Strategic Recruitment and Turnover‏ Relationship

Abstract

This paper aims to find out the relationship between recruitment and turnover. If an organization recruits the right people then turnover has chances to minimize immensely. The research is based on two companies McDonald which is the food and restaurant industry and Microsoft which is the software industry. The trends in both organizations will be studied to see the differences between the two industries. The focus will be on how the organizations recruit and what other measures do they take to reduce turnover. A questionnaire has been used to find out results and the differences between the two organizations have been discussed in detail.

Introduction

This paper aims to find out the relationship between recruitment and turnover. If an organization recruits the right people then turnover has chances to minimize immensely. The research is based on two companies McDonald which is the food and restaurant industry and Microsoft which is the software industry. The trends in both organizations will be studied to see the differences between the two industries. The focus will be on how the organizations recruit and what other measures do they take to reduce turnover. The consequences will be evident through the research. A questionnaire (See Appendix) has been used to research the two organizations because the people working and the administration is the best source of such information.

The world has evolved dramatically with automobiles, steel, tire, and various other industries had erupted during the industrial revolution. Several countries came into the limelight like Japan, Germany, and Taiwan against the European Union. Organizations make up a nation because they provide jobs, earnings, the standard of living; they influence lifestyles and at times culture. Without organizations, a country can never grow. Some developing nations are dependant on imported stuff and that has adversely affected their domestic market which is the main reason why these countries never develop and are either taken over by an influential culture or vanish from the face of the earth. On the other hand who makes the organizations? It’s the people who make an organization and without people, the organization is just a still building with equipment which is useless because it’s the human mind that commands control over these still things and turns them into gold for nations.

Research Methodology

This section contains other sub-sections as follows:

• Research Design: We will be using Qualitative research which is an unstructured; exploratory research methodology based on small samples intended to provide insight and understanding of the problem set.
• Population

The Frame of Reference

• Heterogeneous population since our study will be based on employees from McDonald’s and Microsoft.

Sample and Sampling Method

We will be taking the Non-probability sampling technique under which we will use the Convenience sampling method. The selection of sampling units is left primarily to the interviewer. The justification for using this method is that in this technique the population elements are purposively selected based on the judgment of the researcher and availability of the information and people. The sample size taken is 25 for Mcdonald’s and 25 for Microsoft.

Measurement/Instrument selection

• Our data will be based on primary and secondary data.
• The methods of data collection chosen are surveys (questionnaires specifically). The questionnaire has closed-ended questions and just one open-ended question which are for suggestions/opinions by the person filling the questionnaire. The Likert scale has been used in the questionnaire.

Variables

• Factors to employee satisfaction: pay, skills, personal development, job security, etc.
• Organizational Culture variables: career development, learning type in the work setting, Job to personality fit, recruitment process, etc.
• Organizational Variables: Firm size, type of industry, environment, etc.
• Composition of the workforce: women, ethnic groups, castes, etc.

Software employed

The software which we would take help of is spreadsheet and SPSS as they would be beneficial in working on the data to get the desired results.

Literature Review

Employee turnover is different for different organizations depending on the industry they are operating within and also the environment. E.g. in the hospitality industry which is more labor-intensive, it ranks between 200%-300% on an annual basis. Thus, statistics show that the entire staff of this industry turns over around two to three times a year (Woods, 1997). The organizations chosen for this study McDonalds and Microsoft are also operating within a labor-intensive industry individually. According to (Walker, 1992) employee turnover is a ratio of the number of employees leaving the organization during a specified period against the number of employees still working for the organization. Employee turnover can also be termed as the changes experienced by the organization due to recruitment, resignation, leaves, or discharge of employees (Erdoğan, 1992). The research is aimed to find out whether proper recruitment can minimize turnover or not which will show the relation between the two aspects of the study. Oakley (2000) argues that explanations for the low representation of women at the chief executive level must go beyond organizational policies and practices and should examine the impact of gender-based behavioral dynamics. The more recent approaches over the past decade consider how perceptions of management influence the opportunities for women. The real revolution of the working mother has become more defined in the past five years, as the balance between work and life has almost become one entity. The skill of multi-tasking has become more of an art form. It has become an invaluable tool that working mothers have been forced to master and cannot avoid even if they want to. Workplace pregnancy, maternity leaves, and child care issues often constitute transitions in the lives of employed women. However, identity and role struggles may be particularly acute for managerial and professional women because their careers and their traditional female roles seem at odds. This trend holds both for mothers who have such jobs and those who don’t. The public opinion about working women is even unsure and tilts more negative than positive regarding the phenomenon of women working in higher positions. Women prefer to build their nests and they go for entry-level positions thus they avoid breaking the glass ceiling by prioritizing their family more than the career which increases turnover (Akogla, 2001). The gender wage gap demotivates women which increases turnover and research has proved that men are being paid more compared to women (Burgess, 2000). The working hours are also an issue that causes women to turn over more since they have to juggle between family and work (Erdogan, 1992).

