2. Literature Review The rate ofturnover varies from country to country and company to company.
The highestlevel of turnover normally found in private sectors than public sectors. Thelevels of turnover also vary from region to region. The maximum rates are foundwhere unemployment rate is lower and where it is easy for people to get substituteemployment. Now and then employee turnover benefits organizations absolutely.This might occur when a poor performer is replace by a more expert employee andwhen a retire employee replaced by a younger one. Employee turnover may also beexpensive as it requires different cost to take account such as administrativecosts of recruitment, cost of covering during the period in which there is avacancy, training cost for the new employee etc. Turnover occurs for manydifferent reasons.
Sometimes new job attract employees and pull them to departthe old one. In opposite employee also push to leave job due to the displeasurein their present workplace or by domestic circumstances when someonereallocates with their other half or partner. A poor relationship with the organizationcan be an important reason for the employees to leave their jobs. It is comparativelyunusual for people to leave jobs in which they are happy even offered by highersalary elsewhere. A need of correct training and development isalso major cause for voluntary turnover. Employees have a first choice forsecurity of their jobs. Turnover could be minimizing through consideringdifferent preventive measures by the management. These may include providingtraining to the line managers for an efficient supervision before appointing orimprovement them, providing security of jobs with good working environment etc.
There may be an offer for re-training the accessible managers who have a poorrecord at keeping their staff happily. Supervise managers could be responsiblefor employee turnover in their teams. Maximization of opportunities forindividual employees such as accommodation individual preferences on workinghours, regular appraisals, providing as much job security as possible can helpto reduce turnover.
Employee turnover can be tremendously devastating for anycompany. It makes the employers hard to maintain a steady and successfuloperation. Management should have their rating on employee turnover and dimensionhow this affects organizations performance. Losing a solitary key worker candecrease the likelihood of a project’s success and can reduce investors self-assurancein the firm. Many academic scholars pointed out turnover as the correlationbetween job displeasure and decreased organizational commitment.
The strongerthe feeling of discontent in one’s job, the more likely one is to begin a huntfor an alternative job. This perspective on turnover highlights the role of emotionand attitudes as previous circumstances of behavior. When an employee leaves anorganization, it can have a assortment of effects that not only impact on theorganization, but also the individual employee and the society. Turnover is a guideof organizational effectiveness and as such it authorizes attention and someunderstanding of itself.
In addition, however information on turnover can helpthe planning, prediction and control of resources. In spite of an enormousliterature on turnover in organizations, there is as yet no universallyaccepted account or framework for why people choose to leave. The observablefact of turnover is of interest to organizations and theorists because it issignificant, potentially costly and relatively clear cut. It also describes theend result of a decision process. The goal of ‘effective management ofturnover’ dictate that a high level of complexity, and thereby particularity,needs to be achieved by organizations in order to selectively influence theturnover process. However, the phenomenon has not so far proved amenable toprediction.
WorldLinkCommunication Private Limited has been chosen for the study. The researcher hastaken only four years in this subject from the company. The descriptionsubmitted by the researcher has been done consulted and their relevantfindings, issues, arguments, logic and suggestion have been studied. Likewisevarious famous books, journals, publication a paper has been reviewed for thispurpose.2.1 Human Resource Management Defined Before going to discuss issue related to theissue let, define the topic. Human resource management is defined as astrategic and coherent approach to the management of an organization has mostvalued assets the people working there who individually and collectivelycontribute to the achievement of its objectives (Armstrong, 2006).
HRM is concerned with the human beings in anorganization. “The management of man” is a very important and challenging jobbecause of the dynamic nature of the people. No two people are similar inmental ability, tacticians, sentiment, and behaviors; they differ widely alsoas a group and are subject to many varied influence.
People are open, they feel,think and act therefore they cannot be operated like a machine or shifted and changedlike template in a room layout. They therefore need a thoughtful handing bymanagement personnel. HRM is the process of managing people of an organizationwith a human approach. Human resources approach to manpower enables the managerto view the people as an important resource. It is the approach through whichorganization can make use of the manpower not only for the benefits of theorganization but for the growth, development and self satisfaction of theconcerned people.
