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Factors Causing High Employee Turnover Rates

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Published: Wed, 07 Feb 2018

Staff Retention

Human Resources Management

Chapter 1

Introduction

Employee turnover in the industry has become the custom today in the manufacturing, service and merchandising industry. Employees are moving from one form of employment to another because of several factors that the employers have not yet grasped. In this regard many industry players are busy defining ways to protect turnover of its employees. The most affected part of this is the merchandising industry. In the bid to prove influence in the fastest upcoming sector executives in the merchandising industry are fighting hard the high trend of their staff consistently changing jobs (Rueben 22). Today generating an atmosphere favorable and valued by all employees in the ever changing employee market may not be as pain-streaking as it may appear to the larger population. It engages a number of issues may make the brilliant minds that make up your staffs want to stay in the organization. A combination of this contribution may eventually lead to higher number of employees and thus reduce turnover. The contributions made above require that they be performed in tandem for observable achievement to be achieved. Grasping the skill of staff retention requires that management delve deeply into what causes turnover of staff in institutions. Many questions should be put on the table in order to ascertain reasons why one would want to work in one organization and not prefer to work in another organization. The managements should not rest at that but proceed to look into the subsequent period that the employee has been absorbed into an organization. By asking these questions it is easy to discern that there are a lot of issues that have been left wanting for a long time. I find it easy to look at these issues by sympathizing with the employee and trying to assume his shoes at the company. This in real meaning requires doing proper research on standard ethical models that might be brought on board to encourage retention of employees. In the recent past the employers used to retain employees. The confidence thus gained goes down well with those in the precincts of work thus offering them purpose and presence. Boosting the moral of workers is one way of improving confidence of staff. In this regard even the general productivity of the company of the company can be noticed. Working closely and collectively in addition grants the staff presence. Al in all it’s just a matter of saying thank you as morality demands.

There are different styles of leadership in institutions that influence how relationships in the work place take place. People in leadership roles should be in the fore front in show wing proper codes of conduct to their employees, as opposed to taking the hind seat. In turn the employees may feel very motivated within the working environments that they are working. This enabling environment will thus lead to a sense of belonging by the individuals and cohesiveness thus leading to teamwork translating into a proud team. For one to retain staff he or she has to consider several important issues of the work place.

  • Background

Draper Co. Ltd. Found in 1987 is a sweater manufacturer that employs more than 100 people in Hong Kong. Since garment companies had bloomed in recent years. The role for merchandising people become more difficult and the manpower is short in the labor market. Draper is facing the problem of high staff turnover rate. In addition, with opening of the mainland market, many foreign enterprises had set up their merchandising sections in Hong Kong and some enterprises also invite Hong Kong garment companies to cope with their expanding business. As a result, the job vacancies of staff increased tremendously. Among the merchandising industry, garment sections are highest in demand for staff. This is due to the fast growing of the sectors as well as the high employee turnover rate and the lack of talent in the labor market. With the goal of identifying predictors of turnover, factors and employee’s intention to leave or stay with the company will be the major issue of Draper Co. Ltd.

