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
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.
Table 4: Survey responses to qualitative question 2
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.
Table 5: Survey responses to qualitative question 3
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.
Table 6: Survey responses to qualitative question 4
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.
a. Strongly Disagree
b. Disagree
c. Neither Agree nor Disagree
d. Agree
e. Strongly Agree
3. Working hours are satisfactory.
a. Strongly Disagree
b. Disagree
c. Neither Agree nor Disagree
d. Agree
e. Strongly Agree
4. I’ve been given no incentives/bonuses to show that I’m appreciated.
a. Strongly Disagree
b. Disagree
c. Neither Agree nor 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
2 = Disagree3 = Neither Agree nor Disagree
4 = Agree5 = Strongly Agree
3 5 Satisfactory W orking Hours W HRS1 = Strongly Disagree
2 = Disagree3 = Neither Agree nor Disagree
4 = Agree5 = Strongly Agree
4 6 No incentives/bonus INCT1 = Strongly Disagree
2 = Disagree3 = Neither Agree nor Disagree
4 = Agree5 = Strongly Agree
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
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