effect of employee turnover on organizational …
TRANSCRIPT
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EFFECT OF EMPLOYEE TURNOVER ON ORGANIZATIONAL
REPUTATION
MASTER’S THESIS
IN ORGANIZATIONAL STUDIES
SUBMITTED TO THE
DEPARTMENT OF ORGANIZATION AND LEARNING
OF THE
UNIVERSITY OF INNSBRUCK
IN THE PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF
MASTER OF SCIENCE
BY
MALIK ASAD
SUPERVISOR
UNIV- PROF. DR. RICHARD WEISKOPF
MAY 2020
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DEDICATION
I dedicate my work to my family, teachers, and friends.
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ACKNOWLEDGMENTS
I am highly thankful to the Department of Organization and Learning, University of
Innsbruck, Austria for awarding me the opportunity to pursue my MS. I express my sincere
thanks to my supervisor Univ-Prof. Dr. Richard Weiskopf for supervising my research.
Without his technical and moral support, I would not have been able to complete my work.
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CONTENTS
ACKNOWLEDGMENTS ........................................................................................................................ iii
LIST OF ABBREVIATIONS..................................................................................................................... vi
ABSTRACT ......................................................................................................................................... vii
CHAPTER 1 INTRODUCTION ................................................................................................................8
1.1 MOTIVATION FOR THIS RESEARCH .......................................................................................9
1.2 PROBLEM STATEMENT ........................................................................................................9
1.3 RESEARCH QUESTIONS ........................................................................................................9
1.4 WAYS TO INVESTIGATE THE QUESTIONS ............................................................................10
1.5 OBJECTIVES OF THE STUDY ................................................................................................10
1.6 SCOPE OF THE STUDY ........................................................................................................10
CHAPTER 2 LITERATURE REVIEW .......................................................................................................11
2.1 PRIMARY CAUSES OF EMPLOYEE TURNOVER .....................................................................18
2.2 FACTORS INFLUENCE THE ET..............................................................................................18
2 .2 .1. FIRM STABILITY ..........................................................................................................18
2 .2 .2. PAY ............................................................................................................................19
2 .2 .3. TRAINING & DEVELOPMENT.......................................................................................20
2 .2 .4. WORK SITUATION ......................................................................................................21
2 .2 .5. WORKING ENVIRONMENT .........................................................................................21
2 .2 .6. MANAGERIAL FACTORS ..............................................................................................21
2 .2 .7. PROMOTIONS ............................................................................................................22
2 .2 .8. CLEAR JOB EXPECTATION ...........................................................................................23
2 .2 .9. PERCEIVING ALTERNATIVE EMPLOYMENT & JOB OPPORTUNITIES..............................24
2 .2 .10. JOB FIT ...................................................................................................................24
2 .2 .11. FRINGE BENEFITS ...................................................................................................25
2.3 THE COSTS OF TURNOVER .................................................................................................26
2.3.1 SELECTION AND RECRUITMENT COSTS .......................................................................27
2.3.2 TRAINING & DEVELOPMENT COSTS ............................................................................28
2.4 TYPES OF TURNOVER .........................................................................................................28
2.5 CONSEQUENCES OF TURNOVER.........................................................................................29
2 .5 .1 POSITIVE CONSEQUENCES OF TURNOVER ..................................................................29
2 .5 .2 NEGATIVE CONSEQUENCE OF TURNOVER ..................................................................30
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2.6 SOUND RETENTION STRATEGIES ........................................................................................31
2 .6 .1 RECRUITING SUITABLE EMPLOYEES ............................................................................32
2 .6 .2 EFFECTIVE LEADERSHIP ..............................................................................................33
2 .6 .3 TRAINING AND DEVELOPMENT ..................................................................................33
2 .6 .4 IDENTIFYING THE ECONOMIC PROBLEM ....................................................................34
2 .6 .5 JOB SATISFACTION .....................................................................................................34
2 .6 .6 UNIONIZATION ..........................................................................................................34
2 .6 .7 ORGANIZATION CULTURE ..........................................................................................35
2 .6 .8 BALANCING WORK AND FAMILY LIFE .........................................................................35
2 .6 .9 JOB CHARACTERISTICS AND TURNOVERS ...................................................................36
CHAPTER 3 RESEARCH METHODOLOGY.............................................................................................38
3 .1 QUALITATIVE METHOD ......................................................................................................38
3 .1 .1 QUALITATIVE INTERVIEWS .........................................................................................39
3.1.2 INTERVIEW PROCESSES ..................................................................................................40
3.1.3 INTERVIEW STRUCTURE .................................................................................................40
3.1.4 DATA ANALYSIS STRATEGY .............................................................................................41
CHAPTER 4 INTERVIEWS & DATA COLLECTION ................................................................................44
4 .1 INTERVIEW ANALYSIS ........................................................................................................44
4 .2 DISCUSSION .......................................................................................................................54
CHAPTER 5 CONCLUSION & RECOMMENDATION...........................................................................59
5 .1 CONCLUSION .....................................................................................................................59
5 .2 RECOMMENDATIONS ........................................................................................................60
REFERENCES .....................................................................................................................................61
STATUTORY DECLARATION ...............................................................................................................67
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LIST OF ABBREVIATIONS
ET : Employee Turnover
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ABSTRACT
Nowadays organizations are suffering from many problems. One
of them is employee turnover (ET). This problem is found in many
highly reputed organizations and has received serious attention.
The purpose of this thesis is to study the impact of employee
turnover on organization’s reputation, explore the common reasons
behind employee turnover, and highlight the strategies for the
managers to overcome turnover issues. This research uses a
qualitative approach and contains four interviews with managers
from four different organizations. Two of them work in small
restaurants, and the other two work in a packaging firm and a
fitness gym, respectively. The collected empirical data from the
interviewees is analyzed using qualitative content analysis. It is
concluded that there is one factor that negatively impacts the
reputation of organizations. The occurrence of employee turnover
on a professional level can adversely affect organizations and
deteriorate the firm's networking. That may fall the organizations
to a poor reputation. Besides, a more considerable amount of ET
does not damage the organization's reputation. Organizations with
a positive reputation attract potential candidates in the labor
market, and it increases organization’s reputation. Office to home
distance, organization culture, work stress and other implications
lead to ET, Similarly, high salary packages, highly competitive
environment and lack of promotion are also found essential
reasons for employess quitting in the modern era.
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CHAPTER 1
INTRODUCTION
A continuously changing environment is not only affecting firms, but also members who
work in these firms. Human resource management plays an important role in order to manage
the resources and how workers are treated in the organizations (Hassan, Hassan, Khan and
Naseem 2011) because they are considered as an important asset. The success of every
organization depends on the efficacy of employees because organizations invest huge capital
on its products, but without effective human resource policies their goal can not be achieved
(Ton and Huckman 2008) .
There are numerous ways through which organizations improve their workforces. This
can be achieved by providing effective training, continuous motivation, promotion and
bonuses etc. These strategies require orgnizations to invest lot of resources and ensure that
workers are working effectively in achieving organizational goals and objectives.
The term “turnover” is defined as the ratio of number of employees who leave their
jobs to the number of new employees replacing them (Price 1977, p.15). It basically means,
movement of employees from one job to another job, it can be in form of resignations,
termination,etc. This is a big loss for organizations that invest a lot of capital to develop the
skills of workers, only to have them leave the organization and render their services to their
competitors.
One of the main sources of turnover in organizations is poor recruitment system.
Organizations do not focus on their retention strategies, it occurs when there is mismatch
between workers’ talents and posts as numerous scientists (Lee 2006, Raub and Streit 2006,
Griffeth et al 1997) have linked ET with the recruitment process. Employee turnover not only
harm organizations, but it benefits organization too. For example, inexperienced employees
replaced by experienced workers because inexperienced employees are considered unskilled
and lower performer rather than experienced employees are skill full and high performer.
Another benefit of employee turnover is that experienced employee saves cost and time of
organizations.
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1.1 MOTIVATION FOR THIS RESEARCH
After reading the literature, I found that determining the relationship between the turnover
problem and organizational reputation is a novel avenue for research. It has received less
research attention in the past. Public personnel texts in the literature focus little on ET; for
example, the one of leading public personnel texts gives only a single mention to turnover in
reference to Volcker commission report. A study of JSTOR archives of public administration
review and the journal of public administration research and theory finds the total of only five
articles since 1980 (Meier & Hicklin 2008). Even though an electronic search of the review of
public personnel administration found 34 articles that indicate the term ‘turnover’ in the
manuscript. This lack of research was a motivation behind my decision to work on this area
and inspired me to do some further research on the turnover problem with a focus on
reputation.
1.2 PROBLEM STATEMENT
Many reputed companies are currently facing multiple severe challenges. One of the problem
is high ET, which slows down the worker’s performance as well as the organization’s
outlook. As Stovel and Bontis assumed high performer turnover can harm an organization’s
productivity and result this can lose business patronage and relationships and even can threat
organizational goals (2002). Furthermore, ET increases the expenses related to the
recruitment, training and development of the new employees (Chen, Lin & Lien 2010). In this
study, I considered the common reasons behind ET in the modern era and provide the
effective strategies for managers to avoid ET.
1.3 RESEARCH QUESTIONS
• How does turnover affect organizational reputation?
• What are the common reasons for ET in modern organization?
• What are the types of turnover?
• What are the guidelines for managers to avoid turnover?
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1.4 WAYS TO INVESTIGATE THE QUESTIONS
The problems of ET and its relationship to the reputation of organizations are not easy to
depict in simple correlations of salaries and employee retentions. As I think it is a novel
concept, it requires some practical experience and advice from the experts based on their real-
world experience that is relevant to my research problem.
1.5 OBJECTIVES OF THE STUDY
For the reasons above, this study addresses the following objectives:
• To investigate the effect of ET on organizational reputation.
• To determine the types of and reasons for ET.
• To investigate different strategies for the managers to minimize ET in organizations
1.6 SCOPE OF THE STUDY
This study focuses on the correlation between ET and organizational reputation as I perceive
it is an important issue that deserves attention. Correlations between ET and organizational
reputation are understood to be a great contribution to the working environment. The Issue
will be investigated using the qualitative method and this study contains interviews from the
managers of different organizations.
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CHAPTER 2
LITERATURE REVIEW
This chapter will explore the literature addressing the area of employee turnover and retention
in organizations. It will review the empirical literature relating to the subordinate research
questions, the potential causes of the organization’s high turnover, and an outline indicating
retention strategies that can be useful and available for managers, practitioners, and employers
in the organizations across the world. The first part will include a deeper understanding of
employee turnover followed by a review of previous literature indicating the potential causes
of employee turnover and turnover intentions. The second part will briefly describe the
employee retention which will be followed by a review of employee retention strategies from
previous literature.
Most of the literature studies investigate the determinants of ET. However, less
attention has been given to the effects of ET on the organizations. In this literature turnover is
highlighted as a dependent variable, and a lot of work has been done to define the factors that
predict actual turnover and the reasons behind the individual’s intention to quit the job.
However, very few studies have been conducted on ET as an independent variable.
Mobley discussed ET was noted in 1982. When he indicated the relative causes of ET,
and noted that there was less emphasis on the consequences of ET (Glebbeek and Bax, 2004).
Armstrong argues employee turnover is the rate of people leaving organization. He asserts
that it can be disruptive and costly (2012). Malikeh Beheshtifar assumes missing more
experienced employees and informed others because people who quit the organization can
join another organization easily (2013).