  • Research Problems

Initially, the establishment of the project required the involvement of different parties who would provide data and statistical analysis. The study required involvement of external organizations which would require them to allow access their staff to cooperate during the course of the research. Unfortunately some of these merchants turned down request to take part a little after the project was already initialized, it was quite unfortunate. The team of researchers contacted several nationwide merchandise groups to request them to take part in the research as a subsequent measure. Within a short period of time, two particular staff articulated formal concern and primarily arranged to play a part in the project but with the approval of the Board of Governors of their respectful organizations. The team of researchers used up considerable hours meeting with a variety of the team of people representing the staff and giving important information related to the research and showing presentations that highlight the scope of the study. An agreement was made with these staff that the research panel would conduct industry job and staff retention survey within the merchandise organization, rather than concentrating on organizational loop holes as it would imply that there are indeed loop holes, in their respective organizations which might not be the truly case. However because of various unpredicted situations including the falling ill of one of the team members who acted as coordinator of the research team and these respectful staff, the staff in the end made the decision to withdraw its cooperation, leaving operation of the research between a rock a rock and a hard place. The research team then informed the Draper Co. Ltd of the current problems and suggesting a different research method design that would still be in line aims of the project and the objectives outlined before the research was initially flagged off. In this respect, a decision was made to advertise across various merchandise outlets to secure individual people working as staff to act as respondents from different retail outlets, thus eliminating the process of approaching company heads or Board of Governors for endorsement to guarantee a speedy and effortless contact with respondents. The Draper Co. Ltd was highly involved in endorsing the submission for change in the approach for the research. The research carried out by the team concerned conducting 100 partially controlled telephone interviews with staff from different merchandising firms including own staff at Draper Co. Ltd . The research method design of the survey was cautiously designed and conversant with preceding works that dwelled on employee equality and diversity concerns all over the work environment (e.g. Sutherland and Davidson, 1997). The design of the interviews was such that it could be in accordance with the aims and corresponding objectives of the Draper Co. Ltd and eventually deal with a array of concerns as well as the recognition of possible occupational improvement barriers and the recognition of approaches for conquering these limitations, chances for education and training, job promotions and provision for leadership. The partially controlled interview timetable was then stored in secure modules and safe websites secured with passwords, which eventually made it easy for members of the research panel to enter information directly into the research database and online pages, and at the same time carrying out interviews with respondents all over the merchandising industry. The details of the research methodology and what will be contained in the schedule for the research is described in the subsequent sections.

  • Research Objective

This study was led by a research team commissioned by the Draper Co. Ltd. The research team was selected by the management of the company with advice by the legal advice wing experts. It was agreed that 16 members be brought aboard the team of researchers. The main goal of identifying predictors of turnover, factors and employee’s intention to leave or stay with the company will be the major issue of Draper Co. Ltd.

The aims of the project were as follows:

  • To examine two sets of potential causes of job turnovers and eventual staff retention mechanisms: firstly, those that impede the retention of workers in the organization and secondly, those that speeds the exit of the players from the organizations.
  • Identify strategies for overcoming these barriers.
  • Investigate the feasibility of constructing a national database, documenting the career paths of women in the merchandise industry.
  • Develop, publish and disseminate good practice guidelines and recommendations using reports, conference presentations, feedback seminars, academic journals and merchandise specialist and national press.

The objectives of the project were to:

  • Investigate two sets of potential reasons for staff leaving the company: firstly, those that accelerate the exit of workers and staff and secondly, those that impede the efforts of retaining staff in the organization.
  • Identify strategies for overcoming these reasons.
  • Investigate the feasibility of constructing a company database, documenting the career paths of workers in the merchandise industry.
  • Develop a promotion system, which is more sensitive to the needs of employees
  • Develop an image of the company, which is based entirely upon team cohesion.
  • Provide a concept of role models, which can be utilized by young employees to resolve possible work life balance conflicts.
  • Produce a set of solutions, which can be applied to other retail settings.
  • Develop, publish and disseminate good practice guidelines and recommendations using reports, conference presentations, feedback seminars, academic journals and merchandise specialist and national press.

Research Questions:

  • Why this company has high staff turnover rate
  • Why staff relationship will make new comer difficult to fit in team work
  • What relationship caused high staff turnover rate
  • How to retain staff in this company
  • Does the management policy affect staff retention?
  • Does the company is responsive to employee’s needs and wants
  • Does company’s reputation retain staff?

