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USING MOTIVATIONAL STRATEGY AS PANACEA FOR EMPLOYEE
RETENTION AND TURNOVER IN SELECTED PUBLIC AND PRIVA TE
SECTOR ORGANISATIONS IN THE EASTERN CAPE PROVINCE O F SOUTH
AFRICA
By
SAMUEL, OLORUNJUWON MICHAEL
Submitted in fulfillment of the requirements for t he degree of
MASTER OF COMMERCE IN INDUSTRIAL PSYCHOLOGY
In the faculty of
MANAGEMENT AND COMMERCE
Of the
UNIVERSITY OF FORT HARE
SUPERVISOR: MR. C. CHIPUNZA
SEPTEMBER, 2008
i DECLARATION
I declare that “USING MOTIVATIONAL STRATEGY AS PANACEA FOR
EMPLOYEE RETENTION AND TURNOVER IN SELECTED PUBLIC AND
PRIVATE SECTOR ORGANISATIONS IN THE EASTERN CAPE PR OVINCE
OF SOUTH AFRICA” is the author’s original work and has never been submitted
by the author or anyone else at any university for a degree. All the sources that I
have used or quoted have been indicated and acknowledged by means of
complete references.
_________________________________________
SAMUEL, OLORUNJUWON MICHAEL
05 SEPTEMBER, 2008
ii
Acknowledgements
This dissertation would not have been successful had it not been for the
immense contribution of some people. In this regard, I would particularly like to
gratefully acknowledge the following:
� Mr. Crispen Chipunza, my supervisor for his encouragement, support and
guidance.
� Dr. P. O Adebola for facilitating my study at the University of Fort Hare.
� Dr. & Mrs. F. B Lewu for your wonderful support and unparallel hospitality.
� Mr. Wale Fatoki, my “coach” and very good friend for his friendship, frank
advice and financial assistance.
� Prof. Anthony Okoh for your inspiration, brotherly advice and love.
� Sola Alege for his financial support to my family while I was away.
� Messrs Patrick Igonor and Akin Odeyemi for providing statistical and data
analysis for this dissertation.
� The organisations and employees who participated in this study.
� My jewel of inestimable value, Bose. Thanks for being there for me always
and for keeping the home front while I was away in foreign land. I will
forever love you.
iii
� My lovely children, Damilola & Ayodeji for your understanding and
endurance during my absence.
� Lastly and most importantly to God Almighty, the author and finisher of my
fate for His abiding faith, provision and the grace to complete this
dissertation.
iv
DEDICATION
I dedicate this project to my family – Bose, Damilola and Ayodeji who missed my
love and absence while the programme lasted.
v
TABLE OF CONTENTS
Declaration
i
Acknowledgements
ii
Dedication
iv
Table of Contents
v
List of figures
xii
List of Tables
xiv
List of Annexure
xv
Abstract
xvi
CHAPTER ONE
INTRODUCTION, PROBLEM STATEMENT AND OUTLINE OF THE STUDY
1.1 Introduction
1
1.2 Problem statement
6
1.3 Objectives of the study
9
1.4 Research hypothesis
10
1.5 Significance of the study
10
vi
1.6 Delimitation of the study
11
1.6.1Size of the organisation
12
1.6.2 Type of organisation
12
1.6.3 Geographical demarcation
12
1.6.4 Units of analysis
12
1.6.5 Subject of evaluation
13
1.7 Definition of key concepts
13
1.8 Outline of the dissertation
14
1.9 Concluding remarks
15
CHAPTER 2
AN OVERVIEW OF EMPLOYEE RETENTION AND TURNOVER IN
ORGANISATIONS
2.1 Introduction
16
2.2 Definition of employee retention
17
2.3 Definition of employee turnover
19
2.4 A global overview of employee retention and tur nover
21
vii
2.4.1 Retention and turnover in South Africa
25
2.5 Factors influencing retention and turnover in S outh Africa
30
2.5.1 Global economic influence on retention and turnover
30
2.5.2 National economic influence on retention and turnover
33
2.6 Relationship between recruitment sources, reten tion and turnover
35
2.7 Reasons for employee turnover
42
2.8 Costs associated with turnover
49
2.9 Measuring employee turnover
55
2.10 Turnover as cost benefits to organisations
58
2.11 Concluding remarks
61
CHAPTER 3
STRATEGIES FOR MANAGING EMPLOYEE RETENTION AND TURN OVER
IN ORGANISATIONS
3.1 Introduction
63
3.2 Management of retention and turnover by public and private
Sector organisations
64
viii
3.2.1 An overview of employee retention strategy
65
3.2.2 Policy approach by government in public sector organisations
71
3.3 Motivational strategies
75
3.3.1 Goal setting technique
77
3.3.2 Training, education and development opportunities
79
3.3.3 Career growth and promotion opportunities
83
3.3.4 Management style
85
3.3.5 Compensation and other financial benefits
90
3.4 Job satisfaction
94
3.4.1 Measuring job satisfaction
99
3.4.2 Herzberg (1959) two-factor theory and job satisfaction
102
3.5 Theoretical framework of employee motivation
105
3.5.1 Expectancy theory (Vroom, 1964)
106
3.5.2 The Hierarchy of Needs theory (Maslow, 1943)
111
3.6 Concluding remarks
113
ix
CHAPTER 4
RESEARCH METHODOLOGY
4.1 Introduction
114
4.2 Research design
114
4.3 Research strategy
117
4.4 Target population
118
4.4.1 Sample frame
118
4.5 Sample
120
4.5.1 Sample size
121
4.6 Sampling error
123
4.7 Sampling procedure
124
4.8 Data collection
127
4.8. 1 The research questionnaire
128
4.8.2 Description of the research questionnaire
129
4.8.3 Reliability testing of the questionnaire
130
4.8.4 Administration of the questionnaire
131
x
4.9 Statistical analysis
133
4.10 Concluding remarks
135
CHAPTER 5
DATA ANALYSIS, RESULTS AND DISCUSSIONS
5.1 Introduction
136
5.2 Demographic results of respondents in the publi c sector
organisations
136
5.3 Demographic results of respondents in the priva te sector
organisations
139
5.4 Reliability of the questionnaire
143
5.5 Testing of hypothesis
144
5.6 Presentation and discussion of results
146
5.7 Concluding remarks
163
xi
CHAPTER 6
CONCLUSIONS, RECOMMENDATIONS, LIMITATIONS AND
DIRECTION FOR FURTHER RESEARCH
6.1 Introduction
164
6.2 Conclusions
167
6.3 Recommendations
167
6.4 Limitations of the study
172
6.5 Direction for further research
172
6.6 Concluding remarks
173
List of references
174
Annexure
196
xii
List of figures
Figure 1: Gender distribution of respondents in the public sector
organisations
136
Figure 2: Age distribution of respondents in the public sector
organisations
137
Figure 3: Highest educational qualification of respondents in the
Public sector organisations
138
Figure 4: Employment duration of respondents in the public sector
organisations
138
Figure 5: Position of respondents in the organisation
139
Figure 6: Gender distribution of respondents in the private sector
organisations
140
Figure 7: Age distribution of respondents in the private sector
organisations
140
Figure 8: Highest educational qualification of respondents in the
private sector organisations
141
xiii
Figure 9: Employment duration of respondents in the private sector
organisations
142
Figure 10: Position of respondents in the organisations
142
xiii
List of tables
Table 5.1: Cronbach’s alpha results
143
Table 5.2: Levels of significance between the overall variable and intrinsic
motivational variables.
144
Table 5.3: Levels of significance between the overall variable and extrinsic
motivational variables
146
xiv
List of Annexure
Annexure A: Research questionnaire for top employees
196
Annexure B: Cross tabulation table for intrinsic variables
199
Annexure C: Cross tabulation table for extrinsic variables
212
xv
ABSTRACT
USING MOTIVATIONAL STRATEGY AS PANACEA FOR EMPLOYEE
RETENTION AND TURNOVER IN SELECTED PUBLIC AND PRIVA TE
SECTOR ORGANISATIONS IN THE EASTERN CAPE PROVINCE O F SOUTH
AFRICA
By
SAMUEL, OLORUNJUWON MICHAEL
SUPERVISOR : MR. C. CHIPUNZA
FACULTY : MANAGEMENT AND COMMERC E
DEPARTMENT : INDUSTRIAL PSYCHOLOGY
DEGREE : MASTER OF COMMERCE
Retention of skilled employees has become strategic and critical to sustainable
competition and effective service delivery among organisations in the ever
changing world of work. Globalisation has tremendously enhanced mobility of
xvi
skilled individuals, thereby accelerating the rate of employee turnover in
organisations. This phenomenon has dramatically changed human resource
practice in the area of attracting skilled employees into the organisation and most
importantly, retaining them. Given the high costs of turnover and its destructive
tendency, it has become imperative for managers to identify retention variables
that constantly motivate and influence the decision of valuable employees to
have a longer tenure in an organisation.
The present study looked at the extent to which intrinsic and extrinsic
motivational variables were used by managers to influence retention and reduce
turnover of key employees in both public and private sector organisations.