Employee turnover is also considered as one of the major problems for the firms in
Asian countries such as Singapore, Malaysia, Taiwan, and South Korea (Khatri, Fern, &
Budhwar 2001). For example, in 1995 the average ET rate was 3.4%, 2.9% and 2.7% in
Singapore, South Korea and Taiwan respectively. In a recent forum on human resources
organized by Malaysia, Hong Kong, and Singapore, all of the members were fully in
agreement that job conditions are slightly affected due to ET in these countries. In fact, ET
has become a culture (Asia Pacific Management news 1997). Similarly, it also has been found
that ET is continuously rising in China. High ET rates are found among the Chinese nationals
employed in Sino-foreign partnerships despite the high salaries paid to the employees (Khatri
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et al 2001). Gupta also highlighted the potential issues in the research that emphasized on the
causes of ET and was less focused on its effects, which are essential problems for
organizations (1998). These problems should be dealt with. Because it is assumed that ET
may have benefits to firms; this assumption has been upheld in many theoretical papers (e.g.,
Guthrie 2018). This well-known view has led firms and researchers to differentiate between
functional and dysfunctional turnovers (Glebbeek and Bax 2004). Many assumptions suggest
that the level of a company’s turnover can be too high or too low. Dysfunctional turnover
refers to the departure of effective performers (high skilled workers) whereas functional
turnover refers to that of substandard performers (Griffeth 2001).
Managers across the globe are paying serious attention to the problems of ET because
it has been noticed by the researchers that if the level of turnover is high and not being
controlled, it may negatively affect the efficiency and productivity of organizations (Shukur
2015). In addition, unnecessary ET is a waste of capital for the organization, as they must
invest in the recruitment, selection, and training of new employees (Ahmed, Sabir, Khosa,
Ahmad, & Bilal 2016). Consequently, organizations face unnecessary turnovers. By working
on the ET, an organization can address this issue efficiently.
The ET issue was noticed even in well-developed organizations because well-known
organizations demand equivalent qualifications and parallel skills from the employees, but
there is a problem of the pay gap between the male and female workers. Researchers found
that male employees have a high salary than females, which later becomes the reason for the
conflict and unsatisfactory work environments. The highest possible level of performance is
always achieved by the workers in an organization only when staff is fully satisfied with the
working environment (Ahmed et al 2016).
The poor working environment becomes the reason of ET and it may harm firm
effectiveness, researchers have been directly relating effectiveness and ET to the productivity
of organizations and have been looking for the strategies to maximize the organization’s
profits. Similarly, it has been noted that the only possible ways to enhance the effectiveness of
organizations is to raise employee morale and the efficiency of services. Creating
organizational effectiveness and achieving sustainable business results are the main objectives
for the managers, which can be successfully attained by creating a flexible working
environment and strategy for firm structure. This can lead them to achieve high levels of
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employee retention, strong financial performance, and high customer satisfaction (Ahmed et
al 2016).
Employee turnover is considered a sensitive issue among organizations. It seriously affects
the outlook of the organization and leads to the confusion regarding the firm among the
public. For example, Massachusetts Mutual Life Insurance Company, Amazon and the
American Family Life Assurance Company have faced turnover problems (Giang 2013).
Economist Katie Bardaro noted that the reasons for this were that workers have enough job
opportunities to find a secure job and they ultimately moved to new role. Another reason is
the effect of technology on the new generation; they are more familiar and proficient with
technology as compared to their parents. Unlike their parents, a majority of workers in the
young generation are not loyal to their companies and are not staying in the industry for a
long time. They came to know this fact by their experience during the recession, when their
parents had lost their job and even their pensions (Giang 2013). These are the reasons that
clearly state why workers switch to other jobs.
Employee turnover may also have positive repercussions. For example, the departure
of a worker may increase the promotional opportunities for the remaining employee’s in the
company. Moreover, companies improve the output of workers by terminating lower-
performing or overpaid workers. Nevertheless, at majority of studies report that a high
amount of ET generally worsens the firm’s effectiveness due to high operating and personnel
costs for those organization that experience high ET rates (Griffeth 2001). Similarly, highly
reputed organizations are found to have lower ET rates than less successful organizations
(Alexander 1991)
The cost of the turnover of high performers depends upon the resources that
companies spend on their workers to improve their knowledge, skills, and capabilities.
Workers who quit from organizations drain human capital, and if workers are highly skilled,
quits also affect organizational performance and ultimately impact organizational reputation.
Kiwook kwon and Dborah E. Rupp believes that the negative relationship between high
performer turnover and the organization performance can be moderated by human capital
investment (HCI) and firm reputation (2012). They mentioned three influential theoretical
perspectives that articulate the relationship between high performer turnover and the
organization performance.
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First, the human capital theory states that organizational productivity is due to the
company’s specific skills and workers because HCI costs and incentives apply to the
candidates who are able to provide a positive return on investment (Rupp 2012). ET drains
human capital, which is a significant loss on investment and negatively impacts
organizational performance.
Second, the social capital theory creates social relationships among firms because
connections between the firm’s members are considered a more valuable resource for
organizations. Employee turnover is considered buffers of social capital by damaging the
firm’s internal social fabric. Because firm’s members hold key structural and relational
network positions, turnover may lead to a significant loss of social capital within companies
and will result in damage to the jointly created reputation of these firms. The social capital
theory states that organizations with a good reputation always benefit from teamwork and
create cooperation with other firms that share the same sense of purpose. (Kositanont, Wanna,
Duangchawee, & Tribuddharat 2014).
Third, the cost-benefit perspective states that ET may not be harmful to the
organization’s performance, but it affects the performance level of the workers who left and
depends on the organizational situation (Musa, Hashim, & Reba 2017). This approach focuses
on the implications of the performance levels of workers who left the organizations. Because
ET poses various costs to firms, the exit of people whose performance is very low may
benefit organizations, it permits human capital to replace low-performance workers with
highly skilled workers. For example, Kositanont et al. state that the departure of high
performers may deteriorate the organizations, but the departure of low performers may raise
the performance (2014). The cost-benefit perspective emphasizes the performance level. The
organization builds a reputation because their skilled workers provide reliable products, and
these products lead to a positive image of the firms in the minds of consumers. If the turnover
occurs in a highly skilled workforce, it will worsen the company’s reputation.
DISCUSSION
HCI invests huge capital on new employees in organizations for example, education and
employee skills training. When employee get trained by one organizaiton and swtich to their
competitor, it may lead organization to loss and another factor is that training makes
employees more employable for other firms and create turnover intentions. Social capital
theory strengthen not only organizational performance, but the internal environment too. For
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example, social relationship of candidates from one organization to another organization.
When turnover occurs specially among those employees who hold the top positions in
organization it may deteriorate organizational social links with other organizations. As Jason
D. Shaw assume turnover not only erodes performance by depleting organizational skills but
more dramatically by changing social structure and social fabric of an organization. Cost-
benefit somehow contributes to organizational reputation, when low performer replace by
high performer, it builds a good reputation of organization (2005).
REPUTATION
Organizational reputation first entered the field of vision in 1983. The study of reputation has
been studied since the publication of fortune’s “ The most respected companies” rankings. An
effective reputation is more commercially than a bad reputation. Reputation is a precondition
for individuals to cooperate with the firms (Cheng 2017). An organization with a good
reputation may assist firms to gain a sustainable competitive advantage over the competitors
in the market for product services and ideas (Xu Jinfa 2010). A good reputation leads to long
term accumulation of enterprises, however damaging of reputation only needs a specific
event, organization reputation once loss, firm will lose its value in a short time.
At present, reputation has been studied by philosophical scientists. Manifold scholars
have different definitions and views as they defined in their articles, but there is no precise
definition of reputation (Cheng 2017). Fomburn argued organization reputation is an
evaluation of firm past behavior and future prospects and is a key attraction when compared
with competitors (1996). Researchers opine that reputation is a vital resource, it is beneficial,
can be managed and in some ways, it gives a competitive advantage in the form of goods and
services. Social families think organization reputation is a corporate asset, but it's unclear how
they relate to other studies, for instance, corporate social responsibility, management issues,
and relationships with stakeholders. Marketing scholars syndicate some of the approaches of
literature regarding reputation in order to expand the impact of reputation, including product
and services brands.
Public relations scholars argue reputation plays an important role in crisis
management and the development of corporate image (Charles J. Fombrun 2000). Carrol
reputation is a sense of admiration that builds a positive image and trust in the individual to
another person (2013). Mudnane discusses organization reputation is a sum of all stakeholder
impact on the organization and is an asset that brings value to the business (2003). Besides,
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Zheng Xuan refers to organization reputation as the overall evaluation of the company based
on direct and indirect information and experience that an organization has in place, and good
organization reputation indicates the firm’s trust and respect (2017). Furthermore, reputation
is considered a socio-cognitive process consisting of beliefs, information, and the impression
in the minds of people in the organization. Additionally, reputation is considered as an
important source of competitive advantage for organizations. People wish to work in reputed
firms, and they want to secure their jobs. If a company has a poor reputation, then workers are
more likely to quit the jobs. Furthermore, poor reputation leads to discomfort, distress, and
less satisfaction among the employees. It lowers the trust of consumers as well (Helm 2013).
Reputation is an important factor for an organization. It takes numerous years for an
organization to build its reputation. For example, Toyota has been a reputed company in
automobile manufacturing for more than two decades. The prices of their vehicles were rather
high as compared to their competitors. Toyota had been considered a major contributor to
innovation. It has a positive working environment and a designer team that has made
progress. However, from 2009 to 2011, they had some issues with car maintenance. Toyota
recalled the products after discovering that 2.3 million vehicles had a problem with their
accelerator pedals. Due to this factor, Toyota’s strong reputation declined, and as a result,
company faced a short-term turnover. (Frank Ahrens,’’ Toyota Shares Slide as it Reputation
Loses Steam, (Lange, Lee, & Dai 2011)
There are three different concepts related to organizational reputation.
1. ‘Being known’ is the awareness of a company in people’s minds, which demonstrates the
visibility of the firm’s image.
2. ‘Being known for something’ represents a company’s reputation for something. For
example, Apple Inc. is known for producing high quality products.
3. ‘Generalized favorability’ means the overall evaluation or judgments of the firm by
observers that judge a company as positive or negative.
DISCUSSION
The organization with a good reputation attracts more customers and employees and it may
run for the long term. It can happen only when the organization has a skilled workforce.
Because skilled workers of the organization provide reliable products and people will judge
the organization positively. As Rupp, argue organizational performance is expected to be a
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key factor for reputable companies; the loss of talented workers will affect firm performance
(2012). On the other side, employee turnover makes it impossible to reach a good reputation.
An organization should create a friendly environment that can stay up employees for the long
term and more committed to the organization; it will lead to a low level of turnover intention.
An employee’s attachment to an organization improves its efficiency and leads to the growth
of the organization. Customers rely on organizations with a good reputation. When an
organization has a good reputation, it provides efficient products and services to its customers
and those customers do positive word of mouth. It promotes the organization’s reputation. In
order to succeed organizations should focus on performance and create a positive reputation.
Positive reputation yields benefits to the organization in terms of the ability to retain the best
candidates. Furthermore, when an organization has a strong reputation, they charge the
premium for brand names; due to this, organization’s reputation grows and attract more
customers.
