| Introduction:
Employee retention and turnover are topics of
a lot of conversations centering on HR. in today’s
competitive world, company loyalty and a familiarity
with the organization most often takes a back
seat when a talented employee gets an attractive
offer from another company. As he decides whether
to take the leap or not, his predicament is made
worse by his present firm whose members decide
to try every trick in the book to persuade him
to stay. If he decides to leave, the story does
not finish here. Rather, the pressurizing tactics
only get worse. Some people succumb to this pressure
and stay while others are slightly braver and
enter the world of the unknown, specifically a
new company. But the question is, when do organizations
go too far in trying to keep an employee who has
decided to leave? There must be a boundary between
acceptable and unacceptable behavior. And is employee
turnover really so bad? These are the questions
to be answered from here on.
Crossing the Limits:
Today, recruiting and training costs have become
so high that employers are trying whatever is
within their reach to keep employees. And this
makes perfect sense. This is because after all,
all the company wants to do is keep one of its
most valuable assets. But there are certain ethical
issues involved. In the article by Denise Lugo,
when the employers at Goldman Sachs found out
that three of their Italian foreign exchange specialists
were planning to leave because of their enmity
with a particular boss, they fired the boss and
retained their employees. Psychological pressure,
promises of salary increases and tactics like
the one mentioned earlier are the lengths which
the firms go to prevent their employees from jumping
the ship. There is no set line, beyond which it
can be said that the firm has gone too far. It
is a subjective matter, where it is impossible
to judge whether the firm acted in good faith
or out of spite, ego, or its selfish interests.
Turnover, as will be discussed later can be good
and bad. If the employee who is leaving is definitely
an asset to the company, and if the cost of replacing
him is far more than what would cost to entice
him to stay, then it is best that the company
does try its utmost to keep him. But according
to Joe Grimm who is Recruitment and Development
Editor at the Detroit Free Press, “Offer
growth. People want to get better … if yours
is a place where it takes five years to find a
new opportunity, people will find another way.”
Companies should try to help their employees’
careers in order to get them to stay, instead
of trying to please them in hopes of low turnover
(Victory, 2003).
Turnover: good or bad?
This is what brings us to the very important question:
is employee turnover good or bad? It was reported
in the results of a survey that the prime issue
that companies are facing today is hiring and
keeping good employees. Across the country, the
average turnover rate is 12%. The problem with
employee turnover is that it is extremely expensive.
There are a lot of costs associated with employee
turnover which lead to the final result coming
out as: employee replacement costs can be as much
as 150% of the departing person's salary.
There are a lot of factors which go into this:
the headhunter's fee, the defector's lost leads
and contacts, the new employee's depressed productivity
while they are learning, and the time co-workers
spend guiding the new employee, attracting applicants,
entrance interviews, testing, pre-employment administrative
expenses, medical exams; and acquisition and dissemination
of information. There is no arguing with this
point: employee turnover is bad because it takes
a lot of time, energy and resources (Pinkovitz,
Moskal & Green, 2004; Hansen, 1997).
Employee turnover however, gives employers a chance
to refresh the company and rid it of people who
are not helping the company’s cause in the
grand scheme of things. When a company tries too
hard to retain employees who simply don’t
belong, it introduces in the environment a certain
blandness and mediocrity. The company feels that
it has to keep all of its employees and tries
to please them in every possible way. Employees
start to stay because of the benefits plan of
the company, and not because they are particularly
passionate about the company and its culture.
Before long, the talented employees start paying
attention to headhunters, since they want to be
in a company which regards success in terms of
market share and the below average employees secure
their place in the company knowing they won’t
get these fringe benefits anywhere else. Secondly,
employees who want to leave but are persuaded
by employers to stay often do so out of loyalty
or pressure. These are dissatisfied employees
who will not be very productive anyway at the
end of the day. Hence, turnover can be good, in
certain situations. But turnover of talented employees
must be avoided (Ettore, 1997)
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