Participants were selected from management and non-management employees.
The total sample of the study comprised 145 respondents – 54 management and
91 non-management employees. A questionnaire, measured on a Likert Scale
was used to collect data from respondents. The result showed that employees in
both the public and private sector organisations were motivated to a very large
extent by a combination of intrinsic and extrinsic factors. Motivational variables
such as training and development, recognition/reward for good performance, a
competitive salary package and job security ranked amongst the most important
variables that motivate employees to remain in an organisation. Most private
sector employees were undecided on the extent to which management used
xvii
identified motivational variables to influence their retention in the organisation.
This suggests that most private sector organisations might not have feasible
retention policies. Similarly, employees in public sector organisations are
significantly motivated by financial variables than those in the private sector
organisations. The results of the study are discussed against the background of
employee retention and turnover in organisations.
CHAPTER 1
INTRODUCTION, PROBLEM STATEMENT AND OUTLINE OF THE STUDY
1.1 Introduction
The South African labour-market suffers from a dearth of skilled manpower and a
continuous brain drain (Kinnear & Sutherland, 2001: 15) suggesting that South
African organisations are under pressure to retain available talent. The retention
of talent has however become a major challenge to human resource practitioners
since; according to Harris (2007: 2) talented job candidates in the global skills
market have the luxury of choice. This is affecting South African organisations
since they have to compete not only with one another but with organisations
abroad. The situation has tremendously increased competition for talent in South
Africa with many organisations going to great length to retain their best
employees. Competition has therefore put skilled employees who are already in
short supply under pressure as they are being attracted by more than one
organisation at a time with various kinds of incentives. According to Doke (2008:
26) many newly qualified South African graduates are drawn to foreign shores
with the promise of better remuneration, wider scope and more opportunities,
leaving organisations hard pressed to fill their vacancies with the right
candidates.
Concurring with Doke (2008: 26), Litheko (2008: 26) states that migration of
suitably qualified South Africans abroad is making recruitment an onerous task in
South Africa, because the majority of job candidates are perceived to be
unsuitable for the majority of vacancies at professional and technical levels.
Research findings by Hale (1998) cited in Ramlall (2003: 63) reveals that almost
all public and private sector employers in South Africa are experiencing difficulty
in attracting and retaining new employees.
The changing labour market has brought about an unprecedented labour
turnover. According to Cappelli (2000: 103) strategic poaching of competitor
organisation’s key employees has become an acceptable practice among
employers nowadays. Friedman, Hatch and Walker (1998) as cited in Aron
(2001: 15) report that the notion of a permanent employee has become a thing of
the past. In the changing world of work; Lee (2001: 8) argues that the
psychological contract between employer and employee has changed
fundamentally and long term commitment to an organisation is no longer
guaranteed by either party. Retention of talented employees continues to be a
big problem for a large number of employers thereby constantly challenging HR
practitioners to formulate innovative strategies that will not only attract talent, but
equally retain them in order for these employees to help in achieving
organisational goals and objectives. According to a study of HR professionals in
the United States of America (reported by Mello, 2006: 572), over 75% of those
surveyed reported that retention of talented employees was the top human
resource problem they confronted. Similarly, Harris (2008: 22) asserts that the
biggest challenge facing the South African breweries is the retention of critical
skills. The main reason for the failure to retain these talented employees can be
attributed to the inability of organisations to apply correct motivational strategies
in addressing the problem of retention and turnover.
The issue of employee motivation in contemporary organisations has become so
dynamic that managers have to appraise and re-appraise their motivational
strategies on an on-going basis. According to Czakan (2005: 8), motivational
variables used to attain retention in the past may no longer be appropriate to
motivate talented employees to remain thereby increasing the rate of turnover.
Scarcity of skilled manpower in the South African labour market is also
contributing to the retention problem. For example, Schalkwijk (2000: 5) found
that the South African health sector, particularly the nursing profession, is badly
affected by employee turnover as scores of professional nurses seek alternative
employment or leave the country in search of lucrative work overseas. A study
conducted by the Centre for Health Policy at the University of the Witwatersrand,
South Africa, in April, 2005 estimated vacancy rates for nurses in public hospitals
and clinics in the Limpopo Province at 22.6% and 26.5%, respectively. Ponn-
Kekana, Blaauw, Tint, Monareng and Chege (2005: 54) report that a high
percentage of nurses working in public hospitals in South Africa are demotivated
and already considering quitting their jobs.
The problem of employee turnover is not peculiar to the health sector alone.
Mengel (2001:32) reports that more than half of Information Technology (IT)
organisations in South Africa carried over vacant positions from 1998 to 1999 in
respect of Information Technology professionals. The IT professionals, after
acquiring some work experience, leave South Africa for more lucrative jobs
overseas. The reasons often given by these professionals for quitting their jobs
include poor working conditions, lack of career growth, poor salary incentives,
and general lack of motivation from employers. These are motivational issues
which can be managed by individual organisations in order to reduce the high
rate of employee turnover which, according to Schreuder and Theron (2001: 28)
has become prevalent in both public and private sector organisations with the
attendant costs.
High employee turnover is costly to both the individual organis-
ation and the national economy. Research findings in the United States of
America by Ramlall (2003: 12) indicate that the total cost of employee turnover is
about 150% of an employee’s annual salary. The cost of filling job vacancies, lost
productivity from vacant jobs and the cost of training new employees increase
operational costs. Dess and Shaw (2001: 446) argue that turnover incurs
significant cost, both in terms of direct costs (i.e. replacement, recruitment and
selection, temporary staff, management time) and indirect costs (i.e. morale,
pressure on remaining employees, costs of learning, product/service quality,
organisational memory and the loss of social capital). All these costs are usually
a feature of involuntary turnover. Organisational managers can reduce these
costs by adopting appropriate motivational strategies in order to retain competent
employees, thereby reducing the turnover rate.
In order to succeed in attracting and retaining talented employees, South African
organisations have to consider the needs of their organisations and those of the
individuals, as well as the environment in which they operate. According to
Schalkwijk (2000: 5), organisations have to develop strategic reward
programmes that incorporate pay and employee benefits as well as consideration
for the individual employee’s personal growth and development. These represent
some of the personal needs and career aspirations of employees which must be
considered by employers in order to retain and motivate them to help in
achieving organisational goals. Dess, Lumpkin and Eisner (2008: 119) concur
that productive employees place professional development and personal
enrichment (financial and otherwise) above an organisation’s loyalty. These
arguments are consistent with the positions of Mengel (2001: 32) and Davidson
(2001: 4) who listed critical factors to employee retention to include career growth
opportunities, learning and development, exciting and challenging work, a good
boss, fair pay and benefits, and recognition for work well done. One of the
challenges faced by the managers of human resources in South Africa today lies
in the development and retention of competent employees. Czakan (2005: 8)
alludes to this assertion in submitting that the core of the problem remains the
strategic imperative to attract and retain talented employees who will make the
difference in service delivery and profit maximisation.
Schreuder and Theron (2001: 28) contend that the retention of talented
employees by employers is imperative because the organisation’s competitive
advantage is often dependent on the specialised knowledge and skills possessed
by these employees. Given the mobility nature of talented employees, retaining
them becomes a matter of concern to employers since, in the view of Arkin
(2001: 28) and Buckingham (2000: 45), their leaving means a loss to the
organisation of its intellectual capital or intangible assets.
The above discussion has provided a background to the problem of employee
retention and turnover among public and private sector organisations including
those in South African, and the challenges posed to employers. Managers are
therefore saddled with the responsibility of addressing the problem through the
designing and implementation of appropriate retention strategies that are capable
of reducing turnover to a manageable proportion.
1.2 Problem statement
World-wide the competition by organisations for talented employees is on and
South Africa is no different. In today’s highly competitive business environment,
the dynamics of talent have become a key differentiator for most businesses.
Highly competent employees are migrating from South Africa overseas for better
paid jobs. When these employees migrate, they sometimes move with their
clients’ assets and this affects investment in South Africa. According to
Gillingham (2008: 17), emigration is having an adverse effect on the private
banking industry, with some highly skilled employees opting out and some clients
moving their assets offshore. Farrel (2008) reported by Gillingham (2008: 17)
states that…..”Foreign banks tend to target the very best employees in South
African private banks who accept employment from offshore banks”. Losing
frontline employees who have established good relationships with their clients is
of particular concern. Organisations must not only attract the right candidates
but must also ensure their retention in order for these employees to make a
difference in the realisation of organisational goals. Hendricks (2006: 9) notes
that employees with scarce skills are in great demand by the South African
government and are becoming difficult to source. When these categories of
employees are eventually sourced, they become even more difficult for
government to retain. It is not only the government that is finding it difficult to
retain highly skilled employees; private sector managers also admit that one of
the most difficult aspects of their jobs is the retention of key employees in their
organisations.
