The Effects Of High Staff Turnover Commerce Essay

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The Central and Cecil is one of the Housing and Care, Non Profit Organization established in 1926, by a journalist Mrs Elizabeth Chesterton. She was challenged by her boss at the organization to undertaking a survey of the homeless and less fortunate women on London streets , which was later serialized into a bestseller 'In Darkest London'. Bearing her husband's name she set up a charity Cecil Houses.

The company's HR is centralized and is based at the Cecil House at Waterloo, which is organized and managed by a hierarchy of managers and Business Partners, and a sound payroll system. The company has a strong IT system integrating and interlinked within all the departments.

Recently the company survey has projected an above the average Staff turnover , the management needs to identify the reasons for the turnover and this research focuses on the possible criteria's and projected recommendations. Being a Non profit organization with limited resources at its dispersal, the HR is the leverage to maintaining this High performance Work culture. The policies inscribed in the company promote individual employees development, and the teams performance with various incentive schemes. However the high turnover is constantly leaving a Gap in the structure respectively increasing the overhead cost. Te key questions to initiate the issue of high staff turnover are as follows:

Why employees in the hard to recruit groups are leaving.

What employee turnover is costing the organization.

Categorizing the reasons for turnover being personal or applied or a mixture of both.

How does this staff turnover affect the organization who heavily invest in developing their employees skills through training and development

How does the continuous transfusion of new blood in the company affect this phenomenon that is High Staff Turnover in the company?

What is this turnover doing at the current stage to the company (Central and Cecil) is it acting as functional or dysfunctional.

These are some of the criteria's under which turnover can be traced and targeted. The organizations approach, and the extent to which the value congruence falls short, turnover occurred. In short , people are attracted to and tend to remain with employers whose values are similar to their own.  They often leave when this is not the case. "Organisational and occupational factors determine the types of people who join and remain in an organization" (Schaubroeck, Ganster & Jones,1998).

If the management fails to notice that the employees who may change themselves, or environment who initially experience misfit rather than simply leaving the organization (Simmering .2003). Person-organization fit to the extent that there exists an equilibrium between the values of the organization and the individual.

The cost of employee turnover:

The leaver's resignation and exit interview costs.

New vacancy job posting/ Recruitment process.

Covering the cost of vacancy through the period

The later selection process.

The recruitment and selection administration process costs.

Induction training for the new employee.

"The website states that staff replacememnt costs are typically between £3,500 and £6,000 per leaver".

The Recruitment, Retention and Turnover Survey in 2006(CIPD) indicates that "overall employee turnover rate for the UK is 18.3%. The Highest Level of turnover are found in the Private Sector Organisations" Clearly Cectral & Cecil's turnover is seriously above the industry Standards.

To refrain this turnover organizations simply track their turnover's on a monthly or yearly basis using the formula:

Total Number of Leavers over the assessed period x 100                            =          Turnover Rate

Average total number employed over the assessed period







Central and Cecil….

Thus management of Central and Cecil has shown that they are proactive in trying to address this problem strategically, by trying to develop intensive employee development programs initiating motivation, higher level of job satisfaction and a sense of belonging towards the organization. The staff is actively contributing towards addressing employee issues. Employee contribution is valued and recognized periodically.

The appraisal system that they follow is justified with the response they get back from the employees, but being a Not-for-Profit Organization also has its own implication with it like limited budgets to manage the employee development programs.


This chapter consist of different methodological perspectives, the explanation related to which company examined and why, the data collection method and data analysis.

Research Purpose: According to Gummesson, research is mainly divided in to three types, exploratory, descriptive and explanatory research.

Exploratory research:

Exploratory research is a primary data research technique that can be used as a basis for formulating more precise questions or testable hypothesis. Its approach is to collect as much information as possible related to research area.

Descriptive research:

This type of research used when the problem is well structured. In this research, researcher wants to find out the relevant aspects of the problem.