Jamieson (1995) has described the core of a woman very specifically and which is also representative of the major reason behind the glass ceiling effect. She has used the term “Feminity-competency bind,” which means that when a woman is feminine she is considered to be incompetent and when she is competent she is termed to be manly and virile which is unacceptable to the so-called civilized men of the society. Her book aims to state that women have recently begun to give up on trying to handle work stress and family stress and have begun abandoning professions and jobs to stay home with their children.

Berndt (1990) indicated some theoretical issues related to labor force participation and also other labor supply decisions regarding individuals and households. The neoclassical model studies the labor supply in light of the theory of consumer behavior. The individual does need time off work that is leisure time which is important to motivate them to work. The increase in wages and other perks increases in the hours worked and that will reduce leisure time as a result. The utility is maximized when the combination of goods and leisure increase simultaneously. Thus the income effect of labor supply turns out to be negative. Berndt shows both sides of the coin as to the factors of participation in the labor force and the factors going against participation in the labor force.

Employee performance is another factor for turnover because if performance is good they are recognized for it thus they are motivated to work better and employee satisfaction is higher. Satisfied employees will never leave but dissatisfied will exit (Jewell & Seagull, 1990).

Based on these reasons for turnover one can say the recruitment process has a role to play in turnover but not entirely because other factors are more evident in causing a turnover. Recruitment has an indirect relationship with turnover because if the right people are hired for the right jobs they will be satisfied and turnover will minimize automatically. But recruitment is a complicated process that is not perfect enough to always give correct results since discrepancies exist and that is where other factors come into play that causes turnover. Factors like recruitment or hiring practice, style of management, no recognition or reward system, or lack of a good compensation system are all reasons for turnover so recruitment is just one of the factors that cause a turnover, and improving just one factor will not have a significant effect on minimizing turnover since it is important to work on all factors to reduce turnover but of course, it depends from organization to organization and situation to situation (Abbasi & Hollman, 2000). Employees leave organizations for personal reasons as well like incentives, promotions or career development, etc (Barky, 1996). Literature on turnover mostly shows that there is a negative relationship between turnover and lack of organizational commitment meaning employees less committed to an organization are dissatisfied and will most likely turnover whereas there is a positive relationship between turnover and high organizational commitment since career development increases employee satisfaction minimizing turnover automatically (Johnston et al;1993). Focusing on Mcdonalds the employee morale and satisfaction is high due to reasons discussed further in the paper so their turnover is less comparatively and Microsoft is facing increased turnover that is increasing day by day for reasons discussed further in the paper. Although, both organizations work towards satisfying employees turnover differs from industry to industry. The workforce composition, training opportunities, benefits are the major reasons for the difference between the two organizations.

Findings and Analysis

A questionnaire (See Appendix) has been developed to research the relevant population that is in McDonald’s and Microsoft accordingly. The questionnaire was distributed in the organizations with permission from management for the sake of research only. The management cooperated since they like to encourage students to do research and the questionnaires were filled within three days. While getting them filled I asked them reasons as well and any extra points were noted for better research. Then the questionnaires were coded for interpretation and they were entered in SPSS for easier evaluation of results. The findings will show in general the primary data collected and analyzed from both organizations individually.

To get more accurate and comparative results a T-tests were conducted to see the difference between the effect of the recruitment process on turnover in Mc Donald’s and Microsoft. The test showed there was a significant difference of (p<0.05) between McDonald’s and Microsoft. Therefore, the test proved that the effect of the recruitment process on turnover in Mc Donald’s is higher compared to Microsoft since although turnover rates are higher in Microsoft compared to McDonald’s but the reasons for high turnover in Microsoft are lack of career opportunities and also a lack of cross-departmental coordination. Since the questionnaires were filled face to face and the discussion with the relevant population exposed the reasons to high turnover rates in Microsoft and low turnover rates in McDonald’s. Interestingly, although both organizations are from different industries the reasons for turnover were standard and the employees from both organizations gave similar reasons for turnover in their respective organizations. The research proves that the recruitment process at Microsoft is very adequate according to the requirements since it is known as having the most unusual forms of exercises like one person quoted that during his interview at Microsoft the boss asked him to imagine the Queen of Darkness is standing right in front of him so what would he exactly do and he replied he would prefer to run. The boss gave him options of having a weapon so he chose a crossbow with ice since the Queen of Darkness is made of fire and he instantly shows his desire to kill the Queen of Darkness whereas the boss is shocked and says you will waste the Queen of Darkness by killing her. The man was there for a job in the gaming software development department at Microsoft and this showed he was not a gaming person but could be used in some other department since he did know how to react to a situation on the spot.