Thus, HRM is a system that focuses on human resourcesdevelopment on one hand and effective management of people on the other hand sothat people will enjoy human self-esteem in their employment. HRM is involvedin providing human dignity to the employees taking into account their capacity,potentially, talents, accomplishment, motivation, skill, commitment, greatabilities, and so on. So, that their personalities are recognized as precioushuman beings.
If an organization can belief, depend and draw from their bankaccount on the strength of their capital assets, they can trust, depend anddraw more on their committed, talented, enthusiastic and capable people. Thisis what the HRM is involved in every business, managerial action orintroduction. John Storey (1989) cited in Armstrong, 2006),believes that Human resource management can be regarded as a ‘set ofinterrelated policies with an ideological and philosophical underpinning’. Hesuggests four aspects that constitute the meaningful version of human resourcemanagement: · A particular constellation of beliefs andassumptions; · A strategic thrust informing decisions aboutpeople management; · The central involvement of line managers; · Reliance upon a set of ‘levers’ to shape theemployment relationship 2.1.1The matching model of Human Resource Management Thefirst explicit statements of the HRM concept were ended by the Michigan School(Fombrun et al 1984 cited inArmstrong, 2006).
They held that Human Resource systems and the organizationstructure should be managed in a way that is similar with organizationalstrategy (hence the name ‘matching model’). They further explained that thereis a human resource cycle which consists of four generic processes or functionsthat are performed in all organizations. These are: · Selection: matching available human resources to jobs; · Appraisal (performance management); · Rewards : ‘the reward system is one of the most under-utilized and mishandledmanagerial tools for driving organizational performance’; it must reward shortas well as long term achievements, bearing in mind that ‘business must performin the present to succeed in the future’;· Development: developing high-quality employees. 2.
2 TheRecruitment and Selection Process When HRplanning indicates the need for additional labor, organizations have a numberof choices to make. This may be the first step in a full-scale recruitment andselection process, but sometimes hiring additional employees is not the bestmethod to obtain additional labor. It may be appropriate for an organization toconsider alternatives to recruiting, such as outsourcing or contingent labor,instead of hiring regular employees. If this is a temporary fluctuation in workvolume, the simplest solution may be part-time labor or overtime by existingemployees. The costs of recruitment and selection can be staggering; hiring newemployees should occur only after careful consideration and only when theorganization anticipates a long-term need for additional labor. Estimates onthe cost to replace supervisory, technical and management employees run from 50percent to several hundred percent of employee salaries. Careful HR planningmust consider the overall growth prospects of the organization and accurateforecasting of future labor needs. Recruitment planning begins only when otheralternatives have been considered and eliminated.
Overall plan of the recruitment and selection process should be to acquire atminimum cost the number and quality of employees requisite to satisfy the humanresource needs of the company. There are three stages of recruitment andselection dealt in this chapter: 1. Defining requirements: prepare jobdescriptions and specifications; decide terms and conditions of employment; 2. Attracting candidates: reviewand evaluate option sources of applicants, inside and outside of the company,advertising, using agency and consultant; 3. Selecting candidates: sifting application,interview, testing, assessing candidates, assessment centers, offering service,obtain references; preparing contracts of employment.
2.3The employees Turnover: Definition and concepts Turnoverrefers to retirement, resignation and redundancy. Employee turnover isconsidered to be one of the persisting problems in organizations. The turnover means that anotherorganization may gain a new knowledge employee who can become its competitiveadvantage.
The loss of knowledge thus is a threat for the former organization,which increases the significance of knowledge continuity. Internal factors suchas facilities in the organization and external factors (attractive factors suchas salary and other benefit packages in external market) should be taken inaccount to reduce the turnover rate. More specifically, the following pointsstated as causes of turnover. Ineffective communication about job expectations,inability to listen well and ask the right questions respectfully, wageproblems, under-utilization of skills, adverse working conditions, and lack ofopportunity for advancement through seniority, lack of well-organized trainingprogram (Pertrillose, 1998). Employees’turnover is a much studied phenomenon Shaw et al. (1998).
