This report introduces employee turnover, discusses its causes and effect on organizations. Additionally, the report introduces Google Inc. as a company with a negligible or tolerable employee turnover rate. The recommendations made in this report to Google Inc. highlight what organizations are doing or should do to hire and retain good employees.
This report concludes that organizations should keenly monitor their employee turnover rates. If the rate is high, then employee turnover combative strategies should be implemented, and if the rate is low, preventive strategies should be implemented. To hire and retain good employees, organizations should focus on improving their culture and performance.
The human resource phenomenon that is employee turnover occurs in two ways. In the first, an employee in an organization abandons his or her current position for a new position that is available to him/her in the same organization. The employee turnover, in this case, is internal as it involves only a single organization (eNotes.com, 2011, 5). In the second, and which is more common, an employee abandons his/her current employer to work for a different employer.
The employee turnover, in this case, is external since it involves more than a single organization (eNotes.com, 2011, 5). Employee turnover can be out of the employee’s free will, or it might be a necessity due to circumstance(s). Therefore, employee turnover can be voluntary or involuntary with respect to an employee (eNotes.com, 2011, 8). Employers are among the main causes of involuntary employee turnover eNotes.com, 2011, 8).
The metric that tracks employee turnover in a given organization is the employee turnover rate (eNotes.com, 2011, 2). By default, it tracks the employee turnover for an organization on a per annum basis. An acceptable way to interpret this metric is; it tells an organization how long its employees tend or intend to stay with it. It is proper management of an organization to ensure that the employee turnover rate is as low as possible during any given period. This has proven a challenge for organizations’ human resource experts as well as industrial psychologists (Sigma Assessment Systems Inc., 2011, 1). The employee turnover rate for a given organization is the percentage of the number of employees making a turnover to the total number of employees in the organization (eNote.com, 2011, 17 – 20).
Employee turnover can either be combated or prevented depending on its rate in a given organization. Scenarios that necessitate combative strategies are those with acceptable rates of employee turnover. Scenarios that necessitate preventive strategies are those with unacceptable rates of employee turnover. In either of the cases, if the kind of employee turnover is internal, the best strategy that addresses the problem is setting up adequate human resource mechanisms (eNotes.com, 2011, 4).
An example of such mechanisms is conducting internal recruitment of employees. Preventive strategies mainly emphasize on key organization issues such as professionalism, ethics, performance, and culture. Combative strategies, on the other hand, meet the problem of employee turnover head-on. A robust employee-turnover combative strategy should inherently ensure that a company hires the right person to work for it and again ensure that the organization has a good employee retention mechanism.
The level of risk posed by employee turnover to an organization is directly proportional to the level of skill of the employees, making the turnover (eNotes.com, 2011, 6-7). The risk in this case for an organization is lost human capital to employee turnover, the cost of replacing it and if the turnover is external, the competitive disadvantage it leaves it in as the migrating employee(s) is most likely to find employment in a rival organization where he/ she might reveal the trade secrets of his previous employer. Employee turnover by highly skilled organization’s personnel poses a huge risk to the organization (eNotes.com, 2011, 7). The opposite is true for unskilled personnel in the organization (eNotes.com, 2011, 6). This is due to this fact; skilled employees receive contracts that are more generous from employers in comparison to unskilled employees.
The costs an employer incurs to employee turnover are both direct and indirect (eNotes.com, 2011, 3). Direct costs with respect to employee turnover are the expenses on logistical mechanisms put up for releasing and replacing the affected personnel and managing the resultant transition (eNotes.com, 2011, 3). The expenses include advertisement, administrative, interviewing, hiring, and training costs. Indirect costs with respect to employee turnover mainly result from reduced productivity arising from the phenomenon (eNotes.com, 2011, 3).
In this paragraph, we explore the various ways in which employee turnover causes reduced productivity in an organization. There is a drop in productivity during the period leading to voluntary employee turnover as compromising the employee’s concentration on his or her current job is relatively easy (Sigma Assessment Systems Inc., 2011, 9). There is a drop in productivity during the period between when an employee is lost and when a suitable replacement takes his or her place.
There is a drop in productivity during the period in which the replacing employee is not yet up to speed with his or her job. There is lost productivity when fellow employees abandon their jobs to assist the replacing employee with his or hers. There is a drop in productivity when the replacing employee leaves the job to undergo training on it. There is a drop in productivity when the trainer(s) leaves his or her job to train the replacement.
In this paragraph, we explore other ways (apart from the drop in productivity) in which indirect costs can occur. Indirect cost occurs when, in the event of external employee turnover, the trade secrets of an organization are revealed to its competitor(s) (Sigma Assessment Systems Inc., 2011, 10). High employee turnover rate in an organization easily leads to poor public relations, which consequently becomes another indirect cost (Sigma Assessment Systems Inc., 2011, 11). In the US, high employee turnover causes an organization to incur increased unemployment insurance costs; this is also another indirect cost (Sigma Assessment Systems Inc., 2011, 12).
The causes of employee turnover revolve around the economy of a country, the employing organization, the job, and the employee (Sigma Assessment Systems Inc., 2011, 15 – 21). The state of the economy in a country can be an incentive for driving employee turnover. In economies that offer unskilled personnel with alternative jobs that are readily available and that have attractive earnings, employee turnover is high. This is because employee earnings are a major cause of persisting employee turnover (Sigma Assessment Systems Inc., 2011, 15).
