Measuring And Management Of Employee Retention

Project and Seminar Material for Human Resource Management (HRM)

Measuring And Management Of Employee Retention


In today’s business, retention of valuable employees is one of the most critical issues facing employers, This study therefore focuses on Measuring and Managing of employee retention. The objectives of the study are to identify the role of management regarding employee retention, to determine whether there is a relationship between rewards and job satisfaction and to determine the relationship between job satisfaction and employee retention. The researcher used a descriptive research design. Data for the research work was sourced from both primary and secondary sources. The samples were made up of one hundred (100) subjects drawn from two (2) organizations. Pearson Product moment correlational coefficient analysis and analysis of variance (ANOVA) was used to analyse the data. The study discovered that improvements in employee retention can be made through reward, recognition and compensation as well as building conducive work environment and training and development as regards proper management.

Chapter One


Beadles et al.(2000) found a positive and significant correlation between job retention and organizational performance. Campion (1991) found that inescapable turnover was characteristically viewed as critical to an organization. The notion that turnover decreases the organizational performance was supported by the most of researchers. Mobley (1982) suggested that turnover might interrupt job performance when an employee who intended to leave became less efficient and effective. Shaw, Gupta, &Delery, 2002 found empirically that voluntary turnover was associated with the inferior organizational performance.

Other researchers suggested that turnover could improve performance. One probable advantage of turnover was the exclusion of poor performing employees (Price1989). Furthermore, Staw et al; (1986) proposed that turnover might enhance performance if most of the turnover was by employees with longer or very short tenure.

According to Reggio (2003), employee turnover“refers simply to the movement of employees out of anorganization”. It is a negative aspect, which might leadto the failure of employee retention strategies in theorganizations. “Leaving of job appears to reflectsignificant work place problems, rather thanopportunities for advancement into better Jobs”(Holzerand Wissoker, 2001). Turnover of employees disruptsteams, raises costs, reduces productivity, and results inlost knowledge. So, it is essential for the management torealize the importance of employee job satisfaction. It was estimated in a study by Abbasi & Hollman in 2000that American industries incurred $11 billion annually as a result of voluntary and involuntary turnover. This cost was due to termination, advertising, recruitment, selection and hiring.

Turnover also produced ethereal costs, such as declining morale, and the interruption of social and communication patterns as noticed by Mobley, in 1982. Beadles et al., (2000) stressed the study of turnover as a well-researched area which was one of the major interest in organizational behavior. Shaw (1999) studied the association between employee turnover and organizational culture and Kaak, Feild,Giles, and Norris in 1997 explored the concept of turnover culture amongst lower staff. Some studies by Pizam& Ellis, (1999) recommended retention programs that could diminish turnover and its cause and effects.Realistic job previews, job enrichment, socialization practices were included. Boles et al. (1995) studied to make use of the pre-employment application demographics to reduce employee turnover. Hampton,2000; Shanahan, 2000; Schreiber, 2000; Baumann,2000 studied that the literature was also immersed with recommendations to undertake turnover and reduced retention.

In their study, Pinkovitz et al. (2004) attempted to know how much an organization is more likely to spend to ensure getting an adequate return on investment (ROI) in employees. Turnover direct costs enclose factors such as termination, vacancy,recruitment and selection, orientation and training. Other indirect costs can encompass such factors as lost of productivity of incumbent prior to departure, lost of productivity of co-worker, lost of productivity of the new hire during initial transition.

By calculating the real cost of employeevoluntary resigning, it will be an indicator of what willworth to retain employees. Reggio (2003) pointed to theformula for computing turnover rates that the USdepartment of Labor as follows:

Turnover Rate = (Number of separation duringthe month/Total number of employees at midmonth) X100

Therefore in almost any organization, if the managementutilizes the information compiled throughthe Exit interview system, positively it would result in acontrolled turnover and develop an effective retentionstrategy (Gray, 2003). Gray (2003) reiterates thatorganizations need to assess their typical patterns of turnover pertaining to their own circumstances.However, there are some general policies that should beconsidered so as to improve employee job satisfaction.Employees’ job satisfaction is positively correlated withemployees’ retention. Reggio (2003) concluded fromliterature review that: “it is important that organizationsstrive to keep employees satisfied. Happy employeesmay be less likely to be absent from their job voluntarilyor to look for work elsewhere” (P.38). To overcome thenegative consequences of turnover, there is a need tounderstand the causes and the consequences ofturnover in First Bank context. The study aims todefine the main turnover factors in First Bank and develop general guidelines foremployees’ retention strategy within the Bankcontext.

Lastly, he found that organizational commitment is positively correlated with age, job experience and duration of service in the actual institution. Cohen 1993; Hom&Griffith 1995 and Allen, Shore &Griffith 2003 explored that turnover intentions have represented a reliable indicator of actual turnover and were heavily influenced by job satisfaction. Hom and Griffith (1995) maintained that employees decided to leave their organization when they become dissatisfied with their Jobs. Likewise, Meyer & Herschovitch argued in 2001 that when employees were dissatisfied with their jobs, their desire to remain in their organization started toe rode. In fact, initial consequences of these negative affects, in the form of low job satisfaction were turnover cognitions.

Background to the Study

Today we are living in a dynamic world. Advancement of information technology has brought to Centre stage the importance of human resource, more than ever before (Jyothi and Venkatesh, 2006, p.1). In a competitive scenario, effective utilization of human resource has become necessary and the primary task of organizations is to identify, recruit, and channel competent human resources into their business operations for improving productivity and functional efficiency (Ibid). Qualified, motivated, and experienced human resources are also essential in economic liberalization and globalization era.

Measuring And Management Of Employee Retention

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