A Study of Causes of Employee Turnover

Nadia Mohammed

City University College of Ajman

E-mail: [email protected]

A Study of Causes of EmployeeTurnover

Introduction

This research is about the causes of employee turnover in

Muhammad Jasim Mohammad Rafiq LLC. The research is attempted to

investigate the main reasons for employee turnover. The

objectives of this paper are:-

1. To report on the factors that influence employee turnover.

Organization & Management dilemma

The organization selected in this research project is “Muhammad Jasim

Muhammad Rafiq Construction Company” in Sharjah. It is a limited

liability company. The company currently consists of 50 employees. The

talent pool of the company is not diverse consisting of only two civil

engineers, a finance coordinator, a human resource coordinator, and

the general manager. Most of the employees are low-skilled workers

such as brick layers, masons, carpenters, and general helpers. The

mailto:[email protected]

company currently has a number of construction projects such as

construction of villas and boundary walls.

The management dilemma that the company is currently facing is the

high staff turnover rate. Most of the employees either resign or are

not willing to renew their contracts at the end of their contract

terms. In addition, most of the low-skilled workers tend of abscond

either back to their home countries or work illegally with another

company.

The high staff turnover rate is not only results in direct costs such

as financial losses in sponsoring the employees and payment of the

end-of-term benefits but also the indirect costs are significant such

as the cost of replacement staff and training costs for the new

employees.

The management of the company is currently trying to identify the

possible causes of the high staff turnover. The turnover of employees

requires hiring of new employees who then take some time to adjust and

understand the scope of the projects under construction. This results

in serious delays in the successful completion of the projects.

In this research project, the above-mentioned construction company

will be under analysis and the possible causes of high staff turnover

rate will be identified by formulating suitable hypotheses.

Research Question

The main focus of this research is to identify the main cause of high

staff turnover rate in Muhammad Jasim Muhammad Rafiq Construction

Company since it results in financial losses and also significant

deals in the project. An insight into the company’s management system

will possibly reveal the underlying causes.

Literature Review

Compensation is a key determinant in employee turnover. There is

a positive correlation between the rate of compensation and staff

turnover. (Bartel and Borjas)

Firms offering low salaries are more likely to face an employee

turnover than firms offering higher salaries (Topel and Ward).

If an organization is unstable and the workplace environment is

not as expected by the employees, the organization is at a higher

risk of employee turnover (Zuber).

Organizations with friendly workplace environment are more likely

to enjoy low rate of employee turnover. (Buchanan).

Studying staff turnover is important since high staff turnover

leads to direct and indirect business costs such as the

separation costs (employee repatriation, severance pay, gratuity

pay), new recruitment cost (advertising, recruiter time, search

agency fees), hiring cost (relocation cost, training cost), and

lost productivity costs (Knight, Becan and Flynn). In addition,

staff turnover is also a reason behind company knowledge loss in

terms of its confidential information (Urbancová and Linhartová).

The causes and effects of staff turnover has been discussed

elsewhere in the literature (Arokiasamy).

Employee turnover has been considered by researchers as one of the

most persistent problems within organizations (Armstrong, 2009). The

relationship between job satisfaction and turnover rate has been

studied widely in literature (Chen, 2010). In addition, staff turnover

has also been observed to be related to certain characteristics of

workers, tasks, firms, and markets (Ton & Huckman, 2008).

The turnover of staff has been observed to produce both desirable and

undesirable effects. The undesirable effects include the following

(Hana, 2011):

1. Loss of experience gained by the leaving employees

2. Loss of reputation among the remaining employees

3. Disruption of work morale

4. Increased workload of the remaining employees till new staff is

hired

5. Increased recruitment cost

6. Increased training costs for new employees

However, in some cases, staff turnover can bring desirable effects

such as:

1. New ideas from the new recruits

2. Replacement of less productive employees with more productive

3. Decreased costs in terms of salary payment

For any employer, it is important to identify the underlying causes of

staff turnover in order to retain the remaining employees. The main

idea behind retention is to avoid the loss of competent and

experienced employees that can affect the productivity and service

delivery.

Research Design & Methodology

The proposed research project aims to identify the main cause of

high staff turnover rate in the Muhammad Jasim Construction

Company LLC since high turnover results in financial losses and

also significant delays in the construction projects. The

following hypotheses were formulated in the proposal in order to

explain the reason of high staff turnover:

1. The high staff turnover rate is due to high workload.

2. The high staff turnover rate is due to insufficient

compensation.

3. The high staff turnover is because of highly competitive

market in the UAE.

4. Staff turnover is due to frozen promotions.

5. The high staff turnover rate is due to lack of respect and

support from seniors.

6. Staff turnover is due to a mismatch between job and

employee.

As mentioned in the proposal, the hypotheses will be tested using

comprehensive survey techniques. Details are described below:

Data timescale

The turnover rate in Muhammad Jasim Construction Company LLC will

be assessed over the last year (2014-2015). Only the number of

employees who left the organization will be considered.