But there is nostandard reason why people leave organization. Employee turnover is therotation of workers around the labour market; between firms, jobs andoccupations; and between the states of employment and unemployment Abassi etal. (2000). The term “turnover” is defined by Price (1977) as: the ratio of thenumber of organizational members who have left during the period beingconsidered divided by the average number of people in that organization duringthe period. Frequently, managers refer to turnover as the entire processassociated with filling a vacancy: Each time a position is vacated, eithervoluntarily or involuntarily, a new employee must be hired and trained. Thisreplacement cycle is known as turnover Woods (1995). This term is also oftenutilized in efforts to measure relationships of employees in an organization asthey leave, regardless of reason.
“Unfolding model” of voluntary turnoverrepresents a divergence from traditional thinking (Hom and Griffeth, 1995) byfocusing more on the decisional aspect of employee turnover, in other words,showing instances of voluntary turnover as decisions to quit. Indeed, the modelis based on a theory of decision making, image theory Beach, (1990). The imagetheory describes the process of how individuals process information duringdecision making. The underlying premise of the model is that people leaveorganizations after they have analyzed the reasons for quitting. Beach (1990)argues that individuals seldom have the cognitive resources to systematicallyevaluate all incoming information, so individuals instead of simply and quicklycompare incoming information to more heuristic-type decision makingalternatives.Corporate culture and workers involvement inthe decision making process. The labor market gets smaller, companies becomemore competitive in their compensation structure making corporate culture moreimportant than ever.
Employees are less loyal to their organizations, they wantmore involvement in decision making and they see in their work a realization ofthemselves and this is a fundamental reason for their leave in case their jobdoesn’t satisfy them (Surline, 1999). Employeeturnover is the replacement cycle each time a position is vacated eithervoluntarily or involuntarily (Woods, 2006). The term “turnover” is defined byPrice (1977) as: the ratio of the number of organizational members who haveleft during the period being considered divided by the average number of peoplein that organization during the period. Voluntary turnover is when an employeechooses to quit their job.
When the company ends the working relationshipthrough either layoff or discharge, this is an involuntary turnover. Not allemployee turnovers can be controlled by the company but the rate of voluntaryturnover can and should be a priority for managers. Griffethand Hom (2001) offer to focus on the part of turnover that is of real concernto an organization by differentiating between voluntary and involuntaryturnover. In other words, did the employee choose to leave the job or was it adecision made by the employer? Then, voluntary resignations are furtherdistinguished between functional (exit of substandard performers) anddysfunctional (exit of effective performers). Finally, unavoidable resignationsover which the employer has no influence are also left aside (family move,childbirth, serious illness or death). This leaves the group of avoidableresignations as the key focus. It also implies that to allow an informeddecision, turnover rates have to be calculated down to department level, toidentify which areas are most problematic.
Based on this issues employeeturnover may be classified into five categories: A. Functional Vs DysfunctionalTurnover: Functionalturnover is defined as “A turnover in which poor performer leaves”. Functional turnover occurswhen people departure the firm are underperformers. This is common in large consult,accounting and law firms that employ an “up or out” viewpoint.
Employees in such a company must build up and get better to move up in theranks. Those who are unable to development are allowed to go. Consequently,these firms have high turnover, but the employees who remain are the best and brilliant. Dysfunctional turnover is defined as “A turnover inwhich good performer leaves”.
Dysfunctional turnover is the accurate opposite offunctional turnover, as the best employees leave. This can happen for a varietyof reasons, but a common cause is low possible to advance. If, for example, acompany fills its management position with external candidate and does notoffer them to internal employees, employees are likely to seek external opportunityfor progression.
B. Avoidable Vs UnavoidableTurnover: A turnover that happens in avoidablecircumstances is called ‘Avoidable Turnover’, where as “A turnover that happensin unavoidable circumstances is called ‘Unavoidable Turnover’