It becomes problematic for organisations when the rate of replacement rises over
time especially when highly skilled employees are involved. The real challenge to
HR managers therefore lies in devising ways of retaining employees in order to
reduce the rate of turnover and the associated costs. Dess (2008: 119) concurs
in stating that hiring and developing the best employee will be unproductive if
organisations cannot provide the working environment and intrinsic and extrinsic
rewards to retain their best and brightest. Employee retention has therefore
become a practical guide for managers in order to retain their talented
employees and avoid spiraling costs that are usually associated with turnover.
Indeed, retention practices have posed enormous challenges to managers
considering the shortage of qualified manpower in the South African labour
market. Managers in both public and private sector organisations have to devise
innovative means of retaining high performing employees in their pool in order to
avoid frequent recruitment which is costly and time consuming. According to
Brown (2006: 2), the lack of proper retention strategies is having an adverse
effect on South African organisations, as replacing key employees is distruptive,
expensive, time consuming and may even threaten the sustainability of an
organisation. The implication thereof is such that South African organisations
may not be able to favourably compete in the global market place if the
phenomenon is not properly addressed. Research by P-E Corporate Services
(2001: 1) estimate the rate of voluntary turnover of skilled employees in South
Africa to be at 63%, involuntary turnover, 22% and others, such as death,
retirement and pregnancy, at 15%.
The reasons often cited for voluntary turnover by employees revolve around the
inability of employers to motivate them properly to remain. Thus, according to
Ponn-kekana et al. (2005: 20), some of the reasons include a lack of promotion,
insufficient pay, work overload, and some other motivation related issues such as
opportunities for training and development, job insecurity, work autonomy and a
lack of recognition of good performance. In the light of such evidence, there is a
need to establish the extent to which managers in the South African
organisations are using appropriate motivational strategies to retain employees.
Such a step will help managers in the identification of reliable and sustainable
retention programmes and practices that can effectively reduce turnover in both
public and private sector organisations. The present study is therefore aimed at
identifying and establishing the extent to which managers in selected public and
private sector organisations are applying these motivational strategies. In view of
the foregoing, the fundamental question that is addressed by this study therefore
is: To what extent are intrinsic and extrinsic motivati onal variables being
used in influencing retention and reduction of turn over of employees in
both public and private sector organisations?
1. 3 Objectives of the study
The research was aimed at achieving the following objectives:
1. Identify and establish the key intrinsic and extrinsic motivational variables being
used by selected public and private sector organisations in retaining their
employees;
2. Determine the extent to which the identified intrinsic and extrinsic motivational
variables are influencing employees’ retention and turnover in the selected
public and private sector organisations and,
3. Make recommendations to management of the selected public and private sector
organisations on how to effectively retain employees and reduce turnover.
1.4 Research Hypothesis
The research hypothesised that:
Intrinsic and extrinsic motivational variables are not significantly used to influence
employees’ retention and turnover in either the public or private sector organisations.
1.5 Significance of the study
Not many empirical studies have been conducted in the past to provide
managers with a sustainable remedy to the problem of retention and turnover
particularly in the South African context. Birt, Wallis and Winternitz (2004: 25)
assert that South African organisations are characterised by market-driven
turnover with difficulty in retaining employees that are considered core to the
purpose and continual success of these organisations. These organisations are
facing a huge challenge in determining the factors that are instrumental in
minimising turnover amongst talented employees. The present study will identify
and establish key motivational variables that most influence retention in both the
public and private sector organisations.
Some costs are associated with employee turnover which are often ignored by
managers. Because some of these costs are not expressed directly (for example,
lost productivity, organisational memory, customer defection, employee morale),
managers do not often consider them as detrimental to the growth of the
organisation. Sherman, Alper and Wolfson (2006: 22) assert that these costs are
hard to quantify and may be more damaging to an organisation than the direct
costs. The present study will highlight some of these costs in order for managers
to appreciate the essence of motivating and retaining talented employees on an
on-going basis.
The outcome of the study will significantly advance the frontier of knowledge and
add to the existing academic literature on retention and turnover particularly in
the context of South African organisations. The findings will also be useful in the
formulation of effective retention policies and in reviewing existing ones. It is
believed that the results of the study will inspire other researchers to investigate
further areas that are not covered in this study.
1.6 Delimitation of the study
The purpose of demarcating a study is to make it more manageable and to this
end, the proposed research was limited to selected public and private sector
organisations in the Eastern Cape Province of South Africa.
1.6.1 Size of the organisation
The selected organisations in the study had an estimated employee population of
about 1800 and as in other organisational settings; they have a hierarchical
structure (top, middle, and lower levels of management and other operational
employees). This helped in identifying various levels of employees that
constituted the research elements in this study.
1.6.2 Type of the organisation
The study was limited to selected public and private sector organisations in the
Eastern Cape Province of South Africa. Available literature indicates that these
categories of organisation are also experiencing employee turnover and retention
problems.
1.6.3 Geographical demarcation
The data for the study was limited to the selected organisations in the Eastern
Cape Province of South Africa, particularly the East London and Bisho areas.
1.6.4 Unit of analysis
The study was limited to top level management and operational employees (i.e.
line managers and lower level employees) within the selected public and private
sector organisations. Management is responsible for providing strategic plans
which Bryson (2004: 120) describes as plans that establish an organisation’s
overall objectives, and seek to position the organisation in terms of its
environment. This level of management formulates broad policies (including
human resource) upon which other levels of management operate. This category
of employees will be requested to answer structured questionnaires that solicit
information on which motivational variables are being used to influence and
manage employee retention and turnover in their organisations. Non-
management employees are responsible for production and task implementation.
These category of employees in most organisations, constitute the highest
population of the workforce. Information will be sought from them in respect of
the effectiveness of the motivational variables being used by their managers to
influence their stay in the organisation.
1.6.5 Subject of evaluation
The subject of evaluation in this study can be broadly divided into the following
areas:
� An overview of employee retention and turnover in organisations.
� Strategies for managing employee retention and turnover in organisations.
1.7 Definition of key concepts
� Motivation – Defined by Riggio (2003: 184) as “a force that serves three
functions: It energises or causes people to act, it directs behaviour toward
the attainment of specific goals; and it sustains the effort expended in
reaching those goals”.
� Strategies – According to Web definition, www.web-strategist.com-
strategies are group of activities to produce outputs required to achieve
planned outcomes.
� Employee turnover – The ratio of the number of workers replaced in a
given time period to the average number of workers (Free dictionary by
Farlex).
� Employee retention – Ways of managing and retaining talented
employees using innovative retention programmes (Phillip & Connell,
2002: 1).
� Public sector – Part of the economy that provides basic government
services (government departments, parastatals, provincial and
municipality). (www.investorwords.com).
� Private sector – According to Web definition, is “that part of the economy
which is controlled or owned by private individuals, either directly or
through stock ownership”. That portion of the economy that is composed
of businesses, excluding government.
1.8 Outline of the dissertation
Chapter 1: Introduction, problem statement, and outline of the study.
Chapter 2: An overview of employee retention and turnover in organisations.
Chapter 3: Strategies for managing employee retention and turnover in
organisations
Chapter 4: Research methodology.
Chapter 5: Results and discussion.
Chapter 6: Conclusions, recommendations, limitations and direction for future
research.
1.9 Concluding remarks
This chapter has provided a general background to the study and emphasises
the challenges of retaining available skilled employees. The chapter also
highlighted the damaging impacts of high rate of turnover on both public and
private sector organisations and the issue of costs. Factors that delimit the study
were also discussed. The next chapter will provide a general overview and
factors that influences retention and turnover in South Africa and some other
countries in the world.
CHAPTER 2
AN OVERVIEW OF EMPLOYEE RETENTION AND TURNOVER IN
ORGANISATIONS,
2. 1 Introduction
Chapter one has provided a general background and put the problem of
employee retention and turnover in perspective. The chapter also stated the
objectives, hypotheses, significance and the delimitations of the study. The
general content of the study were also highlighted. The chapter served as the
background for understanding the research problem.
The aim of this chapter is to provide a broad definition of retention and turnover
and present a general overview of the subject in different countries of the world.
Reasons for employee turnover as well as turnover as cost benefit are also
discussed. The chapter also sets the basis for a comprehensive analysis of the
costs that are usually associated with turnover while various methods of
calculating and measuring retention and turnover are examined.
The section below will define and give a general understanding of employee
retention and turnover in organisations.
2. 2 Definition of employee retention
Retention is a voluntary move by an organisation to create an environment which
engages employees for long term. According to Chaminade (2007: 1), this
attachment relationship should be durable and constant and link the employee to
the organisation by common values and by the way in which the organisation
responds to the needs of the employees. The main purpose of retention is to
prevent the loss of competent employees from the organisation, which could
have an adverse effect on productivity and service delivery. Also, retention allows
senior and line managers to attract and effectively retain critical skills and high
performing employees. This is achieved by providing these managers with
information on retention and retention strategies that will ensure that the goals
and objectives of the organisation are realised.
Creating a retention strategy means placing the employees’ needs and
expectations at the centre of the organisation’s long-term agenda in order to
ensure the professional satisfaction of the employee and create a trusted
relationship. In this stable relationship, the employee remains in the organisation
by personal choice based on free will and considered decision. Retention of
employees is crucial to the overall success of any organisation. Brown (2006: 2)
notes that the lack of proper retention strategies is damaging South African
organisations severely, as replacing key employees is disruptive, expensive,
time consuming and may even threaten the sustainability of an organisation.
