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HIDDEN COST OF EMPLOYEE TURNOVER IN HAZARA UNIVERSITY

Hazara University was established in year 2001 initially, the University launched only five graduate study programs in 2002 with a student intake of 164 and 10 faculty members. The strength of the student has crossed the figure of 5,000 and the faculty has been increased to 3,000. The university is expanding and developing in many fields. During this short span, the University registered unprecedented progress. Hazara University is gifted both with natural as well as human potential and resources to become an ideal university and a prime seat of learning. But unfortunately the devastating earthquake had created many problems for the management as most of the buildings were damaged and declared unsafe for any use. The dynamic and the visionary Vice Chancellor, Prof. Dr. Ihsan Ali immediately started to join together the broken pieces and put the university back on its track.

Here my dissertation will help management to take appropriate steps to retain the employees and minimize the hidden cost of employee turnover in the university. As we know that the earthquake fear factor is also one of the reasons for employee turnover in this university apart from the know factor we will here find the various factors for employee turnover.

HUMAN RESOURCES MANAGEMENT

The Human Resources Management (HRM) function includes a variety of activities, and key among them is deciding what staffing needs you have and whether to use independent contractors or hire employees to fill these needs, recruiting and training the best employees, ensuring they are high performers, dealing with performance issues, and ensuring your personnel and management practices conform to various regulations. Activities also include managing your approach to employee benefits and compensation, employee records and personnel policies. Usually small businesses (for-profit or nonprofit) have to carry out these activities themselves because they can't yet afford part- or full-time help. However, they should always ensure that employees have -- and are aware of -- personnel policies which conform to current regulations. These policies are often in the form of employee manuals which all the organizations will distribute among the employees.

Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. Human Resource Management can also be performed by line managers.

Human Resource Management is the organizational function that deals with issues related to people such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training.

COMPENSATION: Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction.

HIRING OR RECRUITMENT: Hiring or Recruitment refers to the process of attracting, screening, and selecting qualified people for a job at an organization or firm.

PERFORMANCE MANAGEMENT: Performance management includes activities to ensure that goals are consistently being met in an effective and efficient manner. Performance management can focus on performance of the organization, a department, processes to build a product or service, employees.

The performance management can comprise two separate types of management. In one aspect of performance management, an analyst may view the performance of a company as a whole, and also evaluate the effectiveness of the managers and heads of companies in reaching goals. In another sense, performance management may be a system of evaluating employees to help them reach reasonable goals and thus ensure that the company performs better.

ORGANIZATION DEVELOPMENT (OD): The nature and needs of organizations are changing dramatically. Correspondingly, the profession of organization development has been changing to meet the changing needs of organizations.

“Organization Development is a body of knowledge and practice that enhances organizational performance and individual development, viewing the organization as a complex system of systems that exist within a larger system, each of which has its own attributes and degrees of alignment. OD interventions in these systems are inclusive methodologies and approaches to strategic planning, organization design, leadership development, change management, performance management, coaching, diversity, and

Work / life balance."

-- Matt Minahan, MM & Associates, Silver Spring, Maryland

SAFETY: Safety is the state of being "safe" (from French sauf), the condition of being protected against physical, social, spiritual, financial, political, emotional, occupational, psychological, educational or other types or consequences of failure, damage, error, accidents, harm or any other event which could be considered non-desirable. This can take the form of being protected from the event or from exposure to something that causes health or economical losses. It can include protection of people or of possessions.

Here I (the research scalar) request university management to put there affords to build the confidence of the employees so that all the precautionary measurers are taken if any mishap happens in future.

WELLNESS: What is the definition of wellness? More than ever before, we hear this word in the news, on billboards, in conversation and even at work. Interestingly, there is no universally-accepted definition of wellness. There is, however, a set of common characteristics seen in most thoughtful attempts at a definition of wellness. We generally see a reference to a “state of well-being,” which is vague, to say the least. Also frequently seen is a “state of acceptance or satisfaction with our present condition.”

The truth is wellness is a tough word to define. That said, we’ll leave it to Charles B. Corbin of Arizona State University who gives this definition of wellness: “Wellness is a multidimensional state of being describing the existence of positive health in an individual as exemplified by quality of life and a sense of well-being.”

Wellness is an active process of becoming aware of and making choices toward a more successful existence.

EMPLOYEE BENEFITS: Employee benefits and (especially in British English) benefits in kind (also called fringe benefits, perquisites, perqs or perks) are various non-wage compensations provided to employees in addition to their normal wages or salaries. Where an employee exchanges (cash) wages for some other form of benefit, this is generally referred to as a 'salary sacrifice' arrangement. In most countries, most kinds of employee benefits are taxable to at least some degree.