Reputation and turnover are interrelated to each other. If an organization has a good
image, then the ET will be decreased. As Malikeh Beheshtifar assumes increasing an
organizational reputation diminishes turnover intention. If organization has ill reputation
employees will quit the job and switch to another organization (2013).
Management should investigate further to know the reason why workers quit or switch
to other organizations. They should have progressive ideas to attract the employees and retain
them in the organization. Job satisfaction is a key element for ET; there is a possibility that
firms continue to promote a vibrant environment by considering the workforce as a dynamic
resource, and they may analyze the reasons for ET nowadays. Workers are considered the
backbone of any organization, so companies should take the initiative to implement an
employee’s motivation process. Doing so will increase worker performance and will thus
ultimately provide a high quality products and outstanding services. It will also help to
understand the reasons for ET (Hasan 2017).
Turnover occurs when employees are not satisfied with their jobs, but this is not the only
reason for employees quitting from an organization specifically when employees hold the
demanded skills, they expected to have high salaries and more benefits. So, this is requsite to
comprehend the causes of ET. There are several causes and influential factors that clearly
state why people quit from the organization.
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2.1 PRIMARY CAUSES OF EMPLOYEE TURNOVER
Employee turnover is considered alarming for many organizations that continue to retain
skillful workers in the labor market. In a national survey report, it was written that 52% of
firm owners agreed that ET and quit rates have substantially increased over the last ten years.
Based on a survey of resignation rates by the Institute of Saratoga, 17 million employees
switched to other jobs in 1999 (Griffeth 2001).
In most of the previous literature, demographic, psychological, and economic data are
considered as the major drivers of turnover in organizations (Staw 1980). Age, educational
background and number of years of employees work in organizations impact on employee
turnover. People who work in organizations long term can be understood as more experienced
and more attached. So, this is necessary for an organization to retain efficient employees.
Employees with high qualification have many chances of moving to other organizations.
Psychological and economic factors become the reason of leaving jobs for example, when
employees have overloaded work in an organization and get pressure from managers owing
to this factor employees may go for alternatives options.
In the past, it was noted that the ratio of female workers in ET is higher than that of
the male employees because of parental issues. Furthermore, unsatisfactory working hours in
the organization is another reason to quit the job. According to Hasan et al. workers who are
inexperienced and unqualified are unsatisfied in their careers and eventually show less
commitment to the organization (2017). These negative attitudes give rise to ET.
Furthermore, they recognized the contradictory effect of low-level training in the firms, which
results in poor job performance and a high rate of ET. On the other hand, the organizations
that provide effective training, learning, and skill development to their employees achieve a
high level of success and decrease ET. This means that members of an organization may have
a high commitment to the job and may be encouraged to stay in the firm.
2.2 FACTORS INFLUENCE THE ET
2.2.1. FIRM STABILITY
Firm’s stability is one of the major factors affecting ET. Stable firms provide conditions that
bring satisfaction to their employees. Whether people stay in their organizations largely
depends on the stability of their firms. If an organization is unstable in achieving its goals or
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objectives, it drives the employees to quit the organization. Researchers have ascertained that
high levels of instability can cause organizations to have high levels of turnover (Zeeshan
Ahmed1 2016).
DISCUSSION
Consistency or inconsistency is a determinant that enhances employee turnover by
satisfaction level of workers. Employees are always dependent on the organization, which
represents the long term relationship of workers within the organization. If an organization is
not stable and fail to achieve their goals, then it weakens the employees and organization
relationship, which leads organizations to a high level of employee turnover. As Ongori said
organizational instability has been shown to have a high degree of employee turnover (2007).
Furthermore, Alexander has also argued when there is a high level of inefficiency, and
there will be a high degree of employee turnover (1991). The firm’s instability actually
represents insecurity of employee’s jobs in organizations and raises employee’s propensities
to quit from the organization. So in such situations, workers leave from the organization and
look for an alternative where they may advance their careers.
2.2.2. PAY
Pay has played an important role in hiring workers and rewarding high-quality human
resources (Ongori 2007). One of the critical drivers of turnover and performance is low
salaries. When employees possess skills and perform as per the requirements of the
organization, and they receive low salaries and insufficient financial rewards, these factors
discourage them, and they transfer to another organization (Hasan 2017). It is often said that
job dissatisfaction is the result of poor pay scale policies. The reason is that new workers may
think that previous workers were paid higher salaries than them in a similar role (Chowdhury
& Nazmul 2017). If the pay is sufficient, it will satisfy the workers and lead to higher
productivity in the organizations.
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DISCUSSION
Pay is a bridge between employers and workers that helps the organization to understand and
make good decisions which contribute to achieving organizational goals effectively. There are
two ways through which an organization pays its workers. For instance, some employees are
paying by depending on their positions, which might vary organization to organization. Some
workers are paying a similar positions of work at the same pay scale. These employees feel
that this is inequality, which triggers high employee turnover in the organization.
2.2.3. TRAINING & DEVELOPMENT
Employees, in general, require direction and guidance to achieve organizational goals. Those
who newly join the organization may need extra supervision to learn the new skills for their
job. Lack of proper training or absence of training initiatives can push the employee behind in
their performance. Therefore, employees, in this case, realize that their skills are not matching
the requirements of the organization (Ahmed et al 2016).
Furthermore, they conclude that ET and job satisfaction are directly related. They
note that job satisfaction has a direct impact on the training provided to employees. Therefore,
satisfaction in a job has a significant impact on ET rates. Additionally, the level of quality of
training programs provided to the employees has an indirect effect on keeping employees in
their organizations. Thus, training is one of the leading determinants of ET, according to
many researchers, and it is the main source of success in modern organizations.
DISCUSSION
Workers always need guidance in proceeding to their tasks. If workers are unguided, that is
more complex in order to attain organizational goals—training importance growing to
organizations in order to gain an advantage among competitors. Training is considered an
opportunity for career advancement. Employees get training because it increases worker’s
productivity, and this is an advantage to organizations owing to an increase in worke output
and will turn to a high salary. Training gives job satisfaction to workers and give
opportunities in their careers. If employees are not properly trained, they will be left behind in
the career and will think they are not valuable to the organization. As a result, they will depart
from the organization.
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2.2.4. WORK SITUATION
Employment status is one of the most conventional problems that is recognized. It is a
significant issue with respect to ET. According to researchers, the nature of work is the vital
influence of workers, which is an intrinsic characteristic, and it is a solemn aspect of the
financial execution of individuals’ lives (Ahmed et al 2016). Members’ satisfaction with job
characteristics draws special attention to some essential factors (e.g., the scope of work, job
challenge, the diversity of work, and job retention). It also depends on their environment and
approaches (Ahmed et al 2016).
2.2.5. WORKING ENVIRONMENT
If the working environment is poor because of a lack of basic facilities like proper air
conditioning, open space, restrooms, proper lighting, safety equipment, drinking water, and
refreshments, then the working environment can affect employees’ output. One of the
important factors contributing to the low performance of employees is the working
environment. Employees prefer to stay in their organization if they are provided with an
acceptable working environment. Several organizations have strict and unstable environments
that demotivate employees. Poor working environments are, therefore, a reason for
organizations’ low productivity rates (Chowdhury & Nazmul 2017).
DISCUSSION
The work environment is a structure that signifies what surrounds in employee’s field and the
behavior of workers towards the job. Organizational environment affects worker’s
performances, and if performance gets affected. As a result, productivity will be declined. It is
an alarming stage for organizations because direct performance affects productivity, and
productivity put the impact on organization stability. If employees withdraw from an
organization, it may consider greater loss for organizations. As Shaw argued, high level of
voluntary turnover affects organization unit of performance (2011).
2.2.6. MANAGERIAL FACTORS
Poor staff management and selection policies because of managerial decisions contribute to
the low performance of employees. Weak supervisory systems and grievance procedures can
demotivate employees, and as a result, they can decide to leave the job (Hom & Kinicki
22
2001). According to Griffeth and Home, organizations may reduce turnover when they
perform good balance communication between management and staff (2001).
Not only the imbalance communication but employees should be treated as respect
and allow them to participate in the decision- making process, which makes them committed
to the organization. Participating in the decision-making process allows each worker the
opportunity to voice their opinions and knowledge sharing. It also improves the relation
between employees and managers.
DISCUSSION
Employee retention considers crucial to organizations in order to increase a high rate of
employee turnover. Nowadays, the business environment is getting advance and more
competitive. Organizations pay serious attention to retaining the skilled workforce. According
to Chipunza, retaining of highly skilled employees becomes a serious concern to managers in
organizations due to employee turnover (2009). Furthermore, owing to the competitive
environment, skilled labor gets more attention from organizations.
Retaining good employees depends on organization policies; if the organization
hires potential employees, it will contribute to attaining organizational goals. For example,
Peter w. home discuss organization is responsible for achieving prospective employees
because they will assist the firm in reaching its goals (1984). In reaching organizational goals
and objectives, there must be an effective supervision system. If managers or supervisors are
not focusing on workers or not caring about, then the worker will show a lack of work
engagement and this will push workers to demotivation towards their job. As a result people
will depart from the organization. For example, Sonnenfeld discusses Hawthorne’s studies
states workers are highly responsive to additional attention of their managers and work more
proficiently because they feel that their managers care about them and interested in and their
work (1985).
2.2.7. PROMOTIONS
Promotions are the best strategy to motivate employees. Promotions are generally combined
with pay. Bonuses, promotions, and many other rewards are major drivers to achieve the best
organizational performance (Abdullah, Mamun 2018). Not promoting the best employees can
23
create uncertainty among workers, which leads to ET. In addition, employees start
considering to leave the company due to ineffective performance and unfairness at the job.
Organizations should be capable of retaining the best workers and provide opportunities for
better career development with possible job enrichment (Ongori 2016).
DISSCUSSION
Promotion is a crucial factor that saves organizations from turnover. It reduces the probability
of leaving organizations for employees. According to Paula Phillips Carson Kerry D. Carson,
promotion is a precursor of ET, which is inconsistent and inconclusive (1994). Not every
organization focuses on employees promoting, and when the promotion is not given to
employees, it leads employees to withdrawal from organization. Promotion and turnover are
interdependent if there is promotion, turnover will be decreased, and if there is no promotion
turnover will be increased .
2.2.8. CLEAR JOB EXPECTATION
It is a pressing issue in the organization if there is a lack of fulfillment of the personal
demands of workers. It could dissatisfy employees and can lead to turnover. New employees
do not have their job expectations met, and thus workers feel unlikely to tolerate the managers
and supervisors. Therefore, they decide to leave the job (Ongori 2016).
DISCUSSION
Job expectation considers that employees expect something from employers which is
probable to happen during the job. These expectations have a substantial effect on employee’s
psyche and their behaviors and play an important role in employee’s attitudes towards
organization’s goals and objectives. Job expectations should be clear and apprehended by
both bosses and workers. Fulfilling list of workers expectations are tricky, but there is some
common level of expectations that organizatisons should fulfill,s which can help to keep the
balance between two parties (Employers and employees).
For instance, packages, job security, training, and development. Punctuality, loyalty.
Fulfilling employee’s job expectations push workers to satisfaction level. They will be
satisfied if their demands are fulfilled, and they might change employee’s turnover intentions.