Talented and high performing employees should be encouraged to remain in the
organisation by designing retention policies that will provide individual employees
with opportunities to demonstrate their skills and ensure that they are matched
with the right jobs. Such retention policies should, in the view of Nyoka (2006: 2)
also include strategies that will enable employees to balance their work life
demand with their family life by establishing family friendly policies and enabling
flexible work arrangements to accommodate essential personal commitments.
With such effective retention policies in place, managers are able to keep the
employee turnover at a manageable rate.
It is imperative for organisations through the employment process, to attract
quality employees to the organisation. However, it is more important for
managers to device strategies with which to retain these talented employees in
the service of their organisations in order for employers to benefit from the
investment already made in them. Employee retention is one of the most critical
issues facing organisational managers as a result of the shortage of skilled
manpower, economic growth and high employee turnover. Phillips and Connell
(2002: 1) state that employee retention involves being sensitive to employees’
needs and demonstrating the various strategies in meeting those needs. These
strategies, according to Czakan (2005: 8) include career growth and
development, competitive compensation benefits, opportunities for training and
supportive management. Apart from the strategies mentioned above, employers
should use a flexible approach to encourage retention and this approach should
consider a number of value-adding components. Such components, Brown
(2006: 2) contends include mentoring/coaching, opportunities for skill and career
development, as well as flexibility around the frequency and size of performance
rewards and incentives. The whole process of retention is to ensure that
employees are retained in the organisation, especially employees with valued or
needed skills or experience in a scarce/critical field (where recruitment is
difficult).
2.3 Definition of employee turnover
Employee turnover occurs when employees leave their jobs and must be
replaced. The world web dictionary defines employee turnover “as the ratio of
the number of workers that had to be replaced in a given time period to the
average number of workers” (www.wordnet-princeton.edu). The Chartered
Institute of Personnel and Development (2007:1) defines employee turnover as
the “ratio comparison of the number of employees an organisation must replace
in a given time period to the average number of total employees”. In their own
definition, Abassi and Hollman (2000: 305) define turnover as the “rotation of
employees around the labour market; between firms, jobs and occupations; and
between the states of employment and unemployment”. Turnover, according to
Iverson and Pullman (2000: 980) can be classified as voluntary (to include
withdrawals out of volition) or involuntary (to include layoffs and dismissals).
Voluntary turnover often results in departing employees migrating, in most cases,
to competing firms, creating a more critical situation since their transferred
knowledge can be used to gain competitive advantage. Turnover is a costly
expense and a huge concern to employers and must be avoided. High turnover
represents a considerable burden on human resource and line managers, who
are constantly having to recruit and train new employees.
Given the intense search for talent by various organisations the world over, the
above background to the context of retention and turnover present a number of
challenges to HR practitioners and top management. The core of these
challenges revolves around the inability of organisations to retain high performing
employees. These challenges require that top management, in consultation with
the human resources managers, formulate and implement a comprehensive
strategic retention programme that will attract and retain talented employees.
Such programmes should take into consideration variables such as base pay and
other financial incentives, career growth and development, training and skills
development, a good working environment, the recognition of good performance
and others. Smit and Cronje (2002:344) consider some of these variables as
crucial in rating organisations. These have helped these organisations in
retaining high caliber employees and also in maintaining low turnover rates.
The following section provides a general overview of retention and turnover as
applicable in different parts of the world.
2.4 A global overview of employee retention and tur nover
In the United Kingdom (U.K), the Chartered Institute of Personnel and
Development (2007: 1) reports that the overall turnover rate for the U.K. in the
year 2006 was reported as 18.1%. Turnover rates vary from sector to sector with
the highest level of turnover (22.6%) found in the private sector organisations
with the public sector having an average turnover rate of 13.3%. In the United
States of America (USA), Smith (2007:1) argues that businesses spend over
USD200billion annually recruiting and replacing their employees. In the
healthcare sector in USA for example, a report by Sellgren, Ekvall and Tomson
(2007: 169) estimates that the turnover rate would reach a level of 29% in year
2020. Gustafson (2002: 106) shows that the hospitality industry in the USA and
elsewhere is experiencing a labour shortage with the attendant high rate of
turnover. Kaufman (1998: 54) forecasts a considerable current and future
shortage in the supply of information technology (IT) professionals in the USA. A
jobs forecast by Computerworld (1998: 1) estimates that there were 350 000
vacant IT jobs in the USA in 1998 with a forecast of 1.3million more IT
professionals needed in the next decade with a turnover rate of 13% or higher.
This suggests that turnover would continue to be a problem in the years ahead.
To reduce the ever increasing turnover rates, organisations must understand and
put in place the right strategies to retain these professionals. According to
Lockwood and Anari (1997: 252) the following factors were listed as crucial
retention strategies for IT professionals in the USA and U.K in the order of
importance: Money (base salary plus bonus and stock options); the chance to
learn new skills (i.e. those that the market values); the reputation of the
organisation in technology; and working conditions (e.g. physical, colleagues &
boss, casual dress). On retention strategies that were particularly successful in
maintaining a low turnover rate, one of the solutions suggested was an increase
in salary. A Computerworld (1998: 1) survey found that the majority of IT
professionals admitted to having left their former organisations for more money,
while a little above half of these professionals left for career advancement.
Common practice suggests that most people need a vacation break to prevent
job stress and burnout. Furlonger (1997: 3) reports that Scandinavian and
European organisations typically offer more vacation benefits and three day
weekend mini-vacations than their USA counterparts. This practice attracts
scarce skilled professionals (who attach importance to work-life leisure) to
organisations in Scandinavia and Europe, now that the international labour
market has become a global unit.
Khatri (2001: 154) asserts that employee retention and turnover are at an all time
high in Asia thereby posing a great difficulty to HR management. A widely held
belief is that employees have developed ‘bad’ attitudes due to the labour
shortage. Employees are believed to job-hop for no reason, or even for fun.
Hewitt Associates (2006: 1) found that public and private sector organisations in
China, Hong-Kong, India, Japan, Korea, Malaysia, the Philippines, Singapore,
and Thailand experienced 14% and 16% turnover rates in year 2004 and 2005,
respectively. The possibility of the rate increasing is high as Asia’s dynamic
growth agenda collides with the demographic trends of an ageing population and
an immediate need to attract more skilled employees. The effect of a rising
turnover rate is already manifesting as it is now easier than before for employees
to move from one organisation to another thereby increasing the complexity and
costs of retaining the right employees in an organisation.
Many reasons have been given for the high rate of turnover in Asia and one of
these reasons according to a study by Hewitt (2006: 1) is inequity in
compensation. The report noted that many organisations are already losing their
employees to organisations that are offering higher salaries. The study listed
limited growth opportunities and role stagnation as other reasons for high rates of
turnover. A very effective retention strategy adopted by Asian organisations is the
ability to raise base pay above the market rate. Organisations are also
increasingly providing the opportunity to teach their employees new skills and
providing favourable work-life balance in their bid to retain key employees. The
banking and finance sector in Asia recorded the greatest turnover of 25%, which,
according to Hewitt (2006: 1), was brought about by stable economies, growing
markets, and increased retail investor confidence. The outsourcing sub-sector
which has recorded unprecedented growth in recent years also recorded a 23%
rate of turnover in 2006 while the manufacturing sector recorded the lowest rate
of 11%. Employee retention is critical to the long-term health and success of any
organisation; however, it is becoming increasingly difficult for organisations in
Asia to attract, motivate and retain key employees. Turnover rates are still on the
rise, and as the search for talent becomes more intense each year, it is
becoming increasingly important for organisations to ensure they keep the right
employees in place to drive future business success.
Retention variables for New Zealand employees, according to Boxall, Macky and
Rasmussen (2003: 198) are multidimensional. They include variables such as
interesting work, which was rated as the strongest factor in attracting and
retaining employees in both public and private sector organisations. The
research outcome by Boxall, Macky and Rasmussen (2003: 198) shows that
employees expect management should make personnel decisions based on
merit and also demonstrates that extrinsic rewards (such as pay, promotion & job
security) play a role in both employee retention and turnover management. The
research further suggests that management lend support to the idea of good
relationships with co-employees and supervisors.
From the foregoing, it is evident that retention and turnover have become global
problems that are posing great challenges to HR practice in both the public and
private sector organisations. Turnover rates differ from country to country and
from sector to sector with a worrisome indication that turnover rates will continue
to rise in the years ahead. Changing demographics are affecting the labour pool
the world over as there are few skilled job candidates from which to hire. Societal
norms are also changing, where loyalty to one employer is no longer to be taken
for granted. Managers across public and private sector organisations are faced
with the increasing need to retain current employees in order to position their
organisations to be more attractive to talented job applicants.
2.4.1 Retention and turnover in South Africa
One of the biggest challenges being faced by Human Resources practitioners in
South Africa is the management of retention and turnover in their organisations.
