The Issues Of Employees Turnover In Companies Business Essay

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The main objective of this project is to search and analyse the reasons of the resignation of some of the UAE national staff from the company and get some recommendations to change this situation. When staff leaves, this turnover can have a negative impact on your business. This is especially the case if those leavers either are considered as the key to its success and continuity or do so because they think you have treated them unfairly, which could result in tribunal claims.

Therefore, retaining staff and treating them fairly has benefits for your business. Continuity and stability become part of your business culture, and staff feel they belong to the organization and take pride in their work. Skills and competencies are maintained in key business areas and productivity is often increased.

Staff turnover is a business risk, but you can minimize the ways in which it affects your business through a structured staff management program.

This guide will help you manage staff turnover by providing examples of what makes staff leave and a checklist of measures to help staff retention. There is also guidance on how to measure and benchmark turnover and how to improve the management of leavers.

What is employee turnover?

Employee turnover is a ratio comparison of the number of employees a company must replace in a given time period to the average number of total employees. A huge concern to most companies, employee turnover is a costly expense especially in lower paying job roles, for which the employee turnover rate is highest. Many factors play a role in the employee turnover rate of any company, and these can stem from both the employer and the employees. Wages, company benefits, employee attendance, and job performance are all factors that play a significant role in employee turnover.

I have chosen this topic because employee turnover is the most critical factor for business success and it affects the company productivity and motivation amongst staff. In order to create a successful company, employers should consider as many options as possible when it comes to retaining employees, while at the same time securing their trust and loyalty so they have less of a desire to leave in the future.

The Importance of Worker Retention and Knowledge Transfer

When a business loses employees, it loses skills, experience and "corporate memory". The magnitude and nature of these losses is a critical management issue, affecting productivity, profitability, and product and service quality. For employees, high turnover can negatively affect employment relationships, morale and workplace safety. The cost of replacing workers can be high, the problems associated with finding and training new employees can be considerable, and the specific workplace-acquired skills and knowledge people walk away with can take years to replace.

The problem of turnover can be addressed through a variety of pro-active retention strategies: workplace policies and practices which increase employee commitment and loyalty. Knowledge transfer initiatives on the other hand, ensure that the knowledge and expertise of a company's employees its 'corporate memory' are systematically and effectively shared among employees. They can offset the negative impact of turnover, but can also work pro-actively to reduce turnover by providing learning and skills development opportunities to employees - factors known to reduce turnover.

The current turnover rates for qualified UAE nationals

ZADCO is a family of nearly 30 nationalities from many different cultures. We encourage understanding and respect for our different cultural backgrounds, as well as support for ZADCO's cultural values defined in our Vision and Values.

ZADCO is committed to employing, training and retaining UAE National to reach the strategic goal of 75% UAE National in 5 years time. The government and ADNOC have set this target. Currently ZADCO has reach 54.2% of UAE nationals (Emiritization) which is quite a good rate, however this is becoming increasingly difficult as HR is facing big problem in getting UAE Nationals because it is competing with other local companies offering more competitive packages. The chart below shows the statistics of UAE national evaluation by years (2001-2009).

Figure : Net increase (Emiritization) from 2001- 2009

ZADCO has a problem with retaining its qualified UAE Nationals. Many newly hired employees are leaving the organization before completing 3 years. Recruitment costs, induction and training are very high and retention strategy is essential.

High turnover affects companies in several ways, however, when long-time employees leave, they often take valuable institutional knowledge or intellectual assets with them. Experienced staff members serve as morale boosters for work teams and help new employees progress more quickly. As a consequence, the need to replace these assets will cost employers a lot in both time and money.

The reasons for UAE nationals leaving the organization

Turnover is becoming a serious problem in today's corporate environment. The employment culture is changing as well. It is now relatively common to change jobs every few years, rather than grow with one company throughout the employment life as was once commonplace. In addition, employees are increasingly demanding a balance between work and family life. With more and more people taking to work for themselves, or moving around experimenting with careers and employers, the task of keeping good staff becomes more challenging. 

Here is a graph that showing the reasons for UAE national employees of leaving the organization in 2009:

Figure : 2009 UAE nationals attrition

The above graph is shows the following data:

Reasons

No. of employees

Retirement

1

Unauthorized Absence

4

Family issues

2

Other issues

8

Personal reasons

14

Better offer

18

End of Secondment

3

Figure : Date gathered from the figure

The above data is showing the numbers of the UAE national employees in ZADCO and their reasons behind leaving the company in and during 2009. The reasons are include employee retirement, unauthorized absence, family issues, personal reasons, better offer and end secondment. Moreover, the above graph shows that the most reason of UAE national employees are leaving the company is the better offers in other companies. This is because the employees want to develop and have better career development, therefore he\she thinking individually. However, the employee doesn't know how much the company lose business, money and employees or the individual.

In addition, there are many reasons why good employees quit and go to another company, Most of the reasons start with management and most are preventable. Good people don't leave good companies, they leave poor managers.

