1. Recruiting and Retaining People Lecture 7: Labour Turnover and Retention

2. Analysis and investigation External labour market Internal labour market Organisational assessment Corporate strategy Forecasting Planning and resourcing Implementation and control DemandSupply HR imbalance – quantitative/qualitative Working patterns; retention; health and safety; release; training and development; employment relations; organisation structure and development; recruitment and selection; equality of opportunity; pay and reward; performance management. Using HR techniques Developing policies and reviewing practice Utilising technology Source: Williams, in Leopold (2002) Human Resources in Organisations, Harlow, Pearson Education Ltd, pp. 31. (adapted from Bramham (1994)

3. Defining Labour Turnover Taylor (2010: 307) explains need to differentiate between those who leave employment due to employer decision/ employee decision: –Employer initiated e.g. misconduct dismissal –Voluntarily initiated e.g. resign for new post –Not always so clear-cut e.g. resign on ill health So, his broad definition of labour turnover: “all resignations not formally initiated by employer” and some –‘Controllable’ – e.g. job dissatisfaction –‘Uncontrollable’ – e.g. ill-health, death –Our focus? Controllable voluntary turnover

4. Does Labour Turnover Matter? Should organisations worry about turnover? Generally accepted that high labour turnover has undesirable implications e.g. costs –But, debate on how significant these are (see CIPD survey in Taylor p. 309) Hence, rising labour turnover viewed as a costly problem for HR to resolve –E.g. see research on assumed negative link between high labour turnover and organisational performance (Taylor, p. 312) Suggests organisations need to monitor/manage labour turnover and retention

5. Turnover and Retention Torrington et al (2008) –Two different perspectives 1.Focuses on whole organization Labour turnover Benchmarking turnover externally Policies to improve general labour retention 2.Focuses on key employees Talent management also known as ‘the war for talent’ via more sophisticated retention practices (for identified key ‘talent’)

6. Turnover Rates and Trends Torrington et al. (2008: 192) dispute the oft-cited notion that “there are no longer any jobs for life” (though they admit there are still relatively rare”) They argue that job tenure appears to have been broadly stable for many years (e.g. years 1975-1998 in study by Gregg and Wadsworth, 1999) See following findings on job tenure…

7. Job Tenure Average Job Tenure (Mean) –199693.5months –200190 months Median Job Tenure –199661 months –200148 months Macauley, C. (2003) ‘Job mobility and job tenure in the UK’ Labour Market Trends, Labour Market Trends, vol 111, no 11, pp 10. [online] (Accessed 22 October 2008). Available from http://www.statistics.gov.uk/CCI/article.asp?ID=596

8. Factors Affecting Job Tenure Economy: lower in growth, higher in recession Little gender difference except women less likely to stay with organisations for 20 years or more – career breaks Age – older people move less frequently than younger people Married/cohabiting couples and people with children move less frequently than single people and those without children More educated workers are more mobile

9. Factors Affecting Job Tenure “further north the region.... higher the proportion… of people staying in the same firm” (Macauley, 2003) Factors involved?: –Housing – rented, mortgaged, wholly owned –Full time staff stay longer than part-time –Job retention increases as pay increases –Job retention varies by occupation Lower in retailing and catering Higher amongst managers and professionals –Job retention varies by industry Lowest in hotels and restaurants Highest in public administration and defence –Job retention lower in UK than EU as a whole

10. Advantages and Disadvantages of Labour Turnover to Organisations Torrington et al (2008); Taylor (2010) –Advantages ‘New blood’/ideas and enthusiasm Control labour costs/profitability Loss of poor performers –Disadvantages Cost of replacement (R&S, induction, training etc) Loss of ‘trained resource’ (perhaps to a rival) Impact on productivity/efficiency/effectiveness Indicative of poor management?

