Problems in Retaining Employees in Construction Companies in South Africa

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PROBLEMS IN RETAINING EMPLOYEES IN CONSTRUCTION COMPANIES IN SOUTH AFRICA

Abstract

Title: Problems in Retaining Employees in Construction Companies in South Africa

Purpose – The purpose of the following research is to evaluate the factors contributing to retaining employees in the construction industry. Will carry out research and make inquiries in order to determine why employees are leaving their respective companies. It will also investigate current retention plans as well as cost implications to the employers.

Design/methodology/approach – This study is firstly a literature review using data based on content analysis, case studies and historical data. Secondly, information would be collected from 10 randomly selected employees working within the industry. Interviews are conducted with different companies human resource managers as well as employees who have left their jobs in South Africa to work in other construction companies, including reasons as to why the decided to leave.

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Findings – There seems to be a high number of employees who are taking their professional services to other companies, and there are a number of different factors that contribute differently to the employees leaving their companies. The negative effects to this are cost and managerial implications to the employer, also resulting in lower productivity levels which affect current projects they are working on and therefore the financial status of the company.

Originality/value – The information will assist South African construction companies to consider its construction employees and do more to ensure they stay within the country, if not their current company. They can do this by initiating programmes within the industry that benefit both employer and employee.

Keywords: South Africa, Construction Industry, Retain Employees

1 INTRODUCTION

1.1 General

Retaining employees is becoming a major problem in construction companies. The needs of the workforce are constantly changing and companies aren’t able to keep up. This causes good people to leave good jobs. People are being exposed to new and better prospects much more easily in these modern times, and so it is much easier for a person to leave their job for greener pastures. Many companies don’t realise how important it is to retain employees as they assume it comes naturally to running a business. Although this is true to a degree, a company should never underestimate the value of retaining employees or the how much it will cost the company to replace them. Even losing a lower level worker has significant impact to the cash flow when your account for interviewing people to replace that person as well as the cost of training, all the while losing productivity and therefore cash flow.

1.2 Statement of Problem

There is a high rate of employees changing jobs, this leads to an increase in expenditure, as a result this leads to lower productivity which affects production at various projects. Employee’s lack of appreciation at work is a driving factor for them leaving.

1.3 Aim

The study will try to inform and assist construction companies in understanding the problem of not retaining staff and its cost implications. It will also provide ways of developing more practical retention strategies.

1.4 Objectives

Various objectives include:

  • Investigating the causes
  • Determine means of keeping employees
  • Determine cost to employer
  • Create a strategy for the construction industry

Chapter 2Literature Review

The primary issue for South African companies is finding good people with the right training and education and being able to retain them. If companies want their business to thrive hiring the best employees has become a critical issue. The challenge for owners is to source, attract and retain the right employees (Unicorn HRO)

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Only 15 years ago, constantly moving from one job to another was a foreign concept in South Africa. People use to spend more than 25 years at the same company, sometimes even doing the same job. Times have now changed, with new technology people have access to information they never had before, right at their fingertips. This new found awareness of other potential success has led to a behaviour being formed, commonly known as “job hopping”. Job hoppers are people who constantly jump from one job to another in short periods of times. There is a negative connotation associated with job hopping as employers think these people do not have what it takes to follow through with their jobs. They believe their behaviour is seen as irresponsible and shows a lack of commitment and loyalty. This becomes a liability to the company (Trunks, 2008) (Nkomo, 2010).

2.1 Reasons for Employees Leaving

According to PSP Metrics (n.d.) a survey carried out by Gallup on 100,000 employees in different organisations resulted in them finding common reasons as to why employees chose to leave their current companies. These included:

  • There was a lack of respect for management.
  • Their job caused unnecessarily high levels of stress.
  • There was a lack of a challenge at work, leading to their job becoming mundane and boring.
  • A poor working environment
  • A lack of communication concerning information

Most employers in the current working environment complain that their employees are no longer motivated to work, however it is usually the opposite which is true. The problem can lie in one of the above mentioned areas. Money used to be a major factor when choosing to stay with your company or leave, but that is no longer the case. Most, if not all employees today want to feel that their work makes a difference in the bigger scheme (Nkomo, 2010).