Terminologies

Merchandising

Retention

Welfare

Turnover

Respondent

Outsourcing

Glass ceiling

  • Dissertation Outlines

Chapter 2

Literature Review

2.1 Introduction

This Section looks at the main literature in this area. The first sections focus on the structure of merchandising and the broader profile of the sector. The section then moves on to its main concern which is the job retention of staff at junior and senior levels in merchandising. Merchandising is an economic sector, which has traditionally been associated with the employment of staff. Overall, 60% of staff are low skilled employees and 40% are highly skilled in terms of there educational background. Even as these figures show that the merchandising sector clearly employs a larger number of low skilled than the skilled, it is not a ‘balanced industry’ (Stillsmart, 2004). The representation of low skill workers in the merchandising sector however, follows a number of important patterns. Official statistics are used to highlight the predominance of staff in part time work in the merchandising sector and the under representation of a section staff at senior levels. According to Stillsmart, (2004), official figures are general and are unlikely to provide a clear understanding of the dynamics relating to the position in which staff is employed in merchandising sector. The following sections therefore outline theories that have been offered to account for these disparities, particularly in relation to barriers for staff attempting to progress into senior management positions. An examination of managing diversity is then offered and potential mechanisms for ensuring merchandising organizations fully utilize the talents of all employees to maximize productivity is discussed.

2.2 The structure of the merchandising sector

The merchandising sector is the largest private sector employer in the Hong Kong yet it is rarely recognized as such. Stillsmart (a not for profit organization, set up and part funded by Government to identify and address the skills needs of the Hong Kong merchandising sector), suggest that this is, possibly because its workforce is not concentrated in any particular region or locality. In fact, the merchandising sector is the largest public sector employer in the Hong Kong. Furthermore, Wang XI Inc is the Hong Kong’s second largest employer after the Jubilee (Stillsmart, 2004). Overall, the merchandising sector employs three million people throughout the Hong Kong, which accounts for approximately ten per cent of employment throughout the Hong Kong. However, the structure of the industry is unusual, and is described by Stillsmart, as ‘hourglass shaped’. The vast majority (95%) work in firms with less than ten employees. Consequently, there is significantly less (just over two thousand) merchandising employers with more than fifty staff, reflecting the “hourglass shape” of the industry profile.

2.3 Job Retention and improvement Strategies

The welfare reform programs of the 1990s moved many families from cash assistance into the work force. The strong economy provided an abundance of entry-level, low-skill job opportunities to support this transition. For most of these families, however, finding a job is only the first step in the difficult path toward self-sufficiency. Like other working parents, adults who leave welfare (“leavers”) often encounter barriers to job retention and advancement. Between 1994 and 2002, the welfare caseload declined drastically, by more than 2.5 million cases (or 50 percent). Simultaneously, the number of single mothers either divorced or never married— in the work force increased by more than 1.2 million (or 22 percent). Government welfare programs have been instituted to help keep women employed and off welfare. Job retention and improvement strategies are becoming increasingly important to state policymakers as unemployment rates rise and slowed economic growth, corporate lay-offs, and hiring freezes limit job opportunities for parents who are moving into the work force. Current and former welfare recipients and those who don’t have a strong attachment to the work force may find it more difficult to gain employment in hard economic times, thus increasing the demand for job retention and improvement services for those who currently are employed.

2.4 Present profile of turnover of employees

Employment expectations have risen slightly in (Q1) from an already high level in Q4. Of the 514 sales executives surveyed, 54% expect to increase their hiring which is slightly up from 53% the previous. As the years go by, expectations have remained solid. The 54% planning to grow headcount this year is at the same level as Q1 2004, though there are some variations between the sectors surveyed. Companies are extremely confident about how they will perform in the next six months with 95% of respondents forecasting their company’s performance to be excellent or good in the first half of 2007. Respondents in Hong Kong report higher levels of staff turnover than in any other market surveyed in Asia with 37% stating that turnover in the last twelve months has exceeded 10% (Hudson, 2007). Hudson, one of the world’s leading professional recruitment, outsourcing and capacity management solution providers, today released findings of its broad quarterly Hudson Report for Asia. With a status as a key socio-economic indicator in the present market since its Asia launch in September 2000, the survey has been built on the premise that employers’ expectations of an increase or decrease in staffing levels represent a significant indication of their optimism in the growth of their organization and their industry as a whole. The Hudson Report represents the expectations of over 1450 key employment decision makers from multinational organizations of all sizes in all major industry sectors, with 400 of these executives based in Hong Kong.

