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FACTORS AFFECTING EMPLOYEES’ VOLUNTARY TURNOVER: A
CASE OF DELOITTE & TOUCHE KENYA
INTRODUCTION AND BACKGROUND
Employee turnover literature presents various definitions. Wesonga et al., (2011)
considers labour turnover as movement of people in and out of a firm. This definition
hardly takes cognisance of the fact that turnover happens in a context and usually
people will leave an organization in a strategic direction. Abassi and Hollman (2000)
define employee turnover as rotation of employee within the labour market, between
different organizations and jobs, and also between states of employment and
unemployment. This definition however hardly recognizes that some staying
employees have intentions to leave and that employee turnover is driven by various
reasons both internal and external to the organization.
Chepchumba and Kimutai (2017) define employee turnover as people who have left,
are leaving and intending to leave for various reasons. Price (1977) brings time
element and computation into definition. Price (1977) considers turnover as a ratio of
the number of organization members who have left during the period considered
divided by the number of people in that organization during that period. Therefore, in
general employee turnover can be considered as a situation in which employees rotate
voluntarily or involuntarily in the labour market between employment in different
organizations and jobs and unemployment for specific reasons and within a specific
period.
Kwamboka (2015) distinguishes the types of employee turnover. Voluntary turnover
relates to when employees leave an organization at their own discretion. Involuntary
turnover relates to when an employee leaves at the discretion of the employer. For
employees’ voluntary turnover, the employees choose to resign or terminate their
services from their employing organization for a variety of reasons such as; better job
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offers elsewhere; poor working conditions and management, relocation, lack of career
growth, poor pay among others (Lepilale, 2009). Khoele and Daya (2014) observe that
turnover can be voluntary occasioned by resignation or involuntary occasioned by
dismissal or retrenchment. Ampomah and Cudjor (2015) refer to voluntary turnover
as controllable turnover and involuntary turnover as uncontrollable turnover. This
distinction is echoed in Ongori (2007). They further distinguish between functional
turnover where the employee’s departures is beneficial to the organization and
dysfunctional turnover where the departing employee is considered valuable to the
organization. This distinction is echoed in Khoele and Daya (2014). For purposes of
this study employee turnover refers to employees who voluntarily resigned or would
voluntarily resign from the organization if a situation warrants it.
The merits of employees’ voluntary turnover are well noted. Elkjaer & Filmer (2015)
note potential to bring in new thinking to the organization, assist management to
respond to change and skill demand, and replace instances of poor performance.
According to Okumbe (2011) employee voluntary turnover may be healthy for an
organization because it provides avenues for good-riddance since it helps cushion the
organization against impending redundancies. Nyakego (2014) observe that employee
turnover creates opportunity to introduce new competence, new ideas and
experience into the organization and open up career development opportunity for
other employees. Wesonga et al. (2011) argues that turnover brings in new ideas,
skills and enthusiasm to the labour force.
However, voluntary turnover of highly skilled employees remains a challenge for
business organizations. The direct and indirect cost of voluntary turnover of seasoned
employees is increasingly affecting business operations and the achievement of
business goals. Chepchumba and Kimutai (2017) observe that voluntary turnover of
highly skilled employees negatively affect the organization’s performance and
effectiveness.
Background Information
Business organizations across Africa report rising annual employee voluntary turnover
rates. According to Ernst and Young (2014) annual employee turnover rates in
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business organizations across Africa is 5% . The Economist Corporate Network
(2015) reports staff turnover across Africa at below 10% but also notes that it is on the
rise especially in the East Africa and Southern Africa regions. In South Africa
majority of companies report staff turnover of between 5-10% (Khoele & Daya,
2014). The rising trend is projected to continue with emergence of competition for
talent in Africa and continued demand for technical and professional skills. This
observation is already evident especially in the service industry sector where
employee turnover is on the rise (Adewuyi, 2012; Kuria et al. 2012; Obiero, 2011;
Kariuki, 2015). Professional service firms in Kenya are no exception (Mwangi, 2010).
Employee voluntary turnover in business organizations is attributed to several factors.
These factors can be internal to the organization and therefore within the employer’s
control or external to the organization and therefore beyond the employer’s control.