According to Porter, job dissatisfaction is a result of meeting worker’s initial job expectations
(1973). Furthermore, Adam represents the equity theory. When an employee compares his
24
rewards given by the organization against his contribution to the job and when he finds
differences in ratios, this leads to employees dissatisfaction (1965). So this is clear, no
fulfillment of the expectations push employees to dissatisfaction level, as a result they quit
from the organization.
2.2.9. PERCEIVING ALTERNATIVE EMPLOYMENT &
JOB OPPORTUNITIES
Whether employees quit their organizations depend upon the possibility of getting an
alternative job in the market. But this an uncontrollable issue that depends on external
environmental factors such as the availability of jobs. A study conducted by (Carsten 1987)
found a significant relationship between job availability and voluntary turnover. To be more
precise, job opportunity may also be interconnected with the market condition and
educational background. It means a worker with a higher education background and
experience can find an alternative job opportunities. Furthermore, employees with strong
educational background have more chances to upgrade their job positions as compared to less
educated employees. They are likely to consider their qualification as a competitive advantage
(Abdullah et al 2018).
Job opportunities are also an essential reason for employee withdrawal. Employees
contribute a lot to enhancing organization effectiveness, which leads to success. Nowadays,
employees do not attach to the organization for the long term until they get growth in careers.
Employees with a high educational background face lack of growth in careers within
organizations. It may trigger them to search for an alternative job in the market. Decades back
employee’s career was dependent on the organization, but now people own their career,
especially the young generation, they focus on their career advancement. People who have a
lack of growth in their career they search for alternative jobs and quit.
2.2.10. JOB FIT
Satisfaction level of the job increases if there is a good fit between the qualities of the
candidate and the job offer. It is crucial to have a good fit between what the applicant wants
and what an organization requires. If an organization seeks to enhance productivity, it must
recruit suitable workers and should take essential measures (job training, pay methods, and
proper supervision) to increase job satisfaction. Also, turnover will not decrease until workers
25
are unsatisfied with their jobs (Chowdhury & Nazmul 2017). Such as Thompson et al. have
said that “a happy worker is a productive worker (2002).”
DISCUSSION
It is tough to keep the fit between employee’s qualities and jobs offering by the organization.
Somtimes employees got a job, but they are not performing those tasks in which they are
specialized. For example, employee applies for HR job, but they hire in the finance or
marketing department, which puts employees in trouble, and as a result, they quit. Sometime
Organization prefers its requirements, not employee’s requirements, which become the reason
for withdrawal. According to Campion selection process related good fit between employees
qualities and job. It is an essential if there is no mismatch between candidate qualities and job
because it enhances the satisfaction level of employees (1991).
Resource: https://writepass.com/journal/2012/12/factors-affecting-the-job-satisfaction-among-
employee-among-the-staff-turnover-in-organisations/
2.2.11. FRINGE BENEFITS
A fringe benefit is a twisted incentive, which is contracted between workers or a group of
workers as a part of the executive membership program, which affects performance. It is very
crucial for human resources to programing benefit expenditure and financial resources for the
worker’s future. It is also vital for firms to comprehend a worker’s job expectations and take
the necessary steps to fulfill their needs and wants (Chowdhury & Nazmul 2017).
Employees are motivated by the number of factors, likewise intrinsic and extrinsic
reward by the organization. So this is necessary for managers or employers to know
26
employee’s monetary needs, psychological neede with the aim to motivate them. Here the
perception of psychological variables might be considered employee’s high expectations from
the organization, and violation of this expectation might trigger employees to quit.
DISCUSSION
Fringe benefits are given to an employee to create their interest while working in an
organization. Organization improved its performance by worker’s effectiveness, and worker
performance is better if they are satisfied with their jobs, and it will help to achieve
organizational goals. Organizations pay fringe benefits to develop worker’s interest to work
more effectively in the organization. Employees demand high salaries and more fringe
benefits that may stay up them for the long term in the organization. For example (Harald
Dale-Olsen 2004) argued organizations establishment higher wages and experience a
reduction in employee turnover rates. Likewise, paying more fringe benefits also decreases
worker turnover. Musa et al said that high performer turnover negatively impacts
organizational performance, but if firms have poor reputations or if firms have higher HCI,
this negative relationship could be weaker (2017). Furthermore, they argued that
organizations that invest less in human capital, face higher negative impacts due to high
performer turnover than those who invest more.
2.3 THE COSTS OF TURNOVER
As discussed above, there is no standard idea for understanding employee turnovers; a wide
range of factors are found useful to interpret the ET. A person who quits and the organization
and is subsequently replaced involves a high cost to the companies. These costs include the
search for external labor for a possible substitute (Ongori 2016). The following are the cost
analyses that come into effect due to ET.
27
Source: (https://www.slideteam.net/cost-of-employee-turnover-powerpoint-slide-designs-
download.html)
2.3.1 SELECTION AND RECRUITMENT COSTS
The most noticeable consequence of turnover is the requirement of energy and expenses in
finding a replacement in the organization. When a worker leaves a company recruiting staff
starts the search for another candidate to be recruited and screen proper selection. If numerous
people quit from the organization on a regular basis, the organization will employ full-time
recruitment and selection experts (Hicklin 2007).
Those organizations that hold members for a short period of time (e.g., the military,
universities, and social clubs) keep looking for the potential candidate and thus hire
permanent staff. If a turnover occurs on an irregular basis, then firms are assigned to recruit
temporarily and this function can be assigned to personnel consultants and executive search
agencies. A large amount of recruitment and selection pushes the organization to
institutionalize these functions. However, recruitment and selection can cause a considerable
cost to the firms ( Hicklin 2007).
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2.3.2 TRAINING & DEVELOPMENT COSTS
When recruiters hire people for an organization, they start the hiring process several months
before because of employees hiring formalities and efforts to bring their performance to the
same level as the departed members. Sometimes, role is complicated and takes a long time to
define objectives (Hicklin 2007). Training costs involve direct expenses. For example, the
organization must formalize the instruction programs for the new employees.
The cost of having more experienced workers helping new members of the company
is also high. Training and development costs are thought to have the same expenses as
recruitment and selection. Job level and its complications may affect time and training, which
is important to reach successful performance. However, when promoting insiders to higher-
level position, training and development cost will be lower as compared to hiring new
workers (Hicklin 2007).
DISCUSSION
Organizational members can be recruited and selected easily for organizations, but the process
of the training starts a month before that new workers may work effectively as departed
employees do. It depends on the nature of the job. If the job is complex, it may take a long
time of training for new workers. And if the role is not programmed and objectives are not
defined, then workers need time to build their role in the organization.
When an organization hires employee on departure position from inside the organization,
it is a bit less complicated and put insufficient cost because the employee already trained and
knows the organizational culture. New employees possess skills and ability, which is
necessary for them to achieve corporate success; every new employee needs training only to
understand organizational objectives and goals. Owing to this, organization spent huge capital
on their employees to train them.
2.4 TYPES OF TURNOVER
Voluntary turnover is due to a worker’s decision to leave an organization, whereas
involuntary turnover is due to an employer’s decision to terminate or dismiss an employee.
With voluntary turnover, employees decide to quit in the following circumstances: the end of
a contract, retirement, natural causes such as death, and other job opportunities. Whereas,
involuntarily turnover means employees are dismissed or transferred to other branches in the
29
organization. However, both kinds of turnovers are perceived as risky for organizations
(Shaw, Delery, Jenkins, & Gupta 1998).
Earlier research on the turnover in organizations emphasized understanding and
predicting the reasons behind the voluntary departure of workers (Anderson & Milkovich,
1980). But recent studies have focused, analyzed, and explained the characteristics of
voluntary departures (Weeks & Sen 2016). Very little research has been carried out on the
characteristics of those employees who are dismissed, especially when organizations
terminate them on the basis of poor performance or dismiss them to reduce the workforce. It
has a great impact on a company’s effectiveness when organizations choose the list of
workers who should leave.
There is no empirical evidence that supports the difference between voluntary and
involuntary turnover, (Shaw et al 1998). Voluntary and involuntary turnover are sometimes
termed avoidable turnover and unavoidable turnover respectively (Shaw et al 1998).
Voluntary turnover has an important implication for the company’s personnel planning. It is
believed that a great amount of voluntary turnover impacts organizational effectiveness and
the ability of firms to achieve their goals (Griffeth, R. Hom, P. Gaertner 2000).
2.5 CONSEQUENCES OF TURNOVER
I briefly discussed the reasons for employee turnover and the types of ET. We further need to
state the consequences of ET. Employee turnover may have positive repercussions and may
not be harmful to the organizations and have positive consequences for the organization as
well.
2.5.1 POSITIVE CONSEQUENCES OF TURNOVER
Turnover was considered an untested assumption in the past and was thought of as the
dependent variable that was always unwelcome by organizations (Hicklin 2007). When
workers are performing less, the cost of hiring and replacement of new employees can quickly
compensate the organization by hiring high-performance workers. Furthermore, the
replacement of underperforming workers and cut off their benefits may have some indirect
effects.
Such as, (a) the replacement of poor performances, which can encourage existing
employees to stimulate and perform better. (b) Creating a source of latest ideas for innovation
30
and reform (Hicklin 2007). Some organizations like to provide a certain level of
compensation for high-performing workers, which in return delivers a good contribution to
the company (Hicklin 2007).
These trade-offs suggest that it may be fruitful for organizations to manage the
turnover process rather than minimizing the level of turnover. In past studies, it has been
noted that ideas about turnover minimization have not been appreciated by the private sector.
Turnover can facilitate the organization members and can create fresh viewpoints as well as
may extend the experiences of key personnel (Hicklin 2007).
DISCUSSION:
Turnover not only has negative effects on the organization, but it also has a positive effect as
well. For example, when a poor performer replaced by a high performer. As Lau & Albright
argued, turnover, some extent, contributes to organization growth by replacement (2011).
Furthermore, turnover creates more opportunities for employees who work in the
organization. Hiring a new skilled workforce increase diversity. Moreover, the displacement
of poor performers offer opportunities to promote talented people or higher performers in the
organization (Iqbal 2010). So there are few reasons state that turnover may be beneficial for
organizations, and a lot of work has been done on the negative consequences of
organizational turnover.
2.5.2 NEGATIVE CONSEQUENCE OF TURNOVER
Apart from the positive consequences of turnover, there are also negative aspects of turnover.
According to researchers, if turnover is not managed properly, it may affect organization
profitability (Hicklin 2007). For example, two decades ago, when line employees (employees
who are responsible for attaining the company’s goals) in an organization left their jobs, their
direct and indirect costs were $1,400 to $4,000 per person, respectively (Ongori 2016).
This cost was not the same as the previous turnovers back in 1992. In the 21st century,
turnover affect many customer services and customer satisfaction (Hicklin 2007). For
example, sales recessions and low productivity are chiefly affected by turnover. They waste
management’s time, and in terms of costs, they disturb the organization’s profitability (Ongori
2016).
31
Another study added that when a single employee quits a firm and replacement with new
employee cost 50% of the worker salary (Ongori 2016). When an employee quits and the
organization replaces the worker, productivity decreases because it takes time for the new
worker to learn about the new job and the company. Thus, it consumes time. Furthermore,
when talented employees leave, the organizations lose a lot because these departing workers
can work for organization competitors (Ongori 2016). Therefore, if turnover is not managed
properly, it will be more costly to the organization (Ongori 2016).