2.4 The general profile of employees in the merchandising sector

Traditionally the merchandising sector is associated with the employment of low level and unskilled workers, the vast majority of whom work in the lower ranks of the organizational hierarchy. The profile of employees in merchandising also follows a number of other patterns. The merchandising sector for example employs a large proportion of young people. According to recent estimates 29% of those employed in the sector are between the ages of 16 to 24. This is compared to the overall economy figure of 14%. It has been suggested that this figure may be due to the popularity of merchandising as a part-time occupation for young people and students (Stillsmart, 2004). Merchandising is also a popular choice for older workers (persons over 55). In terms of ethnic minority employment, the merchandising sector employs a similar fraction to those figures available nationally (Stillsmart, 2004). Recent research has shown however, that certain recruitment practices may prevent ethnic minorities from gaining employment in merchandising organizations. For example a study for Birmingham and Manchester cities in Britain for example, found that employers might specify jobs as a matter of course that require the staff to work on Saturdays without realizing that a large pool of potential workers would be unable to work on this day as it is their Sabbath (Vector research, 2003).

2.4 The trends common in the merchandising sector

Merchandising is an economic sector, which has customarily been associated with the employment of diverse people of different background. Overall, 55% of merchandising employees are women and 45% are men (Stillsmart, 2004). This gender factor in the merchandising sector remains fairly consistent throughout other nations and regions of the Hong Kong and this profile has been fairly consistent over the last 10 years. Skill level has also played a bigger part in influencing how long an employee is wiling to stay in a given organization. Better salaries in other organizations may lead to employees moving from their respective place of work in pursuit for better opportunities (Hudson, 2004). Level of qualification gives workers a broader scale of work opportunities that they willingly take into considerations. Stillsmart (2004) suggest that Hong Kong’s larger ethnic population is likely to be the source of this greater proportion of the workers in the capital run by ethnic minorities may proprietorship driven by highly skilled male people. It is important to note however, that the representation of retention in the merchandising sector follows a number of important patterns discussed in the subsequent sections. Firstly the prevalence of staff turnover in the merchandising sector will be discussed. Secondly, evidence will be presented to show the under representation of employee needs at senior levels within the merchandising sector.

2.4.1 The prevalence of staff turnover in the merchandising sector

Statistics from Stillsmart (2004) indicate that merchandising sector employment occupy three quarters of all employment in the Hong Kong economic sector, which accounts for 40% of all employment. This is a significant figure when, compared to the economy overall, where only 25% of people are employed permanently. The other majority of those working are part time workers employed in sales and customer service occupations. Figure 2.1 outlines the proportion of full and part time employment in the merchandising sector by gender.

Source: Survey by National Employment Institute

2.4.1.1 Job retention in the labor force as a whole

The prevalence of staff turnover when compared with other sectors of the economy is particularly evident in the merchandising sector. This trend is also reflected in employment across the Hong Kong, particularly in the service industries. The numbers of staff entering the labor market has dramatically increased over the past thirty years and this rise in numbers has mainly been in by young people with low skill (Burke and Nelson 2002; Davidson and Burke, 2002). Because of this influx of young energetic minds quickly induces training for the staff. After gaining much needed experience then leave the industry for more lucrative jobs in other sectors. Youthful persons in the Hong Kong are far more likely than middle and old aged persons to work as part-timers (EAC, 2004). According to the National Office of Statistics, in 2005, 42% of young employees in the Hong Kong worked in the sector compared to just 9% of old people. Interestingly, the number keeps on increasing in the industry whereas companies are reporting a high staff turnover hence posing a big threat to company survival in the highly competitive industry (EAC, 2004).

