Key literature and theoretical background of the topic of investigation
This segment of the report is dedicated to evaluating and analyzing key theoretical concepts related to employee retention and turnover. Some of the existing literature on the topic of employee retention and turnover are taken to identify the factors that have an impact on the issue. Then the effect of these factors will be discussed in brief. After that, the theoretical frameworks will be evaluated to understand the meaning of the data. As discussed in the introductory section, employee turnover in this report is defined as the deliberate detention of the workers of a particular organization. In other words, employee turnover is the fraction of the employees who leave the organization before the termination of their contract period. Employee retention is the perfect antonym for employee turnover. It can be defined as the intentional or unintentional keep one of some of the employees who stay even after their contract with the organization terminates. These two aspects of organizational activities are very crucial for any organization to perform well. Employee turnover and employee retention are also affected by numerous factors. In the next segment, these factors will be discussed in brief.
Factors
There are three significant factors that affect employee turnover. These factors are Job Satisfaction, supportiveness, and Organizational Commitment. These two factors and several aspects of them are the primary reasons for any voluntary resignation of the workers. Let’s discuss these factors in brief.
Job Satisfaction
It is one of the primary reasons for any voluntary resignation within any organization as opined by Ribes, Touahri and Perthame, 2017. It is very usual that an employee who gets a feeling of self-satisfaction in doing his/her job would be loyal to his/her organization and perform responsibilities accordingly. It will not only help the organization to avoid employee turnover, but it will also help the organization to grow more, as stated by Hom et al., 2017. However, there is another side to every coin. The employee, who does not feel satisfied with their job, will not be as loyal to the organization as a happy employee would be. They tend to hold the organization responsible for their miserable lives. There is a high chance of these employees of leaving the organization even before the contractual period is over. Therefore, it can be said that job satisfaction as a factor has a significant impact on the employee turnover for an organization. Understanding this factor will help the organization to deal with the issues related to employee turnover well. There are numerous reasons that can contribute to an employee’s job satisfaction. Some of the common causes are the limited scope of career and financial advancement, work culture of the organization, behaviors of the co-workers, etc.
Organizational Commitment
Commitment to the organization also has an immense impact on the subject like employee turnover as stated by (). One can identify the correlation between organizational commitment and employee turnover. Lack of commitment to the organization is a clear indication of quitting of that employee. The corporate responsibility not only has an impact on the employee turnover but it also has a substantial effect on the real economic turnover of the firm according to Anitha, 2016. Some of the researchers like Elangovan (2001) have noted that organizational loyalty and commitment is a better predictor of employee turnover than job satisfaction. Job satisfaction is a subjective experience. It cannot be understood well from outside. However, a lack of organizational commitment is easily identifiable from the outside so that it can be a better forecaster of employee turnover than job satisfaction.
Supportiveness and work-family conflict
According to Deery and Jago, 2015 one of the primary reasons for employee turnover is the incongruity in various aspects of their lives due to their work. In many organizations, employees do not even get time to spend with their families if the employees want financial improvement in their life. This will generate a work-family conflict in the lives of the employees which may lead to employee turnover. According to Aguenza, and Som, 2018, organizations that do not show enough supportiveness to the workers in this context, the workers are more likely to move to another company. The more the organization supports its employees in the issues in their personal lives, the more the employees will stay loyal to the organization and have a better feeling related to job satisfaction.
Apart from these, there are several other factors that influence employee turnover such as feeling not connected with corporate values, lack of appraisal, and inequity in pay scales, etc.
Just like the employee turnover is impacted by several factors, employee retention id also affected by numerous things. As stated by Deery and Jago, 2015, retention activities of a firm aims at improving the employee commitment to the organization and overall economic growth of the company. Employee turnover adds to the expenditure of the company as new employees who replace the workers who left the organization has to be trained and developing and executing training modules need money. So, the organization must put their effort to retain most of its employees. The factors discussed below are some factors that help to understand the mechanism of employee retention. The factors that influence the retention of the employees are:
Respectful treatment from the organization
As noted by Deery and Jago, 2015, it is the most critical factor that affects employee retention. If the employees are treated with respect within the organization, they tend to feel more job satisfaction and thus their commitment towards the firm increases.
Supportiveness
If the organization demonstrates supportiveness towards the personal issues of the employees in their premises, the employees tend to stay in the organization and show more loyalty. It will not only help to retain most of the employees for a company, but it also helps the organization to redact unnecessary expenditures from their budget. Thus the company will grow.
Type of the work
The kind of work, the company is giving to its employees is one of the most important things related to employee retention. If the task assigned to the new workers is over complicated, they tend to lose interest in the job. If the functions given to the experienced employees are overtly non-challenging and straightforward, they also tend to lose their attention from the job. Therefore, it can be identified as one of the primary factors of employee retention.
Theory
The critical theoretical frameworks for employee retention and turnover are discussed below:
Expectancy theory
Expectancy theory suggests that any effort given by employees for their organization is accompanied by some kind of expectation in return. According to (Anitha, 2016), the amount of commitment they are showing towards their organization is mathematically equated with what they expect to get in return. However, employee expectation is not one dimensional. It has multiple dimensions and various aspects related to it. Some of the most common forms of expectations are: hike in salary shortly, job promotion, learning new skills, gaining experience, etc. If the employees do not see any potential growth for them in the organization premises, it will manifest itself in the attitude of the employees and their commitment to the firm.
This framework can be beneficial for understanding the issue of employee retention and employee turnover. Unfulfilled expectations lead to employee dissatisfaction and as discussed earlier in this segment of the report that job satisfaction is one of the critical factors of both employee retention and employee turnover. The theory also suggests that employees who feel that their expectations are neglected in the organization will leave the company to go for something that they see as a better opportunity for them.
ERC’s Retention Model
As stated by Anitha, 2016, Employee Retention Connection (ERC) model identifies three primary drivers that influence employee retention and use them to retain most of their employees to avoid potentially increased expenditure. These three key drivers of employee retention are: stimulating work, recognition and reward, and Leadership. The employees can be given more responsibilities. Increased responsibilities and autonomy in decision making can improve the commitment of the employees to the organization. However, sometimes it is impossible to give employees freedom in decision making.
Therefore, works can be designed in a stimulating environment to allow the workers to become autonomous in decision making. The leadership is also an essential factor of employee retention. Proper administration can motivate their subordinates. Motivation is another crucial factor in employee retention. The final factor that influences employee retention is recognition and reward. The achievements of the employees are needed to be identified by the organization. They also must be rewarded for their achievement. Being recognized and awarded for the achievement will facilitate employee motivation and thus contributes to employee retention and avoid turnover of the employees.
The theoretical frameworks given here is identifiable with job satisfaction. Thus, it can be concluded that job satisfaction is the driving force of both employee satisfaction and employee retention.
References
Ribes, E., Touahri, K. and Perthame, B., 2017. Employee turnover prediction and retention policies design: a case study. arXiv preprint arXiv:1707.01377.
Hom, P.W., Lee, T.W., Shaw, J.D. and Hausknecht, J.P., 2017. One hundred years of employee turnover theory and research. Journal of Applied Psychology, 102(3), p.530.
Anitha, J., 2016. Role of Organisational Culture and Employee Commitment to Employee Retention. ASBM Journal of Management, 9(1).
Aguenza, B.B. and Som, A.P.M., 2018. Motivational factors of employee retention and engagement in organizations. IJAME.
Deery, M. and Jago, L., 2015. Revisiting talent management, work-life balance, and retention strategies. International Journal of Contemporary Hospitality Management, 27(3), pp.453-472.