Survey Census

Muhammad Jasim Construction Company LLC currently has 27

employees. The number of employees in the previous year was 39. A

total of 12 employees have left the company during the previous

year and they will be surveyed.

Procedure & Methodology

This research adopted a questionnaire approach by collecting data

from employees who left the organization. The survey will include

questions related to factors such as remuneration, employee

relationships, recognition, and company culture and work

environment and conditions. Finally, from all the survey results,

the main reason for high staff turnover at Muhammad Jasim

Construction Company LLC will be highlighted.

Survey technique and analysis

Survey will be printed and hard copies will be given to the

employees who have left the company. Questions will be

dichotomous, nominal and interval (Likert response scale). The

responses to questions will converted to percentages and results

will be analyzed.

Results and Discussion

The respondents were asked if their expectations about the

workplace environment were met after they joined the company.

16.7% of the respondents strongly agreed, 41.7% said they agreed,

8.3% reported they disagreed and only 8.3% strongly disagreed.

The remaining 25% neither agreed nor disagreed.

66.7% strongly disagreed when asked if they felt devalued and

unsupportive by their seniors. 16.7% disagreed, while only 8.3%

agreed and 8.3% strongly agreed.

50% of the respondents agreed about working hours being

satisfactory. 25% reported they strongly agreed, 8.3% disagreed

and 8.3% said they strongly disagree. Only 8.3% of respondents

said they neither agree nor disagree.

33.3% of the respondents strongly agree on the statement “I’ve

been given no incentives/promotions/bonuses to show that I’m

appreciated.” 41.7% said they agree, 8.3% said they neither agree

nor disagree, 8.3% reported they disagree, while only 8.3% said

they strongly disagree.

Table 1: Summary of survey results

No. Question Strongly Agree Agree Disagree Strongly Disagree Neither Agree nor Disagree

1 Did your expectations m eet the the workplace environm ent? 2 5 1 1 3

2 Do you feel devalued and unsupportive by seniors? 8 2 1 1 0

3 Do you enoy satisfactory working hours? 5 3 2 1 1

4Your response to the statem ent “I’ve been given no incentives/prom otions/bonuses to show that I’m appreciated.”

4 5 1 1 1

Num ber of responses

The respondents were asked about the single, most compelling

factor that influenced their decision to quit. 36% of respondents

said that they resigned because of “insufficient salary”. 34% of

respondents said they were offered a better job opportunity. 25%

reported that they had to leave because of high workload, and

only 5% respondents said they left due to poor relationships with

colleagues.

Table 2: Responses to main reasons to quit the job

Reason to quit Num ber of responses PecentageInsufficient salary 4 33.3Better job opportunity 4 33.3High workload 3 25.0Poor relationship with colleagues 1 8.3

Insufficient salary

Better job opportunity

High workload Poor relationship

with colleagues

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Percentage

Figure 1: Percentage of responses on the main reason to quit job

Furthermore, few qualitative questions were asked from the

respondents.

What did you most like about your job?

16.7% of the respondents said that the seniors always expected

the employees to grow. 41.7% of the respondents said that the

company’s culture was very great. 25% of the respondents reported

that the workplace environment was very professional. 8.3% said

that the task assigned to them were very challenging and they

were able to increase their skills. Only 8.3% of the respondents

reported that the seniors were very supporting.

Table 3: Survey responses to qualitative question 1

W hat did you m ost like about your job? Num ber of responses PecentageSeniors expecting to grow 2 16.7Com pany culture 5 41.7W orkplace environm ent 3 25.0Challenging tasks, opportunity to enhance skills 1 8.3Supportve seniors 1 8.3

0.010.020.030.040.0

Perc

enta

ge

Figure 2: Percentage of responses to question on what the workers liked the

most about the job

What did you least like about your job?

27% of the respondents said that the working hours were not

flexible and caused them stress. While 28% of the respondents

said that the given salaries were not sufficient. 44% of the

respondents reported that they were not given incentives or

bonuses to appreciate them. Whereas only 10% said that housing

allowance was not provided.


W hat did you least like about your job? Num ber of responses PecentageW orking hours not flexible 2 16.7Insufficient pay 5 41.7No incentives/bonus 3 25.0No housing allowance 1 8.3

Working hours not flexible

Insufficient pay

No incentives/

bonus

No housing allowance

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Percentage

Figure 3: Percentage of responses to question on what the workers disliked the

most about the job

Under what circumstances would you consider returning to Muhammad

Jasim Muhammad Rafiq LLC?

25% said that they would consider rejoining if the working hours

are made more flexible. 25% of the respondents said they would

return if there was an increment in their salaries. 41.7%

respondents reported that they would consider returning to the

company if they were given incentives to appreciate them. Only

8.3% said that they would consider rejoining the company if

housing allowance was provided to them.