Respondents from both the organizations responded differently to the question of recruitment is the key to reducing turnover and to recruitment being an important factor along with others to reduce turnover in their organizations. Yet again a T-test was carried out to see the difference between Mc Donald’s and Microsoft regarding recruitment being the key factor to reducing turnover and the test showed a significant difference of (p<0.05) once again. This shows that employees at Microsoft are more of the opinion that recruitment is an important factor along with other factors to reduce turnover and of course they mostly believed that if recruitment was not done appropriately that is if the person hired was not right for the job it will result in a turnover. The reason is obviously that since turnover is high at Microsoft that is in the last few years it has increased from 8% – 9.6% and it’s still increasing and the reasons for turnover are lack of career opportunities and coordination between cross-functional departments. Whereas, in Mc Donald’s the employees thought that recruitment is the key to reducing turnover which shows the organization has an excellent recruitment system that ensures the right people for the right job enter which will lead to satisfied employees and of course reduced turnover as a result. At Microsoft, the average employee is aged 30 which shows there is an aging workforce that will lead to turnover eventually. The workers in the technology department are overworked and have had no vacations or leaves thus they are dissatisfied. The aging workforce has led to problems of juggling between work and family responsibilities which has resulted in a turnover. The organizational culture at Microsoft is such where there is no play and only work since employees hardly get to go for vacations and the organization is in constant crisis due to the issue of meeting deadlines continuously. Microsoft was the employer of choice during the dot com bubble but now the bubble has burst and the issue of lack of career opportunities is mostly at the top level because the organization has paid them so much in the last few years and with their experience, they are capable of opening up their businesses and this has cause dissatisfaction leading to increased turnover rates. Several executives testified in the Department of Justice anti-trust against Microsoft leading to further increasing turnover rates in the overall organization. Another issue is the lack of coordination amongst cross-functional departments in the entire organization because Microsoft’s scope is too large for a company dealing in technology. The organization’s strategy of responding quickly to the changing environment plus a constant growth strategy of acquiring and taking over has caused a lack of coordination amongst the departments of the organization. This has led to projects going redundant and the organization eventually faced a loss. The compensation at Microsoft has been really good and stock options have been amazing due to the high price of the stock but recently the stock market dropped so the organization announced compensation increments for the first time. The major problem at Microsoft is being overworked and under stress plus research carried out during 2003 shows 44% of employees in the USA have preferred to quit their jobs due to a lot of work and stress. This is what has happened to Microsoft because compensation and the recruitment process are not the reasons although a few employees did suggest the company should have a stress test in the recruitment process to make sure the employee is ready for the stress that is considered normal in the organization. Therefore, recruitment still has a major part to play in reducing turnover because the right fit for the job will not leave the organization but of course the impact differs in situations and industries. The Human resource department at Mc Donald’s is very efficient and the organization has the best HR system in its industry also winning the employer of the choice award with the lowest turnover rates in the industry. Mc Donald’s values its people the most since it believes it’s the employees they have to take care of and in turn, the employees will take care of their customers. They issue an Mc Donald’s Crew Handbook each year that guides the employees further in the organization leading to personal as well as organizational development. According to the employees, the organization statistics say that 12% of all teens working in the USA are employed by McDonald’s alone. This shows Mc Donald’s has a young as well as a mature element in their workforce leading to a good blend. McDonald’s employs youngsters a lot and in fact, more than 60% of the workforce is aged 20 or under. Mc Donald’s is known for its workforce diversity and increased value plus equal employment opportunities that increase employee satisfaction and employees do not want to leave the company leading to the industry’s lowest turnover rates. According to the employees, recruitment is the key to reducing turnover in their organization because the right person for the right job and with Mc Donald’s supreme treatment and benefits to employees the turnover will minimize automatically which is relevant to the case of this organization. Mc Donald’s has a policy of providing career growth opportunities to any employee who shows the interest and enthusiasm to grow due to which several current senior management personnel and managers have been promoted from the basic crew working for branches. This way they move up the organization all aware of the culture and the work and this has saved training and recruitment costs to Mc Donald’s. This can not be done in Microsoft because it has specialized departments with specialized employees that can move up the hierarchy only within their scope of work due to the nature of their jobs. This is a major reason why recruitment is also an important factor but not the only factor leading to minimized turnover according to employees of Microsoft. Whereas, McDonald’s has capitalized on this opportunity due to the nature of the industry they operate within. Mc Donald’s has several systems like loyalty points, an employee of the month, etc to motivate their basic crew which Microsoft can not adapt. Mc Donald’s has younger people in the majority as employees which is a major factor contributing to reduced turnover of course the factors of valued employees and workforce diversity are pivotal. Of course, Mc Donald’s has a proper training system and many benefits like flexible hours mainly benefiting women, bonuses, and paid vacations, unlike Microsoft which lead to increased turnover at Microsoft and a minimized turnover in Mc Donald’s since employees are comparatively more satisfied. The aim of the Human Resource Department at Mc Donald’s is to develop people at every level and providing them growth opportunities since they will serve the customers best. This is evident with the fact that 40% of managers as stated by a respondent started at Mc Donald’s as hourly-paid workers at the restaurant which shows they have moved up the organization thus they develop a commitment and relationship with the organization considering it to be the source of their improved lifestyle and increased standard of living thus they feel liable to work with a lot of commitment for the organization, therefore, leading to reduced turnover. Mc Donald’s has a policy of employing locals at every branch irrespective of their caste, creed, race, color or physical disabilities, or gender and they aim to develop these individuals at every step promoting them up the hierarchy and giving them competitive compensative packages and benefits. Thus due to their recruitment policy, recruitment plays a major role in reducing turnover at McDonald’s, unlike Microsoft. According to all respondents from Mc Donald’s, HRM at Mcdonald’s has always been a matter of great concern and the company has managed to stay at the top in the field. They are a restaurant with a difference because they give due importance to their employees since they believe that the company is nothing without them and the employees have to be given their share. They believe human resources are an asset to the company and the assets need to be handled with a lot of care and diligence. They have certain policies and strategies to manage their employees and provide them the importance and care that they truly deserve. McDonald’s provides benefits to retain its employees like competitive wages, haircut discounts, wage increases, life insurance, education support, uniforms, and flexible hours, paid vacations, bonus schemes, and stock purchase plans. This is one reason why employees at Mcdonald’s do not wish to leave the corporation at any cost.

