The strength of a company’s success depends on its personnel. More and more CEOs realize this and put their energies into managing their employees. However, as in any other business, there are problems with HR management. Difficulties come from both employees and management. Among the main problems are unqualified staff, lack of line or managerial staff, lack of discipline, low levels of motivation, performance, responsibility, and a hostile atmosphere in the team. From this, one can see that the organization’s human resource management problem arises because of ineffective personnel management and managerial errors. In the case I am considering, the company’s concern is high staff turnover, which creates additional problems. Among other things, it affects the organizational culture of the company. An action plan needs to be made because the CEO wants data on what changes and why are happening to employees. In addition, this paper will include a discussion on how to improve the company’s profitability using human resources.
Employee turnover is a natural process that occurs in all global companies. Nevertheless, only as long as it does not cross the 5% per year threshold, which happens in the case study because the manager is concerned about this issue (Hom et al., 2019). This is already a dangerous threshold, exceeding which indicates that all is not well in the company, that its solvency is in danger of collapse. In such a situation, it is time for a manager to think about why employees are fleeing and how they can be retained. In order to analyze and provide data to the manager, it is necessary to collect information about the reasons why employees leave. The desire to change jobs often arises because of stress, dissatisfaction with the profession and responsibilities, family and external factors, and salary. For example, the company has not worked out a system of feedback. Feedback is necessary for both professional and personal issues of the person in the workplace. Otherwise, the employee will feel unnecessary duties alienation in the team. One way or another, these conditions directly reduce productivity and the company’s success as a whole.
Another option may be a situation where the employer is not interested in the career growth of subordinates, not invested in skills development. It could also be that the team ignored newcomers, who were promised to be supported at the first stages. It is also worth considering the cause of staff turnover in the illiterate selection of staff who do not have the necessary competencies and do not stand up to their demands. In addition, if a specialist, competent, valuable, not even try to keep, in general, there is an unflattering opinion about the company, the trust in the employer is lost (Hom et al., 2019). Once the causes of the turnover have been analyzed, it is necessary to understand why the organization manifests such a picture. Moreover, it is essential to analyze who is dismissed. If those who leave are those, the company planned to fire – then the personnel policy is carried out correctly. If key, critical specialists are leaving, this is a reason to take action.
There is a need to collect a certain amount of information for the analysis. In each case, it is necessary to determine the circumstances that make employees leave to identify the objective motives. Perhaps employees are not satisfied with working conditions, illiterate management, or low wages. The motives for dismissal are different, and all of them must be clarified. Otherwise, one can forget about the competent personnel policy, about the stability of the collective in the company. It is necessary to approach this question seriously because the superficial analysis will not help to strengthen the team. Regular collection of statistics on dismissal a complete analysis of the reasons for finding a new job will increase the chances of avoiding staff turnover. To report to the CEO, it is possible to use the following analytical operations and indicators.
The personnel turnover rate (TR) reflects the entire personnel situation. This indicator must be calculated by dividing the number of employees who left the company by the average number of employees during the reporting period.
The obtained coefficient of 3-7% indicates average staff turnover at an established company with a long history. For a startup company just entering the market, a turnover rate of 20% is standard. Specialization is also necessary to consider. In retail trade, the turnover rate is acceptable up to 30%, in IT – up to 6% (Jayawardena, 2021). Higher numbers indicate global problems in the organization. Thus, a manager will get quantitative data and be able to observe what is going on with the workforce in his company.
The second objective of the case study is to increase the profitability of the company through effective human resource management. Human resources are one of the most important elements of any company, or even the most important. The profitability of the company directly depends on the efficiency of employees. Accordingly, by investing in their development improving the scheme of the organization of personnel management, the company will receive the return in the form of increased results and profitability. In order to effectively manage the personnel in the company, it is necessary to take several steps. Firstly, it is necessary to ensure that there is a common strategy for the development of personnel. This aspect is essential, as usually employees need to know their prospects in this company in order to work productively. Therefore, it is better if they can see the vector of their own development. Moreover, the company itself needs to understand exactly what decisions it will make in the near future. Due to constant changes in plans, employees find themselves in a state of instability, and this most often leads to staff turnover.
Secondly, a properly built system of personnel management is necessary. The main influence on employees is exerted, as a rule, not by the first person of the company, but by line managers. It is their responsibility to interact with the personnel, their motivation, and their training. Their task is to make the work of their subordinates as effective as possible. Therefore, it is vital to build a clear system of delegating rights, obligations, and opportunities to make decisions independently from the top down. If the management understands and supports this scheme of influence on the staff, the company will develop quickly. Thirdly, it is necessary to ensure that there are levers of influence, specific tools to influence the staff (Reid, 2018). These include both legal documents and all sorts of benefits, bonuses, and more. They are needed to motivate personnel. Moreover, one of the causes of staff turnover in the case study is staff complaints about the absence or inadequacy of bonuses and wages. Therefore it is crucial to review the system of bonuses and insights in the company, and if it does not work correctly, to introduce new regulations.
For the bonus system to work, it is based on the following principles. Firstly, it is important to provide the employee with an understanding of what exactly and to what extent he/she can be rewarded extra. The use of subjective evaluation criteria, which can be interpreted differently, is unacceptable. Secondly, the motivation should be at least 30% of the employee’s income (Reid, 2018). If a person earns about 100 thousand dollars a year, the right bonus, which encourages work harder, should be 30 thousand dollars. When calculating the size of the bonus, it is usually determined by the total income of the employee for the position in question in our field. The ratio of the fixed part to the bonus part is different for different positions.
The more levers of influence and the wider the amplitude of their use, the more intensively one can influence the subordinates. These tools can be positive (the system of incentives) and negative (the system of deductions and penalties). Many companies monitor salaries in the market with some periodicity to understand the estimated salaries of employees. The company described in the case study can be recommended to conduct semi-annual monitoring. The application of all these guidelines will help employees increase their motivation and loyalty to the company, which will increase their efficiency. Consequently, when employee productivity increases, the company’s income also increases.
References
Hom, P. W., Allen, D. G., & Griffeth, R. W. (2019). Employee retention and turnover: Why employees stay or leave. Routledge. Web.
Jayawardena, D. (2021). Critical human resource management: People management across the Global South and North. Routledge. Web.
Reid, W. (2018). The meaning of company accounts. Routledge. Web.