THE IMPORTANCE OF RETENTION
Retaining good workers is absolutely
critical to an organization. Encouraging employees to remain in the
organization for a long period of time can be termed as employee retention. It
is a process in which the employees are encouraged to remain with the
organization for the maximum period of time or until the completion of the
project.
Zineldin, (2000) has mentioned
retention as “a responsibility to
continue to do business or exchange with a particular company on an ongoing
basis”. Stauss et al., (2001) has defined retention as “customer liking, identification, commitment,
trust, readiness to recommend, and repurchase intentions, with the first four
being emotional-cognitive retention constructs, and the last two being
behavioral intentions” .
Organizations invest significant
effort in marketing their products and services. The same type of effort should
be applied at attracting and retaining employees as well. To attract the best
talent, an organization needs to be viewed as the "best place to
work." A high employee-retention rate implies that the organization is the
employer of choice.
Employee retention strategy is a
process in which the employees are encouraged to remain with the organization
for the maximum period of time Shavita Deshwal (2005) and Denton (2000) states that employees who are happy and satisfied with
their jobs are more dedicated towards their work and always put their effort to
improve their organizational customer’s satisfaction.
Furthermore, Acton et al., (2003) stresses, the human resource
department plays an active role in retaining its employees and makes policies for employee betterment and such that the employee
would be satisfied with the organization and stay with the firm for longer
time. This shows that it is not just retention of employees but also retention
of valued skills.
FACTORS AFFECTING EMPLOYEE RETENTION
It is recognized that employee
retention is not influenced by a single factor, but there are several factors
which affect retaining employees in an organization. Management needs to pay attention to factors such
as compensation & rewards, job security, training & developments,
supervisor support culture, work environment and organization justice. According
to Osteraker (1999), the employee satisfaction and retention are key factors
for the success of an organization.
Table 1 shows various factors of
employee.
Table 1 – Factors affecting employee retention
Factors
|
Authors
|
Research Papers
|
Year
|
Compensation
|
D.Davies, R.
Taylor, C. Savery.
|
The role of
appraisal, remuneration and training in improving staff relations in the
Western Australian accommodation industry.
|
2001
|
DG Gardner, L
Van Dyne, JL Pierce
|
The effects
of pay level on organization-based self-esteem and performance.
|
2004
|
|
Reward and Recognition
|
J.W. Walker
|
“Perspectives”
Human resource planning
|
2001
|
L.T. Silbert
|
The effect of
Tangible Rewards on Perceived Organizational Support.
|
2005
|
|
Promotion and opportunity for
Growth
|
Meyer, John,
Laryssa Topolnytsky, Henryk Krajewski and Ian Gellatly.
|
Best
Practices: Employee Retention
|
2003
|
L. Eyster, R
Johnson and E. Toder .
|
Current
strategies to employ & retain older workers.
|
2008
|
|
Participation in Decision Making
|
P.Hewitt
|
High
Performance Workplaces: The Role of Employee Involvement in a Modern Economy
|
2002
|
Work-Life balance
|
J. Hyman and
J. Summers
|
“Lacking
balance? Work-life employment practices in the modern economy”
|
2004
|
Work environment
|
N. Miller, A.
Erickson & B. Yust
|
Sense of
place in the workplace: The relationship between personal objects and job
satisfaction and motivation.
|
2001
|
S. Ramlall
|
Managing
Employee Retention as a Strategy for Increasing Organizational
Competitiveness
|
2003
|
|
Training and development
|
P. Garg &
R. Rastongi
|
New model of
job design motivation employees Performance.
|
2006
|
Leadership
|
Y. Brunetto,
R .FarrWharton
|
Using social
identity theory to explain the job satisfaction of public sector employees
|
2002
|
Job-Security
|
J. Davy, A.
Kinicki, C. Scheck
|
Developing
and testing a model of survivor responses to layoffs
|
1991
|
● · Compensation and employee retention
Competitive compensation packages
are imperative. Employers need to have effective remuneration packages in comparison
with similar organizations. Davies, Taylor, & Savery (2001) outlines, that compensation to top
workers is given by every organization but very few organizations uses it
strategically and that salary and benefits policies are not being used
strategically, within the organization to improve morale, reduce turnover, and
achieve targets within an establishment.
● · Reward and recognition
Recognition from, team members, co-workers is important as Silbert
(2005) outlines, that reward is important because it has a lasting impression
on employees which, in turn, gives the employees an impression that they are
valued in the organization.
● · Promotion and Opportunity for growth
Prince (2005) argues that talented employees are required for competitive
advantage, and employees want career growth opportunities to develop and rise
in their career paths. Such plans include advancement plans, internal promotion
and accurate career previews at the time of hiring.
● · Participation in decision-making
Organizations must make their employees feel valued to earn their
loyalty to the organization. Modern businesses always keep its employees well
informed about all the important affairs of its business and involve them in
decision-making at all levels which can exploit the talents of its employees. Employee
involvement in decision-making helps in creating a sense of engagement among
the employees, which helps in creating a good friendly working environment and
contributes towards building a good employer-employee relationship (Hewitt, 2002).
● · Work environment and employee retention
Wells & Thelen (2002) states in their study that organizations which
have generous human resource policies, have a good chance to satisfy and retain
employees by providing them an appropriate level of privacy and strong control
on work environment which enhances the motivation levels to commit with the
organization for the long term.
