Employee Turnover

Introduction

As a leadership and organizational behavior student, I believe that the overall culture of an organization has a lot to do with employee satisfaction and turnover. Although achieving zero percent employee turn-over is unrealistic, high turnover can cause major drawbacks to an organization. ABC Company is an investment company that deals with a number of mutual funds that are registered with the New York Stock Exchange (NYSE). I am the leadership and organizational behavior consultant of the firm. The human resources manager asked me to do a research to find out why there is a very high turnover in the fund department of the organization.

This paper discusses research on the subject of employee turnover in an investment company, specifically the fund department. The paper provides information on the current status of employees in this department and why there seems to have such a high employee turnover compared to other departments of the organization. It also suggests the changes that the management could use to reduce this turnover from several sources of information. If strongly considered, these suggestions will help save the company a lot of money through employee retention.

Problem Statement

The Problem - Can Employees be made happy?

As I observed and analyzed the employees of the fund department, I realized that the employees have a couple of issues that are causing the high turnover. These include but not limited to; compensation, training, motivation and job satisfaction. It seemed that there is some sort of communication breakdown, between the employees and the managers.

Literature Review

According to a research done by the Harvard Business School, replacing an employee is likely to cost twice or more the employee’s salary. The U.S. Department of labor also estimates that it cost at a third of a person’s salary to replace them. This means that assuming a $6 an hour job, it would cost up to $ 3,600 for every person that leaves an organization. Losing a good employee hurts an organization both emotionally and financially. An organization not only looses the employee’s experience and knowledge, but also employee morale and customer satisfaction. This in turn can cause major damage to the organization (Mel Kleiman, pg. 17, 2 pgs).

Willis Mushrush, a business and industry Specialist, at the University of Missouri wrote an article on how to reduce employee turnover. In his article, Willis says that; “turnover costs for many organizations are very high and can significantly affect the financial performance of an organization”. Not only are direct costs such as recruitment, selection, and training of new peopling a major expense, but also the indirect cost. Examples of indirect costs are time, increased workloads, overtime expenses for coworkers, and reduced productivity associated with low employee morale. Willis adds that estimated costs do vary from organization to organization, and may be as low as a few hundred dollars to as high as four times the annual salary of an employee.

According to Rhonda Abrams, pg. C.2, in her article on creative ways to build loyalty, employees are people, too. Although this may seem obvious, some employers do not treat their employees like they should. They treat them like disposable objects, that are easy to get, discard and easy to replace, Rhonda says. Rhonda continues to say that, although sometimes a manger has to fire an employee that is not meeting their work requirements, employees are not disposable. Of course, there other reasons to dispose an employee, for example when the business no longer can sustain the employee. Rhonda adds that if an organization has a lot of employee turnover, it is wasting its’ valuable time and resources.

Tom Shehan, the president of ADP TotalSource in the Detroit regional chamber, recommends that employers should try and understand why employees look elsewhere and leave an organization. Tom sights that according to a Society for Human Resource Management survey, there are three top reasons why employees search for new positions:

• Want better compensation and benefits (53 percent).

• Are dissatisfied with their potential career development (35 percent).

• Are ready for new experiences (32 percent).

While salaries and career advancement are important, Tom adds that, many employees will choose to leave because they do not believe that their work is appreciated. According to surveys, Tom says that more than 40 percent of people leave their jobs because they do not believe that their companies value their contributions. Tom argues that; “a lack of appreciation, a lack of teamwork and the perception that business owners don’t care about their employees are consistently the highest-rated reasons for low job satisfaction. This often stems from poor communication on the part of employees, their managers or both”.

Val J. Arnold (pg. d.21), outlines seven key tips on how a manger and other leaders can tell if employees are unhappy. "Unhappy workers exhibit telltale signs that disclose their feelings," Val J. Arnold, senior vice president of Executive Services for Personnel Decisions, International, says; "by knowing the signs, managers can focus on changing the employee's attitude or searching for a new employee." The following are the tips that Arnold gives for spotting an unhappy employee:

1. Won't go the extra mile. According to Arnold, content employees will normally volunteer to stay late to work on projects or pick up additional tasks. They are excited about taking on new challenges that will expand their work skills. On the other hand, unhappy workers do not put extra effort.

2. Complain, complain, and complain. Arnold says that unhappy employees will find something to complain about, for example their boss, salary, or company policies, rather than focus on the positive aspects of the job. He continues to say that, while some of the complaints may be valid, unhappy employees are more likely to focus on problems, while happy employees will work with colleagues to find solutions.

3. No comment. Whereas some unhappy employees complain, some withdraw or others become apathetic about what happens at work, Arnold says. In meetings they rarely have opinions, and may have a "who cares?" attitude.

4. Watching the clock. Unhappy employees also tend to spend as little time at work as possible,