Research of Literature

Research of Literature

Identification of the problem

After conducting an interview based on human resource at the Body Shop, it was found that the biggest problem being faced by the company was that of employee retention. The current reduction rate in number of employees is 8%, which the company aims to bring it down to 3%.

There are many problems that need to be addressed while looking for solutions. This is because the process of hiring is not an easy one. It takes a great extent of the company's time and resources in order to select and train the employees whom it feels will be productive for the company. A significant amount of money is invested in platforms for recruitment and advertisements, in order to attract talented individuals (Lepak & Gowan, 2010).

The Cost of Turnover

The cost of turnover is significant and extends to add to the company's expenses. The company spends an average of 50000$ to 70000$ on each new employee, as the mentioned costs account for hiring and initial training for employees (Lepak & Gowan, 2010). The company loses out on productivity mainly because it takes approximately 6 months to train a new employee to start from where the previous employee had left.

Loss of Company Knowledge

The loss incurred by the company is not just in terms of money. When the employee leaves, they also take away the precious knowledge about product they have gained and at times are even able to attract customers to competitors. The process of filling the position and investment of time and money in order to train the new employee to be productive takes at least 3 months (Baker, 2007).

Reputation of the company

The company's reputation gets affected as the previous employees have built strong customer relationships and when they leave, it leaves a negative impact on the customers (Phillips & Connell, 2003). The tasks of the employees who are responsible for interaction with clients come to a halt till a new manager is brought to fill that space. During this process, the customers lose faith in the company and customer loyalty levels are compromised (Thomas & Applegate, 2010).

De-motivation for current employees

The high turnover rates causes de-motivation among the existing employees of the company. When an employee leaves, the entire productivity cycle gets disturbed and its effects are seen on the whole company. The employees are afraid that they too, will be laid off one day and it discourages them instead of motivating them (Phillips & Connell, 2003).

What other companies are doing

There are different measures that companies take in order to retain their employees. These measures include:

Offering competitive pay to employees

Offering employees the pay scale which they deserve is very important in order to retain them. If the workers feel that they are not getting the pay according to the amount of work they do, then they will consider leaving the company. Companies make sure they give their employees the pay which they deserve (Phillips & Connell, ...