Some of these benefits are: housing (employer-provided or employer-paid), group insurance (health, dental, life etc.), disability income protection, retirement benefits, daycare, tuition reimbursement, sick leave, vacation (paid and non-paid), social security, profit sharing, funding of education, and other specialized benefits.

The purpose of the benefits is to increase the economic security of employees.

The term perqs or perks is often used colloquially to refer to those benefits of a more discretionary nature. Often, perks are given to employees who are doing notably well and/or have seniority. Common perks are take-home vehicles, hotel stays, free refreshments, leisure activities on work time (golf, etc.), stationery, allowances for lunch, and—when multiple choices exist—first choice of such things as job assignments and vacation scheduling. They may also be given first chance at job promotions when vacancies exist.

EMPLOYEE MOTIVATION: No matter the size of your company, having a team of motivated, hard-working employees is crucial to your business success. When people lose their motivation, however, their job performance suffers -- they become less productive, less creative, less of an asset to the company.

The bottom line: You pay a heavy price when employees have motivation issues.

How then to light a fire under an employee who has lost his or her motivation, whether a former hard worker whose performance has declined over the years, or a long-term problem employee who has failed to improve?

Here are 10 useful pointers on getting your employees enthused, productive, and ready to give their all:

Build a foundation. It’s important to build a solid foundation for your employees so they feel invested in the company. Tell them about the history of the business and your vision for the future. Ask them about their expectations and career goals, as well as how you can help them feel part of the team. When any new employee starts, make sure he or she receives a thorough welcome orientation.

Create a positive environment. Promote an office atmosphere that makes all employees feel worthwhile and important. Don’t play favorites with your staff. Keep office doors open and let folks know they can always approach you with questions or concerns. A happy office is a productive office.

Put people on the right path. Most employees are looking for advancement opportunities within their own company. Work with each of them to develop a career growth plan that takes into consideration both their current skills and future goals. If employees become excited about what’s down the road, they will become more engaged in their present work.

Educate the masses. Help employees improve their professional skills by providing on-the-job training or in-house career development. Allow them to attend workshops and seminars related to the industry. Encourage them to attend adult education classes paid for by the company. Employees will feel you are investing in them, and this will translate into an improved job performance.

Don’t forget the fun. Once in a while you have put work aside and do something nice for the people who work for you. Treat the office to a pizza lunch or take everyone to the movies. Reward employees with an unexpected day off or by closing the office early on a random Friday afternoon.

Acknowledge contributions. You can make a huge difference in employee morale simply by taking the time to recognize each employee’s contributions and accomplishments, large or small. Be generous with praise.

Provide incentives. Offer people incentives to perform well, either with something small like a gift certificate or something more substantial such as a performance-based bonus or salary increase. Give out “Employee of the Month” awards. Such tokens of appreciation will go far in motivating employees.

Honor your promises. Getting people to give their all requires following through on promises. If you tell an employee that he or she will be considered for a bonus if numbers improve or productivity increases, you’d better put your money where your mouth is. Failure to follow through on promises will result in a loss of trust -- not only that person’s trust, but the trust of every employee that hears the story.

Provide career coaching. Help employees reach the next level professionally by providing on-site coaching. Bring in professionals to provide one-on-one counseling, which can help people learn how to overcome personal or professional obstacles on their career paths.

Match tasks to talents. You can improve employee motivation by improving employee confidence. Assign individuals with tasks you know they will enjoy or will be particularly good at. An employee who is successful at one thing will have the self-confidence to tackle other projects with renewed energy and excitement.

COMMUNICATION: Communication is the exchange and flow of information and ideas from one person to another; it involves a sender transmitting an idea, information, or feeling to a receiver (U.S. Army, 1983). Effective communication occurs only if the receiver understands the exact information or idea that the sender intended to transmit. Many of the problems that occur in an organization are the either the direct result of people failing to communicate and/or processes, which leads to confusion and can cause good plans to fail (Mistry, Jaggers, Lodge, Alton, Mericle, Frush, Meliones, 2008.

Studying the communication process is important because you coach, coordinate, counsel, evaluate, and supervise throughout this process. It is the chain of understanding that integrates the members of an organization from top to bottom, bottom to top, and side to side.

During the transmitting of the message, two elements will be received: content and context. Content is the actual words or symbols of the message that is known as language — the spoken and written words combined into phrases that make grammatical and semantic sense. We all use and interpret the meanings of words differently, so even simple messages can be misunderstood. And many words have different meanings to confuse the issue even more.

Context is the way the message is delivered and is known as paralanguage — it is the nonverbal elements in speech such as the tone of voice, the look in the sender's eyes, body language, hand gestures, and state of emotions (anger, fear, uncertainty, confidence, etc.) that can be detected. Although paralanguage or context often cause messages to be misunderstood as we believe what we see more than what we hear; they are powerful communicators that help us to understand each other. Indeed, we often trust the accuracy of nonverbal behaviors more than verbal behaviors

ADMINISTRATION: In business, administration consists of the performance or management of business operations and thus the making or implementing of major decisions. Administration can be defined as the universal process of organizing people and resources efficiently so as to direct activities toward common goals and objectives.