DISCUSSION
Turnover, whether it is financially or otherwise, may harm organization productivity and
profitability. Employee turnover leaves a negative impact when experience workers quit and
move to a competitor; it gives the organization a great loss. Maybe the departing person
knows the organizational secrets and the competitor can take advantage of that.
2.6 SOUND RETENTION STRATEGIES
Firms are unsure about the valid reason why candidates leave their companies. ET is the result
of the organization’s poor policies, which can be the reason for poor recruitment and selection
processes.
Source: (https://gethppy.com/employee-turnover/5-reasons-your-retention-rate-is-so-low)
When workers become unsatisfied in uncompetitive environments, they feel uncertain about
their firms. Employee turnover has high costs. Therefore, for businesses, it is difficult to know
32
why workers leave and search for another opportunity. Recent research has highlighted the
classification of human capital management in order to increase organizational performance
and effectiveness in employees’ performances (Ongori 2016). If employees have access to
knowledge, they can collaborate with other workers to generate ideas and access knowledge;
in these cases, workers stay with their organizations. Therefore, companies promote
knowledge sharing because it contributes to strong employee performance and creates a
strong learning culture (Ongori 2016).
Organizations succeed when they provide desirable working environments and hiring
policies. It can retain talented workers in their organization. Competition is continuously
increasing, and organizations are struggling with effective strategies to improve recruitment
and selection processes. Managers are facing high pressure from their top management to
encourage the employee to stay in the companies (Ongori 2016).
A simple solution to the ET dilemma is to pay more benefits to employees than
compensation. However, financial support is not the only solution. There are many reasons
for ET, which depend on several problems associated with work and non-work-related issues
(Ongori 2016). It is always crucial for an organization to retain potential employees.
Managers should focus on arranging well-organized training programs for the employees so
they can have a well-balanced job design in order to retain potential workers or to retain
employees in the organization. Low income is another reason for dissatisfaction, which leads
employees to leave the organization. Therefore, it is important to formulate sound and robust
retention strategies to develop a good relationship between employees and their working
organizations (Chowdhury & Nazmul 2017).
2.6.1 RECRUITING SUITABLE EMPLOYEES
It is clear that sound retention strategies draw the attention of employees and encourage them
to stay for a long time in their organizations. An organization should concentrate on hiring
high-potential candidates. Firms have an essential role and can choose qualified and
experienced workers because employee retention for long-term help them to achieve business
goals. Businesses may be negatively affected if organizations recruit an uncertain workforce
(Ongori 2016).
This finding demonstrates that optimizing recruiting design is vital to provide
adequate human resources. It also provides a proper way of recruiting suitable candidates
33
based on job conditions and motivation. Thus, if companies are willing to minimize their ET
rates, they must focus and take positive action to mitigate the turnover rates (Hom & Kinicki
2001).
According to Chowdhury & Nazmul, qualified and knowledgeable workers are more
engaged within the company to create unique ideas. These ideas are crucial for organizations
in developing their internal working culture. On top of that, these ideas are ultimately the best
way to encourage, attract, and hire very talented employees to counter turnover (2017).
2.6.2 EFFECTIVE LEADERSHIP
Employees do not stay in their jobs if managers fail to support them (Abdullah et al 2018).
Many social scientists make the same conclusion that ineffective leadership is the major
factor of ET, and it is essential for an organization to provide effective training to the
managers and supervisors to improve the skills (Abdullah et al 2018). This point does not
mean that employees should develop personal relationships with their superiors, but they need
to have positive relationships with them. However, one argument put forward by researchers
is that the manager should spend time in each meeting and provide direction, feedback, and
work with colleagues cooperatively.
HR managers are continuously developing new ideas to improve their retention
strategies, but according to the experts, one of the essential retention tools is being a leader
instead of a manager. Managers need to support the potential of their employees and
appreciate their workers in terms of performance, and it should be the responsibility of an
effective leader to take care of their concerns and provide tools for professional and personal
development (Abdullah et al 2018).
2.6.3 TRAINING AND DEVELOPMENT
Managers should create a more flexible environment where information should be freely
communicated. Workers should be given opportunities to be more informed for further career
development. A variety of training programs must be the foremost priority of organizations.
In short, hiring the best candidates positively impact organizations and their productivity
(Abdullah et al 2018). As Victoria J. Marsick argued, organizations that focus on and give
priority to learning and development have high workers satisfaction, productivity, and
profitability (2003).
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2.6.4 IDENTIFYING THE ECONOMIC PROBLEM
Usually, workers are most likely to want to quit their jobs for numerous economic reasons
(Hom & Kinicki 2001). Employees must support their families and have healthcare and
education. When their incomes do not match their needs, they opt for the alternative option
and find a better job. For example, Ford’s car plant faced various types of ET that reached
300–400% each year. However, when the organization realized the issue behind the high rate
of turnover, it approved the decision to increase basic wages from $2.50 to $5.00 per day. In
doing so, the rate of ET has substantially decreased (Abdullah et al 2018).
2.6.5 JOB SATISFACTION
Job satisfaction is the mixture of psychological and physiological and environmental
circumstances that cause an employee to honestly satisfied with his job (Aziri 2011). Locke
described job satisfaction is an enjoyable or positive emotional state resulting from the
appraisal of one’s job or job experience (1976). Feldman argued the amount of overall
positive feelings of employees have towards their jobs (1982). Besides, Aziri stated job
satisfaction as positive and negative feelings that employees have towards the job (2011).
Moreover, Job content and job autonomy are two major job motivational factors that lead
workers to become more satisfied (Abdullah et al 2018). If employees realize that they can
take part in decision-making processes, they will be motivated to do their best for the
organization (Abdullah et al 2018). Satisfaction with supervisors reduce turnover and increase
job retention (Chowdhury & Nazmul 2017).
2.6.6 UNIONIZATION
Labor unions in companies lead to less ET. If the employees are union members, they will not
leave the job frequently. Labor unions and employees together create a collective voice to
negotiate with employers. In the past, many studies have found that labor unions may provide
a good working environment by providing a good opportunity to negotiate between
management and labor (Chowdhury & Nazmul 2017).
The advantage is that labor unions improve employees’ satisfaction by raising their concerns.
When workers deal with unions, they become more satisfied, as they have a voice to speak
with employers to get high wages and fringe benefits. Hence, labor unions help to reduce the
rate of ET and establish systematic grievance settlement procedures that lead to harmonious
35
industrial relations. Trade unions may also contribute to improvements in productivity and
discipline (Chowdhury & Nazmul 2017)
2.6.7 ORGANIZATION CULTURE
Organizational culture has a significant influence on the ET rate. If an organization has a good
working culture, the employee will stay in the company. If workers are unsatisfied with the
culture, working environment, and organizational structure, they may leave their job (Price
2001). Firms motivate their workers by creating a good culture, which may lead employees to
stay in organizations.
Firm culture effects on human resource strategies such as policies of selection,
placement, promotion, development procedures, and reward systems. These different kinds of
strategies encourage high levels of commitment and satisfy the workers. Organization cultures
may moderate differences in retention rates of strong and weak performers. Some firms have
cultures that focus on teamwork, security, and respect for individual members. These values
enhance the loyalty and long-term commitment to firms regardless of job performance
(Sheridan 2016).
2.6.8 BALANCING WORK AND FAMILY LIFE
Retention problems can be prevented if an organization can help its employees balance their
work and family life (Abdullah et al 2018). It is also a major issue in companies that may lead
workers to quit their jobs. Working parents have several responsibilities at home. Working
with parental responsibilities is difficult, and it is challenging to manage situations like
dropping children off at school and picking them up. Flexible working hours can help workers
deal better with work-life balance and can reduce job stress (Abdullah et al 2018). Managers
should provide flexible hours where a worker can easily keep a balance between work and
life.
36
Source: https://www.interact-intranet.com/blog/the-impact-of-managers/
2.6.9 JOB CHARACTERISTICS AND TURNOVERS
Job involvement means worker’s involvement in the work and their psychological awareness
about the job (Ongori 2016). It involves an employee’s interest in the job and how the job is
important to them. Therefore, job involvement and its characteristics are related to each other.
Job characteristics are the most important factors for workers (Ongori 2016). There are five
job characteristics (Ongori 2016):
1. Skill variety, which signifies the opportunity for employees to employ different value
and skills
2. Task identity, that refers to employees completing their job from beginning to end
with visible results.
3. Task significance, which affects the lives or work of the people within an organization
or outside the organization and it depends on the nature of the job (e.g., parents
working in an organization who, due to strict job rules, cannot manage their family
responsibilities or women who are unable to look after their family due to different
task significance)
4. Job autonomy, which means providing a flexible environment to workers
5. Job feedback, which refers to information indicating how efficiently employees
perform in the organization (Martin 1979).
Job involvement reduces ET, and keeping these characteristics in mind can increase the
employee’s interest in work (Barber et al 2013) (Davidson, Timo, & Wang 2010) (Helm
2013). After having a deep understanding of ET, researchers have indicated several
meaningful factors affecting the ET. Thorough studies on the types of ET further highlight the
37
fruitful understanding of turnover. Furthermore, as an author, I realized that only a short
overview of ET and defining the problems related to ET is not enough but also the strategies
for the manager are mandatory to overcome the issues of ET.
After reading the literature, I decided to work on the following topic: To what extent
does turnover affect organizational reputation considering a firm’s reputation as an important
parameter, and that there is a strong relationship between ET and corporate reputation. I
believe that by working on the relationship between firm reputation and the ET would be a
motivating and guiding factor to achieve a great contribution in the organization studies
ultimately.
DISCUSSION:
It is essential for employers to have an understanding of why employees quit from the
organizations, and its also important to know the factors that attract employees to the firms.
Job satisfaction has a greater impact on ET intent. Thus if the above strategies are taken, into
account the business will be able to survive and grow by treating employees as an asset which
needs a lot of attention.
Employees are the backbone of any organization, and they need to be inspired and
managed in an organization to meet competitive challenges in terms of offering quality
products and services to the societies. We need to focus on the importance of employee
retention and that influence on organizations. Retention of employees, especially in the robust
employment market and for the top performers, can be a substantial challenge for
organizations.
38
CHAPTER 3
RESEARCH METHODOLOGY
Research is the process of figuring out problems (Williamson 2000). Scientists participate in
the research groups and investigate the issues to increase the knowledge Furthermore,
research is the process of understanding issues by collecting and analyzing information and
proposing ideas based on conclusions and ultimately putting forward interpretations
(Williamson 2000).
3.1 QUALITATIVE METHOD
The method used for a research problem depends upon the type of research problem, method,
and the techniques that are suitable for the project (Ghauri, kjell, Kristianslund 1995).
Research methods bring up the collection of data for obtaining information to solve research
problems (Ghauri, kjell, Kristianslund 1995).
Qualitative research came to prominence in 1980 when a paradigm war was occurring,
and philosophers were arguing about the limitations of qualitative and quantitative techniques
(De Marrais 2004). Qualitative techniques are based on the collection of data in the form of
words and pictures, whereas quantitative data technique is based on numbers (De Marrais
2004). As for research methodologies, there is interpretivism, constructionism, and
inductionism. However, qualitative research does not always utilize all these methodologies
(De Marrais 2004).
