Organizational Problem or Opportunity

Organizational Problem or Opportunity

In the wake of increased globalization, retention of employees has been used as a significant asset in improving organizational performance and increasing profitability. Today, the market has become so competitive that only the strategically positioned organizations thrive. Recruitment and retention of employees, therefore, play a significant role in securing the competitive advantage which is critical for most organizations. However, it is also important to understand the fact that technology and dynamics in global economics has greatly impacted employee turnover and this to a larger extent affects the retention of employees. While the essence of recruitment and employee retention is to maximize productivity and increase profitability, there are several factors that affect an organization’s ability to achieve the same.

Retention of employees has become a challenge for most companies and this has directly affected the human resource departments which is a critical asset to organizations. Companies have to ensure sustained competitive advantage within the market and that means being able to recruit and retain their employees. This, therefore, begs the question as what systems or mechanism can be used to approach the employee retention problem to ensure sustained productivity and increased profitability for companies. The objective of this study is to discuss the strategy of employee recruitment and retention and how best it can be used to optimize production.

Why Employee Retention is a Big Issue

The global economy is growing and the job market is expanding giving spaces for more employees. Nearly all companies are facing the employee retention challenge and the going is as good as it gets. Most industries, be it retail, customer service or hospitality have experienced turnover rates of up to forty percent and this has resulted in reduced productivity as well as profitability. In the current economy, companies are designed around high turnover rates. Jobs are made easy to learn so as to ensure easy assimilation of new employees. Although this is the real solution to the employee retention problem, research shows that it is not a sound approach.

It is important to understand that tenured employees play a vital role in companies compared to frequently changed employees. Loyal employees add far much greater value to the company given the level of understanding they have regarding the company. Again, the costs involved in frequent recruitment of employees reduce the profit margins of companies. The pace at which the world is changing has significantly affected businesses and companies in regards to employee retention. The global economy is picking up and young minds are invading the job market. Young employees want more career growth and companies have not kept up to the needs of the contemporary business world yet, therefore, facilitating high turnover rates. Most often, management usually don’t appreciate the need to motivate its employees and with tools like LinkedIn, job search has been made easy and this encourages employees to move from one company to another in search for self-actualization.

Companies have different employee retention models and this depends on several factors which are defined based on weights depending on age, the role of the employee, demographics etc. More often than not, managers are usually blamed for turnover and this is true in certain cases because no employee would love to work for an arrogant manager. However, the issue of employee retention is far much complex than just looking at organizational management primafacie. It involves a lot more than just an arrogant manager. Nonetheless, it is important for managements to create conducive working environments for employees as part of the solution to the employee retention problem.

Recruiting V Human Resource

Companies have always been engulfed in the turf between recruiting and human resource. This conflict is premised on the over-emphasis to recruit and attract talent over the perceived administrative functions of the human resource. Whereas recruiting is a critical aspect of an organization, the myopic view that places prominence on the importance of hiring while diminishing the significance of other HR core functions is the understanding behind high turnover rates in companies (Attridge, 2009). The development and retention of employees is equally an important administrative function of human resource. This is not to say that recruiting is not vital to a company’s success, of course it is. However, companies should employ holistic approach to the entire employee lifecycle and this includes providing development avenues for their employees as a mechanism to ensure their retention.

The economy is growing by day and that means hiring is growing as well. The future, therefore, belongs to those companies which are working towards retaining their employees and not those that concentrate on hiring employees. With this development, companies are pressured to retain the talents they’ve taken so many years to nurture and develop. It is also important to understand that employees who have worked long enough in an organization presents greater value than new employees. Such employees understand the system and have the needs of the company ingrained in their DNA.

Purpose of investigation

The purpose of this investigation is to understand the significance of employee recruitment and retention in regards to organizational performance and profitability. The perspective of this research not only recognizes employee retention as a challenge to most companies but also as a future determinant of success. Although a lot of research has been done on this topic and findings presented alongside recommendations, the urgency of this issue has not been of significance to most researchers. In addition, the business world is undergoing a paradigm shift and emphasis now lies on the competency of employees as a factor of success. This shift is generational which makes the issue of employee retention critical to the future of organizations. According to the United States Bureau of Statistics, the workforce aged between 18-35 years has an average tenure of 1.6 years per job. Based on the growth of the economy and expansion of the job market, employees will not be able to last for more than two years in one job.

In this regard, it is important to appreciate the need for organizational transformation especially when it comes to recruitment and retention of employees. Companies can only prosper when they invest in employee development and retention. However, considering technological change as a challenge to this cause, it is also imperative for companies to embrace flexibility even as they seek to address the issue of high turnover. The intent of this discussion is to provide an understanding of companies, their needs and how best they can achieve this need with emphasis on human resource and employee management. Human resource is a critical section in an organization because it not only determines the level of productivity in an organization but also impacts the future of an organization based on its decision. A functional human resource should, therefore, ensure the company hires the right individuals and work towards developing those employees to improve their skills and provide the retention incentive in as far as improving productivity and profitability is concerned (Barrick, 2009).

