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Formative Assignment 4 (40572/19) 7RTM

Discuss how you would use resourcing metrics, such as labour turnover in order to
build more effective HR strategies that would ideally reduce the level of turnover
which exists in a business you are familiar with

Contents

Executive Summary ........................................................................................................ 2


Introduction ..................................................................................................................... 3
Complexity of turnover phenomenon. Costs, benefits, challenges .................................. 3
HR metrics and turnover rate evaluation ......................................................................... 4
Turnover in call centre industry ....................................................................................... 5
Crafting an Employee Retention Strategy ....................................................................... 5
- Engaging through culture, leadership and effective management ......................... 5
- Designing meaningful work and a positive/healthy working environment .............. 5
Implementation, Monitoring and Process Evaluation ...................................................... 6
Key conclusions .............................................................................................................. 6
Bibliography .................................................................................................................... 6
Executive Summary
Organisations are increasingly challenged by labour turnover effects and recognise employee
retention as a critical part of the talent management as employee attraction. Based on CIPD data
44% of organisations expect a significant increase in turnover levels, which makes of this
phenomenon a feature of the workplace for the foreseeable future. This trends creates an increased
need to focus on the profile of job movers and the drivers of retention, and puts resourcing and
retention at the core on HR strategies.

Labour turnover is a complex phenomenon, a consequence of external and internal factors, an


indicator of major changes at macro-environment or of dysfunctionalities at the micro-level of
organisation. Turnover rate is an indicator of an organisation`s attractiveness and reflects the
likelihood of a good place to work.

Employee turnover is a concept correlated with several HR policies and needs a multifaceted
approach. Employee retention is becoming a big challenge for companies and retained as a
strategic issue as well as an operational one due to the impact on performance, financial costs, loss
of productivity, disruptive effects, and loss of knowledge, expertise or reputation.

Assessing the turnover state-of-facts of a company is an opportunity to assess vulnerable areas of


policies, to review patterns of action and management models and improve them through tailored
interventions.

Labour turnover could act as a core catalyser for renewing and revitalizing strategic policies,
culture, leadership or organisational dynamics. The pillars retained to act upon have to be
integrated into the company`s strategy and aligned to long-term business goals. The next steps
should be focused on implementation, monitoring and process evaluation in order to track changes
of actions.
The main goal of all interventions retained is to boast engagement and employee retention and
reduce the level of unwanted turnover and its collateral effects. For making this happen, HR
Management should undertake an active approach, a sound analysis of HR metrics for building
effective strategies to reduce the level of turnover.

The rapport reviews some relevant studies on labour turnover and discusses how this metric could
be used to improve HR policies across organisation in order to control and reduce its negative
effects and costs. Based on research results, some key factors arise frequently as main reasons of
dissatisfaction and voluntarily quitting. Among these, the main cited relate to non-meaningful jobs,
absence of career paths, bad management practices, working environment, lack of leadership,
insufficient benefits package.
Based on this, job design, work environment, work satisfaction, promotion opportunities,
engagement culture, participation in making decisions can improve employee retention (Allen et
al., 2010).
For the purposes of this report, I retained the below four strategic areas likely to play a significant
role in employee’s retention and reduction of level of turnover:
- Engaging through culture, leadership and effective management
- Designing meaningful work and a healthy working environment
- Developing a learning culture and career paths
- Rewarding and recognizing for performance

Introduction
A high rate of labour turnover could reveal dysfunctionalities within an organisation and its
analysis should be analysed in the context of external environment (PESTLE), of the own internal
labour market and workforce profile. A strategic approach of turnover is essential for crafting a
robust and realistic employee retention.

Depending on the complexity of turnover level into organisation and the extent to which it affects
performance, the phenomenon can be analysed holistically or focused on particular policies. The
degree of effectiveness depends on identifying correctly the core sources causing disengagement
and decision of leaving, on calculating costs and on designing appropriate interventions.

External and internal factors influence turnover levels. Iimmigration, demographic changes,
internationalisation, technology, millennials, legislation constraints, Brexit are intertwined with an
unpreceded flexibility and mobility of human capital. In this competitive and volatile context,
facing skills shortages, attracting the best talents is a challenge and retaining them a critical
endeavour (Mitchell, 1994). The external forces determine the levels of turnover and employee’s
propensity to change frequently companies, career, roles, or locations.

