HomeOpinion & AnalysisColumnistsLabour Perspectives: Thou shalt not leave

Labour Perspectives: Thou shalt not leave

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Employee turnover is not an event, it is a gradual process of disengagement that can take days, weeks, months or even years until the actual decision to leave occurs.

The cost of employee turnover to an employer is easily overlooked, but research has shown that it can reach as much as 24 months of the salary paid to an employee.

Let’s assume the average salary of an employee in a given company is $20 000 per year.

Taking the cost of turnover at 24 months’ salary, the cost of turnover is then $40 000 per employee who leaves the company.

For a company that employs 500 staff with a 10% annual rate of turnover, the annual cost of turnover is $2 million!

That’s a lot of money in any Zimbabwean company’s book.

Studies have also revealed one out of every three employees plans to leave his or her job in the next two years. What then should employers do to make sure their employees, especially the talented ones, stay longer?

The answer lies in retention management. But what is retention management? It is simply the ability to hold on to those employees you want to keep for longer than your competitors.

A number of factors have been put forward as important in affecting employee retention. This article will focus on five such factors namely financial rewards, career development opportunities, job content, social atmosphere and work-life balance.

Competitive financial packages can signal a strong commitment on the part of the company and therefore can elicit a strong reciprocal
commitment on the part of the employees.

Compensation expert Edward Lawler in his 1990 book Strategic Pay maintains that “organisations that have high levels of compensation have lower turnover rates and larger numbers of individuals applying to work in them”.

Besides economic security, financial rewards also have a social meaning, with one’s salary level providing an indication of his or her status in the organisation and in society.

However, there are challenges in using financial rewards as a recruitment tool. For example, a 1987 study by the Institute of Employment Studies revealed that only 10% of people who had left their employer gave dissatisfaction with pay as the main reason for leaving.

Another compensation expert Greg Smith in Here Today, Here Tomorrow asserts that “money gets employees in the door, but it doesn’t keep them there”.

Money is therefore a necessary, but not sufficient condition for employee retention. The problem with using financial rewards as the key retention tool is that you will always be vulnerable to the possibility that your competitors will be able to offer a better package and thus lure away your best employees!

Training and career development opportunities are also considered as one of the most important factors affecting employee retention.

An organisation that seeks to strengthen its bond with its employees must invest in the development of these employees.

This not only involves the creation of opportunities for promotion within the organisation, but there should also be opportunities for training and skills development that enhance employability internally and even in the external labour market.

Arguably, your employee’s perceptions of growth opportunities on offer reduce their turnover intentions. Greg Smith unambiguously states:

“Make no mistake about it: all organisations will do a better retention job by spending more resources on training and development . . .” It is doubtful that employees whom the company has invested training resources will simply gravitate towards another employer because of modest differences in pay or benefits.

Another important category of retention factors relates to job content, more specifically the provision of challenging and meaningful work.

It has always been argued that people do not just work for the money, but also to create purpose and satisfaction in their life. If work mainly consists of routine-based performance of tasks, the likelihood of demotivation or turnover will be relatively high.

Organisations that think carefully about how to structure jobs and related tasks in a meaningful way will certainly affect their retention rates positively.

Initiatives aimed at enhancing the intrinsic qualities of a job are the most popular type of retention practices for knowledge organisations of today.

The work environment and the social ties within this environment is another key retention factor to be considered by employers.

Loyalty to the organisation is fast becoming a thing of the past, being replaced by loyalty to one’s colleagues.

Enhancing social networks for your staff is an effective means of retention. Social contacts between colleagues and departments are an important factor for retaining talent.

If an employee decides to leave your organisation, make him or her feel that they have lost a social network!

This can be achieved through the creation of a positive social atmosphere by stimulating interaction and mutual co-operation among colleagues through long service award ceremonies, employee-of-the-month awards, company-sponsored sports teams, company parties and many other initiatives.

Finally, when you force your employees into choosing between having a life and a career, you are creating a toxic mixture that can only lead to your employees leaving your organisation.

The conflict between work and career on one hand and private life on the other is more real than it is illusory — it is important to recognise that employees have important family and other life commitments that compete with their work commitments.

Organisations that allow employees to strike a meaningful balance between obligations at work and obligations at home are more likely to “lock” these employees than those organisations that believe work-family conflict is an illusion. Human resources departments must therefore be innovative and come up with policies that improve the work-life balance.

Employee retention is a strategic issue for organisations. Employees are not tied to the organisations they work for.

They will leave and join other organisations. Employee retention will therefore remain a mirage. This is normal, but where it becomes excessive, it can have deleterious consequences for organisations.

The list of retention factors discussed here is not exhaustive and creative organisations should have insight into those factors most important in determining employee retention at both individual and organisational levels.

Organisations should take into account what their employees value and what factors contribute more strongly to their intentions to leave or stay.

Isaac Mazanhi is a labour analyst. He writes in his personal capacity. He can be contacted on e-mail: imazanhi@hotmail.com

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