McDonald’s is a bureaucracy that is a well-divided and administered system of persons. Employees in such companies are recruited along with a proper system and they have linear careers. This structure has a hierarchy and people in different authorities and positions. The structure is usually top-down and information flows top to bottom. This structure also consists of formal and informal networks that assist the smooth running of the company. Unlike Microsoft which is an organic organization and employees do not have linear careers plus they are paid enormously and due to this the employees tend to get overworked with fewer benefits but they are paid well. The stress of work and lack of commitment in the employees of Microsoft has caused turnover and recruitment does play a role in affecting turnover to a certain extend because their recruitment is a good process it’s the other reason causing turnover more comparatively. Therefore, considerable differences exist in both organizations when it comes to studying the relation between strategic recruitment and turnover.

Conclusion

Turnover costs a company a lot the average cost of employee turnover to any organization is 25% of the annual salary in addition to 25% of the annual benefits offered to the employee. It is important to understand the reasons for turnover of employees and generally, these include limited growth opportunities, bad supervisor, uninteresting or unchallenging jobs, lack of a recognition and reward system, lack of a competitive compensation package, chances of an improved compensation package, and the culture plus relationship with colleagues. Certain factors have to be considered by any organization while developing an employee retention program to avoid turnover and these include evaluation of the reasons and problems leading to turnover, feedback of employees that is existing and employees leaving by using exit interviews, high involvement of the management, appropriate and effective communication by management to employees of the changes or the retention program and constant revision of the retention strategy or plan. Recruitment is an essential part of the retention program since it indirectly reduces turnover by getting the right people for the right job who are satisfied and automatically turnover is minimized. Thomas Staffing surveyed that the employees who have been part of the company for less than six months are most likely to leave the organization and the employees who have spent a year are more likely to stay in the organization since they are committed to the organization. Hiring the right employee for the right job is the key (Staffing, 2009). The employee’s abilities, skills, training, experience, and ability to work independently or with a group according to the requirement of the job is essential for the right fit of the person to the right job and this leads to enhanced performance which in turn leads to increased employee satisfaction and minimized turnover automatically. Therefore, it is important to invest heavily in human capital as an asset of the organization and a well-organized approach to recruitment and retention is the key to satisfied employees thus reducing turnover.

Appendix

Relation between Strategic Recruitment and Turnover‏

This questionnaire is related to the research on Relation between Strategic Recruitment and Turnover and the intention to survey the relevant population within the organization to make our research more specific to the organization and study the if recruitment can solely improve turnover or not or if not then what is the relation between the two accordingly. Through this questionnaire, we intend to find out the stance of the employees of the organization regarding the relationship between recruitment and turnover in the organization

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