11. Reasons for Labour Turnover Non-work/personal factors –Domestic/personal circumstances Functional turnover –Poor performers –Failure to fit in with co-workers Push factors (most common reason) –Dissatisfaction with job/organisation Pull factors –Rival employers –Career development

12. Seven Hidden Reasons Bramham (2005) –Job or workplace not living up to expectations –Mismatch between person and job –Too little coaching and feedback –Too few growth/advancement opportunities –Feeling devalued and unrecognised –Stress from overwork and work-life imbalance –Loss of trust and confidence in senior leaders

13. Calculating Turnover Average Annual Labour Turnover Index Number of leavers in year x100 Average number of staff in post at start of year Fairly basic/crude turnover index –How do you interpret the index? E.g. Cannot differentiate between people leaving early/later in their employment service

14. Calculating Turnover Stability Index Number of staff with 1 year’s service x100 Number of staff employed exactly one year before Some organisations use this as an alternative to the LT index/some use it as an additional tool –Can use this device to calculate proportion of staff retained in past year and for previous intakes also (e.g. compare staff with 1, 2, 5, 10 years service) –Can form basis for cohort analysis technique

15. Statistical Analysis of Turnover Cohort analysis tracks given groups/sees what happens to them - e.g. graduate trainees –Survival rate (plus transfers, promotions) Helps org. plan future graduate intakes/careers –Turnover – when and where leavers go Help organisations see why people leave –Data limited to particular group(s)/needs to be collected over long period so demanding Census method – compares leavers’ completed service (in histograms) Retention profile e.g. age, gender, skills audits Replacement and succession planning

16. Graduate Entry Cohort Original Strength Numbers surviving to end of year after engagement Year 1Year 2Year 3Year 4Year 5 2003403528262220 2004322524191817 2006483933302523 2006383227242219 2007423630262321 Total200167142125110100 Average Survival Rate100%84%71%63%55%50%

17. Sales Director Regional Sales Manager (North) Sales Manager (Scotland and Northern Ireland) 3 Salespersons Sales Manager (North and Wales) 6 Salespersons Regional Sales Manager (South) Sales Manager (Midlands) 12 Salespersons Sales Manager (South ) 15 Salespersons

18. Post Current PostholderReady nowReady Soon Ready Future Sales DirectorD. CouttsF. EnfieldJ. Wilson Regional Sales Manager NorthF. EnfieldG. RobertsM. SmithS. Johnson Regional Sales Manager SouthJ. WilsonG. RobertsS. Johnson Sales Manager (Scotland & NI)G. RobertsH. Sim G. Neish M. Knowles Sales Manager (North & Wales)M. Smith H. Sim P. AdamC. Fisher Sales Manager (Midlands)S. Johnson S. Thompson G. DunnN. Hughes Sales Manager (South)M. Aitken C. Cameron W. Davidson M. Green S. Lewis

19. Calculating Cost of Turnover Torrington et al (2008) –Costs of covering workload Temps/overtime –Costs of recruitment and selection Managers’ time spent shortlisting and interviewing Advertising/Agency fees –Costs of training new employee Induction training –Cost during training period Non-/less productive while becoming fully trained See CIPD/Taylor, p.319 median LT costs –Average LT cost £7,750 per employee (2007)

20. Retention Strategies Reward Aspects –Pay Hygiene factor not motivator Wage-work bargain/psychological contract –Benefits Flexible remuneration packages –Intrinsic reward Motivation theory

21. Retention Strategies Managing expectations –Recruitment and selection Realistic job previews –Induction Family-friendly policies Training and development Line management development Consider pros/cons of above strategies? –How to decide which are relevant in org.?

22. Finding Out Why People Leave/Resign Taylor (2008) highlights that it makes sense to find out why people resign e.g. via surveys of former employees/leavers, exit interviews –Exit interviews most common method but limitations to usefulness of data collected –Exit interview can focus on work condition improvements not personal reasons for resigning (Carell et al.1995) –Can help shape retention strategies What about employees we retain? –Make sense to find out why they stay? –Can also help shape retention strategies

23. Managing Resignations Taylor (2008: 450-453) highlights that there are also legal/ethical aspects to consider in managing resignations –Contract of employment/duty of fidelity –Restrictive covenants –Notice periods should have been specified in employment contract –Potentially unethical treatment of people known to have applied for other posts/leaver