Investigation OF Factors Leading To High Turnover In HV Group
Abstract
Employee turnover is a challenging issue in any organization as it induces insecurity for the organization and its human resource. Several kinds of research in the past have proven that employee turnover is among one the most difficult and expensive challenges that organizations face in wake of workforce related challenges. The key purpose of this research is to investigate the reasons for the high turnover rate being experienced by HV Group, which is negatively affecting organizational performance in the form of a general low morale found among company employees.
High turnover rates in the company are highly resulting in an unmotivated workforce leading to effects on employee performance, leading to further issues such as inefficiency in meeting customer deadlines and hurting overall organizational goodwill in the market.
The main reason of the research is to analyze the factors that are leading to a high turnover rate at HV Group in an attempt to counter them and suggest possible actions that can reverse the negative consequences of the turnover rate on the organization and its overall performance.
The research aims to investigate the issue by means of following a mixed research approach using previous literature and findings and pairing it with the results collected from primary research in the form of questionnaires from both employee and management perspectives. This will help in highlighting issues that underlie the prevailing high turnover rate at HV Group. The research findings can aid in suggesting possible remedies to the prevalent issue at the company.
1.0 – Introduction
In the given economic struggle that almost every organization is facing currently, small and big businesses struggle to remain competitive and muscle their way ahead of competitors in their respective industries. In this wake, organizations are often also forced to downsize their human resources to remain afloat in the sea of deadly competition. One area that has been hit real bad is owes to these practices and economic sluggishness the area of employee turnover and retention.
1.1 – HV Group
HV Group was formed in 2001 and currently has over 2,500 employees working in its various industrial sectors, retail and distribution, international, home equipment, Fast moving Consumer Goods, retail franchises and multimedia businesses. Operating mainly in Mauritius and Madagascar, HV Group also deals in real estate sector, thus carrying out functions over various business sectors simultaneously (HV Group, 2020).
HV Group in the past few years has experienced a significant increase in the employee turnover rate across the organization. This situation has lately began to show its hazardous effects not only on the performance of the organization, but also on the organization’s workforce where almost everyone seems to be affected by it. While some employees may attempt to work efficiently in their own capacities, the general unmotivated behavior in the organization seems to affect their performance as well.
The subject of high turnover rate, its reasons and consequences have been largely and elaborately discussed in past literature however since this research is based specifically on HV Group, additional research on the case is required in order to collect direct feedback from the affected to explore which factors and aspects, e.g., environmental, managerial, organizational culture, etc, are leading to the above-mentioned problem in the organization. Previous literature offers ample data on the problem, its issues, consequences, etc, along with recommending solutions to the problems as well. In order to suggest remedial steps to HV Group to counter its current high turnover issues, however, a supplementary assessment of the situation is required so that the main cause of the issue be highlighted and specific directed actions can be suggested to counter the issue.
2.0 – Statement Of Problem
HV Group for the past few years has been facing a continually escalating issue of high employee turnover which directly affects the motivation level and the employees’ morale. An increase in absenteeism has been experienced, leading to further issues such as inefficiency in meeting customer deadlines, putting enhanced pressure on the organization’s management. Further on the overall situation the organization faces in the wake of high turnover is affecting the morale of the employees resulting in reduced performance efficiency leading to a higher number of customer complaints and heightened dissatisfaction among customers.
3.0 – Purpose Of Study
The key purpose of the study is to investigate the causes of high employee turnover rate at HV Group. In this course, the research will also explore how high turnover is negatively affecting the organization. The research will also aim to explore which areas need to be focused on initially and in the long term in order to counter the high turnover issue, before suggesting and recommending actions to be taken in order to promote retention and to counter high turnover in the organization. The research will also briefly shed light on how the organization will benefit from the recommended actions and can reverse the negative effect of high turnover through retention techniques.
4.0 – Theoretical Framework
Hidden
5.0 – Research Questions
The research study aims to answer the following research questions
Q1 – What Are The Reasons Of High Turnover Rate At HV Group In The Past few Years?
Q2 – What Are The Factors Leading To High Turnover Rate At HV Group?
Q3 – How Is High Turnover Rate Affecting Employee Performance And Morale?
Q4 –What Steps Should Be Taken to Promote Employee Retention and Counter High Turnover In The Organization?
6.0 – Importance Of Study
The findings of the research will aid the management of HV Group by facilitating their decision making process in form of firstly highlighting the core issues that are leading to the problem in the organization and secondly through recommending remedial steps and actions to be taken in order to counter the problem. Through highlighting the core issues leading to the problem, problem areas will be highlighted for the management to specifically focus on. Further on through focusing on the issue and countering its affects, the organization can induce a more customer centric culture and also escape the high costs incurred owed to high turnover in the organization.