 

Management/Business Questions

Management questions are useful in applied research because they provide solutions to the research question. Applied research involves practical application of science which makes management questions critical. In this context, the discussion explains the significance of employee recruitment and retention and management questions are useful in generating the information required to ensure employee retention.

What does a manager need to know?

There are different management skills and styles embraced by various companies. However, the essence of management is to ensure an organization achieves its objectives by using the resources at its disposal and this includes human resource. Employees are the building blocks of an organization because they are directly responsible for achieving the purpose of the organization. The dissatisfaction of employees may not only impede productivity but also reduce profits for an organization. A manager therefore needs to appreciate the significance of retaining employees and its effects on the organizational success. Study results indicate that managers have a big role to play in improving the performance of companies and their profitability and this relies on proper management of human resource.

What are the important management strategies to this problem?

This research question can only be addressed by first understanding the challenges of employee retention and the factors that inform these challenges. Most often, monetary dissatisfaction is the primary reason why companies experience high turnover rates (Martin, 2016). All organizations have budget allocations for every employee in terms of remuneration and these allocations are made to a given limit beyond which an organization strains. However, employees grow over time and the need for monetary growth also arises. When employees demand remuneration beyond what an organization can offer, there is always employee turnover which then makes employee retention a hell of a nightmare especially in an environment where there are several opportunities. 

In essence, managers should be able to formulate strategies against the reasons for employee turnover to ensure they retain their best employees (Mitchell, 2001). The biggest challenge to this approach is the issue of poaching employees. Organizations usually want the best for themselves even if it means paying a little more premium. A good employee will receive attention from various organizations with interest in his/her skills. Providing incentives way above his/her current benefits is a common phenomenon in most organizations. This means that the cost of retaining good employees is high given the competition they enjoy in the job market. Provided an employee is comfortable in his place of work, the chances of moving to another organization is minimal.

Intended audience

The findings of this research targets companies that have turnover problems due to challenges of employee recruitment and retention. Companies are therefore, the primary intended audience of this study.  The significance of employee recruitment and retention is a direct factor of influence to companies that seek to thrive within the current competitive business environment. Strategic planning has been adopted by almost all organizations and this is typically driven by the need to succeed by not only achieving an organization’s purpose but also securing the competitive edge in the face of the fierce competition by businesses.

 

Summary

The findings of this study are critical to companies that want to expand and increase their value in terms of the services and products they provide. Employees play a vital role in defining the state of a company in terms of sustainability, productivity and profitability. This paper discusses the importance of employee development and retention as success tool for organizations. However, it is important to note that these findings are not limited to established companies only. Small businesses or prospective companies also need to embrace the need for employee development and retention as a recipe for success. The next section discusses employee retention as a means to success for companies now and in future.

Problem Background

Employee recruitment and retention is an organizational management aspect critical to organizational performance. Every organization is usually aiming at making as much profits as possible. Given the resources at its disposal, a company will fully exploit an employee to ensure it achieves its objectives. Fundamental to this cause is the need to have employees with skills relevant to the activities of the organization and even more important is the level of understanding the employees have in regards to the requirements of the organization.

Definition of terms

  • Employee retention– This refers to the practices that ensure employees stick to their place of work.
  • Recruitment– This is human resource function that entails selection and employees to fill specific job positions in an organization.
  • Human resource– This is the part of an organization that deals with the welfare of employees within an organization.
  • Remuneration– Compensation for work done.

These terms are defined to provide a clear understanding of the subject matter.

Management Question or Management Dilemma Related Topics

The maximization of labour performance and profitability are important aspects of organizational performance. However, the two aspects depend on employee management to ensure the objectives of an organization are achieved. The question informing this research is whether employee retention is a challenge or not. Employee retention is a challenge for nearly all companies and an issue that directly impacts organizational performance and profitability. 

Current state of organizations

The level of competition has gone up among organizations and this has prompted companies to embrace strategic planning and employee management as a way to secure competitive advantage in the market. Every organization is currently facing employee turnover and this results in impacts as discussed in this research study. The costs incurred in hiring of employees take about ten percent of the annual revenue generated by the organizations. With the changes in occurring in the business world, organizations must adjust to keep up with these changes in order to thrive.

Relevant organizational processes or systems or functions

The recruitment and retention of employees primarily impacts the accounting functions of organizations. Costs are incurred during recruitment. By the same token, retention of employees involves provision of motivation such as increase in remuneration and additional benefits (Amabile, 1993) 

Motivation theory and employee turnover

Motivation theory attempts to explain the effect of motivation on employees and its impacts on performance. It holds that effective motivation of employees improves their work performance and also reduces turnover. In the context of this research, it is important to for managers to effectively motivate their employees to ensure maximization of labour performance and profitability thereof (Gagne, 2005).

Summary

Organizational performance is determined by various factors which fall within every sector of the organization. Human resource is one of the sectors of an organization that play a very important role in determining organizational performance in terms of productivity and profitability. Employee recruitment and retention is important to this cause especially for companies that aim at increasing its market share. This study provides an explanation on the importance of employee recruitment and retention in as far as organizational performance is concerned.

 

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