2. Uncovering The Hidden Causes of Employee Turnover

 

Employee turnover is the measure of the employees that join and leave an organization, whether voluntarily (with the employee's choice) or involuntarily (through an employer dismissing someone). There are many factors that contribute to turnover, and they will vary between industries, company culture, and even individual employee cases. These factors include the following main ones that are academically researched or supported by industry examples.

1. Job Satisfaction 

 Job satisfaction is one of the critical determinants of whether employees will remain in or leave an organization. Employees who find their jobs dissatisfying due to various factors—including the nature of the work itself, working conditions, or relationships with coworkers—are likely to look for other employment. Locke (1976) defined job satisfaction as the emotional response to various job facets, and research has consistently shown that dissatisfaction with work manifests in higher turnover rates.

2. Absence of Career Development Opportunities

Once employees feel that the only opportunities for them are some vague and distant prospects of growth and advancement, they drop out and begin to pay attention to options elsewhere which allow for individual professional growth. In the statement submitted by Green haus et al.(2000), they have pointed out lack of career advancement opportunities as the major cause for voluntary turnover, for employees want to grow in their careers. 

Example:

A study done by Gallup (2017) has shown that 87% of millennials attach great importance to having the opportunity to grow in their careers within the organization. Employees will more readily seek greener pastures-for themselves career-wise-when they feel there is no advancement for them within the organization.

3. Compensation Benefits

Compensation is the anchor of employee retention. Underpaid employees generally leave the organization. Research indicates that dissatisfaction with salary is a major driving force that causes an employee to resign voluntarily, and they seek better financial and other benefits elsewhere (Hom & Kinicki, 2001).

Example:

Because of the fierce competition for talented manpower in some sectors, such as technology and finance, companies will find higher turnover for those workers without a competitive salary and benefits. For instance, Google and Facebook offer salary packages, stock options, and extensive benefits to retain their employees. 

4. Poor Management and Leadership

This kind of management itself very significantly determines the retention of employees. Kohler & Rainer (2013) suggested that poor leadership, ineffective communication, absence of support, and micromanagement lead to employee dissatisfaction and turnover in the organization. Such employees feel unvalued and unsupported by their managers and leave.

 Example:

According to The Gallup Organization (2015), around 50% of employees quit their jobs to run away from bad management. This includes: not having clear expectations set by their manager, not getting enough feedback, and not receiving recognition for a well-done job.

 5. Work-Life balance

Employees usually leave an organization for the reason that there is lack or have no work-life balance. This means that some employees feel that their time-consuming job might be taking away their time meant to spend with family, and this leads to dissatisfaction and, eventually, burnout and resignation. Greenhaus and Allen (2011) have pointed out that as the employee for retaining any sort of family-related issues, it can be crucial for work-life balance policies.

For instance, high or low season employees in hospitality or healthcare sectors typically quit their jobs because they barely manage to balance their working hours to meet their demands for a healthy work-life balance. Flexible hours, work-from-home schedules, and sometimes even cheaper family life will be those that would usually have lower turnovers. For example, Salesforce helps its employees in the work-life balance by offering flexible work arrangements and generous leave policies.

6. Organizational Culture 

Employees tend to remain with organizations that are congruent with their values, mission, and culture. Kristof-Brown et al. (2005) note that "the fit between the person and the organization becomes extremely important in terms of employee retention," meaning that employees who share the organization's values and culture will likely stay on for the long run.
Example:

In the case of Zappos, the company operates strongly in terms of its organizational culture. When  it hires employees that share its core values, it results in low retention rates. On the other hand, those companies with poor or mismatched cultures find themselves with a greater turnover due to a mismatch between the values of its employees and the environment the company provides.

In the hospitality sector, low salaries, long hours, poor upward mobility, and job stress are notable contributors to employee turnover. Some employees resign from the hotels because of lack of recognition, and other employees feel they have not received proper training. For instance, a front desk agent may resign after many hours working overtime, without additional pay or a clear prospect for promotion. The high turnover of other employees would affect service quality because of this; it is therefore vital for hospitality businesses to attend to the root causes of turnover.

 

 Theoretical Frameworks in HRM Related to Employee Turnover

Employee turnover has been defined as the crossing of boundaries comprising an organization by its members by Price (1977). Also, Mobley (1982) defined that a turnover is voluntary discharge of the membership in an organization by an individual who gets paid in money for taking part in that organization. This definition represents the voluntary behavior because of the modeling of the major turnover that seeks to study what motivates employees to withdraw from the workplace. This definition is also said to focus on separation from organization, but not in accession, movement between the organizations, or transfer.

Also, many authors have defined this with the same perspective among them as Van der Merwe and Miller (1996), who mentioned that employee turnover is a permanent withdrawal and also function of the person-work relationship. The authors insist that there must a fit between worker, agency, and environment. There should not be such a fit or availability for turnover likely to happen. This association is supposed to go all the way. Its pervasiveness can be influenced by such job conditions both inside and outside the employing organization. Employee turnover is the result of both quits and layoffs, as Lane (2001), who further states that some turnover is the result of jobs in one firm being destroyed and jobs in another firm being created and hence due to the reallocation of jobs across the economy in response to changes in product demand.

 

Maslow's hierarchy of needs states that such needs are in order of importance with higher-order needs such as job security, social ties, and career advancement at the top. If these higher-order needs are not met in any way, the employee may leave the firm.For example: Companies like Google and Facebook offer extremely good prospects for growth in career and create a nice environment for employees to meet their higher needs, thereby lessening turnover.

