Term Paper on "Study of High Employee Turnover in a Florida Comprehensive Services Company"

Term Paper 18 pages (4781 words) Sources: 1+

[EXCERPT] . . . .

High Employee Turnover in a Florida

In recent years, organizational knowledge and employee turnover have been the focus of an increasing amount of attention from management experts seeking to identify improved methods of providing effective human resource services to help companies recruit and retain qualified employees (Droege & Hoobler, 2003). To this end, the purpose of this study is to determine the relationship between high employee turnover and personal factors against the preference for compensation. This evaluation will be conducted on a comprehensive services organization located in Northeast, Florida that employs more than 12,000 people. The organization is one of the largest billing and customer service organization in their county.

Statement of Problem. Today, there is a problem with the subject financial services company experiencing a high level of employee turnover. The problem can be alternatively attributed to an increase in hiring, automated self-paced CD-ROM training technology, outsourced new hire agreements, and increase competition from similar industries in the local area as indicated by computer generated reports, exit interviews, weekly employee surveys and feedback from trainees. Despite the overwhelming research and focus on employee turnover, few have been able to link turnover to a specific personal or intrinsic characteristic. Therefore, the significance of this study is that it will create an opportunity to investigate employee's behavior as it relates to the factors that are able to motivate and retain valuable human capital. In addition, this investigation should be able to uncover what factors drive employees to select a pay method or compensation that would motivate them for increased performance and reduced turnover.

Review and Discussion

Definition and Nature of Employee Turnover.

In-house engineering," "revolving door policy," and "management by turnover," may sound better, but these euphemistic are being used to describe employee turnover today (Burgess, 1998, p. 55). In their essay, "Turnover: The Real Bottom Line," Sami M. Abbasi and Kenneth W. Hollman (2000) report that "Turnover is the rotation of workers around the labor market; between firms, jobs, and occupations; and between the states of employment and unemployment" (p. 333). By whatever name or form, though, employee turnover represents one of the most significant causes of declining productivity and sagging morale in both the public and private sectors (Farrell & Whidbee, 2002; Akpotu & Nwadiani, 2002). Management theorists suggest that high rates of employee turnover are responsible for the failure of U.S. employee productivity to maintain pace with foreign competition (Abbasi et al., 2000). According to Simon Burgess, "Worker turnover generally refers to the movement of workers around the labor market, between firms, and among the states of employment, unemployment, and inactivity. It has been known for some time that worker turnover and job turnover are 'large'" (p. 55). Likewise, Frederic D. Frank points out that employee retention and employee engagement are completely integrated concepts that represent two fundamental human resources challenges in the 21st century. "How do we keep our talent, given unprecedented shortages and erosion of loyalty," he asks, "and how do we keep them engaged, and even passionate about the work they do?" (p. 11). Given the growing severity of these problems, today, it has become increasingly important for managers to better understand what employee turnover means, how it can be measured and analyzed, and what steps can be done to mitigate its adverse impact on the accomplishment of organizational goals. Clearly, as employee mobility increases by virtue of Internet-based human resources recruiting and a volatile job market (Grossberg & Sicilian, 2004), companies are faced with the need to not only define and understand the nature of employee turnover, but to recognize its impact on their bottom line as well; these issues are discussed further below.

Employee Satisfaction and Customer Turnover. One of the most important components of making new customers happy and retaining loyal old customers is to ensure that they receive quality customer service. A dissatisfied employee, whether new or tenured, though, is unlikely to provide this level of service on a reliable basis. For the purposes of this discussion, the entire range of causes of employee satisfaction and dissatisfaction come into play, and these factors are by definition highly subjective and individualistic. Nevertheless, no customer wants to do business with an enterprise characterized by poor customer service and employees who are not motivated to provide that service.

According to Grant:

It must be appreciated, however, that though the absolute level of employee satisfaction has little to do with motivation, it is an important determinant of the volume of employee turnover, employee gripes, absenteeism, alcoholism, and related variables. High employee satisfaction as well as high motivation must be developed for an organization to succeed (emphasis added) (Grant, 1990, p. 12).

Given the make or break nature of ensure that a company has satisfied employees providing reliable and quality products and services for both its internal and external customers then, it becomes necessary to identify the specific causes and correlatives of employee turnover within the organization; these issues are discussed further below.

Causes and Correlation of Employee Turnover. One of the most important components of this analysis would be to identify sources of employee dissatisfaction so that appropriate remedies can be developed and implemented; one such component relates to how well an employee believes an employer is living up to its end of the employment agreement, which can assume a wide variety of manifestations depending on the enterprise and type of work involved, but virtually every position has some type of psychological contract element to it that provides both the company and the employee with a framework in which to communicate and respond (Bamber & Iyer, 2002). Therefore, to the extent that these psychological contracts are viewed as being violated by a company's management is likely the extent to which that company will experience increased incidences of employee turnover.

The types of guarantees made to employees as codified in an employee contract can be explicitly or implicitly communicated in a number of ways such as written documents, oral discussions, or organizational practices and procedures; as a result of the traditional nature of this relationship between employee and employer, Kikul suggests that people will actively seek out this information in order to know what is expected of them and as a way to represent this relationship. "For example, employees may perceive that their firm has promised them fair pay, attractive benefits, opportunities for growth, advancement, a supportive work environment, and sufficient tools and resources," Kikul notes, but if companies fail to deliver on their perceived end of the contract, employees may respond by seeking employment elsewhere (p. 320).

The size of the company involved does not really matter in this regard; both small and large companies are able to provide their employees with some type of job satisfaction enhancer that can make the difference between a satisfied employee and yet another empty vacancy for human resources to fill. For example, Kikul points out that larger companies can provide their employees with the opportunity for career development and advancement in specialized roles and jobs, while small business can offer their employees the opportunity to learn a broad set of skills and abilities across multiple functions and areas of the organization.

Employers will breach this written or unwritten agreement at their peril, though. Whether intentional or not, even perceived violations of these contracts between employee and employer can have disastrous consequences for a company since it can result if wholesale resignations, lawsuits and negative public relations. According to Kikul, "When breaches or violations occur within an employee's psychological contract, it can be experienced as a unique form of distributive injustice, as a variety of unfulfilled promises can deprive the employee of desired outcomes and benefits" (p. 321). From an equity theory perspective, workers attempt to identify an equitable balance between what they receive from the organization and their own contributions; however, when employees perceive that their employer has failed to live up to their end of a promised incentive or benefit, they may likewise withhold their own contributions (Kikul, 2001).

This problem, in particular, is perhaps more serious than many employers might believe; past studies have determined that around 55% of employees believed their psychological contract had been breached or violated by their organization during the past two years. These studies examined the impact that a psychological contract breach can have on the employment relationship and found that employee trust and satisfaction were negatively related to violations of the psychological contract; furthermore, such violations were positively related to the actual incidence of turnover being experienced. These also studies determined that there was a moderate relationship between specific breaches and trust, civic virtue, performance, and intentions to remain with the organization.

According to Kikul, pay that was based on current level of performance, training, career development, and responsibility were associated with employee trust; likewise, high pay, training, and development were all related to extra-role behavior; and, promotion and responsibility were associated with actual turnover, while development was related to job performance. Other studies have reported employees having… READ MORE

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