Writing 3 Discussion 2

Literature Review Synthesis Essay

Adapted from Previous Student Paper

WRTG 394

Employee Retention and Turnover Rates

The literature on employee retention and turnover rates shows that there is a fine line that keeps employees coming back to work, week after week, with ambitious goals and a passion to excel. No matter the workplace in question, the literature shows a few factors that hold true across the board. Management styles, job satisfaction and development, and solid retention programs were the key areas shown in the literature that made a difference in whether or not an employee stayed with a company or went on to find another place of employment.

Management impact on retention and turnover rates

Various studies support the notion that management can make or break a company in many aspects, especially concerning turnover raters and employee retention. When talking about turnover rates and employee retention, it is imperative to understand how exactly they are measured. According to the Saratoga Institute, “Turnover is calculated as the number of employee terminations in a given period—voluntary, involuntary or both—divided by the average number of active employees during the same period” (as cited in Waldman & Arora, 2004). Employee retention is measured by examining individuals in different job groups and measuring how long they stay at their jobs (Waldman & Arora, 2004).

In addition, the cost of employee turnover can be significant to any organization. According to Kepner-Tregoe, Inc. (as cited in “To conquer turnover, first calculate its true impact”), to calculate the cost of employee turnover, one would multiply the wage of the position by 130% (in order to include the cost of benefits) and then multiply the result by 25%. “This cost per employee may then be multiplied by the number of ex-employees [from this position]…to arrive at the total cost of turnover in this position” (“To conquer turnover, first calculate its true impact,” p. 8).

Management has a direct impact on turnover and retention. According to Abrams (2002), “If employees have problems with their managers, their probability of leaving the organization increases dramatically, since day-to-day contact has a profound impact on staffing.” Ultimately, a manager cannot throw money at his or her employees in an effort to maintain feasible retention rates (Mitchell, Holtom, Lee, 2001). The literature regarding management techniques and the impact it had on employee retention and turnover rates showed that open, two-way communication and trust were the biggest contributing factors to success in both areas (Taplin & Winterton, 2007). Aside from the impact the manager as a person contributes, the actual job satisfaction itself also plays a bug role in the rates of employee retention and turnover rates.

The impact of job satisfaction and development on employee retention and turnover rates

Other key points that impact employee retention and turnover rates, according to the literature, are job satisfaction and development. “The first step in decreasing turnover is understanding why your employees leave” (Jardine & Amig, 2001). Making this accomplishment more difficult is the fact that “employees are reminding us that the heart is a tougher battlefield than the mind” (Frank, Finnegan, & Taylor, 2004). When assessing how happy an employee is in his or her current position, the process is not as simple as most employers may think. In today’s times, employers are dealing with both older generations and younger generations who have very different mindsets with regard to what they desire from their jobs. For the older generations, job satisfaction is at the top of their list of reasons to stay employed by a particular company. On the other hand, for millennials, their focus is on development (Lee, Hom, Eberly, & Li, 2018). Living in a time when two very different generations have to learn to coexist in the workforce poses an immense pressure for companies to find a happy medium for both. According to a study done by Gallup, (1) millennials want a purpose, not just a paycheck, (2) millennials are not just looking to be satisfied by their job, they are looking for career development; (3) millennials want to be coached through things, not bossed around or micromanaged; (4) millennials want conversations with meaning on a regular basis, not just annual reviews; (5) millennials want to focus on their strengths, not their weaknesses; and (6) millennials are not looking at work as their job, but more so that it represents their life (n.d.). Baby boomers, however, have a different mindset. At this point in time they are focusing more on job satisfaction and maintaining their employment in an effort to secure their health and retirement benefits. According to Allison Bell of the National Underwriter, “ a good benefits package can be critical to efforts to retain boomer employees” (2005). Time allocated for sick days and vacation days, along with the opportunity to invest in retirement, are important features. However, when employees stay at a job only because they fear losing these benefits, then the quality of work generally suffers (Lee, Hom, Eberly, & Li, 2018).

Employee retention programs

The literature also shows the characteristics of effective employee retention programs. “Employee retention programs are made up of a variety of components. Each of these components must work together in a systematic method to achieve the goal of retaining employees” (Gillies, 2000). In the various programs mentioned, the most successful efforts were found in compensation reviews, employee surveys, easier access to communication with upper management, and scheduling that allows for flexibility (Abrams, n.d.). Additionally, employers also have to combat economic fluctuations in regard to turnover and employee retention (Frank, Finnegan, & Taylor, 2004). When employees know that their pay will increase with a positive compensation review, this incentive gives them something to work hard for. Keeping employees willingly engaged in the betterment of their work performance is a difficult task for any employer, which is apparent by all of the studies that have been done in response to retention rates and employee turnover. There are popular misconceptions that are addressed pertaining to the state of the economy and the relationship that it has with retention and employee engagement (Frank, Finnegan, & Taylor, 2004).

Conclusion

The literature reviewed on employee retention and turnover rates shows that there are many factors that play into measuring the effectiveness of various efforts. While there is no infallible method on determining what works best for all companies as a whole, it is apparent that each company must look within its own walls to determine what is the best course of action to keep highly productive and engaged employees loyal to the company. Focusing efforts on management techniques, job satisfaction and development, and better employee retention programs can greatly mitigate the costly and overwhelmingly difficult task of minimizing employee turnover and improving retention rates.

References

Abrams, M. (2002). Back to basics 1. Employee retention and turnover: Holding managers accountable. Trustee: The Journal for Hospital Governing Boards, 55(3), 15–18. Retrieved from https://www.journalguide.com/journals/trustee-the-journal-for-hospital-governing-boards

Bell, A. (2005). To raise boomer retention, firms may have to update benefits. National Underwriter Life & Health, (44), 37. Retrieved from https://www.nationalunderwriter.com

Frank, F. D., Finnegan, R. P., & Taylor, C. R. (2004). The race for talent: Retaining and engaging workers in the 21st century. Human Resource Planning, 27(3), 12–25. Retrieved from https://journals.aom.org/

Gallup, Inc. (n.d.). How Millennials Want to Work and Live. Retrieved from https://www.gallup.com/workplace/238073/millennials-work-live.aspx

Gillies, B. (2000). A Comprehensive Approach to Reducing Turnover. San Diego Business Journal, 21(41), 22. Retrieved from https://www.sdbj.com/

Jardine, E., & Amig, S. (2001). Managing human Capital. Behavioral Health Management, 21(2), 22. Retrieved from https://www.worldcat.org/title/behavioral-health-management/oclc/29851428

Lee, T. W., Hom, P., Eberly, M., & Li, J. (Jason). (2018). Managing employee retention and turnover with 21st century ideas. Organizational Dynamics, 47(2), 88–98. doi:10.1016/j.orgdyn.2017.08.004

Mitchell, T. R., Holtom, B. C., & Lee, T. W. (2001). How to keep your best employees: Developing an effective retention policy. Academy of Management Perspectives, 15(4), 96–108. doi:10.5465/ame.2001.5897929

Taplin, I. M., & Winterton, J. (2007). The importance of management style in labour retention. International Journal of Sociology and Social Policy, 27(1/2), 5–18. doi:10.1108/01443330710722724

To conquer turnover, first calculate its true impact. (2019). HR Specialist, 8. Retrieved from https://www.thehrspecialist.com/

Waldman, J. D., & Arora, S. (2004). Measuring retention rather than turnover: A different and complementary HR calculus. Human Resource Planning, 27(3), 6–9. Retrieved from https://journals.aom.org/

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