Under what circum stances would you consider returning to M uham m ad Jasim M uham m ad Rafiq LLC? Num ber of responses PecentageOn flexible working hours 3 25.0On increm ent in salary 3 25.0Incentive of appreciation 5 41.7On providing housing allowance 1 8.3

On flexible working hours

On increment in salary

Incentive of appreciation

On providing housing allowance

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Percentage

Figure 4: Percentage of responses to question on re-joining the company

Lastly, the respondents were asked if they would recommend

Muhammad Jasim Muhammad Rafiq LLC to a friend as a place to work.

58.3% of the respondents would recommend a friend to work in the

company. Whereas 41.7% said they wouldn’t recommend.


W ould you recom m end M uham m ad Jasim M uham m ad Rafiq LLC to a friend Num ber of responses PecentageYes 7 58.3No 5 41.7

Yes No0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Percentage

Figure 5: Percentage of responses to question on recommending the company tofriends

Conclusion

The following findings were concluded by the survey conducted:

1. Lack of appreciation was the main reason for the workers toquit Muhammad Jasim Muhammad Rafiq Construction Company LLC

2. Most workers also left the job due to insufficient pay3. Workers who left the job still acknowledge the good company

culture4. Staff who turned over would consider re-joining the company

if appreciation is guaranteed5. The turned over staff would still recommend the company to

their friends due to good work environment

ReferencesArmstrong, M. Armstrong´s handbook of human resource management practice.

London: Kogan Page, 2009.

Arokiasamy, Anantha Raj A. "A Qualitative Study on Causes and Effects of Employee Turnover in the Private Sector in Malaysia." Middle-East Journal of Scientific Research (2013): 1532-1541. 16.

Bartel, Ann and George Borjas. "Wage Growth and Job Turnover: An Empirical Analysis." Rosen, Sherwin. Studies in Labor Markets. Chicago: University of Chicago Press, 1981. 65-89.

Chen, Ying-Chang. "Structural Investigation of the Relationship between Working Satisfaction and Employee Turnover." The Journal of Human Resource and Adult Learning (2010): 41-50.

Hana, Urbancová. "Staff Turnover as a Possible Threat to Knowledge Loss." Journal of Competitiveness (2011): 84-98.

Knight, Danica K., Jennifer E. Becan and Patrick M. Flynn. "Organizational consequences of staff turnover in outpatientsubstance abuse treatment programs." Journal of Substance Abuse Treatment, (2012): 143-150. 42.

Ton, Zeynep and Robert S. Huckman. "Managing the Impact of Employee Turnover on Performance: The Role of Process Conformance." Organization Science (2008): 56-68.

Topel, Robert and Michael P Ward. "Job Mobility and the Careers of Young Men." Quarterly Journal of Economics (1992): 439-79. 107.

Urbancová, Hana and Lucie Linhartová. "Staff Turnover as a Possible Threat to Knowledge Loss." Journal of Competitivenes (2011): 84-98. 3.

Zuber, A. "A career in food service cons: high turnover." Nations Restaurant News (2001): 147-148. 35.

Appendix A

Questions

1. My expectations were met about the workplace environment after I joined the company.

a. Strongly Disagree

b. Disagree

c. Neither Agree nor Disagree

d. Agree

e. Strongly Agree

2. I feel devalued and unsupported by seniors.


b. Disagree


d. Agree

e. Strongly Agree

3. Working hours are satisfactory.


b. Disagree


d. Agree

e. Strongly Agree

4. I’ve been given no incentives/bonuses to show that I’m appreciated.


b. Disagree


d. Agree

e. Strongly Agree

5. What was the single, most compelling factor in your decision?

6. What did you most like about your job?

7. What did you least like about your job?

8. Under what circumstances would you consider returning to Muhammad Jasim LLC?

9. Would you recommend Muhammad Jasim LLC to a friend as a place to work?

Appendix B

Question Variable num ber Code description Variable nam e1 Record Num ber RECNUM2 Respondent Num ber RESID

1 3 Expectations about workplace environm ent W ENV1 = Strongly Disagree

2 = Disagree3 = Neither Agree nor Disagree

4 = Agree5 = Strongly Agree

2 4 No support from seniors SENSUP1 = Strongly Disagree



3 5 Satisfactory W orking Hours W HRS1 = Strongly Disagree



4 6 No incentives/bonus INCT1 = Strongly Disagree



5 7 Insufficient salary INSUFFSAL8 Better job opportunity BETTERJOB9 High workload HIGHLOAD10 Poor relationship with colleagues POORREL

6 11 Seniors expecting to grow GROW12 Com pany culture CULTURE13 W orkplace environm ent ENV14 Challenging tasks/opportunity to enhance skills CHALLENGE15 Supportve seniors SUPPORTIVE

7 16 W orking hours not flexible W ORKFLEX17 No incentives/bonus BONUS18 No housing allowance ALLOW ANCE

8 19 On increm ent in salary INCREM ENT20 Incentive of appreciation APPR

A Study of Causes of Employee Turnover

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