Complexity of turnover phenomenon. Costs, benefits, challenges


Labour turnover is an interesting topic for researchers/professionals alike not only in terms of
analysing employees’ organisational behaviour, motivational drivers but also for a better insight
into the dynamic of organisation as a human construct.

Employers and researchers often regard employee turnover as a critical issue (Hom & Griffeth,
1995). As Eberly, Holtom, Lee, and Mitchell (2009, p. 123) trying to understanding how
“employees decide to leave is key to reducing employee turnover”.

Turnover is frequently retained the “major reason for lack of success” (Allen et al., 2010).
Employee turnover results in multiple costs and may affect substantially the business and
company’s reputation. In call centres, MTD stats (IVR – Automated telephone systems, abandon
rate, phone /email service level, sales targets etc) are a clear indicator of the effects of disruptions
of turnover.
Several economic studies emphasise the positive consequences of turnover for an efficient labour
market and the productive effects when a better match between jobs/works is accomplished (Gray
and all. 1996). A reasonable turnover rate has a positive impact in terms of costs, motivation,
knowledge (Allen and Bryant 2012:7). When the work satisfaction decreases, there are costs
involved for the company that may take different forms: avoiding work, sick leaves (Hom &
Kinicki, 2001; Hulin, Roznowski, & Hachiya, 1985), “turnover contagion” (Felps et al., 2009).
Mobley (1977) elaborated a process model of how dissatisfaction evolves into turnover.
A good start for approaching turnover would be to act upon HR planning and take into
consideration:

- The impact of turnover on specific organisational units;


- Critical skills, expertise and total number of employees required to achieve organisational
and departmental objectives;
- Vulnerabilities and difficulties in areas such as recruitment, attracting, induction, training,
career development Etc;
- Resources needed for developing action plan to meet anticipated HR needs

HR metrics and turnover rate evaluation

Staff turnover is an important way to measure both effectiveness of HRM system and the overall
management of an organisation. Analysing how resourcing metrics be used for designing effective
HR strategies is a process with several steps. The objective of measuring turnover is to determine
when and where the organisation run the risk of losing talent that does not want to lose, and to
determine how to attenuate, control or reduce it. The Voluntary Turnover category is the most
relevant to the turnover risk analysis.

A more refined focus on employees segments, such as High Performers, New hires, Poor
performers, High potentials, Key positions, High risks employees are the groups worth acting on
when turnover levels become worrying (Advanced Analytics: Using data to Drive HR Excellence,
2016).

Various models explain the relationship between turnover and performance. A high crude turnover
rate in the first year of employment may indicate induction weaknesses and the necessity of
designing specific measures to address it. A significant average of turnover after 2-3 years of
service may revel scarce growing opportunities.

Of relevant importance is to research the reasons behind engagement /disengagement, staying /


leaving. A first step is finding out why people leave, why they stay and what could make them
stay (Hinkin et al. 2000). Employees may stay longer due to a positive working environment, a
good management, a progressive salary. The main reason for leaving may be the absence of career
growing even if other good practices are in place, a poor/toxic working environment in terms of
wellbeing, collaboration or communication deficiencies.

The key to long-term results is a comprehensive approach meant to identify the root causes and
design integrative measures. Adopting a One Solution Syndrome may not solve the attrition
problem other valued factors are not addressed
Turnover in call centre industry
Call centres have been an integral part of business operation and its one of the growing sector for
all major organizations (Michelle, 2006). The business is associated with are high staff turnover,
high stress levels, absenteeism, low income, poor benefits, low job satisfaction etc. (Melissa,
2013).
Studies show that call centers have one of the highest turnover rates of any industry; 3C
logic (2016) reported, “The average call center sees an annual turnover of 33%, incurring
turnover costs of 25-30% of a full salary and benefits per employee.” While software, technology
and cloud services are at the core at the industry, the biggest asset remains people that make a
difference. However call centres employees seems to be unhappy workers, with precarious jobs,
high levels of stress and burnout (50% turnover in staff yearly).
The critical source of frustration relates to monotony of work, little empowerment, lack of
autonomy/pride or career opportunities.
53% of respondents indicating turnover as the key obstacle to achieve performance and financial
goals; despite this little is constantly undertook by call centre industry to address the issue. “Costs
with recruitment, hiring, training, level of service, engagement, and bad reputation of the company
as employer have become so ingrained in the call centre cultures that HR/managers act on
controlling turnover rate when financial impact is becoming worrying, when the market is tight
and retention strategies become unavoidable for survival” (Vidal Rudy, 2015).