I have attended an exit interview as observer with our HR members. They use the form shown below in order to get the feedback from the leavers and find out the real dilemma after analyzing it. Accordingly, going through the below questionnaire sometimes the reasons of our employees resignation starts with management, here are some reasons why people quit their job as I got it from both the questionnaire results and observing the interview:

Management wish less expectation by employees & demands that one person will do the job of two or more people, resulting in longer days and weekend work, & this turns into morale killer not only for the person but for the organization.

 

Management doesn't allow the person to make decision about their work. Therefore employee sees their job as only a job rather than developing enthusiasm and pride of ownership.

Management promotes departments to compete against each other while at the same time moralize team work and cooperation.

Management constantly reorganizes policies; shuffles people around and change the course regularly, which make employee a bit confused regarding the priorities in job.

Table : questionnaire form

1- What did you like most about your job?

2- What did you like least about your job?

3- Was your workload

Too Heavy

About Right

Too Light

Varied

4 - Do you feel your Supervisor / Team Leader

a) Communicated Policies and Practices

Always

Usually

Sometimes

Never

b) Followed Policies and Practices

Always

Usually

Sometimes

Never

c) Demonstrated Fair Treatment

Always

Usually

Sometimes

Never

d) Provided Recognition for Job Well done

Always

Usually

Sometimes

Never

e) Encouraged Co-operation

Always

Usually

Sometimes

Never

f) Listened to and Resolved Complaint and problems promptly

Always

Usually

Sometimes

Never

g) Encouraged Suggestions for Improvements

Always

Usually

Sometimes

Never

h) Understood your Responsibilities

Always

Usually

Sometimes

Never

Comments:

5- Would you say the morale among employees in your department was:

Excellent

Good

Fair

Poor

6- How would you rate the following in your department?

Relationships within the department

Excellent

Good

Fair

Poor

b) Relationships within the departments

Excellent

Good

Fair

Poor

c) Relationship with Supervisor

Excellent

Good

Fair

Poor

d) Working Conditions

Excellent

Good

Fair

Poor

e) Safety Concerns

Excellent

Good

Fair

Poor

Comments

7- How would you rate the following issues relating to Training and Development

a) On-the -job training

Excellent

Good

Fair

Poor

b) Opportunity for advancement

Excellent

Good

Fair

Poor

c) Potential for Career Growth

Excellent

Good

Fair

Poor

Comments:

8 - Was your decision to leave the company influenced by any of the following:

(More than one can apply)

Better Job Opportunity

Family / Personal Circumstances

Health or Maternity Reasons

Dissatisfaction with Supervisors or Co-workers

Return to School / study

Relocation

Job Security

Marriage

Other, please specify …………………………………………………………………………

9 - Other comments:

Sometimes employees have other reasons to search for new positions such as they want better compensation and benefits, or they are dissatisfied with their potential career development, or are ready for new experiences. I think according to all what mentioned above, employees from busboy to manager, no position is safe from the ravages of high turnover, in as much as there is always a better offer waiting just around the corner.

Additionally, table below shows the SWOT analysis on the factors for UAE national employee's retention from ZADCO which clarify more about this dilemma.

Table : SWOT analysis on the factors for UAE national employees retention from ZADCO

Strength

Weakness

Good work environment

Respect and support from team leaders and supervisors

Recognition / reward

Good compositions

Effective communication and networking

Effective learning &skills development

Huge training budget

Employees are rewarded when they complete their certification.

Slow process and delayed integration of the UAE nationals employees (process of movement of a UAE National from development position to an operational position)

Concerns about the future of the firm for example (ZADCO has a policy that when the UAE national employee is studying for a part time should sign a contract for not applying for a higher position unless if there is a vacant position.

Higher the employees in inappropriate position.

New employees are not introduced to the appraisal system at the time they have been hired

Opportunities

Threats

Implement system that includes all the UAE nationals' employees who are under development position.

All employees' team leaders and supervisors should have access to this system so they can find out the individual progress. I think this is will help to meet the Emiritization target.

Each team leader should communicate (face to face) with his/her employee in weekly bases or meetings.

Implement a new reorganisation in the company chart so we can have a wide of vacancies position to attract and transfer employees.

Not clear succession plan for vacant position.

Integration process is delayed.

De-motivated employees.

Loss the communication between the employee and his/her team leader.

Unable to meet the Emiritization target.

Organization will lose the qualified UAE nationals.

Having staff leave will affect the company economic growth and productivity.

Decrease productivity of employees who feel that they are not getting what they deserve

Company will lose money invested on people's training and development.

The Cost and Consequences of High Turnover

"In quantifying financial loss, it really depends on the company and the type of expertise required," says David Saxby.

High employee turnover is not just a financial cost to business, but also detracts from the ability of companies and sites to make a positive contribution to sustainable development. Moreover, its affect the company economic growth and productivity as well as staff motivation.