TRAINING AND DEVELOPMENT (T&D): Introduction Human Resource Management (HRM) is a distinctive approach to manage people. People make a business function efficiently and yet they cause the greatest difficulties. Especially in the new information-based economy, people, not physical assets, are now critical. But people, unlike coalmines and factories, cannot be owned. Organizations therefore must create an environment that makes the best people want to stay. In this regard, Training and Development (T&D) can be the most important HRM function to treat people well and increase the competitive power for the organizations. Training refers to improving competencies needed today or very soon. In comparison, development refers to activities intended to improve competencies over a long period of time (Jackson & Schuler, 2003, p350-351).

Retention, in learning, the ability to retain facts and figures in memory

Employee retention, the ability to keep employees within an organization

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 project. Employee retention is beneficial for the organization as well as the employee.

As soon as they feel dissatisfied with the current employer or the job, they switch over to the next job. It is the responsibility of the employer to retain their best employees. If they don’t, they would be left with no good employees. A good employer should know how to attract and retain its employees. Retention involves five major things

Employee retention is most critical issue facing corporate leaders as a result of the shortage of skilled labor, economic growth and employee turnover. We will discuss all aspects of the workforce stability issue in the face of unprecedented churning in the employment market with a focus on retaining your employees and the hidden cost of employee turnover. This is one of the hottest topics for corporate leaders in all fields globally.

SURVEY REPORTS ON EMPLOYEE RETENTION AND TURNOVER COSTS ACROSS THE GLOBE.

Turnover levels vary between industries. The highest levels of turnover (16.8%) are found in private sector organizations. Successive CIPD surveys of labour turnover show that the highest levels are typically found in retailing, hotels, catering and leisure call centers and among other lower paid private sector services groups. Turnover stands at 16.4% in voluntary, community and not-for-profit organizations and the public sector has

an average turnover rate of 12.6%.  

Turnover levels also vary from region to region. The highest rates are found where unemployment is lowest and where it is unproblematic for people to secure desirable

alternative employment.

The number of employees in the UK who have been in their current job for more than

five years has increased from 20% in 2007 to 24% in 2008.

As a proportion of aggregate turnover, the percentage of people leaving organizations through redundancy increased in 2008, which is to be expected given the economic climate. In 2008 26% of employers made more than 10 people redundant, 4 percentage points higher than the 2007 figure. . Similarly, the number of organizations operating

recruitment freezes has risen from 21% in 2007 to 30% in 2008.

“A 3,000-employee organization with average salaries of $45,000 that reduces turnover by just 1% can save $1.3 million, according to the Voluntary Hospitals of America”.

KEY FACTORS LEADING TO EMPLOYEE TURNOVER.

Employee retention involves being sensitive to people's needs and demonstrating the various strategies for Keeping Good People.

Environmental

Relationship

Support

Growth

Compensation

Employee retention takes effort, energy, and resources...and the results are worth it.

BEST RETENTION STRATEGIES IMPLEMENTED ACROSS THE GLOBE.

Job previews - give prospective employees a 'realistic job preview' at the recruitment stage. Take care not to raise expectations only to dash them later. Advances in technology present employers with increasing opportunities to familiarize potential candidates with the organization before they accept a position.

Make line managers accountable - for staff turnover in their teams. Reward managers with a good record for keeping people by including the subject in appraisals. Train line managers in people management and development skills before appointing or promoting them. Offer re-training opportunities to existing managers who have a high level of turnover in their team.

Career development and progression - Maximize opportunities for individual employees to develop their skills and move on in their careers. Where promotions are not feasible, look for sideways moves that vary experience and make the work more interesting.

Consult employees - ensure wherever possible that employees have a 'voice' through consultative bodies, regular appraisals, attitude surveys and grievance systems. This will provide dissatisfied employees with a number of mechanisms to sort out problems before resigning. Where there is no opportunity to voice dissatisfaction, resigning is the only option.

Be flexible - wherever possible accommodate individual preferences on working hours and times. Where people are forced to work hours that do not suit their domestic responsibilities they will invariably be looking for another job which can offer such hours.

Avoid the development of a culture of 'presenteeism' - where people feel obliged to work longer hours than are necessary simply to impress management. Evaluation of individual commitment should be based on results achieved and not on hours put in.

Job security - provide as much job security as possible. Employees who are made to feel that their jobs are precarious may put a great deal of effort in to impress, but they are also likely to be looking for more secure employment at the same time. Security and stability are greatly valued by most employees.