7.0 – Literature Review
Employee turnover in past literature has been deemed to be the cause of substantial loss for any organization as it leads to the depletion of not only capital of an organization but also performance of human capital in an organization (Shaw, 2011). Shaw (2011) further reveals in the study that high turnover has a negative linear relationship with several organizational performance indicators such as productivity of an organization, profits, employee performance, customer satisfaction and value addition of goods or services. Other researchers argued that a small amount of turnover might at times benefit an organization (Glebbeck&Bax, 2004); however, almost all agree that a continually high turnover rate in an organization will have negative consequences on the organization.
7.1 – High Turnover And Organizational Cost Impact
Porter (2011) stated that employee turnover in terms of cost substantially affects organizations as it costs around 50% to 100% of an employee’s wage at times in terms of downtime, recruitment, interviewing, training, orientation, and setting up time. Entry level positions hiring cost organizations a lot, thus heavily weighing down on costs incurred.
7.2 – High Turnover And Organizational Performance
Hausknecht & Holwerda (2013) in their study define that turnover triggers events in an organization in the form of a complex chain. One event leads to another, ultimately resulting in a massive disruption in the smooth operations of organizations starting from the inner employee motivation loss to dissatisfied customers. What comes in between may differ for every organization; however, high turnover rate tends to affect all major aspects of a business over time (Wynen, et.al., 2018).
Ployhart et.al. (2014) study the affects of high turnover rate on performance from the perspective of Human capital stating that high turnover results in organizational memory loss, along with loss of abilities, skills and knowledge in an organization that had been developed in an employee over time through training and experience. This loss in an organization affects the performance o employees in wake of a high turnover rate.
Siciliano (2015) defines the effects of high turnover from social capital perspective stating that a high turnover disrupts social ties and negative affects trust between employees and colleagues, thus affecting performance in an organization.
7.3 – High Turnover & Customer Service
After cost and employee performance, another significant aspect is customer service which tends to be affected by an organization’s high turnover. According to Curtis & Wright (2001), Turnover badly affects service quality. Thus customer service in organizations facing a high turnover. Compromised quality tends to affect customer satisfaction, enhancing the risk of losing vital customers and hurting long-term relationships with them (Wynen, et.al., 2018).
7.4 – High Turnover & Low Motivation and Morale
High turnover in this regard hurts employee motivation and morale in organizations where the rate of turnover is high and promotion possibilities and appraisal are very rare (Gawali, 2009). It was found in Gawali (2009) study that if organizations promote people from lower positions to higher ones in cases of turnovers, employee morale and motivation enhances as they are enthusiastic about promotions. In this case turnover, on moderate levels is positive on motivation and morale; however, in a vice versa case, high turnover results in loss of motivation and morale on the part of employees.
7.5 – Possible Causes Of Employee Turnover
Employee turnover can be the result of several different causes and factors that have been discussed in great length in previous literature. Firth et.al. (2004) define factors such as job stress, lacking commitment, and job dissatisfaction and the cause of high turnover in an organization. A high turnover in an organization is an indication of unhappy or uncomfortable employees. This unhappiness or discomfort can be owed to many reasons, some of which are discussed below
7.5.1 – Stability Of Firm
Any organization’s stability or instability affects employee satisfaction levels. A stable organization, where employees are valued and where employees can remain for a long time, induces satisfaction in employees, decreasing the turnover rate. In a vice versa case; however, high turnover rates are experienced by organizations (Ahmed, et.al., 2016).
7.5.2 – Level of Pay
Pay levels or remuneration play a significant role in the decision to stay or leave an organization. If an organization does not pay employees based on equity and market trends, thus tends employees to shift jobs and a high turnover rate is experienced. A poor pay scale is often found to be the source of job dissatisfaction. Moreover of employees perceive that a certain individual is being paid more for doing somewhat similar job than himself, job dissatisfaction occurs resulting in a high turnover ratio in nay organization (Dobbs, 2001).
7.5.3 – Managerial Factors
The instability of top management or inefficient management may also be the reason behind the high turnover rate in an organization. If the environment of an organization is friendly, stable and allows employee participation, turnover rate is low, as employees tend to stay with the organization for longer (Dess & Shaw, 2001). Zhang (2016) further argue that in organizations where the participation level of employees is higher, especially also in terms of some decision making, employees are more satisfied and thus the turnover rate is much lower. Lambert et.al. (2001) also in their study mentioned that sometimes poor selection policies and poor staffing practices by the management could also lead to a high turnover rate in an organization.
7.5.4 – General Working Environment
If the general working environment of an organization does not offer basic facilities, is considered low grade, etc., it could lead to a high turnover rate. According to Singh (2008), employees find basic facilities to regard their job and performance. These facilities may include minor things such as proper lighting, air conditioning systems, restroom facilities, and safety equipment availability if needed (in hazardous-level jobs). These minor conditions if ignored can cause discomfort in the long run and affect the decision of employees to stay in the organization.
7.5.5 – Career Opportunities
Future career opportunities play a vital role in employee satisfaction, thus leading to affecting the decision of staying or leaving the organization. Motivated employees seldom contribute to the turnover rate in an organization and the best way to motivate them is to offer them a combination of bonuses, good pay, promotion opportunities and other rewards based on employee performance (Lee, et.al.,2019).