Every time an employee leaves and has to be replaced, an operation incurs a

Number of direct financial costs, including:

Separation costs (administration costs associated with processing

Resignations and dismissals, time taken up in conducting exit

Interviews, productivity losses associated with impending

Departure)

Vacancy costs (lost productivity and/or additional costs such as

Overtime or contractor payments to cover for vacancies created by

Departures)

Recruitment costs (advertising, employment of job search

Agencies, time and resources spent in processing applications,

staff time involved in selection interviews, travel costs for short-

listed candidates and re-location costs for successful applicants

and their families)

Training and start-up costs (the time of trainers and staff and of

new employees are taken up in inductions and on the job training, loss of productivity until the new employee reaches full production potential).

After going through the SWOT and based on the weaknesses which are mentioned in it, I recommend the following:-

Table : Results of weaknesses of the SWOT and recommendations

Weakness

Recommendation

Time

Cost

Goal

Very slow process and delayed integration of the UAE nationals employees (process of movement of a UAE National from development position to an operational position)

Implement new system that includes all the UAE nationals' employees who are under development position.

All employees' line managers and supervisors should have access to this system so they can find out the individual progress.

Approximately 9 - 10 months are fine to implement the mentioned system.

This will cost around Dhs 200,000

This process will be fair and fast enough for the UAE national employee progress and integration.

Higher the employees in inappropriate position.

Implement a new re-organisation in the company chart so we can have a wide of vacancies position to attract and transfer employees.

Should be planned every 3-5 years.

0 = cost because everything is available in the company.

This is will help the long time employees to transfer to high position so they will not stay in their position for long life.

Put the right employee in the suitable position.

My Recommendation to Reduce UAE Nationals Employee Turnover

Finding good employees has become a major challenge for small and large businesses alike. But keeping them on the job is perhaps an even bigger one. Employee turnover is the bane of many a business; it wastes time and can cost both money and customers. But even in an employee market, there are things business owners can do to reduce their rate of turnover. After analyzing the interview results and going through the SWOT analysis as will here are some recommendations to achieve this: 

Start With the essentials: When a new employee starts, assign a buddy to them. Make sure they understand how the company works, its policies and procedures. Management should give them a thorough orientation. Help them to fit in easily and quickly. 

Plan Together: If management want to keep an employee, make sure you discuss with them a plan for their career development. Ensure they know that the organization is willing to invest time and money in them to achieve mutual goals if they are interested to stick around and learn. 

Be Flexible: Management should be flexible with work arrangements. Allow for flexi-time. Consider allowing them to work an extra hour a day to build up time for a day off every couple of weeks. If the type of work they are doing permits, consider allowing them one or two days a week when they can "work from home". 

Forget the "Use By" Date: Don't forget your retired staff. Many retirees soon find a life of retirement somewhat boring and will jump at the chance to work part time, or mentor new personnel (a win-win situation). 

Reassure their Security: If you want to keep staff, you have to prove that their career is not at risk by staying with you, and that you have what it takes to be a modern employer. Nobody is going to leave a company that pays well, understands their needs as a human being, and offers job security together with a career plan for advancement. 

Don't Forget the Rewards: Employees want good pay and raises for doing their jobs well, but extra bonuses such as flex hours, telecommuting, and casual dress codes go a long way toward attracting the right employees and will reduce employee turnover. Rewards need not entail cash bonuses, but may include benefits such as child crèches, flexible hours, time off, payment of Association fees, etc. 

Show Interest: Show an active interest in staff's welfare and enjoyment in their employment don't wait until the once a year interview. Management could try offering a company Social Club, or staff picnics, or a newsletter primarily for and about the staff rather than a strictly business newsletter. It would go a long way to ensure their loyalty and appreciation. 

Never Mislead:  If the job opening you are offering is potentially a short-term arrangement, or likely to change or disappear in the future, be open and honest about it upfront. Never mislead employees. In a nutshell, the key to remember is that many employees think of their company (employer) as an extension of their family. Treat them as you would a valued family member and you will have lifelong loyalty. Treat them as a 'number', a disposable commodity, and you will have nothing.

Conclusion

In conclusion, from doing this research I have discovered that employee satisfaction is an important issue that keeping worker stay in the same company for long time. Also, as long as the workers are happy will be more likely to produce more, take fewer days off, and stay loyal to the company. However, many experts believe that one of the best ways to maintain employee satisfaction is to make workers feel like part of a family or team. In my opinion is that the best way to improve employee retention is to understand what employees want and need from the workplace and provide it. However, Studies show that many employees leave for reasons that have nothing to do with money or benefits, but rather with issues such as feeling unappreciated or feeling they have a very limited chance for advancement. Furthermore, the results shows that most of the reasons start with management and most are preventable. Therefore having Good management will lead to less resignation and more growth

Finally, hiring the right people from the start reduces turnover. Managers should have a clear idea of the types of people they want to hire for each position, write detailed job descriptions and commit to hiring the best candidates rather than the first candidates who meet minimum requirements. A thoughtful approach to hiring, competitive compensation and benefits and formal training programs all reduce the likelihood that staff will leave and help employers step off the turnover tread mill.

I think that what I recommended in this research regarding reducing the UAE national employees retention in ZADCO will help in the company growth in future.

I would like to thank Oakwood Company and teams that they gave me chance to do this important research.

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