In a Deloitte and Touche Human Capital survey (as cited in Bennett, 2003: 1) of
major South African organisations, human resources managers reported three
major challenges that confront HR practice. These challenges include dealing
with the new role of HR, the performance of their organisations, and employee
retention. The report specifically mentioned retention as the biggest single
concern confronting HR practice in South Africa. Turnover is facilitated in South
Africa by two major factors that are peculiar to the economy. Firstly, the large
scale emigration of highly skilled professionals (commonly referred to as “brain
drain”) as a result of perceived increasing macro social problems. According to
P-E Corporate Services (2000: 1) the high crime rate in South Africa and the
perceived declining standards in certain social services are some of the factors
that encourage the present above average levels of emigration of highly skilled
employees. Deloitte and Trouche (as cited in Bennett, 2003: 1) reveal that 21%
of the turnover of executives in various organisations surveyed in South Africa
was as a result of emigration. The second factor, according to the report by
Bennett (2003: 1) is the implementation of the Employment Equity Act, Act of
1998, which was introduced in terms of The Affirmative Action Policy. The Act
compelled employers to fill a certain percentage of their workforce with
employees from the previously disadvantaged race/groups (i.e. the blacks,
Indians, coloureds and white women). This policy creates a lot of vacant
positions for black professionals, who are already in short supply. Concurring
with Bennett (2003: 1), Maisela (2001: 53) confirms that many South African
organisations are experiencing a high turnover of black executives who are
constantly poached by competitor organisations. These black executives are
often used to win tenders from government departments and parastatals. Van As
(2001: 43) points out that the implementation of the Employment Equity Act, Act
of 1998 has forced organisations to balance their employment portfolio thereby
providing skilled blacks with the opportunity to hop from one job to another.
The turnover rate in South Africa has been on the increase in the recent past. A
report by P-Corporate Services (2001: 15) indicates that “key employee turnover
is running at a historically high level in South Africa with the turnover rate rising
from 7% in 1997 to 14% in 2001” and is now estimated at 15%. Research
findings by the Hay Group, as reported by Sherman, et al.( 2006:22) confirm this
trend, stating that employee turnover has been on the increase in South Africa
with the turnover rate surging by more than 25% in the last five years. This
increase in turnover has resulted in the loss of high performing employees and
this has put intolerable strain on workflow management in various organisations.
Harris (2007: 7) attributes the present poor service delivery by public sector
organisations to a shortage of high performing employees who have either
migrated abroad or has been poached by private sector organisations. Apart
from poor service delivery, high employee turnover is also associated with
spiraling costs which have increased tremendously the overhead expenses of
organisations.
Some of the costs that are usually associated with high employee turnover
include replacement costs such as advertisements, recruitment agency fees,
employee training and development. Sherman et al. (2006: 22) argue that apart
from the above mentioned direct costs, there are indirect costs which
organisations incur when an employee leaves. These indirect costs include
goodwill, lost sales, lower productivity, work overload, and customer defection.
These costs are hard to quantify and may be more damaging to an organisation
than the direct costs. Potter (2003: 2) concurs with this by identifying three
primary elements of turnover costs. These are the costs of recruiting job
applicants (such as advertising, the screening of applicants, personnel search,
brokerage, relocation expenses); vacancy costs, which are a temporary loss of
productivity occasioned by the voluntary withdrawal of an employee, and thirdly,
the enormous costs of training new employees. All these costs impact negatively
on service delivery and the profitability of any organisation thus making retention
practice a compelling task for managers in order to reduce these costs.
Research findings in the United States of America by Larsen (2003:10) contend
that it costs an organisation about 150% salary equivalents to replace a
professional or technical employee. It also costs a 6 months wage equivalent to
replace a casual employee. This report is consistent with similar research
findings in South Africa by Sherman et al. (2006:22) which state that each
professional who voluntarily withdraws costs the organisation an equivalent of 18
months’ salary and hourly employees costs a half year salary. These enormous
financial and non financial costs associated with employee retention and turnover
can be avoided by organisational managers through the application of correct
motivational strategies.
Bagraim (2001:2) argues that it is not enough to know the need of skilled
employees, what is important is the ability of management to meet these needs.
Meeting these needs requires implementing and evaluating retention practices
on an on-going basis. A study conducted by Kinnear and Sutherland (2001:19) in
South Africa found the following motivational factors very important to retention
practice: Skill development, financial rewards, recognition, challenging work, and
freedom to act independently. These findings concur with a related research by
Lanyon (2007:43) which rated interesting work, good working conditions,
promotion and growth, and money among other factors as essential motivators
for employee retention. It is therefore important for HR managers to improve
constantly on these motivational variables in order to enhance retention practice.
This will also reduce the rate at which high net worth employees withdraw from
their organisations.
The conclusion that can be derived from the literature reviewed above is that
retention and turnover are a global phenomenon. Although the rates of turnover
differ from country to country and from sector to sector, the retention attraction
suggested by different studies appears to have employee motivation as a
common denominator. While interesting work appealed to employees in New
Zealand, employees in Asia and IT professionals in USA and U.K rated higher
salary as a major retention variable. Professionals in South Africa consider a
combination of career advancement, pay and opportunity to learn new skills as
critical to their retention. The variation in retention priorities suggests that a
comprehensive retention strategy that combines various motivational variables
that appeal to individual employees should be employed to address the problem
of a high rate of turnover. HR managers in South Africa and other parts of the
world should design competitive retention packages that are capable of reducing
the present level of brain drain in the economy. It is however important for
managers to have a thorough understanding of the reasons often given by
employees for quitting their jobs. Only then can they design appropriate retention
strategies that will reduce the incidence of turnover.
Having examined retention and turnover in South Africa and other parts of the
world, the next section will discuss factors that influence retention and turnover in
South Africa.
2.5 Factors influencing retention and turnover in S outh Africa
Kampt (2006: 1) submits that some factors interact separately or collectively to
facilitate turnover and make retention management difficult for HR managers in
South African organisations. These influencing factors are broadly divided into
global, national, and organisational.
2.5.1 Global economic influences on retention and turnover
Commenting on the participation of South Africa in the global economy, Thomas
(2002: 237) remarks that the demise of formal policies and structures of
apartheid and the inception of the government of national unity in 1994 has
resulted in South Africa emerging from a position of isolation to a position where
it now competes in the global marketplace. According to Burmeister (2007: 18),
the increased international capital flows that characterised globalisation have led
to increasing global flows of migrant labour. As a consequence, many countries
are competing in the international labour market to attract and retain skilled
employees. This has badly affected the South Africa labour market, with
professionals and other skilled employees from all sectors of the economy
migrating to advanced economies in Europe, and America. With increased
employee mobility in an increasingly shrinking global village, people are able to
transfer their skills to the highest bidder or the location they find most attractive.
South Africa has a reputation for being an excellent place for nurturing talent, so
its managerial ranks are constantly being poached by the world’s leading
organisations. As a result, a number of corporate leaders have gone from South
Africa to top jobs in large international organisations such as BMW, Daimler-
Chrysler, Unilever, Siemens and many others. This practice has further depleted
the pool of available black executives, with a high probability that those presently
available would soon be poached, thereby increasing the high rate of turnover.
The brain drain is not limited to the business sector alone. The medical and allied
profession is worse hit with medical doctors, nurses, radiographers and other
medical related professionals leaving South Africa daily to take up jobs abroad.
Research findings reported by Volgvartz (2004: 1) show that the number of
nurses registered by the British nursing council from South Africa, Botswana,
Malawi, Nigeria, Kenya, Zambia and Zimbabwe has increased since 1999. As a
result, more than 60% of nursing positions remain unfilled in these countries.
Williams (World Health Organisation representative in Malawi) as reported by
Volgvartz (2004: 1) states that “the nurses who are to hold the situation together
at hospitals are all leaving”. The report states further that sub-Saharan African
countries need at least 620,000 nurses to be able to tackle the severe health
emergencies prevailent in these countries. Between 1999 and 2000, the United
Kingdom officially registered 1,460 migrating nurses from South Africa; the figure
for 2000 – 2001 is very much higher (www.ukglobalhealth.org.). Burmeister
(2007: 23) asserts that globalisation has intensified the search for skilled
employees as innovative, internationally experienced individuals are sought after
as competition becomes increasingly global. Burmeister (2007: 23) further
argues that globalisation has accelerated skills transfer across national borders
and limited the ability of countries to manage their human resources independent
of international norms.
Taking advantage of its participation in the global labour market however, the
South African government is set to recruit medical doctors from Tunisia to fill
vacant positions in its hospitals. According to the South African Department of
Health as reported by Simao (2007: 1), arrangements have been concluded to
recruit 1,000 Tunisian medical doctors to work in South Africa. Almost a third of
the posts for public sector health care professionals are unfilled. In a separate
arrangement, a number of Cuban medical doctors are already working in South
Africa as employees of the Cuban government. Simao (2007: 1) also reports that
plans are underway by the South African government to recruit back South
African doctors and nurses who migrated to Britain and Canada by persuading
these professionals to return home. Under the “occupation-specific dispensation”
policy of the government, about R5.3 billion has been set aside for increasing
salaries and recruitment of another 3,000 health employees over the next three
years. About R4.5 billion of this amount is for better pay as one of the reasons
cited for skill migration from South Africa is poor pay. Skilled labour migration
abroad is also costing the South African government a huge amount of money.