7.5.6 – Training And Supervision
Employees also require being guided and directed at times. Jobs that offer ample guidance and conduct training programs develop satisfied and motivated employees, as they feel they are adding to their skill set and are able to conduct their responsibilities well. When employees begin to realize that their skills are falling short ad their performance level is not up to the mark, despite all their attempts, this tends to loss of motivation and creation of dissatisfaction, ultimately leading to a higher turnover rate in an organization (Ibrahim, et.al., 2013).
7.5.7 – Perceived Opportunity Of Alternative Employment
One less sought reason that results in employees leaving an organization is the opportunity they perceive to find alternative employment. Though this is one unmanageable issue; however, there is a need to determine if this may be a potential cause for high turnover in any organization (Luthans, 1995). If employees perceive getting an alternative employment opportunity to be easy, there are several other factors that may play a role in the decision of leaving an organization, e.g. Educational background, market condition, etc (Mamun & Hasan, 2017).
An example if an employee is working in an organization at a job position and suddenly some family member gets sick. If such an employee has the opportunity of finding a similar job near to his home, he may switch based on factors that are external and beyond the control of the organization. If such opportunities are available in abundance to employees, organizations need to work on retaining their employees by means of creating an exceptional working environment or offering some benefits that would make their organization a more appealing offer compared to alternative employment.
8.0 – Research Methodology
The research being conducted for HV Group to explore the reasons behind the high turnover rate will incorporate both secondary sources (previous literature) and primary sources (HV Group employees).
In order to collect first-hand information related to the problems being faced by HV Group owed to which the organization is facing a high turnover rate, the best way to explore the situation is to collect information directly from the main source, employees.
For data collection, the questionnaire will be distributed to employees of different departments and levels to understand their perceived issues and reasons behind the problem. Questionnaires will also be distributed to 10 ex-employees that have left the organization in an attempt to analyze their reasons behind leaving the organization.
The questionnaires will be distributed by hand personally to participants and information will be collected directly at a given time as well before analyses. A total of 60 candidates [10 ex-employees and 10 employees from 5 departments (10 X 5 = 50 + 10 = 60] will be selected randomly from departments after receiving their consent on participation in the research.
Hutton (2009) discuss questionnaires as being a very effective tool in terms of analyzing employees and their thought process and perceptions about various functions and operations in an organization. It is the very reason why several organizations regularly conduct annual or semiannual questionnaire surveys in their organizations to assess how employees are dealing with the changes made in organizations, their jobs and responsibilities, senior management, etc (Surji, 2013).
The structure of the questionnaire used (attached in the Appendix section) will incorporate both quantitative approaches where closed-ended questions with answers structured to be measured on the scale will be used in the first part of the questionnaire (Rehman, 2017). The second part of the questionnaire will use both closed-ended and open-ended questions to incorporate qualitative research methods as well. Open-ended questions allow a better understanding of the situation as the answers to the questions are not limited and can offer a more comprehensive view of the problem (Daniel, 2016).
8.1 – Data Collection Method
All questionnaires will be distributed to randomly selected employee samples (50) and ex-employees (10) personally through hand distribution and a week’s time will be given to return the questionnaire. For the purpose of removing the element of bias, the questionnaires will not carry the names of participants and will be collected sealed in an envelope and collected after a week at the same time to eliminate any association between the questionnaire and its filler. To ensure that the selected sample size is received after collection, questionnaires will be distributed to 60 participants in case someone does not return the questionnaire or does not fill it in properly.
In case all questionnaires are received, only 50 will be randomly chosen for analysis. The ex-employees of the HV group will be given the questionnaire via their email addresses and receive it back after a week. Their names though not disclosed to anyone; however, will be known to the researcher in order to analyze the individual situation of the employee.
All research findings will be delivered in the report with honesty and integrity, observing all levels of objectivity, confidentiality and complete respect for intellectual property as defined by Resnik (2015).
8.2 – Sample Size
The pre-decided sample size of the research is 50 employees (10 employees from 5 departments in HV Group and 10 ex-employees (contact through mobile numbers received from the employee history of the company). In order to meet the sample criteria, 60 employees were randomly selected in case anyone did not return the questionnaire or did not answer correctly. After all, questionnaires are received 50 random questionnaires will be selected for the study. The 10 ex-employees were selected randomly after receiving consent for their participation in the research.
9.0 – Ethical Considerations
All employees participating in the research will be asked for their consent to participate in the research before sending them the questionnaire. Identities, positions and departments of questionnaires received will not, in any case, be revealed to anyone, as the information received will be used purely for research purposes only.
10.0 – Conclusion
The research is expected to offer HV Group reasons based on which the organization has been facing a high turnover rate and based on the findings and recommendations of the report, the organization can take due actions. The research is an attempt to highlight possible factors and causes of high turnover in the organization, only after which remedial suggestions can be made.
The findings of the report will be based on analyses collected from both secondary and primary sources and will aim to offer possible solutions for the organization by highlighting factors that may or may not be controllable by the organization.
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