LITERATURE REVIEW: CAUSES OF HIGH TURNOVER IN PRIVATE ORGANIZATIONS

Employees turnover is a much studied phenomenon Shaw et al. (1998). The trend of high employee turnover in organizations has increased and become very common phenomena in the corporate world. The term employee turnover is widely used in business circles. Although several studies have been conducted on this topic, most of the researchers focus on the implications and effects of the high employee turnover but little research has been done on finding the root cause of employee turnover and the strategies which can be used by managers in various organizations to ensure that there is employee continuity in their organizations to enhance organizational competitiveness. This research basically examines the causes of high employee turnover and some strategies on how to minimize employee turnover in private organizations

Key Words: Turnover, employee, employee satisfaction, causes, strategies, private organizations

INTRODUCTION In the present corporate world one of the most important drivers of productivity and sustainable economic growth in developed economies is the quality and stability of its workforce. Todays competitive business world, it is considered to be an important task to manage employee turnover for any organization. Naturally people want diversities in his/her everyday life; seeks for new and challenging jobs and good working environment in job place. To provide these things to the employees in an economic way is very difficult and cumbersome. But it is also crucial for any organization to retain its talented employees. The rate of turnover

varies from company to company. The highest level of turnover normally found in private sectors than public sectors. Private organizations invest a lot on their employees in terms of induction and training, developing, maintaining and retaining them in their organization. Therefore, managers at all costs must minimize employees turnover. The new world of business puts the importance of human capital and indeed human capital development at the centre of organizational success or failure. Although, there is no standard framework for understanding the employees turnover process as whole, a wide range of factors have been found useful in interpreting employee turnover Kevin et al. (2004). Therefore, there is need to develop a fuller understanding of the employee turnover, more especially, the sources- what determines employee turnover, effects and strategies that managers can put in place minimize turnover. With globalization which is heightening competition, organizations must continue to develop tangible products and provide services which are based on strategies created by employees. These employees are extremely crucial to the organization since their value to the organization is essentially intangible and not easily replicated Meaghan et al. (2002). Lee (2006); Raub and Streit (2006);Stovel and Bontis (2002) have linked employee retention and turnover to recruitment source, while others researched into the phenomenon under relatively stabled economic environments in the western world. The thrust of the present study is to consider the effectiveness of employee reward system in a highly unstable economic environment. Therefore, managers must recognize employees as major contributors to the efficient achievement of the organizations success Abbasi et al. (2000). Managers should control employee turnover for the benefit of the organization success. The literature on employee turnover is divided into three groupings: causes of high turnover, effects of high turnover and the strategies to minimize turnover.

DEFINITION Turnover or staff turnover or labor turnover is the rate at which an employer gains and losses employees. In simple words employee turnover means "how long employees tend to stay" or "the rate of traffic through the revolving door." Employee turnover is the rotation of workers

around the labor market; between firms, jobs and occupations; and between the states of employment and unemployment Abassi et al. (2000). According to Price (1977) the employee turnover is the ratio of the number of organizational members who have left during the period being considered divided by the average number of people in that organization during the period. Managers define turnover as the entire process associated with filling a vacancy: Each time a position is vacated, either voluntarily or involuntarily, a new employee must be hired and trained. This replacement cycle is known as turnover Woods, (1995). This term is also often utilized in efforts to measure relationships of employees in an organization as they leave, regardless of reason.

BACKGROUND The impact of turnover has received considerable attention by senior management, human resources professionals, and industrial psychologists. It has proven to be one of the most costly and seemingly intractable human resource challenges confronting organizations. Overtime organizations invest substantial resources in their employees. The corresponding costs to the firms regarding the quitting of employees and the subsequent hiring of replacement employees can be significant in terms of personal, work-unit and organizational readjustment Cascio (1991) and Mobley (1982). As a result employee turnover has long been the most important issue for the managers. The purpose of this research is to identify and understand the reasons and concepts that prompt the employees to leave the organization.

Marketing Perspective The market researchers apply the external concepts to employee turnover in which work is focused on job alternatives and how such alternatives surface, this theory in known as the Pull Theory. The example of this from the industrial relations can be that the supply and demand of labor have been extensively researched as background to employee turnover.

Psychological Perspective The psychological researchers apply the internal concepts to employee turnover in which work is focused on job related perceptions and attitudes, this theory is known as Push Theory. For example several psychological theories attempt to explain the links among work related perceptions, job attitudes, intention to quit and actual turnover.