Treat people fairly - never discriminate against employees. A perception of unfairness, whatever the reality when seen from a management point of view, is a major cause of voluntary resignations. While the overall level of pay is unlikely to play a major role unless it is way below the market rate, perceived unfairness in the distribution of rewards is very likely to lead to resignations.

Defend your organization - against penetration by headhunters and others seeking to poach your staff. Keep internal e-mail addresses confidential, refuse to do business with agents who have poached your staff, and enter into pacts with other employers not to poach one another's staff.

AN ANALYSIS OF TURNOVER COSTS.

Is All Turnovers Problematic?

Of course not, Poor performers, those who are not the best fit to their roles and discontented staff typically are not considered unwanted turnover. In fact, one study showed that as high as 50% of employees are disheartened that their organizations tolerate inadequate work and poor work ethics.

However, controllable turnover – the loss of desirable, talented staff remains a costly concern – often with a price tag higher than most organizational leaders may perceive.

Cost to replace just one entry level employee, Middle Manager, IT Specialist, or Engineer

Position

% of Pay in Turnover Costs

Replacement Cost

Entry Level ($8/hr)

30%

$4,992.00

Middle Manager ($45k/yr)

125%

$56,250.00

IT Specialist ($83k/yr)

200%

$166,000.00

Your total cost to replace just three entry level people - $14,976.00

Your total cost to replace just three middle managers - $168,750.00

Your total cost to replace just three IT specialists - $498,000.00

CALCULATING THE COST OF TURNOVER

There are two types of costs of involved in employee turnover: visible costs and invisible costs.

VISIBLE COSTS:

Exit costs

Recruitment costs

Induction/orientation costs

Training costs

Recruitment costs include the cost of advertising, the cost of the interview process including any psychometric testing and assessment centers, candidate travel costs, golden handshakes and relocation costs where applicable.

INVISIBLE OR HIDDEN COSTS:

Management time

Disruption to fellow employees

Damage to morale

Missed business opportunities

Lost productivity until new employee is up to speed

Damage to business relationships

Loss of knowledge, skills and expertise

Impact on reputation

Disruption to social and communication networks

Some of these hidden costs are more difficult to calculate and may need to be estimated using expert studies.

ESTIMATES OF THE COST OF TURNOVER:

There have been a number of studies done into the cost of employee turnover for various different groups of employees.

Turnover costs tend to be expressed as a percentage of salary.

Non-skilled 30 - 50%

Service/production 40 - 70%

Skilled 60 - 85%

Clerical/administrative 50 - 80%

Professional 75 - 125%

Technical 80 - 125%

Specialists 100 - 250%

Supervisors 70 - 140%

Managers 70 - 150%

Step 1. Calculate the average number of employees The number of employees is calculated by adding the number at the start of the period, to the number at the end of the period. Then dividing by 2 to arrive at the average number of employees.

For example: At the start of the year the firm employed 1000 people. At the end of the year the firm employed 1200. To arrive at the average we add together 1000 + 1200 = 2200. Then divide by 2 to get our answer 2200/2 = 1100 This figure is the average number of people employed during the period.

Step 2. Calculate the number of departures during the period The key here is to make sure that we only include those departures that are actually relevant. That means those that come within the definition we are using. So for the definitions we are using in this example the relevant figures are: Total number of exits = 220 Voluntary = 110 Early = 55

Step 3. Divide departures by number of employees To arrive at our final figures, we divide the number of relevant departures by the average number of employees. Then multiply by 100 to get the percentage rate. For total turnover we have: 220 / 1100 (x 100) = 20% For voluntary turnover we have: 110/1100 (x100) = 10% For early turnover we have: 55/1100 (x100) = 5% Calculating Employee Turnover

However, there are a number of complications:

Let's say there were 100 employees at the beginning of the year, and 100 employees at the end of the year, and at the end of the year, 84 of those employees were the same ones as were there the previous year. You might say that the turnover rate was 16%.

But suppose one of those 16 who left was actually replaced three times. The employee quit in January, the replacement quit in April, and another person was hired who lasted only until November. Then you might want to count every time an employee left the company and another one was hired - in this case you'd get 18%.

Another complication: suppose the work force is 100 at the beginning and 90 at the end of the year. Perhaps 16 people have left, but only 6 have been hired during the year, while 2 more were hired and retired within the same year. You might define turnover as 18/100 or as 18/90, or as 18/95, since 95 is the average of 90 and 100. Instead of 95, you might want to do a fancier average, where you actually add up the number of employees on each day of the year, and divide the total by 365.

One more complication: who decided it was a calendar year that we should use for sampling the turnover rate? Perhaps there was no turnover at all for 3 years prior, and then a shift in management caused a lot of people to leave this year. Then a more representative measure would average over 2 or 3 or 4 years. Maybe you'd want to average the turnover in each month of the last 48, but weight recent months more heavily than earlier months.

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