● · Training and Development and Employee
Retention
Management development is essential
to an effective retention strategy. Management training not only should focus
on skills such as coaching, delegating, and communicating, but also should
prepare managers to meet and be accountable for specified standards of
performance.
Garg & Rastogi (2006), explained
that in today’s competitive environment feedback is very essential for
organizations from employees and the more knowledge the employee learn, the
more he or she will perform and meet the global challenges of the market place.
Handy (2008) has mentioned that proper innovation, and assimilation of new
knowledge is essential for survival in any work environment. Thus knowledge is
the most expensive asset of any firm.
In today’s competitive environment,
feedback is very essential for organizations from employees and the more
knowledge the employee learn, the more he or she will perform and meet the
global challenges of the competitive marketplace.
● · Leadership and Employee Retention
Brunetto and Farr-Wharton (2002) were of the view that
supervision of the immediate manager increases the level of job satisfaction in
the public sector employees.
How does Job satisfaction affect
employee retention?
Job satisfaction is any combination
of psychological and environmental circumstances, which cause a person
truthfully, satisfied with his/her job. Lane et al., (2010) and Vidal at al., (2007)
in their researches/studies found that job satisfaction is a complex phenomenon
which is influenced by factors like salary, working environment, autonomy,
communication and organizational commitment.
Employee turnover
Many researchers have tried to
answer the question as to what determines people's intention to quit by
investigating previous incidents of employees’ intentions to quit. Until today,
there has been little consistency in findings, which is partly due to the
diversity of employed included by the researchers and the lack of consistency
in their findings.
Therefore, there are several reasons
why people quit from one organization to another or why people leave
organization. Testa (2008) in their studies have found that high turnover rates
of skilled professionals can pose as a risk to the business or organization,
due to human capital (such a skills, training and knowledge) cost. Notably,
given the natural specialization of skilled professionals, these employees are
likely to be reemployed within the same industry by a competitor.
Figure 1-Employee retention, employee satisfaction and employee
turnover framework
(Source: Bidisha Lahkar Das1 , Dr. Mukulesh Baruah - Employee
Retention: A Review of Literature)
Figure 1.0 illustrates that employee retention factors have a direct
relationship with job satisfaction. If these factors exist in the organization
then the tendency to leave the job or switch over to some other job is reduced.
How to reduce employee turnover and increase retention?
To reduce turnover, managers must
show a genuine interest in their employees' development and success and
employees want to feel that
their contributions are important and want employers to demonstrate their
commitment to stated corporate values. In addition to their technical skills,
employees want to be appreciated for their work ethic, working well with
customers and co-workers, and performing high-quality work.
An effective retention strategy
relies on a combination of factors. Employees want their personal and practical
needs to be met: personal needs such as compensation, benefits, and scheduling;
practical needs such as development, resources, tools, and technology. They
also want to feel valued by the organization. Therefore, these critical aspects
become the foundation of the value proposition, as emphasized by the
organization's vision, mission, values, and strategies.
Progressing towards achieving
retention goals should be measured. One tool for such measurement is the Gallups
12 questions to measure employee satisfaction, and is as follows
●
Do I know what is expected of me at work?
●
Do I have the materials and equipment I need to do my
work right?
●
At work, do I have the opportunity to do what I do best
every day?
●
In the last seven days, have I received recognition or
praise for doing good work?
●
Does my supervisor, or someone at work, seem to care
about me as a person?
●
Is there someone at work who encourages my development?
●
At work, do my opinions seem to count?
●
Does the mission/purpose of my company make me feel my
job is important?
●
Are my coworkers committed to doing quality work?
●
Do I have a best friend at work?
●
In the last six months, has someone at work talked to
me about my progress?
●
This last year, have I had opportunities at work to
learn and grow?
Finally, in
conclusion human resources are complex and difficult to understand, but a asset
which can contribute to organizational success. Retaining employees will
help in the long-term growth of the organization and will add to the organizations
employer brand and goodwill.
References:
Zineldin, M. (2000). Total relationship management (TRM) and
total quality management (TQM). Managerial Auditing Journal,
15(1/2), pp.20-28.
Stauss, B., Chojnacki, K., Decker, A. and Hoffmann, F. (2001).
Retention effects of a customer club. International Journal of Service
Industry Management, 12(1), pp.7-19.
Acton, T. and Golden, W. (2003). Training the knowledge worker:
a descriptive study of training practices in Irish software companies. Journal
of European Industrial Training, 27(2/3/4), pp.137-146.
Osteraker, M. (1999). Measuring motivation in a learning
organization. Journal of Workplace Learning, 11(2), pp.73-77.
Davies, D., Taylor, R. and Savery, L. (2001). The role of
appraisal, remuneration and training in improving staff relations in the
Western Australian accommodation industry: a comparative study. Journal
of European Industrial Training, 25(7), pp.366-373.
Prince, J. (2005). Career‐focused employee transfer
processes. Career Development International, 10(4), pp.293-309.
Wells, M. and Thelen, L. (2002). What Does Your Workspace Say
about You?. Environment and Behavior, 34(3), pp.300-321.
Garg, P. and Rastogi, R. (2006). New model of job design:
motivating employees' performance. Journal of Management Development,
25(6), pp.572-587.