Explanatory research:

According to Paul and Eriksson (1998) and Yin (1994) this type of research is used to prove or disapprove condition take place ,also it can used to find a correlation between causes using data collection methods..

I have personally selected to use more of an Explanatory Research, the main reason of this research is Explanatory. This research helps to understand the real relevance of the possible effects of High Turnover in the organization and the effects it could have in managing the leavers, both type of leavers: self initiated or employer initiated, and with the help of answering specific research questions we will gain better understanding of the factors that catalyze the initial stages where we can tap the problem and initiate change to avoid circumstances.


Approach of Research: Two techniques to be used at the time of research, one is qualitative and second is quantitative method (Yin, 1994).

Qualitative method:

According to Denscombe (1998) qualitative method goes more in depth of the problem as compared to the quantitative method. This method is used when researcher wants to investigate the problem. In this method the researcher him/herself plays a vital role. Disadvantage of this method is difficult to compare the collected information from the different objectives



              Quantitative method:

According to Denscombe (1998) quantitative method consist of numbers collecting with the help of survey and questionnaire. The advantage of this method is that the study can be generalized while it is aimed at large target group.  

The research will be based on qualitative and quantitative method. But the more research will be focused on qualitative research as the aim of the research is to recognize the core of the problem, with relevant data that project the real problem


Strategy of Research:

Denscombe (1998), Wiedersheim- Paul and Eriksson (1998) and Yin(1994) state that there are five primary research strategies such as surveys, experiments, case studies, archival analysis and histories. Below table shows five strategies.


Research Strategy

Form of research         question

Requires control over behavioural events

Focuses on contemporary events


How, why




Who, what, where, how, many, how much



Archival Analysis

Who, what, where, how, many, how much




How, why



Case Study

How, why



        Table 1: Research Strategies           Source: Yin (1994 p .6)

With the help of research question and the purpose, we will able to find that, there is no need to control over behavioural events as well as survey; contemporary events, archival analysis, and experiment are not appropriate research strategies for this research. Yin (1994) state that case studies permit to a research, keep important image of organizational and administrative processes.


Sample selection:

After determined research strategy, the next chapter is sample selection. According to Yin (1994), collection of data with the help of all potential units is not possible because of limited financial resources and time limitation. In order to explain the important features of the complete problem area, smaller number of respondents are interviewed and the data is gathered.

However, we cannot be confident that the conclusion he/she will end up with will be capable to simplify the whole research area while the samples chosen are not all representative for the research area for which they are gathered. At the time of primary communication the purpose of research is clear. For completing purpose of this research, there is a need to contact with the line managers who have best knowledge and experience of the employability of the post that the respondent is holding.


Data collection:

In the research the main part is to find out information about the possible reasons behind the current 'High Staff Turnover' that Central & Cecil is facing. Data collection is divided in two parts one is explained above that is primary data and the other one is secondary data. The data will be collected through interviewing, mailing,

Surveys and the initial interviews with the employees/ managers will be taken as the primary data.

In the secondary data will be collected through the books, journals, articles, internet. In this research proposal the data is collected from the secondary data where the information is collected from books, internet and journals.


Data analysis:

After gathering up of the all data i.e. primary and secondary the next step is to analyses the information which you have collected within the timeframe. In the data analysis the main focus is on the comparative analysis of information which has gathered with each other. This Research will give me the idea of the possible criteria's that the company is failing to notice which is enticing High turnover in the company, the reasons behind the employees leaving the company by themselves is the most important one to reframe and the interviews and survey would give me the data, projecting the possible leavers.


Applying SWOT analyses

After analysis of data apply SWOT analyses to the collected information.










After analyzing the data the next step would be to apply the data according to the capacity under which they fall possibly

The strengths of the system that C & C follows the possible criteria's of employee turnover that the organization banks on.

The weakness as to how C & C fails to realize initially and the consequences resulting High Staff turnover.