Generally, the factors highlighted in employee turnover literature include:
organizational stability, lack of job security; lack of promotion and inadequate
training and development opportunities, personal agency, inefficient communication
systems, recruitment practices and policies; managerial style; lack of recognition; lack
of competitive compensation system; and toxic workplace environments among
others. (Abassi & Hollman, 2000; Sherman et al. 2006; Ongori, 2007).
Characteristics of the employee are important factors that can affect voluntary
employee turnover. According to Biswakarma (2016), aged, skilled and married
employees have low chances of leaving work. Loewenberg (2014) also established
that young workers have higher employee voluntary turnover rates than older
workers. Work life balance is also a major factor that affect employee turnover. Kuria
et al. (2012) argued that lack of balance between work and personal life is a major
cause of employee turnover. Compensation is also an important driver for employee
voluntary turnover. Obiero (2011) found better pay elsewhere as the most important
motivation for employee turnover. In addition, career development is found to have a
direct impact on employees’ turnover intentions.
The rate of employee voluntary turnover at Deloitte and Touch Kenya has doubled in
the last five years compared to the average of 5-10% within the East Africa region.
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Establishing the underlying factors therefore informed the basis of this study.
Problem Statement
Employee voluntary turnover has been regarded as an overall measure or indication of
organizational functionality (Ampoamah & Cudjor, 2015). When employees are
dissatisfied with their job, they tend to withdraw in order to try to minimize their
exposure to the job. Employee voluntary turnover is further exacerbated by the fact
that losing high performing individuals affect the productivity of the organization, as
the organization loses the investment that was made in their development. As the
percentage of the workforce in the professional or highly technical work increases,
understanding and effective management of the employment relationship between
professional employees and their employing organizations becomes increasingly
important (Barley, 1996). It is clear that excessive employee voluntary turnover
creates an unstable workforce, increases costs and impacts negatively on
organizational performance.
In Kenya the number of employees voluntarily leaving their jobs is reported to be
increasing. According to Mwangi (2010), banks and audit firms have the highest
employee voluntary turnover. Recent survey on employee voluntary turnover
conducted by Deloitte & Touche Kenya found out that the biggest challenge facing
most companies in Kenya is lack of employee retention within their firms. Employee
turnover according to the survey is because of ineffective career development and
training programs and infective recognition and reward programs (Deloitte & Touche
Kenya, 2014). In addition, the survey showed that workers had strong dissatisfaction
with their work with most indicating that they were not involved in the decision
making processes affecting their work. There was also an indication of not being
happy with the remuneration package despite being technically competent to perform
duties. According to Mbae (2014), the decision making should be more inclusive so
that relevant members of staff provide input to decisions that affect them.
Consistent with Mwangi (2010) observation on rising employee voluntary turnover in
audit firms, Deloitte & Touche Kenya has for the last 5 years experienced high
employee voluntary turnover compared to 5-10% reported within the East Africa
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region. Data at the Human Resources shows employee voluntary turnover rate of over
20% between 2012-2017. Across departments, the audit department reported the
highest employee turnover rate. This has resulted to high costs of replacing employees
and disruptions of business operations. Despite the high employee voluntary turnover,
no study has focused on establishing factors driving this trend at Delloite and Touche
Kenya in the last five years. Although Mwangi (2010) study focused on the
professional service firms, the study findings were generalized to the ‘Big Four’ audit
firms in Kenya and not specific to Deloitte & Touche Kenya. Furthermore, the study
was conducted before the reported turnover rate of 20% was experienced. There is
therefore limited knowledge on factors that drive employee voluntary turnover at
Deloitte & Touche Kenya for the last five years.
Notable past studies conducted on employee voluntary turnover in the last five years
have focused on other sectors such as education (Waititu, 2013), health (Ndemaki,
2014), hospitality (Kuria et al. 2012), Transport (Wambui, 2012), and banking
(Kariuki, 2015). However, hardly any recent study focuses on drivers of employee
voluntary turnover in professional audit firms. Additionally, the studies have focused
more on financial compensation and career development as key factors. Other
variables such as employee characteristics and work life balance have received very
little attention.
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