Owner

In today's small businesses, employers are not only having a hard time attracting employees, but are also having a difficult time keeping them. Employees leave for a variety of reasons, including poor supervision, unchallenging positions, limited advancement opportunities, lack of recognition, limited control over work, perceived pay inequity, and the perception of more favorable opportunities in other companies. High employee turnover is one of the greatest causes of declining productivity and decreased morale in corporate America. Cost of turnover that can be measured directly fall in two areas: separation costs and replacement costs. Separation costs may include severance pay, expenses associated with an exit interview, outplacement fees and possible litigation related to involuntary separation. Replacement costs are hiring fees, including sourcing expenses, Human Resources processing costs for screening and assessing candidates. Other Human Resources cost include the time spend by hiring highly qualified employment consultants interviewing candidates, travel and relocation, signing bonuses if applicable, orientation and training. While morale decreases, recruiting and training costs increase and an organization can find itself in a vicious cycle. Therefore given the high percentage of employees who plan to seek new employment opportunities as the job market rebounds, Human Resources professional and small business owners need to understand the turnover's costs impact and focus on ways to keep their best employees on board. The retention of employees is a major concern for smaller organization. About 25 percent of the 38 companies reporting employee-retention problems had 1999 sales of $10 million or greater: the balance is smaller organizations.

Evidence:

Employee retention is becoming a high priority for many senior executives in many companies. Many surveys have been performed to validate the concerns for senior executives. A secondary data source, Accenture, has recently performed a study listing the top ten concerns for senior executives. During this study, 425 executives from organizations around the world were interviewed, and were asked to identify and prioritize the issues of greatest concern. From this study, the area of the most concern with a response of 35% is attracting and retaining skilled staff. (2005, Gordon-Miller). To further validate the senior executives concerns, a primary data source survey regarding employee retention was performed by Thomas Staffing which asked employees "Do you consider employee retention a problem in your company?", 21% of the respondents indicated that employee retention is a problem in their company. (1999, Thomas Staffing).

In order to alleviate the concerns of senior management, managers need to improve those areas that are directly related to employee retention and turnover. These areas are better identified through employee surveys. According to a survey, by International Survey Research (ISR), that consisted of 22 companies revealed key drivers for intent to leave a company. The drivers, from highest to lowest, are recognition and rewards, individual development, career advancement, empowerment, management leadership, respect for employees, retaining talented employees, supervisor, culture fit, and job security (N.A., International Survey Research). Based on the survey by ISR, the top drivers can be directly connected to job motivation. According to the Herzberg theory, "employee satisfaction depends on two sets of issues: 'hygiene' issues and motivators. Once the hygiene issues have been addressed the motivators create satisfaction among employees" (1999, Syptak, J. M, MD, et al.). The Herzberg theory also lists the motivators as achievement, recognition, responsibility, and advancement.

In general, finding and retaining a qualified employee has been identified by many researchers as much stronger cause of success in any small business. The organizational commitment and employees job satisfaction is the main reason why employees stay in the company.

Study in employee retention has produced evidence to show that some career- related variables (salary, promotion, career opportunities, incentive bonus, feedbacks and open communication) will minimize the loss of qualified employees. Further researches show that the proportion study of retaining employees also includes demographic variables (age, occupancy, gender, and education)

There is also some evidence to indicate that other variables such as quality work life (involvement in decision making, employees training and personal development, self esteem, social interaction, balance work and personal lives) will increase job satisfaction and improve the chance of retaining the qualified employee. More variables that will be recognized is the intrinsic job characteristics (individual variety skills, task significance, job autonomy and task identity) which might increase employee motivation and achievement and thus affect productivity.

There is a success correlation between how involved employees are in their role in the decision-making within the company. Study confirmed that the companies which involve the employees in the decision making show