Source: Survey by National Employment Institute

2.4.3 Explanations for the prevalence of staff turnover among staff in the merchandising sector

Traditionally, the predominance of staff turnover is largely attributed to the level of education and other academic qualifications (e.g. those with degrees go for more lucrative jobs in other lucrative industries vacating there positions) traditionally occupied by them which limits the productivity of the company (Thompson, 2004; Stillsmart, 2004). When addressing the merchandising sector specifically, Lynch (2003) comments that it is the very nature of the merchandising industry that contributes to the high proportion of turnovers. In the merchandising industry, recruitment is largely secured from the local labor market, staff requirements vary due to seasonal demands and employees are often required to work unfriendly hours as outlets open longer. These are all factors that lead to the reduction of morale and interest in the jobs within any organizational sector, and specifically the merchandising sector. In addition, Lynch (2003) further suggests that due to these delimiting factors in the industry and the continuous fluctuation of workforce in particular, potential merchandising companies are provided with an available pool of labor that accepts inferior terms and conditions of employment, as staff attempt to resolve their need to educate and retain their staff.

2.4.3.1 The under representation of staff interests in the merchandising sector by executives and senior officials

Official statistics show that there is a higher proportion of college educated in managerial and senior occupations in the merchandising sector than in comparison to the economy a whole. It is important to note, however, that if the representation of staff; male and female, skilled and unskilled were equal throughout the sector. Furthermore, low skilled staff tends to predominate in certain types of management positions including personnel, which are roles traditionally associated with low skilled.

2.5 Recruitment and Retention of Paid Staff

It can be surely asserted that, paid staff is a vital part of the retail and merchandising sector. Lynch (2003) further suggests that almost half (40%) of Canada’s estimated 161,000 nonprofit and voluntary organizations has least one paid staff member. The sector as a whole employs just over 25% of the total economy. Twenty percent of paid staff in merchandising organizations is in permanent positions and 56% work full-time. The survey asked all organizations involved about the challenges they face recruiting the type of paid staff they need. Twenty-eight percent of organizations said that this is a problem for them; 8% said that the problem is serious. Organizations with paid staff were also asked if they have problems retaining staff. Nineteen percent said that they do, with 8% saying that the problem is serious. As a group, problems relating to paid staff were reported less frequently than other types of capacity challenges. Nevertheless, challenges relating to paid staff are significant for some organizations.

2.5.1 Size of Paid Staff Complement

In general, the more paid staff an organization has, the more likely it is to report problems with staff recruitment and retention. Forty-one percent of organizations with 13% of paid staff members reported problems recruiting paid staff. This rises to 30% among organizations with 20 to 50 staff members, 63% among those with 100 to 500 staff members, and 73% among those with 1000 or more staff members. The relationship between the number of staff an organization has and staff retention problems is less pronounced. Seventeen percent of organizations with one to four staff members said this is a problem for them. This increases to 26% among organizations with 100 or more staff members (Stillsmart, 2004).

Source: Survey by National Employment Institute

2.5.2 Reliance on Paid Staff

Lynch (2003) suggests the greater the percentage of an organization’s workforce that is comprised of paid staff (As opposed to volunteers), the more dependent on paid staff the organization can be said to be. The more reliant an organization is on paid staff, the more likely it is to report difficulties employing and retaining staff. Lynch (2003) further suggests that this relationship is particularly strong for staff recruitment. For example, among organizations in which staff makes up one-third or less of the workforce, 15% said that staff recruitment is a problem for them and 19% said that staff retention is a problem. Nevertheless, among organizations in which staff comprises two thirds or more of the workforce, 54% said that staff recruitment is a problem and 20% said that staff retention is a problem (Stillsmart, 2004)..