The possible opportunities that C & C has failed to notice over the years to reduce or rather make this turnover a functional one.

The threats of the increasing/ decreasing turnover rates in the company.   



Reliability and Validity:

In this research these two factors plays a very important role. To build up the reliability of this research, there is need of to find objectives as possible. However consider reliability when method for the duration of the interview which is helpful to stop non objective data collection. On other hand validity consider at the time measuring what is intended to be measured.

Thus while categorizing the data to where it belongs we need to prioritize in order for it to be useful and appropriate. Thus the point of validity is very important. Reliability of the collected data is another biased option that should be confronted.



The competitive advantage factor:

This is another part of the fact that through this research we will be able to analyze the key factors that triggers the competitive advantage of the employee turnover, is it possible for C&C to create a benchmark in the Non-Profit Industry wherein possible talent is right attracted and maintained.


The L & D in C & C:

Managing the High Performance Work Culture in C & C



*              The initiative taken by the company to retain its employees is the key to assess the high turnover.

* The key factors that leverage in the company to retain the employees.

Maslow's Theory

The theory can be summarized as thus:

•    Human beings have wants and desires which influence their behavior, only unsatisfied needs can influence behavior, satisfied needs cannot. 

•    Since needs are many, they are arranged in order of importance, from the basic to the complex. 

•    The person advances to the next level of needs only after the lower level need is at least minimally satisfied. 

•    The further the progress up the hierarchy, the more individuality, humanness and psychological health a person will show.

The needs, listed from basic (lowest, earliest) to most complex (highest, latest) are as follows:

•    Physiological 

•    Safety and security 

•    Social 

•    Self esteem 

•    Self actualization

The analysis of this survey will take into account the fact that only unsatisfied needs influence behavior and therefore must have a higher weighting that satisfied needs results.

Management Study

A study reported in the NY Times, ref  Feder, B.J. 2000, "F.I. Herzberg, 76, Professor and Management Consultant", New York Times, Feb 1, 2000, pg. C26. Available from: ProQuest Historical Newspapers The New York Times (1851 - 2003). [28 October 2006 identifies the following hygiene issues that affect staff.


•    Pay 

•    Fringe Benefits 

•    Relationship with co-workers 

•    Physical Environment 

•    Supervisor-Employee Relations

In the came of RAM International, it must be taken into consideration that they state they are not able to increase wages. This point to be challenged as cost savings would be made by improving staff retention levels.

The Motivator-Hygiene Theory (Two Factor Theory) was developed by Fredrick Herzberg. This theory states that job satisfaction and job dissatisfaction acted independently from each other.  (Herzberg, Mausner & Snyderman 1959)

Two Factor Theory distinguishes between:

Motivators; (e.g. challenging work, recognition, responsibility) which give positive satisfaction, and 

Hygiene factors; (e.g. status, job security, salary and fringe benefits) which do not give positive satisfaction, although dissatisfaction results from their absence.

Costs of Employee Turnover

The major categories of costs to take account of are:

•    administration of the resignation 

•    recruitment costs 

•    selection costs 

•    cost of covering during the period in which there is a vacancy 

•    administration of the recruitment and selection process 

•    Induction training for the new employee.

The website states that staff replacement costs are 'typically between £3,500 and £6,000 per leaver'

Following the survey, an investigation should be done to cost the current turnover. If turnover could be reduced, some salary increases could be a funded due to the reduction in these costs.  This could result in a win-win situation, with a proportion of the savings going to staff in the form of salary, benefits, or perks and the balance being utilized by the company to improve recruitment processes or fund upgrades to the work environment.

In addition to the turnover statistics, the Stability Index is to be addressed in the survey

This is defined as:-

Number of employees with one year's service or more now/Number employed one year ago x 100%

A high stability index indicates turnover is generated by a high number of short stay employees, but a core work force that is stable.

A low stability index shows a high turnover in a majority of the workforce.

