org/10.1037/apl0000028] Glance, N.S., Hogg, T. & Huberman, B.A., 1997. ‘Training and Turnover in the Evolution of Organizations’, Organization Science, Vol.8, no.1, pp.84-96. Landera, J., Barrutia, J. & Hoyos, J. 2009, ‘Management turnover expectations: a variable to explain company readiness to engage in continuous management training’, The International Journal of Human Resource Management, vol. 20, no. 1, pp. 164-185. Available from: [http://web.a.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=a011e1cd- 275f-4987-a91e-94fe22f74890%40sessionmgr4005&vid=1&hid=4204] Lyness, K.S. & Judiesch, M.K. 2001. ‘Are Female Managers Quitters? The Relationships of Gender, Promotions, and Family Leaves of Absence to Voluntary Turnover’, Journal of Applied Psychology, vol. 86, no. 6, pp. 1167-1178. Available from: [http://web.a.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=faae196c-2e29-4302-8950- ea9854544140%40sessionmgr4004&vid=1&hid=4204] McElroy, J.C., Morrow, P.C. & Rude, S.N. 2001, ‘Turnover and Organizational Performance: A Comparative Analysis of the Effects of Voluntary, Involuntary, and Reduction-in-Force Turnover’, Journal of Applied Psychology, vol. 86, no. 6, pp. 1294-1299. Available from: [http://web.a.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=96979fbb-2877-4fd5-9c2f- 62f06ba495e6%40sessionmgr4002&vid=1&hid=4204] Nyberg, A. 2010, ‘Retaining Your High Performers: Moderators of the Performance-Job Satisfaction-Voluntary Turnover Relationship’, Journal of Applied Psychology, vol. 95, no. 3, pp.440-453. Available from: [http://ovidsp.tx.ovid.com] Shaw, J.D., Delery, J.E., Jenkins, G.D. & Gupta, N. 1998, ‘An Organization-Level Analysis Of Voluntary And Involuntary Turnover’, Academy of Management Journal, vol. 41, no.5, pp. 511-525. Available from: [http://web.b.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=b97767d9-ab35-4ce3-9ce9- 8f78ad5b3803%40sessionmgr110&vid=1&hid=125] Read More