Two organizational factors, namely, performance and organizational culture, are also incentives that drive employee turnover. The first factor is the cause of employee turnover as it makes an employee believe that it is more logical to work for a performing organization than for a nonperforming one. The logic is that performing an organization guarantees job security to an individual if in comparison to nonperforming ones. The organizational culture in place in an organization tells an employee his or her worth in the organization. An employee will migrate from an organization that shows him or her little or no appreciation to one that readily recognizes his or her efforts. Similarly, an employee will migrate from an organization that is less sensitive to one that is more sensitive to him or her.
Job characteristics are another cause of employee turnover. The characteristics of a job can be an incentive for driving employee turnover. For instance, the characteristics of one job can make it more attractive if in comparison to another and, therefore, compelling an employee to change jobs. This is also the case when one kind of job is characteristically more important or more arduous or more dangerous or posters a sense of accomplishment when compared to another. Employee’s unrealistic expectations out of their jobs are another cause of employee turnover (Sigma Assessment Systems Inc., 2011, 17). When an employee is applying for a job, he or she has many uninformed expectations out of it. Thus when things turn out differently, the employee is disillusioned and opts to quit.
Personal factors such as the need for higher learning or family-related issues also compel an employee to make a turnover (Sigma Assessment Systems Inc., 2011, 18). An employee’s demographic and biographical traits, which dictate his or her lifestyle, are also another cause of employee turnover (Sigma Assessment Systems Inc., 2011, 16). An employee will make an employee turnover so as to end up in an environment that accommodates his or her lifestyle. For instance, if the employee is a smoker and in the current organization, he or she is unable to smoke; this easily becomes an incentive that drives the employee to make an employee turnover into an organization or environment that allows him or her to smoke without difficulty.
Google Inc. is a successful internet technology company originally founded by Larry Page and Sergey Brin, computer science degree-holders from Stanford University. In 2009, Google was the worldwide leader in internet and mobile search advertising and weathered the effects of the global recession to register growth and profits (Gamble and Thompson, 2009, 2). In 2010, the company was ranked as the fourth-best company to work for by CNNMoney (Cable News Network, 2011, 1). Google’s employee turnover rate is low, as shown in the table in appendix A, got from CNNMoney (Cable News Network, 2011, 3). Therefore, an employee-turnover preventive strategy would be appropriate for it. The preventive strategy comprises the following recommendations that will ensure the company maintains its performance and organizational culture.
Google should maintain its recruitment policy. The low turnover rate indicates that Google is hiring the right people to work for it. Hiring the right people in an organization is a critical step in preventing and combating employee turnover (MissouriBusiness.net, 2011,7).
Google should uphold its high code of ethics so that it can maintain and enhance the bond it has with its partners and customers. As Gamble and Thompson point out, Google has a competitive edge over its rivals because it has maintained a successful bond with its advertisers and users (Gamble and Thompson, 2009, 14). Ethics, according to the Macmillan English Dictionary, are the principles by which you decide what is right and wrong (2002, 470). It is the case that a decision-making process founded on ethics promises good decision making, which is important in building a strong partnership (Markkula Center for Applied Ethics, 2010, 2). It is, therefore, imperative for an ethical person or organization to match its standards with a proper ethical decision-making model.
Google should maintain its good leadership or assimilate one or a combination of the leadership theories discussed in this paragraph. Good leadership is important in an organization as it helps to bring the individuals together and lead them to achieve the set goals (The Teal Trust, n.d., 1). A good leader means that the right decisions will be made through an ethical model and thus promoting professionalism.
Google should maintain its current organizational theory and structure. Organizational theory in an organization is undertaken to identify the themes that propel problem-solving, maximizing efficiency, maximize productivity, and that takes care of the needs of the stakeholders (Barzilai, n.d.,1).
Another recommendation this report makes to Google is that the company maintains its critical thinking culture displayed so far. Critical thinking skills are aimed at helping an individual or organization act purely objectively and rationally (Kurland, 2001, 1). The ability to make the right decisions is important in securing a better future for an organization such as Google. It is more of the right decisions and less of bad ones that have seen it become a market leader in internet and mobile phone advertising. If they are to maintain this position, then the decisions taken by its management will have to be vetted thoroughly through a critical thinking process because it is the lack of critical thinking skills that are the starting point of the downfall of an organization.
Another recommendation made by this report to Google is for the company to pursue continuous quality improvement. Continuous quality improvement refers to the formal approach applied in analyzing performance as well as improving it (Duke University Medical Center, 2005, 1). Continuous quality improvement ensures that an organization’s performance is maintained and enhanced through the production and selling of products with excellent quality.
Employee turnover in an organization, whether internal or external, has negative impacts on it. Organizations should monitor employee turnover by calculating the employee turnover rate regularly. When the rate is low or acceptable to the organization, preventive measures should be put in place to ensure the rate does not rise above the acceptable value. When the rate is high, combative strategies should be effected so as to bring it down.
The recommendations made in this report to Google Inc. ensure that the company’s employee turnover rate remains negligible. The recommendations address organizational issues that can trigger employee turnovers, such as performance and organizational culture.
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Table 1. Google statistics in the year 2010.