Human Resource Management - How To Retain The Best Employees

Introduction

Employee turnover has been a subject of interest to scholars of organizational theory and development for some time. Employee turnover affects every type of business from manufacturing to service and is costly and disruptive to productivity. This phenomenon, according to Flaherty (2005), is a serious issue for the business community as well as for the general community of society. At exit interviews, employees cited being displeased with management as the cause for leaving the organization. Eisenberger, Cummings, Armeli & Lynch (1997) stated that employees in the fast food industry leave because of low salary, a desire to improve one's quality of life, and poor management.

When an employee voluntarily terminates his or her employment, exorbitant expenses occur. Brockner (2006) stated that the organization must bear the responsibility for both direct and indirect expenses associated with the costs of turnover. Exit interviews, recruitment, applicant testing and interviewing, along with placement of the worker are some examples of direct costs associated with employee turnover. Berta, Hayes & Barrier (2004) stated further that those indirect costs of employee turnover, such as lost knowledge, productivity, experience, employee morale, customers and profits, have serious implications for the success of most organizations. Additional indirect costs include the responsibility to train, monitor, and measure the performance of new employees.

Discussion

Employee retention is a process in which the employees are encouraged to remain with the organization for the maximum period of time or until the completion of the defined project. Employee retention is beneficial for the organization as well as the employee (Buckingham 2000).

            According to documents present in literatures around the world, we see that there are six key concepts behind employee retention and in turn, employee satisfaction. These are: recruiting, communications, training, job satisfaction, pay, and benefits.

Capko (2007) suggested that employees resign because of an unhappy relationship with a supervisor or manager. During exit interviews, employees discussed what their managers did to contribute to their decision to leave the job. It was evident that employees did not leave companies; employees left bad bosses. Breukelen, Van & Steensma (2004) stated that upper management could improve a supervisor's relationship with his or subordinates by emphasizing the need for training and development of supervisors, especially new supervisors.

In general, the departure of qualified staff represents significant costs to the company. More specifically, the cost of replacing an employee ranges from 93% to 200% of annual salary of the employee, the nature of its powers and responsibilities. Companies working in a highly competitive economic environment can not ignore the impact of these expenditures on organizational effectiveness. Staff turnover is likely to hinder the company in its economic growth and make it lose its competitive advantage.

Exit interviews have shown that the retention problem rests with management; however, many employers have not responded to the crisis. A survey conducted in 32 countries asked 9,700 employees to respond to what they expected of their employer. The employees responded by identifying care, concern, and fair treatment ...