The chosen methodology for my research is based on qualitative design. The
following are the important parts of qualitative research (De Marrais 2004):
1. Data: often gathered from interviews, surveys, and observations
2. Interpretive and analytical procedure: analyzing data to draw findings or theses
3. Report: After analyzing data, writing reports in the form of a thesis
The aim of this research is to analyze the effect of ET on organizational reputation and,
further, to highlight the reasons and types of ET affecting the firms. Strategies for the
managers to avoid the ET had been discussed in the literature and have also been one of the
39
major parts of this research. There has been a lot of work published on ET (Abdullah et al
2018). However, in this research, concentration is mostly given to the relationship between
ET and firm’s reputation. I decided to conduct interviews at four small organizations; two
small restaurants, a packaging firm, and a fitness gym. The reason behind the selection of
these organizations was that they were easy to access.
3.1.1 QUALITATIVE INTERVIEWS
The interview consists of an organized talk where two or more people sit together and ask a
series of questions and find answers. First, the interviewer starts a discussion and asks the
question, and the interviewee replies to his question. The interview is a method of
communication used by the academic researcher to figure out significant issues. It is also used
broadly by the mass media and those who provide professional services (e.g., consultants,
counselors, and therapists) (Ghauri, Kjell, Kristianslund 1995)
The interviewer indicates issues that should be linked to the research question of the
study (Eriksson, Päivi , Kovalainen 2008). My research question is, to what extent does ET
affect organizational reputation. In this thesis, I will use a qualitative research approach that is
comprised of primary and secondary data. The primary data will help in the collection of data
for the research, and it is gathered from unstructured interviews that are conducted from the
owners of two restaurants, a packaging firm, and a manager of a fitness gym in Innsbruck,
Austria. Qualitative interviews often have an unstructured or informal style. This type of
interview helps us to explore the topic from the contributor’s point of view (Eriksson, Päivi,
Kovalainen 2008).
Unstructured interview differs from a structured interview in many ways. For
example, in unstructured interviews, the interviewer prepares some questions in advance that
he wants to ask from interviewee rather than using formal and structured interview
instruments or protocols. Second, the interviewer has flexibility to move the conversation
freely in any direction he or she interested in (Eriksson, Päivi, Kovalainen 2008).
The purpose of conducting an interview is to provide an efficient and practical form of
data collection. It is a practical method where people can share their personal experiences.
The interview is a social construction of knowledge about the given topic (Eriksson, Päivi,
Kovalainen 2008).
40
3.1.2 INTERVIEW PROCESSES
Interviews are a concept that was extracted from the literature. It is an appropriate type of
technique to pose relevant questions to the participants. This study’s focus is on obtaining the
data on views and perceptions about the company’s reputation if it is damaged by the ET. We
conducted the interviews on the 10th, 15th, 20th, and 30th of October 2019. Three interviews
were conducted at the coffee shop and one was conducted at a participant’s office.
All places were ideal for interviewing. It was simple to design questions to cover all
the aspects of my research. I recorded all the interviews through an audio recording software
and developed an interview guide that consists of open-ended questions, which allow
participants to contribute detailed information about their viewpoints and experiences (Daniel,
Thurner 2010). All the interviews consisted of meaningful questions and started with a warm-
up question. At the beginning of the interview, I introduced myself to the participants and told
them about the purpose of the interview.
Participants were informed that interviews would be recorded, and all the data would
be kept anonymous. Moreover, I told the participant that they could skip answering any
question that was too personal. In this way, I was able to ensure the clarity of my research
problem, interview, and their role and gave the participants the opportunity to step back in the
case if they felt uncomfortable. We started by asking about their educational background and
their history with their current company. These questions served as icebreakers before moving
to potentially more sensitive topics.
3.1.3 INTERVIEW STRUCTURE
FIRST PHASE:
I started the interview by informing the interviewees that this interview is being conducted
only for academic purpose and will not be used anywhere else except in this research on the
topic of ‘Effect of employee turnover on organizational reputation’. The interviewee will also
be informed on tape that the interview is being recorded for the convenience of interviewer
and interviewee, but he/she does not feel comfortable their name will be kept secret. The
interview will last no more than 30 minutes, and if he/she is fine with it or has any questions.
41
SECOND PHASE:
1. How employee turnover impact organizations?
2. How does organizational culture influence employee turnover?
3. How do strict working hours become the reason for quitting a job?
4. How does employee turnover affect an organization's productivity and its
performance?
5. How organizational productivity affect firm's reputation?
6. How does the turnover help to employ qualified people?
7. How growing organization's reputation raises turnover intentions?
8. What is the relationship between turnover and size of the organization?
9. Do the turnover is related to employee's behavior?
10. How can we stabilize balanced turnover?
11. How family status affects Employee turnover?
12. How would you characterize the turnover-rate in your company?
13. What are the most important factors that influence turnover-rate in your company?
14. What is the reputation of your company (as an employer) among the employees and in
the eyes of the general public?
15. How does reputation play a role in ET intentions?
16. What is the role of the organization's image in keeping talent?
17. What is (from your perspective) the most important activities to keep important (e.g.,
talented, committed) employees. Can you give examples of such activities?
18. How does ET affect your organization’s reputation?
3.1.4 DATA ANALYSIS STRATEGY
As we outlined above, my approach to analyzing the empirical material was generated
through semi-structured interviews. The collected empirical data of this study was analyzed
with qualitative content analysis, which is a suitable technique for gathering information
about communication (R Murray Thomas 2004). Qualitative content analysis as a research
method is a systematic and objective means of narrating and quantifying phenomena (Kyngas
2007).
42
It is also known as the method of analyzing the documents. Qualitative content
analysis allows the analyzer to test the theoretical issues to enhance the comprehending of
data. Furthermore, the qualitative approach is a research method for making replicable and
valid inferences from data to their context, to yield knowledge, new insights and
representation of facts, and practical guide to action (Kyngas 2007). Moreover, Shanon
argued researchers regard qualitative content analysis as a flexible method analyzing text data
(2005).
The specific type of content analysis approach chosen by a researcher that varies with
the theoretical and considerable interests of the researcher and the problem is being studied
(Shanon 2005). Three methods are used in the content analysis to interpret meaning from the
content of the texts and data—conventional content analysis used with a study design whose
purpose is to describe the phenomena. Directed content analysis aim is to validate or extend a
theoretical framework or theory conceptually. Summative content analysis is used to
identifying and quantifying certain words or content in a text to comprehend the contextual
use of the terms or content (Shanon 2005).
As the title of my thesis highlights that it is about different understandings and
interpretations of the texts and analyzing empirical data through open-ended questions;
Furthermore, I have indicated above that I have developed an interview guide comprises of
open-ended questions. I also have mentioned ET concerning organization reputation that there
is little effort put on it. That is why I have decided to use a conventional content analysis.
The purpose of conventional content analysis is to describe the phenomena, and this type of
approach is appropriate when an existing theory or research literature on aspects is limited.
This technique uses open-ended questions in the interviews. It also tends to be open-ended or
specific to participant's comments instead of preexisting theories such as "Can you tell me
more about that" (Shanon 2005).
I transcribed all the interviews from oral to written form to makes conversation easier
and accessible. I also jotted down some emotional expressions of interviewees during the
interview, like laughter and sighs. I did this to maintain all details for later analysis. One thing
that we did not mention is their names. We will use letters (A, B, C, D) for respondents
instead of their real names. The numbers of members working in each organization are
different from each other. One restaurant had fifteen members, and another restaurant had ten
43
members probably. In the fitness gym, there were fifty employees, and the packaging
company had fourty employees.
44
CHAPTER 4
INTERVIEWS & DATA COLLECTION
Interviews were conducted with four participants. Two of the participants, A and B, were
managers in restaurants, participant C was a manager in a packaging company, and participant
D was a manager at a fitness gym. Out of four participants, three were male and one was
female, and they had been in their occupations around 12 years. I kept the interviews short
and started with four interviews, which was enough for my study.
4.1 INTERVIEW ANALYSIS
In this section, I will analyze and discuss the interviews and the data collected with the help of
these interviews. Although, I have already provided the questionnaire above, but just for the
sake of my reader’s convenience, I will discuss the question in a sequence and will also
mention the question before discussing it. By doing this, I will provide the context to the
readers, so that they can follow me during the argumentation and discussion.
How employee turnover impact organizations?
According to the interviewees, the effect of ET depends on the situation and level of
employees who are quitting. If a worker is experienced, then the departure of that worker
would have a negative effect on the firm because the organization will lose a knowledgeable
person. If an employee who leaves the firm is not contributing to the organization’s
environment and the replacement is experienced, ET will positively impact the organization
in that case. One of the interviewees replied that it negatively impacts the company. If more
experienced person leaves the job, the new replacement may take time to get trained in the
new culture of the firm.
How does organizational culture influence employee turnover?
The interviews show that the culture of an organization affects ET. A firm learning culture is
a “valid construct” in the prediction of the job. Organizational culture yields job satisfaction
and it curtails turnover in the firm. However, if culture is strict and not suitable to the
45
employee, the worker will decide to leave the organization regardless of their salary because
these days, companies are paying almost equivalent salaries in the market.
How do strict working hours become the reason for quitting a job?
The interviewees mention that working hours are a part of the organization’s policies, and
these policies are followed by organizational culture. Strict working hours are a reason for
employee resignations. All the interviewees were agreed that people want to work in a
flexible work environment, and the trend is changing (e.g., in some firms, workers are
allowed to work from their homes). Some workers have children, especially women who look
after their families (e.g., preparing breakfast for the children and dropping off at schools).
Female workers might have pressure from the office work and family, and it is hard
for them to balance work and family. As a result, they resign. Even strict working hours
impact the lives of single employees. Sometimes they go to parties and get up the next day
early in the morning for the job. It is difficult for them to maintain a balance between life and
work.
How does employee turnover affect an organization's productivity and its performance?
According to the interviewees, employee turnover impacts organization productivity, but the
interviewees opinions differed slightly. Interviewee A said ET affects productivity and
performance, but it depends on the status of the employee. If a worker has a low status like
dishwasher or waiter, then it will not influence restaurant productivity and performance, but if
he or she is cook, then their resignation will negatively impact productivity (e.g., the cook that
resigned prepared 150 food items per day and the new inexperienced cook prepares 80 food
items per day).
Customers wait a maximum of 30 minutes for food at the restaurant, and if the food is
not delivered, they start complaining and go to another restaurant. Furthermore, he said that in
the beginning, inexperienced cooks could not prepare food with the same quality of an
experienced cook. Due to this, customers may be affected. Interviewees B and C had similar
arguments, but there was a slight difference. For example, interviewee C said turnover affects
not only firm productivity but also team productivity. It depends on the type of organization
46
and the employee’s skill. For example, in some organizations people are working in a
production line and repeating the same task every day.
If employees quit their job, the whole production team will be affected along with
productivity as well. In other small organizations such as coffee shops, their productivity will
not be affected. Because when somebody quits their job, the owners immediately hire another
person, and it takes probably an hour to train them. But interviewee B replied that the
organization level does not matter. If somebody quits the organization, the entire team will be
affected because all the workers will be under pressure, and there will be a lot of stress. Under
stress, no one will be able to work effectively. And the replacement of new workers takes
time due to the adjustment in the environment. Interviewee D replied that ET affects
productivity and performance when an experienced person leaves, and a new substitute
comes. He will be in a learning stage, and it takes a significant amount of time, capital, and
energy to get him trained.
