Employee Turnover Ratio

The average number of employees that an organization replaces against the total number of employees working within that organization for a specific period defines the employee turnover ratio. Therefore, employee turnover ratio is defined as “the rotation of workers around the labour market; between firms, jobs and occupations; and between the states of employment and unemployment” (Abassi & Hollman, 2000).

Employee turnover happens in organizations despite the cost incurred in employee training, development, selection, and recruitment. On the other hand, lost productivity among other factors provides the baseline and rationale to determine the reasons for employees exit from Culpepper and Associates Inc., a business organization that the current study focuses on determine underlying solutions to the problem (Joinson, 2000).

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Theoretical assumptions and concrete findings on employee turnover from Culpepper and Associates Inc., shows job related issues as one of the causes of employee turnover. According to Abassi and Hollman (2000), other factors include job related issues.

These include include stress, lack of commitment by both the employer and the employee, poor compensation schemes offered by the employer, poor job selection procedures and criteria, lack of motivation, employee dissatisfaction, salary issues, organizational factors such as poor communication within the organization, and environmental factors such as better employment opportunities.

According to Joinson (2000), Culpepper and Associates Inc., has experienced employee turnover, which has resulted in a number of negative cost impacts on the company.

These costs include employee replacement costs, which includes the cost of searching for an employee in the job market, employee retention costs, lost sales and business costs, employee engagement and retention costs, customer retention and satisfaction costs for Culpepper and Associates Inc. These can be categorized into direct business costs. However, a number of strategies have been proposed as employee retention measures.

On the other hand, Culpepper and Associates Inc, has suffered a downward trend in organizational performance in terms of customer satisfaction, has lowered operating performance, higher costs of doing business, and adverse effects on the tasks specialized employees perform within the organization.

Other performance related effects include disruptions of business processes within and outside of the organization, which adversely affects company profits, and lack of specialized knowledge to perform specialized tasks with the risk to cause company closure and a negative image.

Among the strategic approaches for retaining employees, according to Joinson (2000) and Abassi and Hollman (2000) include formulating an organizational policy that the management should follow to implement employee retention.

Therefore, Culpepper and Associates Inc., should consider revising employee recruitment policies, evaluating employee training and induction courses, redesigning the current job design, evaluating wage payments policies and adjusting the wages competitively, and making it the responsibility of the management to establish underlying reasons for high employee turnover.

Borrowing from Abassi and Hollman (2000), the management of Culpepper and Associates Inc., should consider additional factors such as revising human management capital to enable management be more effective in investing in employees to improve the entire image of the company and its corporate performance.

Other factors include workforce optimization to improve organizational performance. These optimization factors include improving working conditions, improving organizational accountability in the business activities and in decision-making within the organization, and integrating motivational factors as illustrated in Marlow’s hierarchy of human needs (Abassi & Hollman, 2000).

Other variables to consider include discharging poorly performing employees, putting in place information detectors and triggers to provide prior information on employee tendencies and behavior, providing motivation and career development opportunities, formulating organizational policies that allow best employees to be selected and retained while avoiding poorly qualified employees.

References

Abassi, S. M.,& Hollman, K. W. (2000). Turnover: the real bottom line, Public Personnel Management, 2 (3):333-342.

Joinson, c. (2000). Article: Capturing Turnover Costs. HR Magazine. Retrieved 29 Jan, 2012 from http://www.workforcelanguageservices.com/benefits/turnover/turnover_article.html