2.1.1 A Bad Working Environment

Working in a bad or toxic environment is a major factor in employees leaving and normally contributes to the other factors, a bad working environment not only leads to resent towards your job but can also cause serious health implications.

Salpeter (2013) identify a few signs that indicate a toxic work environment.

  • Your boss is a bully. When a leaders constantly insults and berates employees and no one stands up to him.
  • Co-workers vs. Co-workers. It becomes a very uncomfortable working environment when workers who are equals harass each other and there are no consequences.
  • Someone taking credit for your work. This can become highly frustrating and can even lead to you missing out on rewards and even a possible raise.
  • Doing other peoples work. This becomes highly frustrating when it is not recognised by senior management and the person whose work you’ve done is not reprimanded.

2.2 Cost of not Retaining Employees

Studies have shown that the cost to replace an employee can range between 30-50% of the employee’s annual salary. 150% for mid-level employees and for a higher level employee, the total cost of turnover can reach as high as 400% of the employee’s annual salary (Blake, 2006)

When you wonder why the cost is so high, you have to factor in what you have already invested in that person i.e. salary, training, time etc. Now factor in the costs of hiring someone to replace them i.e. interviewing applicants and the cost of training them, all this while losing productivity and therefore money (Unicorn HRO, n.d.).

An employee leaving also affects other employees, especially if that person has been with the company for a number of years. The morale of fellow employees drop and their productivity follows. An entire department may have to adjust to an employee leaving and then re adjust to an employee coming in; this again affects productivity (Unicorn HRO, n.d.)

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2.3 Retention Strategies

A basic rule to success is that if you want your business to prosper, you have to invest in it. In order to succeed the best investment you can make is your employees. Employee turnover can become very costly to an employee, especially if you have invested in training and development strategies for that person. Retaining employees through retention strategies becomes important (Unicorn HRO, n.d.).

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The first step in retaining your employees is being able to track retention, if you can’t measure it you won’t know how much it need to improve. If you know how well each department is managing, you’ll know who needs improvements. Each department should have a senior supervisor, a good senior supervisor can be very crucial to retaining your employees. Steven Miranda (n.d.) states “Employees don’t quit their jobs, they quit their managers”. Most employees’ primary relationship is with their senior supervisors, and this can directly determine whether a person stays or not. Regular meetings should be held to determine ways of making that relationship a better one. (Conerly, 2013).

The second step will be creating and maintaining a good working environment, that not only retains employees but attracts them as well, helping them grow. A good working environment can eradicate many problems leading to employees leaving their companies. When trying to address the current working environment you can assess 3 major aspects pertaining to the work place. According to Irwin (2011):

  • The ethics and values on which the company instils
  • Policies and actions used to turn those values into every day workings
  • The physical environment that the employees work in

When looking at ethics and values. It is important to set an example to the employees. They will look for this leadership and act accordingly. There is no point in behaving, immorally or unethically and then act surprised when employees start behaving the same way.

A bad working environment is probably the biggest factor in employees leaving and the ability to control the work place and make it better will work out in the long run. There are various methods with which you can accomplish this.

  1. Feedback

When employees don’t receive feedback from their employees they tend to worry that they are not doing a proper job or they think no one cares so they begin to slack. This can be avoided by having regular meetings with your employees to evaluate their work. Positive reinforcement is key. Instead of constantly pointing out what is wrong, point out ways that the person can improve on their weaknesses. This makes it easier for employees to speak to managers about certain problems they have (WaspBuzz n.d.).

  1. Office Hours

Different people work at their optimum level at different times of the day. Some people may be done with their work at 12 p.m. while others may only do their best work after 10 a.m. allowing employees flexible working hours while setting those goals to achieve in those hours will lead to an increase in production and therefore income. Rewarding your employees with time instead of money is always welcome and sometimes more appreciated (WaspBuzz n.d.).

  1. In The Loop

As far as you can, keep employees in the loop about the business without divulging any confidential issues. This makes them feel that the job they do is important and directly affects the company. It gives employees a sense of accountability and pushes them to work harder to improve the company.