All four interviewees believed that turnover affects firms’ productivity, but they
explained the relationship in different ways. For one interviewee, employee status plays a
major role in the impact of turnover on productivity. But the other two interviewees agreed
with interviewee D; they said ET affects productivity and performance when an experienced
person quits.
How organizational productivity affect firm's reputation?
According to the interviewees that firm productivity affects organizational reputation.
Furthermore, two interviewees responded in detail that productivity affects firm reputation,
while one of the interviewees had a different point of view. The interviewee from the fitness
gym did not answer question 5.
Interviewee A has given the same example as discussed above in answer 4.
Interviewee B said that a delivery man used to deliver orders in 20 minutes in the restaurant,
but if due to slow production, he takes 40 minutes to deliver an order, it would negatively
impact customers. They will then write unsatisfactory reviews, which will become the reason
for the decrease in the organization’s reputation. But interviewee C provided a different
answer. Turnover only slightly impacts reputation. It depends on the individuals and how they
consider a company with a positive and negative reputation.
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He said productivity does not affect organizational reputation, but the standard and
quality of the product affect organizational reputation. To sum up, two interviewees believe
that firm productivity affects organizational reputation, but one of the interviewees said that
productivity has no connection to reputation and that only product quality matters.
Interviewee D did not answer this question.
How Does the turnover help to employ qualified people?
Three of the interviewees B, C, and D mention that ET helps to employ qualified people in
the firms, but interviewee A did not answer. Interviewee B said that turnover benefits the
organization by allowing it to employ qualified people. But sometimes the firm fails to fulfill
its demands. For example, when a replacement is more qualified and experienced,
organizations are compelled to pay a high salary, which creates conflict between the
organization and the employee because experienced and talented employees expect high
salaries from organizations.
Interviewee C stated that sometimes turnover helps to employ qualified people in the
organization, such as when somebody quits an organization and a more experienced person
joins. In general, having some portion of turnover is better than not having at all ; if there is no
turnover, no ideas will be generated. Interviewee D argued it depends on the nature of the job.
If there are managerial level jobs, then more qualified people will apply. In such cases,
turnover helps find qualified people.
How growing organization's reputation raises turnover intentions?
The Interviewees show that when organizational reputation improves, ET decreases.
Interviewees A and B stated that when their restaurants reputations improved, the owners of
the restaurants wanted to continue running the businesses as they are, and they did not bother
their workers. However, if reputation declines and sales are less than expected, it may cause
the turnover intention.
Furthermore, interviewee C argued that when companies grow, they have
sophisticated retention policies and focus on specific workers and young talented people. In
terms of turnover, reputed organizations hire the right people for the right job and keep the
48
old ones. There is less ET in well-known organizations, whereas small companies always
look for newly qualified people, and there is more ET in these firms.
In addition, interviewee D opined that increasing organizational reputation decreases
ET. There will no voluntary turnover among people who are working in a reputed
organization. Workers will never quit organizations that enjoy positive reputations. However,
it also depends on the size of the organization. She further said that if the firm is larger, it will
increase ET and if it is small, it will raise less ET. All interviewees agreed that increasing
organizational reputation decreases ET, but the relationship varies from organization to
organization. For example, when the restaurant becomes popular, there is less ET, as is the
case with well-known companies, which usually have less ET because of strong retention
policies.
What is the relationship between turnover and size of the organization?
According to the interviewees, there is a relationship between ET and the size of the
organization. Moreover, Interviewee C stated that turnover is affected by the size of the
organization; larger organizations have greater turnover and hire more people. Interviewee D
agrees with the statement of that turnover is affected by organization size, but she said if the
firm is larger and unproductive and has failed to achieve its goals, there will be a larger scale
of ET. If a large company is successful, it will experience less turnover. The same applies to
small businesses.
Two of the interviewee’s A and B expressed their views that the size of the firm does
not influence ET. For example, they said that there is always a high level of turnover in
restaurants because most of the students work part-time to pay their expenses. However, after
completing their studies, they quit restaurants.
Interviewees A and B suggested that turnover depends on the type of the organization.
For example, in the case of restaurants, the size of the restaurants do not matter because
turnover is normal in restaurants. But in the case of other types of firms, if they are
functioning effectively and achieving their goals, this means that employees are working
efficiently, and there will be low turnover as compared to unproductive firms.
49
Do the turnover is related to employee's behavior?
The interviewees mention that employees’ personal behavior is related to their propensity to
quit. Besides, three interviewees believed that people quit their organizations because of their
personal behavior. For example, interviewee A said that conflict sometimes arises between
bosses and workers, which leads to a weaker relationship between the bosses and workers
and, ultimately, the workers will quit. Interviewee B sometimes said employees get fed up
while doing the same job.
One interviewee, C, stated that turnover is not affected by personal behavior. At my
firm, some lower-ranking employee was promoted over me, but I did not quit the
organization. I accepted it as a natural factor. Interviewee D related workers’ personal
behavior to the organization’s goals. If workers are producing output, they will feel satisfied,
and if they are not contributing, they may feel unsatisfied, which may eventually cause
conflicts.
How can we stabilize balanced turnover?
According to the interviewees providing a flexible working environment may stabilize
turnover in organizations. For example, interviewee A suggested that employers should give
adequate breaks to his or her workers and give them vacations. Interviewee B said an
employer should be a good listener and treat every employee equally. The manager should
know which tactics should be used to ensure that employees stay in their organizations for a
long time, should fulfill the promises they made during the interview, and should strictly
abide by the employment contract.
Interviewee C stated that leadership development is more important and the other factors,
such as increasing salaries and benefits, should come later. According to him, most employees
quit because of their leader’s behaviors. Leadership development may reduce ET. Interviewee
D suggested that employees should be given a flexible environment and entertainment, such
as giving half-price tickets to the cinema and coupons to other shops. Employees should also
be provided with a lot of other benefits to keep them satisfied.
50
Interviewee A and D were focused on providing a flexible environment, and
interviewee B and C focused on manager and leadership. For example, the manager should be
skillful. Workers who work under the supervision of leaders and managers sometimes
perceive that their leaders and managers are very strict to them and not respectful. They may
feel they have a low quality relationship with their leader, which can lead them to quit their
job. In such cases, firms should arrange some programs for manager development to stabilize
the turnover.
How family status affect Employee turnover?
According to the interivwees, that family status plays a vital role in the determination of ET
rates. Moreover, family status was considered one of the major reasons for workers quitting,
as said by interviewee A. Similarly, interviewees B, C, and D said that workers leave a job
because of family conditions. If they are far from their families, it will be expensive, and that
may lead to a lack of concentration at work, which affects the performance. So, people would
like to work where the family resides.
How would you characterize the turnover-rate in your company?
The interviewees mention that employees are quitting from the organizations. It depends on
their background. Interviewee A said the turnover rate at his restaurant is average because we
treat our employees well, and also we pay them well. He further argued we have part-time
workers like students and permanent employees as well. Interviewee B contemplated a high
turnover rate at his restaurant due to students that work at the restaurant. He explained
students join a restaurant for a short time, and when they finish the studies or find any other
job opportunity, they quit. Interview C mentioned a low turnover rate at his organization.
Owing to providing good monetary benefits, excellent working environment and
consider them more valuable to the organization that made employees loyal with the firm and
working hard in achieving organizational goals. Interviewee D described the turnover rate as
very rare at her fitness gym. Due to effective hiring policies, they control the turnover rate at
the fitness organization. According to her, the fitness gym offers a small position to the
students. If students quit immediately, the organization hires another person to the job.
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What are the most important factors that influence turnover-rate in your company?
According to interviewees A, B, C, D, many influential factors lead the turnover rate in
general, as we discussed in our literature review part "Causes of ET." Interviewee A said
employees quit because of work stress and the distance from work to home. He gave an
example of a person that he hired. The employee was happy with the product and everything,
but after a few months, he quit. The interviewee said the restaurant was far from the worker's
Appartement, and he got another job offered nearby his house.
He further discussed paying good salaries or attitude of the employer, not the only
reason of employees quitting, but it can be different. Interviewee B also argued employees
stop working owing to organizational culture. Culture refers to strict working hours, start
working, or leaving a restaurant at the exact time. He further explained our restaurant is
bustling and most employees work at the weekend as well. Employees feel discomfort
working at the weekend, especially students, which is the reason that we have a higher
turnover.
Interviewee C argued although at his organization turnover rate is very low but still
there some factors that causing turnover rate. He said our competitors offer high salary
packages, and another factor is a highly competitive work environment. If employees are not
performing well, they can not survive in the organization. Interviewee D also reflected that
our employees quit owing to offering higher positions by our competitors because we have
meager promotion chances at the fitness gym. That's why offering a more top position
magnetize our employees to quit.
What is the reputation of your company (as an employer) among the employees and in
the eyes of the general public?
The interviewees opined their organizations have a good reputation in the general public.
Besides, Interviewee A said our restaurant known as one of a leading restaurant in the city.
Because we provide good food for our customers and they like it. Else we don't take any tips
from our employees that drive our organization to a positive reputation. Interviewee B asserts,
52
our restaurant has a good reputation. As a manager, I deal very well with my employees, and
also we provide a pleasant working environment for our workers as well, which encourages
them to deal reliably with the customers.
Interviewee C said our company known for its rapid growth as well as sustainability programs
among the public. Our employees feel proud of their organization's attachment. He also said
our employees work as a family to achieve common organizational goals. Interviewee D
contemplated, the reputation of our company is quite good due to providing job autonomy and
working family environment. Employees feel more attachment to the organization. In the
view of the general public, we organize several events such as running events, etc. people
participate in the activities that envision a positive image of our organization in the public
psyche.
How does reputation play a role in ET intentions?
According to interviewees A, B, C, D reputation is an element and plays a vital role In
turnover intentions. Interviewee A and D assert, give full rights to employees and proper
training, taking care of employee's needs other than professional needs; this creates a good
reputation in the eyes of employees and the public. If an employer pays full attention to the
workers and employees will give full attention to the customers.
Thus it diminishes the turnover intentions. Interviewee B says organization reputation
lies upon its managers and bosses. He further said new employees complained about their
previous employers about not fulfilling the promises that were made during the interview
which lead them to leave the organization. Interviewee C states We take good care of our
employees, and employees positively reciprocate us, thus decrease their turnover intentions.
What is the role of the organization's image in keeping talent?
The interviewee mention that organization positive image helps to keep the talented worker in
firm. Interviewee A and B state the same, our organization has a positive image due to taking
care of the talent of our employees, provide training, giving them mental relaxation and as a
manager we are very friendly with our employees. It represents a positive image of the
organization, and employees do positive word of mouth. That makes them stay at our
organization. Interviewee C said Good organizational image give employee his/her identity. If
53
an employee is happy and satisfied with its organizational image/performance, then he loves
to identify himself/ herself with the company name. Employees feel proud/ motivated if their
company has a good reputation in the market.
Therefore, if employees are proud/satisfies with their organization, they will
contribute towards the organization in positive ways and never intended to leave it.
Interviewee D contends we have no fixed hours for our employees in our organization. They
can come and leave as long as they want. She said we don’t ask them to come to organization
at a specific time. We want tasks to be done. Sometimes they complete the task very fast and
have more free time. That’s how we keep talented people.
What is (from your perspective) the most important activities to keep important (e.g.,
talented, committed) employees. Can you give examples of such activities?