This to be calculated for both management and the line workers separately.


The effects of labor turnover in the company can have both positive and negative effects on the company's goodwill. Though the turnover figures to take into account the more valuable the employee becomes to company the more damaging the resignation becomes to the company. Turnover to a company has many other factors that are affected by the effects of turnover in the company which can be considered as good reasons for the employers to take measures to decrease the labor turnover in the company. The turnover factor not only brings the cost factors to a rise but also issues like loss of productivity , impaired quality of service as "Experience brings consistency" to the role that an employee employs himself. Increased administrative burden is another factor that has been the main reason for companies to negotiate and not compromise with the turnover factors.



Turnover the rationale behind the Labor Turnover, has turned up to be concerning factors especially in the current economic scenario. The questions as to why people leave a company, has become across the UK a major issue, as it costs a company a huge amount of money and time for the company.


The C & C has not yet taken this issue of turnover as one of the major issue as the company is going through a process of development and change now they are aiming and have incorporated a strategy to reduce the turnover . All the suggestions made are intended to improve staff turnover and manage retention better. Being a Not for Profit organization makes it even more difficult for C & C to retain employees. The homes are located in places around the city of London, and they manage to complay to the main HO at Waterloo. Sometimes the demands and expectations of the tenants are stressful to accommodate, and so the 40 %of the employees who have a direct contact with them most  of the time find it even more difficult. This creates a hard environment in which to work and the constant threat from external competitors hightens the pressure as they are expected to perform even better.

Another factor that needs to be addressed is the fact that the company's Head office is found to be a bit remote according to a few employees who left the company found that it was irreacheable, and that the higher management depended totally on the feedback given by the scheme managers.

The reasons for high labour turnover will be ascertaitned and which specific reasons apply to the company. From these reasons solutions will be advised for the organization. We








Aims of this research

To investigate the causes of Labor turnover.

To examine the Labor turnover problem at C & C.

To offer solutions in order to reduce the labor turnover ion the organization.


Labor Turnover:

"Labour Tirnover is the rate at which staff leave an organization and are replaces by new employees. Too high urnover rate may mean that there is something unsatisfactory about working for the organisaion and that therefore would need to be taken" (Adams 1993).

Researchers have used various ways in which labor turnover or wastage have been measured. 'Labour turnover rates provide a valuable means to benchmarking the effectiveness of HR policies and practices in organisations'. Armstrong (2001)


A report from ACAS explains that even though turnover can be a problem for businesses, especially in cases of management turnover a certain amount is beneficial.  Bringing new ideas and creativity into a company can improve the company's performance.


2.2 Labour turnover in the UK


One of the main problems facing organisations today is Labour Turnover.  The CIPD has found that labour turnover rates and the cost of labour turnover are at an all time high. The average labour turnover figure is 26% a rise from 18% last year and average cost of turnover per employee at £ 3,933.00. 

The length of service of the employees leaving may indicate their reasons for leaving and will be reflected in the exit interviews.  The reasons people leave can alter depending on how long they have been at the company, e.g. someone leaving after just starting may have found that the job did not suit them, whereas an employee leaving who has worked for the company longer may have problems with job satisfaction or more complex issues.  This will have an effect on the possible ways of controlling the level of turnover. 


When looking at a report from the CIPD it is possible to see that employees leaving within the first six months of employment have stayed at a similar percentage over the last few years and was at 22.6% in 2000.  Employees leaving after a length of service of 7 to 23 months have risen from 26.3% in 1998 to 29% in 2000.  Employees serving 2-5 years and then leaving have also risen from 21.1% to 23.8%, and those leaving after serving over 6 years have fallen from 30.2% to 24.6%.  Where employees are leaving within the first few months the companies may wish to address their recruitment requirements, induction and training. Where employees are leaving after a longer period of time more difficult issues are raised.      






























Assessed 00.01 am 21/01/2010.





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