The third step is to ask employees why they work for you. Two things come from this. Firstly the employee reassures themselves as to why they work for you and in turn the employer gains a better understanding of what draws people to your organization. These reasons become vital information as to why people are working for your company and if you are sending the right image out. This information also helps when recruiting, if the person values the reasons other people work there then they would probably be a good fit for your company (Irwin, 2011)

Once you have established why people want to work for your company, the next question is what the company can do in order to make things better as there is always room for improvement. If done in the correct way the company may discover great ways for not only improving the conditions your employees work in but also other parts of your business.

Employee retention strategies should help bring a sense of family to the business place. Even though families do have internal conflict and don’t always agree, they tend to work it out. This bond will see employees stick together through tough times and rejoice in the great times. They will help to support each other and will help each other grow. If this sense of family is achieved, it becomes a lot harder to leave than leaving somewhere you just go to work.

Chapter 3Research Methodology

3.1 The Approach

The approach to this research is primarily a qualitative approach, based on various articles and case studies. The study used this to focus on the most common problems when faced by companies to retain their employees. The study also used a minor secondary quantitative approach where a survey of 10 people in 2 companies was taken to gauge the relevance of the articles the research was based on.

3.2 Limitations

This study was limited by the below mention:

  • Scheduling. This became a major issue when people could not find the time to partake in the survey or hold interviews.
  • Confidentiality. Many people did not want to take part in the survey as they were afraid the information would be used to victimise them.

Chapter 4Results and Discussion

4.1 Causes of constant job change

Local employers are failing to attract, retain and develop their employees. Some of the key findings of the study include organizations implementing and responding to performance reviews poorly, despite having proud and willing employees as a result employees move from one company to the next, companies fail to invest sufficiently in skills.

Many employees prefer a better Woking environment. This will increase working relations between fellow employees and between employees and their managers. This will result in more productivity and income.

4.2 Costs to the Employer

Employees moving from one organization to the next cause the company to lose its initial investment and invest more into finding replacements. These actions are causing a significant impact on company's morale, productivity and overall profit.

4.3 Survey Conducted

The Charts below represent the answers to various questions asked on the survey.

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.Figure 1: Question 1

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Figure 2: Question 2

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Figure 3: Question 3

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Figure 4: Question 4

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Figure 5: Question 5

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Figure 6: Question 6

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Figure 7: Question 7

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Figure 8: Question 8

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Figure 9: Question 9

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Figure 10: Question 10

Chapter 5Conclusions and Recommendations

Retaining good employees is important to a company’s long term success. Constantly changing employee’s starts to affect the efficiency of the company causing a lower standard of work, in turn causing low productivity and low income.

The cost of replacing, recruiting and training new employees becomes a major issue and can affect the financial standing of the company. It is simply unaffordable to ignore an employee retention problem.

There are many ways to to curb this problem:

  • Companies need to show their employees that they care about them. Taking personal interests into account and developing their staff.
  • Creation of good, meaningful and challenging works so that the workplace does not become boring or mundane.
  • Create a good working environment for employees. Happy employees make a happy company

Having a retention plan is a must for a company. Investing in this will save you a lot more in the future.

Companies must adopt a culture where they value their employees, and where personal gain is aligned with business gain. Companies must let go of old fashioned recruiting methods and utilize modern methods in order to retain their employees.

Chapter 7: References

AOL Jobs: “12 signs you are working in a toxic environment”

http://jobs.aol.com/articles/2013/09/09/signs-toxic-office/ (2013)

Forbes: “Quits are up: 7 employee retention strategies your company must have”

http://www.forbes.com/sites/billconerly/2013/12/11/quits-are-up-7-employee-retention-strategies-your-company-must-have/ (2013)

Mondaq: “Five top employee retention strategies”

http://www.mondaq.com/x/155322/Five+Top+Employee+Retention+Strategies (2011)

Unicorn HRO: “Effective tools for retaining employees – what you should know”

http://www.unicornhro.com/articles/effective-tools-for-retaining-employees--what-you-should-know (n.d.)

Wasp/Buzz: “6 sins of office stress: How to create a better working environment”

http://www.waspbarcode.com/buzz/6-sins-office-stress-create-work-environment/ (n.d.)