The interviewees discuss essential activities to keep important (talented, committed)
employees in the organization. Moreover, Interviewee A opined we have employees from
different religious backgrounds. We give them extra leaves and gifts to the employees on their
religious festivals such as Christmas, Easter, etc. We also give gifts to our female employees
on women’s day. Else, we provide training and also bonuses to our employees that realize
them more worthiness to our organization. Interviewee B said we give rewards, promotion
opportunities to our employees. We also take care of their birthdays and give gifts to them.
Interviewee C argued in our organization; we yield excellent direct and indirect
monetary benefits, a pleasant work environment, growth opportunities, career development
opportunities, fair performance evaluation, and feedback programs. Interviewee D claims we
give freedom of work to employees, getting feedback from employees to know their interest
regarding the job, and our trainers are allowed to sell their training at our gym.
How does ET affect your organization’s reputation?
According to Interviewee, A ET does not effect severe the reputation of an organization, but
to some extent, it does. Interviewee further argued, Nowadays, employees look for job
security and also a good environment to work in. If an employee comes to know that the
54
company has greater employee turnover, that may convince him or her not to stay longer in
the organization. Interviewee B considers employees are an integral part of any organization.
He said if the ET rate is high, it creates an ill reputation in the business community.
Moreover, New employees need more attention and energy to train them, and it’s hard to
maintain the discipline within the organization. He further argued, high rate of ET is not in
favor of any organization. Therefore, I always pay bonuses and give them gifts on Christmas
and their birthdays to stay them in the organization.
He said most of the employees at our restaurant are students and they have to leave
after completion of their studies. So, we are mentally prepared and always have a search for
new good employees. Interviewee C opined, as I mentioned earlier, we have friendly
employees in our organization, and we have a pleasant working environment. Our ET rate is
meager. But still, if we lose employees, it affects not only our organization’s reputation, but it
costs us a lot by providing them training and development, hiring and human capital cost, etc.
Interviewee D narrated, we also have a low turnover rate, our employees quit due to
offering a higher position. But when employees build a union, and their demands don’t match
as per organization expectations, then they may leave. In such a situation, a higher amount of
ET severely affects organization reputation.
4.2 DISCUSSION
We discussed the reasons for ET briefly in our literature review. In this chapter, we highlight
voluntary and involuntary turnover, the effect of ET on organization reputation, causes of ET,
and strategies for managers to reduce ET in an organization along with outcomes as we
collected via interviews.
According to our findings, voluntary turnover is considered detrimental to an
organization's reputation. We also discussed definitions of voluntary and involuntary turnover
in the literature review, but in this following chapter, we will discuss in detail. If a worker
starts to search for a new job, this action reflects his or her intent to leave the establishment,
which referred to as voluntary turnover (Ito & Brotheridge 2005).
55
In this kind of turnover, employee leaves an organization based on free choice. In
other words, voluntary turnover can be termed as avoidable turnover (Price 2001). Possibility
of employee's voluntary turnover is because of low salary, job dissatisfaction for the people
with high expectancy levels, lack of job security, experiencing new jobs, and alternative job
opportunities, especially for skilled workers.
With an entire point of view on voluntary employee turnover, job satisfaction seen as vital.
Voluntary turnover affects an organization's effectiveness in reaching its goals. Thus,
managers should be conscious of this situation and give support to curtail the cost of
unwanted separations (Price 2001). In the matter of involuntary turnover, the organization
removes employees owing to poor performances, economic conditions. Some reflect this type
of turnover as unavoidable turnover (Price 2001).
Adding involuntary turnover cases that occur because of death, illness, or retirement is
not suggested for inclusion turnover calculations (Baysinger 1984). According to our
findings, voluntary turnover is considered detrimental to organizations. It also depends on the
level of employees who quits. If an experienced employee leaves, that departure of a person
may negatively affect the organization because the organization will lose a higher performer.
If a top performer in that sense replaces a poor performer, ET will positively impact the
organization.
Voluntary turnover puts a high cost on human capital investment from an
organization. Replacement of substitute costs includes the various cost to an organization. For
instance, searching for a possible substitute, induction of the alternative, training, and
development of replacement unless he or she achieved the performance of the departure
person (Fair 1992). Besides, involuntary employee turnover helps an organization to qualified
higher performers.
Having some portion of turnover is better than having not at all. If there is no turnover,
no ideas will be generated. We concluded ET effects organization reputation if turnover
occurs among those employees that hold key positions in the organization. As above,
interviewee A gave the example of a cook at the restaurant, who prepares 150 food every day,
and new substitutes come and prepare 80 meals. If the food is not delivered in 30 minutes,
customers start complaining.
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As a result, they write negative or unsatisfactory reviews, which is enough for
damaging a restaurant's reputation. Organizational efficiency lies upon its worker's expertise.
If workers are performing well, the organization will survive. According to Rupp, human
capital investment argues organization productivity depends upon its specific skills and ability
of employees working in the firm (2012).
Rupp represents social capital theory, an organization with a strong reputation may
get the advantage with the collaboration, teamwork of other reputable firms. So, these benefits
create a social capital advantage for reputable organizations if a turnover occurs among such
employees, it may have severe loss of social capital (2012). Whereas unproductive employees
negatively affect the impression of organizational reputation in the public eye.
Besides, Xian discussed (Rupp 2012) also presented a negative correlation between
corporate reputation and turnover intentions, especially in high-performing companies in the
organization (2019). Interviewee A argued ET does not affect too much if it occurs among
employees that do not hold high positions. Nowadays, employees look for job security and the
environment. If a worker feels an enormous amount of turnover in the organization they quit.
Interviewee C discussed turnover affects their organization's reputation if it occurs.
Interviewees B, D, refer to organizational reputation damages if turnover occurs with a
more considerable amount. If an organization has a good reputation, it may attract a pool of
candidates. The high rate of ET is not necessarily detrimental for the firm unless it happens
among those workers who fit on the more top positions. According to (Malikeh Beheshtifar
2013), there is a reverse relationship between corporate reputation and ET intentions.
Firm positive reputation leads many candidates to compete to enter an organization,
and hired employees ever try to preserve related places; as a result, an organization
magnetizes the potential candidates in the labor market, and it increases its reputation. As we
mentioned the reasons for ET in organizations in the literature review, we further tried to
know the causes of ET in the interviewee's organizations, we found only a few reasons, which
still consider as an essential in these days.
Interviewee A said, paying high salaries or attitude of the employer is not the only
reason that makes people quit from the organizations. But it can be different with time. He
said people leave due to work stress and distance from work to home. As Ashraf opined
57
overstressed job decreases workers performance and chief contributor to employee
dissatisfaction (2011).
Interviewee B described workers quit because of organizational culture; strict working
hours that lead employee's negative behavior towards an organization. As Price argued, firm
culture has a consequential impact on the ET rate (2001). If an organization's culture is
impoverished (e.g., strict working hours and problematic policies), then the employees will
quit their job.
Culture has significant effects on the rates of newly hired workers who voluntarily
terminate their employment (Sheridan 1992), Interviewee C said people quit from the
organization due to high salary packages that offer by the competitors. Another factor is a
highly competitive working environment. If employees perform well, they can stay in the
organization; if not, they can leave. Interviewee D refers to offering a higher position to
workers is the strongest predictors of ET.
This variable is not under the control of the fitness gym. For example, Ongori said the
lack of promotion of talented worker generate uncertainty among employees that leads to
employee turnover (2007). All four interviewees expressed their views about reducing ET.
Interviewee A lighted up to treat all employees equally. No matter which religion or ethnicity
they have. Interviewee B said by providing flexible working zones, rewards, and promotion
opportunities that may reduce ET in the organization.
As Miller mentioned, employees get benefited from the work environment, which
yields a sense of belonging (2001). Furthermore, Hanqin Qiu discussed offering promotion or
advancement opportunities may reduce employee's intention to quit (2014). Interviewee C
argued ET rate at our organization is very low because we provide direct and indirect
monetary benefits, working environment, growth opportunities, career development
opportunities, and performance evaluation and feedback programs.
Jessen proposed employees are motivated by the number of items such as intrinsic and
extrinsic rewards; therefore, managers are required to study the worker's monetary, physical,
and psychological needs to motivate their workers (2018). Interviewee D also reflected that
the number of factors helps to minimize ET in their organization. For example, a pleasant
environment, training, job feedback that we already discussed above. However, job autonomy
we consider essential factor reduces ET. Autonomy is positively related to organizational
58
commitment. It provides the freedom to perform their work independently ( (Manju K. Ahuja
2007
59
CHAPTER 5
CONCLUSION & RECOMMENDATION
In this chapter, the conclusions are presented based on the analysis of my interviews.
5.1 CONCLUSION
The main objective of this study is to explore the relationship between ET and organizational
reputation. The reasons for ET and strategies for managers to minimize ET are highlighted in
the report. This report showed the common reasons for ET. What modern firms are facing
nowadays are office/home distance, organization culture, work stress, Other implications to
streamline the ET high salary packages, and highly competitive environment, lack of
promotion.
Sometimes, workers quit because of the strict working environment. Employees would
like to work in a flexible environment rather than an unsatisfied climate. I believe from this
report that organizational productivity is based on worker’s performances. If the
performances of the workers are efficient, the organizations will produce more reliable
products, which leads to a robust organizational reputation. Furthermore, the report also
mentioned the retention strategies for managers should adapt to overcome on ET.
Treating employees equally provide flexible working zones, promotion opportunities,
direct, indirect monetary benefits, job autonomy, performance evaluation, and feedback
programs. From this thesis, I conclude that ET on top positions is responsible for poor
organizational reputation. If a turnover occurs among professional and specialized workers,
this will cause more significant problems. Furthermore, organizations have strong network
connections with other firms, and they influence each other.
If turnover happens among the workers who hold technical and network positions, it
will lead to a significant loss (e.g., low performance, which could deteriorate the structure of
networking). This finding suggests that the occurrence of ET on a professional level will
adversely affect organizational reputation. It will not only severely impact the firms, but it
could have severe repercussions on the reputations of both small and large firms.
60
5.2 RECOMMENDATIONS
In this section, we made the following recommendations based on my findings.
1. As this study has revealed that there is very little effort put into the problem of ET
concerning organization reputation, not a lot of researches are done on this issue,
which means it has been neglected over the years. So, my first and foremost
suggestion would be to invest in the research and evaluate the actual suggestion to
form a proper strategy.
2. Secondly, I would suggest that the right people for the right job should be hired.
3. If possible, firms should be flexible in letting employees work from home and even
show flexibility about working hours.
4. Encourage employees to show good and generous attitude towards each other and
keep an eye on the ones who spread negativity among the co-workers; if necessary,
fire those employees who spread negativity.
5. Being a human, most of us need recognition for what we do, so recognize generously
through promotions, souvenirs, certificates, bonuses, further training, company tours,
activities that bring all of them together, and feel included.
6. Employees should be the first priority of each and every company because, without
them, there will be no product and no profit, so make them happy and satisfied and
show them that their happiness is your main concern
7. Everyone should be included in owning the company from the guards to the directors,
and everyone should feel the respect and ownership
61
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STATUTORY DECLARATION
I declare that I have authored this Master Thesis independently, that I have not used other
than the declared sources / resources and that I have explicitly marked all material which has
been quoted either literally or by content from used resources.
The Master Thesis was not used in the same or in a similar version to achieve academic
grading or is being published elsewhere.
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