 

Maslow's need hierarchy can explain employee turnover in the hospitality industry. When employees are not paid fairly as per their basic physiological needs, or when they are insecure in their jobs, they become more likely to leave. The lack of support from colleagues or ineffective management affects the belonging need, while low esteem has a source based on limited recognition or promotion opportunities. Finally, an employee may feel that his or her potential is not being realized- an example is the talented chef with no creative freedom-who seeks fulfillment outside the organization (self-actualization). Developing all levels of Maslow's needs hierarchy reduces turnover because it offers satisfying and motivating working conditions.

Herzberg's two-factor theory: He considered hygiene factors for example salary and working conditions as well as motivators such as career progression or recognition. Lack of hygiene factors leads to dissatisfaction and turnover; motivation factors improve job satisfaction. For example, Amazon's fulfillment centers suffer from high turnover rates for hygiene reasons, meaning poor working conditions, and cannot compete with high pay. This suggests that it's not just about hygiene and motivators but the combination of both.

Job Demands and Resources- This model emphasizes establishing a balance between job demands (workload, time pressure, etc.) and resources (support by colleagues, autonomy). When job demands expend resources, employees will likely tend toward burnout and turnover. Example: Research pertaining to turnover rates among health workers shows that when sufficient resources such as support mechanisms or staffing levels are proffered against high job demands, turnover escalates. This situation has exacerbated during the COVID-19 pandemic, especially in the healthcare setting.

Organizational Culture and Employee Commitment: In any case, one emergent theory is that organizations are increasingly recognizing how organizational culture helps retain employees. Cultures that resonate with employee value congruence and a strong organizational identity will also preserve their employees' loyalty much better. Example: Companies like Patagonia are very mindful of cultivating an organizational culture focused on environmental accountability, which translates into an increased employee commitment leading to reduced turnover.

Expectancy theory - holds that people are motivated to behave in ways that produce desired combinations of expected outcomes. Generally, expectancy theory can be used to predict behavior in any situation in which a choice between two or more alternatives must be made. For example, it can be used to predict whether to leave or stay at a job and whether to try substantial or minimal effort at task (kreitner and Kinicki, 2001).

 

Factors contributing to Employee Turnover 

a)External Factors:

Economic Conditions: During times of economic uncertainty or recession, factors such as layoffs or unstable financial situations may force employees to resign.

Job Market Competitiveness: In industries where talent is in high demand, employees tend to be attracted to competing companies that offer better compensation or benefits.

b) Internal Factors:

Leadership and Management Style: Bad leadership breeds massive turnover. Employees who feel undervalued or unsupported by their management will leave.

Career Development Opportunities: Lack of career development opportunities or growth is one of the major contributing factors to employee turnover.  

High Turnover in the Retail Industry:

According to a report by the Bureau of Labor Statistics in January 2008, some retail companies such as Walmart and McDonald's post high turnover rates in their organization, which was primarily due to low-wages, low chances at career growth, and insufficient working conditions. Most employees tend to leave latterly for greener pastures or to seek job fulfillment elsewhere.

Example: Walmart investment in training and upskilling programs for employees is seen as a way out of high turnover. Such training is essential as it offers an opportunity for growing the individual within an organization.

b) Tech Industry:

The high turnover in the tech world is a result of stiff competition among other things for talents and a want to work on unique innovative projects. To cushion themselves, firms like Microsoft and Apple offer their employees a good salary and benefits with an emphasis on innovative culture.

Example: Employees working for a company like Apple and Google are less likely to turnover because there is a culture of innovation and high engagement levels. However, some of the tech giants have also seen their attrition rates sprouting because their projects demand so much that the work-life balance is disrupted.

c) Healthcare Sector:

There is a major turnover in hospitals because of things like burnout and stress, as well as emotional exhaustion especially with respect to nurses and doctors. The above conditions worsened through COVID-19 leading to higher turnover rates in most of the hospitals.

Example: Nurses in the United States experienced great turnover during the pandemic, and this is where many hospitals are adding support systems for healthcare workers, such as mental health services, flexibility in working hours, and higher pay in order to curb their turnover.

Conclusion 

For organizations, employee turnover has merits and demerits. It makes a cash outgo, interrupts a cohesive team, and puts the morale of an employee on a negative slope. At the same time, it brings new ideas, offers flexibility, and can replace under performers.

Handling turnover is about understanding the magnitude of the problem and minimizing the adverse consequences of turnover for the organization. You have to weigh the costs incurred against the benefits of having some flow in and out. Moreover, organizations should indulge in the right systems to retain best talents and get an ever-more engaged, stable, and productive employee population that makes optimal use of data in strategic employee engagement initiatives and career development programs-the means toward that end.

References 

 Locke, E. A. (1976). The nature and causes of job satisfaction. In M. D. Dunnette (Ed.), Handbook of industrial and organizational psychology (pp. 1297-1349).

 Greenhaus, J. H., Callanan, G. A., & Godshalk, V. M. (2000). Career management. The Dryden Press. Gallup. (2017). State of the American Workplace Report.

Hom, P. W., & Kinicki, A. J. (2001). Toward a greater understanding of employee turnover and retention. Academy of Management Perspectives, 15(4), 243-255.

Gallup. (2015). State of the American Manager: Analytics and Advice for Leaders. Gallup. Kohler, K., & Rainer, G. (2013). The Role of Leadership in Employee Retention. International Journal of Human Resource Management, 23(9), 1896-1905.

Greenhaus, J. H., & Allen, T. D. (2011). Work and family balance: A review and extension of the work-family literature. Journal of Applied Psychology, 96(1), 44-58.

Kristof-Brown, A. L., Zimmerman, R. D., & Johnson, E. C. (2005). Consequences of individual’s fit at work: A meta-analysis of person-job, person-organization, person-group, and person-supervisor fit. Personnel Psychology, 58(2), 281-342.