CAUSES OF HIGH EMPLOYEE TURNOVER There may be several factors involved why an employee leaves their job. Turnover has both monetary and non-monetary consequences. These costs include separation processing, recruitment, new-hire training, and lower productivity, loss of revenue and team morale. Over time there have been a number of factors that appear to be consistently linked to turnover. Some of the common reasons for employee turnover are They don't feel appreciated for their contributions They feel the company doesn't care about them There is favoritism The company doesn't deal effectively with problem performers

A lot of research has been done on finding the causes of high employee turnover; various researchers have identified different factors. Mobley et al (1979) revealed that age, tenure, overall satisfaction, job content, intentions to remain on the job, and commitment were all negatively related to turnover (i.e. the higher the variable, the lower the turnover). In 1995, a analysis of some 800 turnover studies was conducted by Hom and Griffeth, which was recently updated (Griffeth et al, 2000). The study they conducted resulted in useful findings on the causes of turnover. These include: job satisfaction, organizational commitment, comparison of alternatives and intention to quit. Generally employee turnover factors are classified into two categories voluntary turnover and involuntary turnover

Voluntary Turnover Voluntary turnover occurs when an employee leaves by the employee's own choice, and can be caused by a number of factors. Some of these reasons include better career opportunities, increased compensation, and boredom with current tasks. These may include poor job

feedback, job dissatisfaction, unmet job expectations, performance problems, situational constraints, socialization difficulties, greater degrees of job stress, and a lack of career advancement opportunities.

Involuntary Turnover
Involuntary turnover occurs when an employee is discharged or terminated, often for just cause.

The main reason for involuntary turnover is when employees are asked to leave for reasons including poor performance or inappropriate behavior.

There are some factors that are, in part, beyond the control of management, such as the death or incapacity of a member of staff.

Factors of Employee Turnover Pertaining to Job Many researchers including (Bluedorn, 1982; Kalliath and Beck, 2001; Kramer et al., 1995; Peters et al., 1981; Saks, 1996) have conducted a lot of surveys and analysis to find out the causes of employee turnover in the private organizations. The researchers have not yet been able to accurately identify the causes of high employee turnover and the results lack consistency. The main reason for the lack of inconsistency and inaccurate findings is diversity. The companies have people from various regions of the country while international companies have employees from all over the world. As employees belonging to different regions have different nature and attitude towards the job which is the main reason for the lack of inconsistency in the findings. Therefore, there are several reasons why people quit from one

organization to another or why people leave organization. The experience of job related stress (job stress), the range factors that lead to job related stress (stressors), lack of commitment in the organization; and job dissatisfaction make employees to quit Firth et al. (2004). This clearly indicates that these are individual decisions which make one to quit. There are other factors as well which include personal agency refers to concepts such as a sense of powerlessness, locus of control and personal control. Locus control refers to the extent to which people believe that the external factors such as chance and powerful others are in control of the events which influence their lives Firth et al. (2004). Manu et al. (2004) argue that employees quit from organization due economic reasons. Mostly people quit from organization due to economic reasons and these can be used to predict the labor turnover in the market. Good local labor market conditions improve organizational stability Schervish (1983). Large organizations can provide employees with better chances for advancement and higher wages and hence ensure organizational attachment (Idson and Feaster 1990). Trevor (2001) argues that local unemployment rates interact with job satisfaction to predict turnover in the market. Role stressors also lead to employees turnover. Role ambiguity refers to the difference between what people expect of us on the job and what we feel we should do. This causes uncertainty about what our role should be. It can be a result of misunderstanding what is expected, how to meet the expectations, or the employee thinking the job should be different Kahn et al. Muchinsky, 1990. Insufficient information on how to perform the job adequately, unclear expectations of peers and supervisors, ambiguity of performance evaluation methods, extensive job pressures, and lack of consensus on job functions or duties may cause employees to feel less involved and less satisfied with their jobs and careers, less committed to their organizations, and eventually force them to leave the organization (Tor et al., 1997). If roles of employees are not clearly spelled out by management/ supervisors, this would accelerate the degree of employees quitting their jobs due to lack of role clarity.

Factors of Employee Turnover Pertaining to Organization It has been observed that organizational instability also leads to high degree of high turnover. Zuber (2001) suggests that employees are more likely to stay and work in the private organizations when there is a predictable work environment and vice versa. In organizations where there was a high level of inefficiency there was also a high level of staff turnover (Alexander et al., 1994). The reason is that the organization which has more stability has more chance of making higher profits which will ultimately pay the employees. Therefore, in situations where organizations are not stable employees tend to quit and look for stable organizations because with stable organizations they would be able to predict their career advancement. Employees have a strong need to be informed. Organization with strong communication systems enjoyed lower turnover of staff (Labov, 1997). Employees feel comfortable to stay longer, in positions where they are involved in some level of the decision-making process. That is employees should fully understand about issues that affect their working atmosphere (Magner et al. (1996). But in the absence openness in sharing information, employee empowerment the chances of continuity of employees are minimal. Costly et al. (1987) points out that a high labor turnover may mean poor personnel policies, poor recruitment policies, poor supervisory practices, poor grievance procedures, or lack of motivation. All these factors contribute to high employee turnover in the sense that there is no proper management practices and policies on personnel matters hence employees are not recruited scientifically, promotions of employees are not based on spelled out policies, no grievance procedures in place and thus employees decides to quit. Griffeth et al. (2000) noted that pay and pay-related variables have a modest effect on turnover. Their analysis also included studies that examined the relationship between pay, a persons performance and turnover. They concluded that when high performers are insufficiently rewarded, they quit. If jobs provide adequate financial incentives the more likely employees remain with organization and vice versa. There are also other factors which make employees to quit from organizations and these are poor hiring practices, managerial style, lack of recognition, lack of competitive compensation system in the organization and toxic workplace environment Abassi et al. (2000).

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