According to McClelland (2002: 167), the South African brain drain is costing the
government about US$5billion annually and this need to be urgently addressed.
The global job market provides international job opportunities that cause the
brain drain from which the receiving countries benefit mostly. However, not all
turnovers result from job opportunities abroad; some respond to the performance
of the national economy thereby facilitating job mobility within local organisations.
2.5.2 National economic influence on retention and turnover
The South African economy has been in an upward phase of the business cycle
since 1999 - the longest period of economic expansion in the country’s recorded
history. McClelland (2002: 167) asserts that the annual economic growth rate
averaged 3.5%. This is a radical appreciation from the pre-1994 era with an
average growth rate of less than 1%. This economic growth has, however
imposed a lot of challenges on retention practices and turnover management by
HR managers. One of these challenges is the frequency of recruitment and
turnover rate of skilled employees within a pool of depleted labour market and
the attendant costs. With acute shortage of skilled manpower in a rapidly growing
economy, the competition for the few available skilled employees becomes
intense among organisations and this provides opportunity for job hopping
amongst skilled employees. Czakan (2005: 8) states that worldwide, the search
for skilled employees is on and South Africa is not exempt. With over 40,000
vacant positions in government departments and parastatals, and about 67,000
in Gauteng province alone, job hopping among skilled employees is inevitable as
alternative employment opportunities continue to exist.
P- E Corporate Services (2007:1) report that employee turnover within South
African organisations has surged to about 12% across all job categories, with the
Gauteng province running at 14%. The South African Reserve bank review (as
cited in P-E Corporate Services, 2007: 1) shows that job hopping costs South
Africa more than R25billion a year. Emphasising the turnover rate amongst
employees, McGlaham (2006: 6) remarks that the mobility rate is such that a
young employee entering the work force after graduation can expect to have an
average of twelve different jobs by the time such employee attains the age of 40
years. This is consistent with the position of Quintin (cited in Fiona, 1999: 2) who
states that, “when you get to the managerial positions, there are very few black
South Africans because they are poached and job-hops six times within a short
period of time”. In a research conducted by the Human Sciences Research
Council (HSRC) and reported by Lucas (2003: 7) 56% of black graduates in
South Africa had changed jobs since entering the labour force and the reason
commonly given for this frequent labour turnover is promotion to a higher job
level, while others cited higher earnings. With an annual economic growth rate of
3.5% and coupled with active participation in the global economy, it is expected
that job openings in South Africa will continue to abound and this will encourage
employees with critical skills to frequently move from one job to another thereby
making retention and turnover management a difficult task for managers.
Research findings by the Harvard Business School (2000) and cited in Birt et al.
(2004: 29) indicate that, despite the high levels of current commitment to both the
organisation and the job, the phenomenon of market-driven turnover is
paramount amongst high performing employees. The research further states that
employees base a decision to leave on the availability of better external
employment offers. According to Muchinsky, Kriek and Schreuder (2002: 208),
skilled employees in organisations are experiencing continuance commitment
rather than affective commitment. Varner and Fila (2000) cited in Birt et al. (2004:
29) explain that with continuance commitment, employees base their decision to
remain with the organisation on perceptions of other available opportunities as
well as the cost of leaving the organisation rather than on a more emotional
attachment to the organisation as is found in affective commitment
Having established the influence of both international and national economies on
retention and turnover initiatives in South Africa, it is equally necessary to look at
recruitment sources as they generally affect retention and turnover. This will
assist HR practitioners in organisations and recruitment agencies to craft
retention strategies around recruitment techniques.
2. 6 Relationship between recruitment sources, rete ntion and turnover
Employee retention stems from the employment process. Three employment
processes (recruitment, selection & placement) predetermines the effectiveness
of retention strategy. For employee retention to be successful, it has to be linked
positively to the processes and practices of recruitment and the sources from
which job candidates are recruited. Recruitment practice and empirical research
suggests that employees may differ in their propensity to quit depending on the
source from which they are recruited. Two rather different approaches to
recruitment identified by Wanous (1975) as cited in Raub and Streit (2006: 279)
are the “traditional” approach which suggests that the ultimate goal of recruitment
is to attract a maximum number of applicants to the recruiting organisation. In the
traditional approach, providing incomplete or even biased information about the
job and/ or the organisation may be an acceptable means for reaching this goal.
The other approach is the “realistic” approach which suggests that a “realistic job
preview” whereby recruiters provide balanced and honest information about both
the negative and positive aspects of the job and the organisation is undertaken.
The traditional approach was criticised by researchers such as Wanous (1975,
1978) cited in Raub and Streit (2006: 279) who hypothesised that its benefits in
terms of attracting a large number of candidates may be more than outweighed
by its negative consequences for the selection and retention of those candidates.
Following Wanous’s criticism, many HRM scholars like Raub and Streit (2006:
279) posit that an unrealistic presentation of job-related information may lead to a
“rude awakening” when newly hired employees discover the reality of the job.
The larger the gap between what has been promised during recruitment and
what the employees experience during their first weeks and months on the job,
the higher the propensity to quit. The resultant effect is that the new appointees
will be frustrated, dissatisfied, and unproductive and in the end they may quit
rapidly.
Similarly, Lee (2006: 1) proposes two mediators to recruitment theory as they
affect turnover. These are the “realism” with which the candidate comes into the
job and the job-fit, i.e. the extent to which the employee feels that the job accords
with his/ her personality, ability and so on. Lee (2006: 1) contends that if various
recruitment sources can be found to have different realism and job-fit, and these
in turn affect turnover, then retention strategies can be crafted around these
recruitment techniques.
Griffeth, Hom, Fink, and Cohen (1997: 27) explain that the recruitment source in
which an employee enters a job may impact significantly upon work outcomes,
including turnover. Broadly speaking, recruitment sources can be divided into two
types, namely internal and external. According to Lee (2006: 3), internal sources
denote employees who are sourced from within the organisation while external
sources provide employees who come from the outside. External sources include
candidates sourced through advertisements in various media, public or private
employment agencies, campus recruiting, internet applications, walk-ins, and
head-hunted candidates. Internal sources include promotions or demotions
(vertical moves), internal job postings (horizontal moves), employee personnel
records, intranet advertisements and referrals. Empirical evidence (Lee, 2006: 3)
indicates that internal candidates are expected to provide better outcomes than
external candidates. In the case of turnover, Lee (2006: 3) proposes that internal
candidates are less likely to quit (or will stay for longer period) than externally
recruited employees.
A large number of empirical studies have confirmed that realistic recruitment
does indeed lead to a reduction in turnover. Dean and Wanous (1984), Phillips
and Meglino (1987) cited in Raub and Streit (2006: 280) explain that realistic
recruitment does not mean that recruiters should communicate positive
information only. Indeed, a combination of both “reduction” (i.e. negative) and
“enhancement” (i.e. positive) previews seems to work best. The message source
seems to play an important role in employee turnover. According to Colarelli
(1984) cited in Raub and Streit (2006: 281), information received from job
incumbents is perceived as more credible than information from other sources.
This has been theorised to lead to more realistic impressions of the job, thereby
providing favourable work outcomes.
Literature by Taylor (1993) as reported in Lee (2006: 21) argues that a realistic
approach is proposed to lead to better outcomes for four reasons: Firstly,
applicants are better able to deal with the negative aspects of the job in a mental
sense. The formation of realistic expectations means dissonance and the
resultant dissatisfaction are not experienced. Secondly, candidates will have had
time to formulate actual strategies for dealing with negative aspects of the job.
Thirdly, the honesty inherent in revealing the less desirable aspects of the job
may improve trust between employer and employee, leading to greater loyalty,
commitment and retention. Finally, an element of realism enables candidates to
decide for themselves whether the job meets their needs and requirements.
Thus, the realistic approach leads to self-deselection of unsuitable candidates
out of the recruitment system, probably reducing costs due to early exit,
dismissal and so on. Lee (2006: 20) explains that it is generally considered
desirable to inject a certain level of realism into the recruitment process. Some
recruitment sources are inherently more conducive to realism, as the applicant is
given different information depending on where she or he comes from. For
example, internal candidates may have more information about the job merely by
having had the opportunity to observe their colleagues performing the job. With
such job related information at the disposal of job candidates, turnover would be
reasonably reduced because prospective employees would have decided
whether they want to accept the job or not during recruitment process.
It is crucial to attribute great importance to providing realistic information about
the job and the organisation; and to this extent, HR practitioners or recruitment
agencies must be familiar with the working conditions in the organisations they
are recruiting for. Raub and Streit (2006: 283) stress that recruiters must be
honest about the job-related information they give to job candidates at interview
level. For example, when recruiting candidates for a manufacturing organisation,
recruiters must be willing to disclose details about certain hazards that are
associated with the manufacturing process such as industrial accidents, polluted
working environment, and the general work context. The general work context
may be characterised by long working hours, restrictive overtime regulations, and
several limitations to the number of days off. This information may assist job
applicants to decide if these working conditions fit into their career aspiration and
help their decision making process on whether to accept or reject the job offer.