However, call centres become aware of the necessity of improving HR strategy and implement
better policies to attract and retain valuable employees.

The worthy areas of consideration (Griffed and Hom, 2001) recommended relate to job
enrichment, working environment, career progression, reward, and leadership. A growing
academic literature on the influence of the Quality of the Work Environment (QWE) on turnover
(Boxall et all., 2009; Cottini et al., 2009; Hom and Ellis, 2008, Taplin and Winterton, 2007)
correlates job satisfaction, the ‘embeddedness’ of an employee in organisation with commitment,
engagement and reduced turnover.

Crafting an Employee Retention Strategy


Understanding the key drivers behind voluntary turnover is a first step for improving staff retention
rates. Designing actions, allocating budget, deadlines to implement them is the next step.
Four areas to act upon have been retained:
- Engaging through culture, leadership and effective management
A positive environment, a solid culture and great leaders are determinants factors for retaining best
talents and creating a sense of belonging. Poor management, conflictual, discriminative
environment, shocks, unethical behaviour are the most cited reasons for leaving. Building a culture
of trust, support, learning, performance, and leadership could lead to a significant increase in
employees’ engagement. (Christ Mabey, 2007; Clausen et al. 2014).
- Designing meaningful work and a positive/healthy working environment
Employees need to experience a sense of belonging and meaningfulness of their work. Job design,
autonomy, valorisation ownership, would increase sense of fulfilment, engagement, performance
and reduce turnover levels (Turner and Kalman, 2014). Office design, an ergonomic-friendly
workplace, wellbeing policies have positive impact on employees morale. Quality of the work
environment (QWE) could influence a manager’s ability to shape their employees’ quitting
intentions, as a substantial literature indicate (Markey R, Ravenswood K, Webber D J., 2012)
- Developing competencies for promoting and career paths
Creation of opportunities could be a powerful factor in employee retention (Talent and Talent
Management Insights, 2015). Several studies (Dolton and Kudd 19991; Elias 1994; Greenhalgh
and Mavrotas 1996; Green and all 2000; Bryant 2012) have analysed the extent to which training
has a major impact on retention. Financial resources should be allocated for training but correlated
with a career plan development (Salas and Stagl 2009; (Allen and Bryant 2012). Investing in
training but not correlating it to career development would not engage employees to stay with the
company but looking for better opportunities outside (West et al 2012).

A clear and structured career path program would allow employees to make projections of their
future with the organisation. Letting the employees know that they can grow with the company is
an encouragement to stay (CIPD, 2005b). In terms of costs, the organisation would save money if
focus would be on developing talent in-house with a direct and positive impact on retention (CIPD,
2012).

- Rewarding and recognizing for performance


A strategic approach to reward i.e ‘based on the design and implementation of long-term reward
policies”(CIPD 2014) indicates a sign of appreciation and willigness to keep the best employees.
Total reward integrate financial and non-financial incentives (training, learning, opportunities, flex
work, as pay and benefits).
Implementation, Monitoring and Process Evaluation
A strategic review is a process with several stages (Analysis, Diagnosis, Recommendations, Action
Planning, and Resources, Costs and benefits analysis). The implementation plan should include an
action program, responsibility distribution for each stage, resources allowance for translating the
intervention measures retained. During the implementation process, barriers to implementation
should be signalled so as an analysis support measures be designed for overcoming them.
Key conclusions
Employee retention is a critical part of talent management portfolio and reveals the main
weaknesses of an organisation. Failure to control unwanted turnover rates would result in various
costs and the return on investment in human capital would be lost.
Engaging and retaining talent across organisation, securing competencies, knowledge, and making
the best use of them to achieve business goals, along with building up a good reputation on a
globally connected market could not be ignored by companies whose aim is to last on the market
map.
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