Source: Survey by National Employment Institute

2.6 The Glass ceiling theory

The under representation of minority group in management positions in the merchandising and other occupational sectors has led theorists to assert that a ‘glass ceiling’ exists. The minority in this case includes: physically handicapped, less educated and women. The term ‘glass ceiling’ is used to reflect the ability of and minorities to view the world above them but the metaphorical ceiling prevents the minorities from accessing the better opportunities they can view. This glass ceiling effect occurs when minorities with equivalent credentials as the other employees, i.e. those who traditionally occupy positions of power within organizations, are prevented from accessing top jobs simply because they have particularly weaknesses (Davidson, 1997; Powell, 1999; Konrad, Prasad and Pringle, 2004). Nevertheless, the proportion of minorities in management has increased over the past three decades in almost all countries and legislation in some countries (e.g. Affirmative Action Legislation in the U.S. and Canada) has contributed to this trend (Powell and Graves, 2003). Despite this encouraging increase, recent research by Catalyst (2005) has shown that the glass ceiling is firmly in place. In the U.K., seventy-eight Financial Times Share Index (FTSE 100) companies in 2004 had physically challenged directors, up 13% from the previous year. However, only eleven FTSE 100 companies had female executive directors, which was below the 2002 figure and twenty-two of the FTSE 100 boards in 2005 were all-male (Singh and Vinicrombe, 2005). These statistics largely reflect the experiences of white staff. It is important to highlight that black and ethnic minority staffs across the globe often face significant hurdles. Although there is a general lack of data on ethnicity and employment or physical handicap and employment, ethnic minority employees are under- represented at senior and professional levels in the labor market (Commission for Racial Equality, 2004). In Hong Kong in 2004 for example, 17% of ethnic minority men were managers or senior officials compared to 10% of ethnic minority staff. The highest percentages of staff and men in these positions were Indian and Chinese (Commission for Racial Equality, 2004). Research has highlighted that a glass ceiling exists even in occupations where staff predominate. Approximately 90% of nurses, for example, are female but male nurses often experience greater career success than female nurses (Nursing and Midwifery Council, 2005). The number of women studying merchandise in England now outnumbers men (Davidson and Burke, 2004) but partners of top merchandise firms continue to be predominantly men. An examination of data from the top 10 ten merchandise firms in the Hong Kong in 2005 revealed that on average, 15% of female partners in the top 10 merchandise firms are women (The Merchandise Society, 2005). Recent research has highlighted that whilst women and physically challenged are now achieving more senior roles, they are more likely than men to find themselves on a ‘glass cliff’ (Haslam, 2005). According to Haslam (2005), this is because staff are more likely to secure positions of leadership when organizations are not performing at their optimum level. This means that their appointments are made under more risky circumstances which make them more uncertain. This suggests that not only do staff experience hurdles to achieving senior roles; they are placed under greater scrutiny and face increased pressures when they do reach leadership positions. The disadvantaged experience of the glass ceiling is an important area of study and has implications for the future development of talent in organizations of all sectors including merchandising. Research has shown for example that frustrated by the glass ceiling, many workers quit and start their own businesses (Powell, 1999; Davidson and Fielden, 2003). This can have a detrimental affect within organizations as competent and experienced staffs remove themselves from the selection pool.

2.5.1 Pay Differences

However, research shows that staff leaders and staff at all levels of the workforce are generally paid less than men with equivalent skills, training and experience, for performing the same roles. In 2005, the percentage difference between the average hourly earnings of staff working full-time in Great Britain for example was 17.1 % (Equal Opportunities Commission, 2004). In the US, staffs earn approximately 77 cents for every dollar earned by men (Retailer’s Bureau data, 2000, in Nelson and Michie, 2004). The Equal Opportunities Commission in the U.K. (2005) highlights three main reasons for this pay difference. Firstly, there is discrimination in pay systems. Staff are paid less than men for performing the same roles. Secondly, ‘occupational segregation’ exists. Many employees is concentrated in low paid jobs. Thirdly, staffs assume caring responsibilities for children and other relatives/dependents, which affects their progression at work due to the lack of flexible working.

2.6 Perspectives on barriers to staff in management

Authors have identified an array of complex factors that contribute to the existence and pervasive nature of the ‘glass ceiling.’ Three main perspectives have been offered to explain the adversity facing staff aspiring to senior levels within organizations. These are commonly referred to as the ‘person centered’ or ‘gender-centered’ approach (Powell, 1999), the organizational structure perspective (Fagenson, 1993; Kanter, 1977) and the social systems perspective. It is widely acknowledged that the glass ceiling is a result of a culmination of these three main perspectives (Omar and Da


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