A study by Raub and Streit (2006: 284) reveals that recruiters tend to avoid
outright negative or threatening information. For instance, many recruiters do not
disclose possible sanctions to candidates in case of breach of contracts. Some
organisations, for example have contract clauses such that penalise an
employee who quits the job before the end of the first contract period (usually
three months), such employees are often required to bear the costs of their
relocation expenditure and may be blacklisted, thereby virtually excluding them
from future employment opportunities with the same organisation. Hendricks
(2006:8), for example, points to the provisions of the South African Public Service
Regulation, Resolution 3 of 1999 which allows for relocation fees to be paid to
new recruits abroad to enable them relocate to South Africa. This is done to
enable the government to attract scarce skills from outside the country and to
encourage essential skills candidates to take up appointment with government.
However, some aspects of the Act require that employees who leave before
completing 12 months of service, lose their service bonus and also, that
employees who are paid relocation fees but resign before completing 12 months
of service pay back the costs incurred in relocating them. Most often, these
conditions of employment are not disclosed to job applicants until they get on
board.
The literature reviewed above has demonstrated how retention initiatives can be
built around recruitment policy. It is evident that internally recruited employees
have the tendency to stay longer in the organisation than external recruits
because they (internal recruits) are already accustomed to the environment and
the working conditions in the organisation and might, over time have resolved to
build a lasting career in the organisation. Employee retention should be linked
with an effective recruitment and selection process. HR practitioners and
recruitment agencies, while recruiting job candidates for their organisations,
should consider job previews as an integral part of the recruitment process. Job
previews, when honestly conducted, have the potential of reducing early turnover
of employees since such employees would have had firsthand knowledge of
what the job entails and the conditions of service, particularly the base salary and
other financial incentives during the job preview. Though realistic recruitment and
job-fit approaches provide an important element for both job satisfaction and
employee retention, they must be combined with other motivational variables to
form a comprehensive retention strategy that can reduce high turnover rates
effectively.
2. 7 Reasons for employee turnover
Many reasons explain why employees withdraw from an organisation especially
in an economy where skills are relatively scarce and recruitment is costly, or
where it takes several months to fill vacant positions as the present situation in
the South African public sector. Employees voluntarily resign their appointments
in organisations for various reasons which can be classified into two: pull and
push factors. The pull factors, according to Sherratt (2000: 38) include the
attraction of a new job especially in a growing economy (like South Africa) with
many job opportunities, or resignation by employees from an organisation to go
into private business. In such cases, it is the availability of alternative jobs that
attracts an employee to withdraw from a particular organisation. Sherratt (2000:
38) also explains that the push factor may be dissatisfaction with the present job
that motivates an employee to seek alternative employment elsewhere.
Sometimes, it is a mixture of both the pull and push factors. However, some
reasons for leaving are entirely explained by domestic circumstances outside the
control of any employer, as is the case when employees relocate with their
spouses or partners.
Recent research by the British Chartered Institute of Personnel and Development
(2006: 1) shows that push factors are a great deal more significant in most
resignations than most managers appreciate. The research contends that it is
relatively rare for people to leave jobs in which they are happy, even when
offered higher pay elsewhere. Research conducted by the Hay group and
reported by Sharman et al. (2006: 22) reveals that about one third of the millions
of employees surveyed worldwide plan to quit their jobs within two years. The
research further reveals that in the last five years, employee turnover has surged
dramatically and this is attributable to various factors some of which are
discussed hereunder.
The performance of the national economy is one of the most commonly
identifiable reasons why employees quit their jobs. In a period of economic
boom, it is a common practice for upwardly mobile professionals to hop from one
job to another. Sibiya (2007: 14) reports that the number of job vacancies in the
Gauteng Province of South Africa rose from about 47 000 in the year 2002 to
about 67 000 2006; representing an increase of about 42.5% in four years. Ntuli
(2007: 22) confirms this report, estimating the number of unfilled vacant positions
in government departments and parastatals as indicated by the South African
Civil Service Commission to be 40 000. Harris (2007: 3) indicates that there were
5863 private-sector vacancies advertised in June, 2007 in the various media in
South Africa. This, according to Sibiya (2007: 14) “represents a 28% increase
from the first quarter, confirming again a growing economy and indicating an
overall increase in the demand for skills in the private sector”. Economic growth
provides a good ground for turnover among skilled employees both in public and
private sector organisations since some of these new positions provide better
incentives and indeed translate to promotion. Sibiya (2007: 14) is supported by
Mueller and Price (1983) as cited in Iverson and Pullman (2000: 982) that the
availability of jobs outside the organisation enhances job mobility and that the
supply and demand created by the job market either restricts or enhances the
movement of employees. Therefore, the greater the job opportunities, the greater
the tendency for voluntary turnover.
One important push factor that leads to early turnover of new employees is the
unrealistic expectations and general lack of knowledge by many job applicants
about the nature of the job at the time of employment. Schultz and Schultz
(2006:243) state that unrealistic expectations cause many employees to resign
their appointments soon after taking up a new job. Many job applicants have
unrealistic expectations about their dream jobs but get disillusioned when such
expectations are dashed by their employers. Some employers attract job
applicants with unrealistic and non-existent conditions of service during
interviews. However, when these new employees get on board and the
conditions of service promised by the employers are not fortcoming, such
employees immediately update their resumes and quit for other jobs. The British
Chartered Institute of Personnel and Development (2006: 2) notes that a great
deal of employee turnover consists of people resigning or being dismissed in the
first few months of employment. This is due to poor recruitment and selection
decisions, both on the part of the employee and employer. Expectations are high
during the recruitment process, leading applicants to compete for and accept
jobs for which they are mostly not suited. Organisations do this in order to ensure
that they fill their vacancies with sufficient numbers of well qualified candidates
as quickly as possible. However, over the longer term, the practice becomes
counter- productive as it leads to costly but avoidable turnover and the
development of a poor reputation in the local labour market.
According to a study by the Chartered Institute of Personnel and Development
(2006: 2) in the United Kingdom (UK), there are factors that are specific to the
individual that can influence early turnover. These include both personal and
trait-based factors. Personal factors include changes in family situation, a desire
to learn a new skill or trade, or an unsolicited job offer. In addition to these
personal factors, there are also trait-based or personality features that are
associated with turnover. These personality traits are some of the same
characteristics that predict job performance and counter- productive behaviours
such as loafing, absenteeism, theft, substance abuse on the job, and sabotage of
employer’s equipment or production. Most environmental contributors to turnover
can be traced to management practices. Turnover tends to be higher in
environments where employees feel they are taken advantage of, feel
undervalued and inadequately compensated. Management practices that
promote inequity, inefficiency and lack of foresight and ability to provide
purposeful leadership will encourage skilled and professional employees to leave
the organisation. Kinnear and Sutherland (2001: 17) further argue that skilled
employees need space to act independently and freedom to plan and execute
work the best way they choose. This requires progressive organisational
leadership which allows for independent judgment by employees. Managers can
help to address this by removing organisational policies that restrict innovative
thinking and practice within the organisation.
Certain jobs have peculiar characteristics that contribute to turnover. According
to Lanyon (2007: 45) some jobs are characteristically more attractive than others.
Someone who enjoys travelling long distances will find sales job attractive while
a personality with a strong ability to convince others through argument may find
satisfaction in advocacy jobs. However, if these personalities engage in jobs with
characteristics other than those peculiar to them, they may not find job
satisfaction, which will lead to turnover. Sherratt (2000: 38) posits that there is
turnover that is demographically specific, particularly for women who are
balancing significant work and family duties at the same time. Employees may
choose to leave an organsation instead of sacrificing their other interests and
responsibilities in order to make the job work out. Some women elect to quit their
jobs after the birth of a child, rather than simply take maternity leave while some
relocate with their spouses. These factors translate into higher turnover rates for
women in most organisations.
Although money may not be the most important consideration in the turnover
intent of some skilled employees, nevertheless, money remains an important
factor in turnover decisions. Kinnear and Sutherland (2001: 17) argue that skilled
employees in South Africa need to earn a competitive package and also have the
opportunity of earning performance based bonuses. They want their efforts to be
rewarded and to have a fair share of the organisation’s success in monetary
terms. This argument also reflects the outcome of a research finding by Patron
(2004: 21) who found that, although money may no longer be the most important
motivator among career professionals, nevertheless, it remains a good
combination in the retention equation. In a similar research conducted by
Consumer Insight Agency (cited in Cruz, 2006: 24) it was found that the black
talent in various organisations want to earn enough money in order to start their
own businesses and become Chief Executive Officers (CEO). Kinnear and
Sutherland (2001: 17) also contend that black professionals in South Africa want
to be constantly challenged, gain skills across a broad range of disciplines and to
this extent, quit jobs that do not offer them opportunity for such personal growth.
