THE RELATIONSHIP BETWEEN EMPLOYEE RETENTION STRATEGIES AND EMPLOYEE TURNOVER
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Employee retention is seen as a phenomenon which is increasingly getting the attention of many organizations (Hong et al., 2012) as it leads to a serious problem when high performing employees leave the organization. Organizations faced with adverse outcomes when good talented workers opt to leave and these include decreased efficiency and productivity, increased costs and threat to the long-term survival and sustainability of the organization (Beach, Brereton, & Cliff, 2003). As such, talent retention has become more and more crucial for the management (Samuel & Chipunza, 2009). In this regard, Slattery and Selvarajan (2005) explained that human resource practices are capable of reducing employee turnover, where intention to leave among employees were found to be minimized when employees perceive that the organizations are providing positive human resource practices (e.g., better pay and benefits, job freedom, and job security) (Stewart & Brown, 2009). Retaining employees is a critical issue and if handled properly and effectively, it would add value and competitiveness to any organization. Employees are considered as to be the top assets of the organization and as such, it is pertinent for organizations to exert efforts to retain existing talents to prevent new recruitment. To this end, increasing employee retention has become a trend in the business organizations in countries, including Jordan. Employees with outstanding skills and talents can significantly contribute to the organization’s competitive advantage. Hence, organizations should retain such talents particularly in this challenging and unpredictable environment where change is inevitable (Samuel & Chipunza, 2009). Employee retention is beneficial for the organization and the employees at the same time. Employees today have a lot of good opportunities in hand. The moment they feel unhappy or dissatisfy with the existing employer or the job they are holding; they will always hop to another employment. It is solely the accountability of the employer to retain their best employees. Failure of doing so may lead to the loss of talented employees. Good employers should realize what to be done to attract and retain their employees. Employees are the most vital resources of any organization. If employees are not able to use their full potential and not heard and valued, they would leave because of stress and frustration (Kakar, Raziq, & Khan (2015). Even when they remain with the organization, the feelings of frustration and dissatisfaction would lead to negative consequences that could affect performance and productivity. When these negative feelings get too overwhelmed, the employees would leave. Nonetheless, if employees get a sense of achievement and belongingness from a healthy working environment, the company would have satisfied and dependable employees contributing to the growth of the company.
Employee retention on the other hand refers to the percentage of employees remaining in the organization (Phillips and Connell, 2003). The top priority for any organization should be the attraction and retention of key employees. Even the most proficient companies can be seriously damaged because of failing to implement good employee retention strategies. A considerable investment in both time and money is required in order to find the right people. The key for all organization is to make rational decisions about retention strategies and prioritize employee’s interests (Putting People First: Employee Retention and Organizational Performance, 2011).
Employee retention is also defined as a process in which there is total encouragement to the employees to remain with the organization for a long period of time (Sandhya and Kumar, 2011). In order to increase employee’s performance, it is critical for organizations to ensure that they create and adopt employee retention strategies. A high turnover rate is a serious problem that most organizations are now facing and this is due to reasons such as poor working conditions, no career advancements, job dissatisfaction as well as lack of a decent salary package (Ivancevich, 2010). This in turn leads to low employee performance and as a result organizations have to come up with practices and policies on employee retention. This will also ensure that employees are more willing to stay in the organization for a longer time as well as having a positive impact on their performance.
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