THE RELATIONSHIP BETWEEN EMPLOYEE RETENTION STRATEGIES AND EMPLOYEE TURNOVER

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Employee retention is seen as a phenomenon which is increasingly getting the attention of many organizations (Hong et al., 2012) as it leads to a serious problem when high performing employees leave the organization. Organizations faced with adverse outcomes when good talented workers opt to leave and these include decreased efficiency and productivity, increased costs and threat to the long-term survival and sustainability of the organization (Beach, Brereton, & Cliff, 2003). As such, talent retention has become more and more crucial for the management (Samuel & Chipunza, 2009). In this regard, Slattery and Selvarajan (2005) explained that human resource practices are capable of reducing employee turnover, where intention to leave among employees were found to be minimized when employees perceive that the organizations are providing positive human resource practices (e.g., better pay and benefits, job freedom, and job security) (Stewart & Brown, 2009). Retaining employees is a critical issue and if handled properly and effectively, it would add value and competitiveness to any organization. Employees are considered as to be the top assets of the organization and as such, it is pertinent for organizations to exert efforts to retain existing talents to prevent new recruitment. To this end, increasing employee retention has become a trend in the business organizations in countries, including Jordan. Employees with outstanding skills and talents can significantly contribute to the organization’s competitive advantage. Hence, organizations should retain such talents particularly in this challenging and unpredictable environment where change is inevitable (Samuel & Chipunza, 2009). Employee retention is beneficial for the organization and the employees at the same time. Employees today have a lot of good opportunities in hand. The moment they feel unhappy or dissatisfy with the existing employer or the job they are holding; they will always hop to another employment. It is solely the accountability of the employer to retain their best employees. Failure of doing so may lead to the loss of talented employees. Good employers should realize what to be done to attract and retain their employees. Employees are the most vital resources of any organization. If employees are not able to use their full potential and not heard and valued, they would leave because of stress and frustration (Kakar, Raziq, & Khan (2015). Even when they remain with the organization, the feelings of frustration and dissatisfaction would lead to negative consequences that could affect performance and productivity. When these negative feelings get too overwhelmed, the employees would leave. Nonetheless, if employees get a sense of achievement and belongingness from a healthy working environment, the company would have satisfied and dependable employees contributing to the growth of the company.

Employee retention on the other hand refers to the percentage of employees remaining in the organization (Phillips and Connell, 2003). The top priority for any organization should be the attraction and retention of key employees. Even the most proficient companies can be seriously damaged because of failing to implement good employee retention strategies. A considerable investment in both time and money is required in order to find the right people. The key for all organization is to make rational decisions about retention strategies and prioritize employee’s interests (Putting People First: Employee Retention and Organizational Performance, 2011).

Employee retention is also defined as a process in which there is total encouragement to the employees to remain with the organization for a long period of time (Sandhya and Kumar, 2011). In order to increase employee’s performance, it is critical for organizations to ensure that they create and adopt employee retention strategies. A high turnover rate is a serious problem that most organizations are now facing and this is due to reasons such as poor working conditions, no career advancements, job dissatisfaction as well as lack of a decent salary package (Ivancevich, 2010). This in turn leads to low employee performance and as a result organizations have to come up with practices and policies on employee retention. This will also ensure that employees are more willing to stay in the organization for a longer time as well as having a positive impact on their performance.

According to Sandhya and Kumar (2011), retention of employees is not only important because of the costs incurred to recruit and train or just to reduce turnover. It is important because it helps organization to retain their most talented employees from being poached. When an employee leaves an organization, they take with them information that is very valuable about the organization, the current projects, customers as well as past history about the competitors to their new organization. Therefore, a good employer should be able to know how to attract and retain his employees. In order to accomplish an organizations goals and objectives, the retention of employees has proven to be a very significant factor. For any organization to be able to gain the desired competitive advantage, they need to be able to retain their employees first. With the many changes today in global economics, trade agreements as well as technology, employers need to be very careful because it is such issues that affect the employer/employee relationship (Nyamekye, 2012).

Turnover of skillful employees is a major concern of managers and administrators in today’s business world due to the costs incurred to replace and lost productivity of them. Employees leave their jobs due to many reasons, but research has shown the following as primary reasons; conflict or dislike of boss or supervisor, not fitting into the organizational culture, or being attracted to another employer who meets the expectations of employees (Phillips and Connell, 2003).. Therefore, reducing employee turnover by means of effective retention practices is the most important area of interest to any organization with highly skilled labor force.

According to Gberevbie (2010), employee retention strategies refers to the plans, means or set of decision making behavior that is set in place by organizations in order to effectively retain their competitive workforce to improve employee performance. Most researchers have found that employees will remain and work in order to ensure the achievement of organization goals is successful only when there is adoption and implementation of appropriate employee retention strategies. This study will focus on the relationship between employee retention strategies and employee turnover, A case study of Breweries, Ota.

1.2 STATEMENT OF THE PROBLEM

Every business desires to increase the productivity and lessen turnover, thereby leading to be profitable. Employee turnover supervision is an obligation to attain organizational goals effectively (Kakar, Raziq, & Khan, 2015).

However, high turnover would bring devastation to the business in the form of both direct and indirect costs. Direct costs are referred to costs such as expenses on recruitment, selection, orientation, workshop and training for the fresh employees (Gberevbie, 2010). Indirect costs are indicated to spending on education, condensed self-confidence, stress on the existing worker and the collapse of social capital. Moreover, high employee turnover will put at risk on reaching the organizational goal. To combat the challenges in the cutthroat business world, management has considered employee turnover as a major concern and initiated some measures to retain them in the organizations (Nyamekye, 2012).

However, due to the less attention, top management does not concentrate on this major issue. They are perhaps little capable of realizing the situations about how employee turnover has a detrimental effect on the productivity of the organization. Therefore, it is more significant to conduct the research on employee turnover to help business organizations by identifying their problems, analyzing the information and recommending possible solutions in recent time.

The strategies that an organization employs to retain their staff have great impact on an employee’s performance (Gberevbie, 2010). It is critical for any successful organization to understand the employees’ perspectives and measure their retention factors. A study conducted by Earle (2014), mentions that organizations should provide a good environment where people enjoy being, where they feel energized and valued and they will definitely want to stay and that negative associations are often reinforced when employees feel like they are always dragging themselves to an unpleasant environment on a daily basis.

1.3 OBJECTIVES OF THE STUDY

The general objective of this study is to examine the relationship between employee retention strategies and employee turnover, a case study of Nigerian Breweries, Ota. The specific objectives include the following:

1. To find out the effect of flexible work environment strategies on employee performance.

2. To determine the effect of career development strategies on employee performance

3. To ascertain the various internal and external factors causing employee turnover in Nigerian Breweries Ota.

4. To examine the retention strategies undertaken by management of Nigerian Breweries to reduce employee turnover.

5. To investigate if there is a relationship between employee retention strategies and employee turnover in Nigerian Breweries.