Impact of Employee Retention Essay Example for Free

Impact of Employee Retention EssayGriffeth Hom (2001) have argued that employee swage is assuming crisis proportions for many employers who postulate to retain people in the tightest labour market. Griffeth Hom (2001, Pg 1) 52% of companies report that their turnover is increasing and quit judge atomic number 18 running richly of 1.1% a month. Turnover tail be a real fuss in many organisations. Companies spend a great deal of time and m one(a)y recruiting and training employees and the embody of replacing staff members lost through turnover are great. The monetary cost of replacing one employee is generally estimated to range from 50 percent to 200 percent of the annual salary for the position, and may until now be uplifteder in very specialized fields. Furthermore, poor employee retention washbowl have a negative strike on extendplace productivity, theorise satisfaction, and also on the overall morale of the organisation.It is prove that a high turnover percen tage can cost employers a great deal of financial distress. Depending on the size of the company, to many employers it can make the difference in staying or going verboten of business. Phillips (2003,Pg 4) tell that, of late employee retention has captured the attention of the business, financial, and executive community as a life-sustainingly eventful strategic issue that can have a dramatic effect on productivity and profits. Cascio, 2000 and Johnson,1995 cited in Griffeth Hom, Retaining Valued Employees (2001), are of the opinion that, human resources professionals and researchers project that the cost of one turnover incidence ranges from amongst 93% to 200% of a leavers salary, depending on his or her skill and level of job responsibility.Labour turnover has a negative impact on the organizations. Although every manager and team member is aware of problems associated with high turnover, a review of its foremost consequences puts employee retention in the appropriate pers pective. Patricia (2002, pg 4, 5) noned that employee turnover has a heartbreaking impact on organisations. Firstly high financial costs, which is both in damage of direct and verifying costs and the performance of companies has been inhibited in many ways by high turnover place. sometimes the costs alone causes turnover to become a critical strategic issue. Secondly, in harm of choice as an issue, where in a tight labour market in which the company depends on having employees with critical skills, recruiting and retaining the appropriate talent can determine the success or failure of the organisation.Thirdly in foothold of productivity loses and workflow interruptions , where an employee who quits abruptly not only leaves a productivity gap still also causes problems for others on the same team and within the same flow of work. Fourthly in terms of loss of know-how especially with regards to knowledge industry, where a departing employee may have the critical knowledge and skills needed for on the job(p) with specific software. This can be a negative impact at least in the concisely run. Fifthly, turnover can have a serious impact on the image of the organisations. Patricia (2002) also remark that some of the other impacts of turnover on organisations may be with regards to loss of business opportunities, administrative problems, col of social and communication networks, and job satisfaction of remaining employees.Patricia (2002) noted that it is important to remember that turnover can have a negative impact on the individualistic, particularly if an employee is leaving because of problems that could have been prevented. Furthermore, Patricia (2002) noted that a voluntary turnover because of problems that could have been avoided creates a variety of consequences such as loss of employee benefits or job seniority, financial difficulties, loss of social network, relocation costs, wasted efforts and uncompleted projects, and even more in terms of ca reer problems. Branham (2005) noted that employees quit because of the disengagement process and deliberation process. Branham (2005) also noted that there are 7 reasons as to why employees leave organisations. They are as follows1. The job or the workplace was not expected.2. The mismatch between job and person.3. Very little coaching and feedback.4. Few growth and advancement opportunities.5. quality devalued and unrecognised.6. Stress from overwork and work-life imbalance.7. Loss of trust and confidence in senior leaders.There is no set level of employee turnover that determines at what point turnover starts to have a negative impact on an organisations performance. Everything depends on the type of labour markets in which you compete. Where it is relatively easy to find and train parvenu employees quickly and at relatively little cost (that is where the labour market is loose), it is possible to sustain high quality levels of service provision despite having a high turnover r ate. By contrast, where skills are relatively scarce, where recruitment is costly or where it takes several weeks to fill a vacancy, turnover is likely to be knotty for the organisation. This is especially true of situations in which you are losing staff to direct competitors or where customers have developed relationships with individual employees. Some employee turnover positively benefits organisations.This happens when a poor performer is replaced by a more plentiful employee, and can happen when a senior retirement allows the promotion or acquisition of welcome novel blood. The more valuable the employees in question the more damaging the resignation, particularly when they move on to work for competitors. Moderate levels of staff turnover can also help to reduce staff costs in organisations where business levels are unpredictable month on month. When business is slack it is straightforward to hold morose filling recently created vacancies for some weeks. Staw (1980 cited i n Griffeth and Hom (2002), argues that turnover is not always bad. For instance, vacating employees or employees who quit can increase promotional opportunities for other employees or can infuse new ideas and technologies when new employees replace those who left. Dalton, Krackhardt and hall porter (1981cited in Griffeth and Hom (2002), are of the opinion that certain kinds of jobs exits or quits among marginal performers are even desirable.Abelson alcove singer (1994, cited in Griffeth and Hom (2002) that a certain quit rate might be tolerated as a cost of doing business in a particular industry. Stephen Taylor (2002, Pg 15) noted that for many HR specialists, rising staff turnover is seen as being an important organisational problem. It follows that improving retention rates should be high on the management agenda, and it is proper for resources to be devoted to achieving this aim. However a certain amount of turnover is actively welcomed by many managers. Nonetheless, Griffeth Hom (2001) have noticed that organisational-level research and corporate studies report that high exit rates generally worsen organisational effectiveness.Though there are diverse opinions from various authors, and taking the above financial statement into consideration, it is clear that employees play a fundamental role in the success of any organisation and therefore by retaining talented or rather key employees is a very important task that the managers should undertake. Phillips Connell (2002) noted that, some organisations do a superb job of managing retention, whereas others fail miserably. The issues are not always externally driven but often lie within the organisation.