In their effort to retain critical employees, various organisations have shifted their
attention to determining the variables that impact most favourably on the
retention of core employees. The Towers Perrin study (cited in HR Focus, 2003:
3) shows that variables that motivate talented employees to remain in an
organisation are a mixture of both intrinsic and extrinsic factors such as
performance-based pay, employee stock ownership, and profit-sharing bonuses.
Others include meaningful and challenging work, good supervisors, and
development opportunities. Birt et al. ( 2004: 28) note that variables such as the
need for organisational provision of resources to help employees cope with
stress, attention to the physical work environment (in terms of facilities, office
space, storage space, and car park), and the negative effect of corporate politics
are also critical to employee retention practice. Managers should incorporate
these factors in their retention policies and review their effectiveness from time to
time as employees’ needs are dynamic and changes over time.
In view of the foregoing, it is evident that a rapidly growing economy that is
characterised by shortage of skilled manpower as we presently have in South
Africa will certainly create a lot of retention and turnover challenges for HR
practitioners. They have to be innovative and proactive in developing strong
recruitment and retention policies that will position their organisations as
employers of first choice. Such retention policies should be checked for both
internal and external equities to ensure fairness in the system. Organisations
should be open and reasonably disclose issues such as working conditions, pay
structure, opportunities for career development and other conditions of
employment to job applicants during job previews. This will assist prospective
employees to make up their minds on whether they want to accept a job offer
from the organisation rather than getting on board only to discover a gap
between the reality in their employment terms and their career goals. When this
happens, employees feel dissatisfied with their jobs and subsequently leave the
organisation.
Empirical evidence has shown that all the factors enumerated above act
individually or collectively to inform an employee’s decision to quit or remain in an
organisation. Over time, money is considered as the most critical determinant of
turnover. However, that assumption has changed. The new breed of
professionals and highly skilled employees now place other factors such as
career growth, skills development and training opportunities in the fore of
motivational variables that determine which organisation to work for. For
organisations to attract and retain quality employees, these variables must be
evaluated and integrated into an effective employee retention programme of the
organisation. It is thus important for organisations to first of all recognise what
motivates an individual employee before a meaningful retention practice can be
developed.
The concepts of retention and turnover are closely related to costs and no
meaningful evaluation of the subject will be complete without examining both
direct and indirect costs that are usually associated with the two. The following
section will discuss costs that are usually associated with retention and turnover
in organisations.
2.8 Costs associated with turnover
In their analyses of turnover costs, Schultz and Schultz (2006: 242) conclude that
employee turnover is costly for organisations. Every time an employee quits, a
replacement must be recruited, selected, trained, and permitted time on the job
to gain experience. Phillips and Connell (2003: 1) concur and enumerate the
costs of turnover to include, recruiting costs, selection and or employment costs,
orientation costs, training costs, lost wages/salaries, administrative costs, lost
productivity, loss of human capital, and customer satisfaction issues.
It is important for management to know why employees, particularly high
performing employees resign from the organisation. The common way of
investigating employee’s resignation is by conducting an exit interview which also
is another cost to the organisation. The reason given by Phillip and Connell
(2003: 1) for such interview is to investigate the reasons for the employee’s
withdrawal. If the reasons given by the employee suggest inadequacies on the
part of the organisation (for example, inadequate salary, inequity, poor
promotion, etc.) management can review the issue and this will help the
organisation in the formulation of retention policies that adequately provide for
the shortcoming. In conducting an exit interview, some costs are involved and
they must be taken into consideration when calculating turnover costs. Bliss
(2007: 1) lists these costs to include the time of the person conducting the
interview and the administrative costs involved in processing the resignation
letter, including stationery and printing. Before a recruitment process is initiated,
a job analysis is necessary to determine the job content of the vacant position. A
job analysis expert will have to be consulted to evaluate outstanding work and
job requirements of the vacant position. These costs also represent turnover
costs and must be considered.
In South Africa, the Employment Equity Act (Act of 1998) and the South African
Labour Law provide that a vacant position be publicly advertised before it is filled.
Advertisement costs are enormous and constitute a huge loss to organisations
especially when many positions are involved. It becomes even more expensive
when the services of recruitment agencies are employed as they usually charge
between 20-30% of annual compensation of the recruited employee
(www.collegegrad.com). This could translate to a huge amount when an
executive search is concerned. Other recruitment related costs include employee
referral, internet posting, and pre-employment tests to help assess candidate’s
skills, abilities, aptitude, values, and behaviours. Related to these costs as
suggested by Bliss (2007: 1) are the selection of applicants, conducting of
interviews, preparation of candidates’ assessment, employment offer, and
notification of successful, and sometimes, unsuccessful candidates too.
Having completed employment process, orientation programmes are conducted
for new employees in order to familiarise them with the work environment and
other employees. Orientation materials such as organisation products, souvenirs,
computers and other materials are involved. After orientation, new employees
are assigned to departments where they are trained for the effective performance
of their duties. This involves supervisors and other departmental employees who
put in their time in training the new employees. All these attract costs and must
be taken into consideration when calculating turnover costs because they
represent productivity losses.
Training and re-training of employees constitute one of the most crucial aspects
of management in both the public and private sector organisations. According to
Choo and Bowley (2007: 341) new employees normally undertake on- the- job
training, and in some cases, they are sent abroad to acquire a specialised skill.
These costs are enormous and when a highly trained employee resigns without
justifying these huge training expenses, organisations stand to lose all the
investments already made. Long serving employees are normally entitled to
gratuity, severance packages, and such benefits as those that will continue to be
paid for a lifetime (such as, life pension, medical and child education). These are
unproductive expenses to the organisation and such expenses may hinder the
growth of an organisation. Certain indirect costs are equally involved when an
employee quits and these, according to Sutherland (2004: 40) include the
knowledge, skills and contacts that the departing employee takes out of the
organisation. These attributes are, in most cases, lost to a competitor
organisation that may use this to gain a competitive advantage.
Some strategically placed or long serving employees, due to the position they
occupy in an organisation, become accustomed to some customers/clients who
deal directly with them. In the course of their business relationship, these
customers/clients repose much confidence and loyalty in these individual
employees rather than the organisation. When such an employee leaves,
especially for a competitor organisation, they quit with these customers/clients
whose confidence and loyalty they have won over time. Organisations spend a
huge amount of resources to retain other customers/clients who may want to also
quit.
Organisations also suffer productivity loss when an employee quits. When a new
employee is hired and trained, Bliss (2007: 1) estimates such employee’s
contribution to the productivity level at 25% for the first 2-4 weeks of employment.
Productivity loss is therefore 75% of the new employee’s full salary. For example,
if a new employee is hired and placed on a monthly salary of R20000; the
organisation will be losing the sum of R15000 as productivity loss every month
because the new employee is not adding full value to the organisation yet. This
will however improve progressively between weeks 5-12 when the employee will
be contributing 75% productivity level thereby reducing productivity loss to 25%
of the new employee’s full salary during the period. While the new employee is
undergoing on-the-job training, the supervisor and other employees in the
department will be involved in bringing the new employee to speed. The
supervisor and the other employees’ time will be lost in the process; this lost time
must be quantified in monetary terms. It is also expected that the new employee,
in the course of on-the-job training, will make mistakes which may lead to
damage to equipment, disrupt production, or delay a delivery schedule. Such
mistakes must be expressed in monetary terms and treated as part of turnover
costs to the organisation. A substantial cost is incurred in productivity when a
management employee quits; such an employee will no longer be available to
guide and direct departmental employees who are responsible to the departed
manager.
In organisations where sales persons are employed with a sales territory
allocated to them, lost sales in respect of these category of employees is
calculated as dividing the budgeted sales revenue for the particular sales territory
into weekly amounts (Bliss (2007: 1). The weekly amount is multiplied for the
number of weeks the sales territory is vacant, including training time when the
vacancy is subsequently filled, until the new sales representative begins to add
value to the organisation. For non-sales employees, the revenue per employee is
calculated by dividing the total organisational revenue by the average number of
employees in a given year. It does not matter whether an employee contributes
directly or indirectly to the generation of revenue, their purpose is to provide a
defined set of responsibilities that are necessary for revenue generation. To
calculate lost revenue when an employee quits, the number of weeks the position
is vacant is multiplied by the average weekly revenue per employee.
In view of the above analyses, Bliss (2007: 1) concludes that the costs and
negative impact of employee turnover on organisations can be significant.
Sherman et al. (2006: 22) also concur by stating that direct and indirect costs
associated with turnover include the cost of advertisement, vacancy costs- which
are a temporary loss of productivity occasioned by the voluntary withdrawal of an
employee. Apart from the above mentioned direct costs, there are also indirect
costs which include loss of goodwill, lost sales, and customer defection. Given
the high costs of turnover and its negative impact on running a business, a well
thought-out programme designed to retain employees must be put in place by
managers in order to reduce unnecessary turnover.
It is clear from the above discussion that turnover costs constitute a huge threat
to the survival of any organisation. Indirect costs such as knowledge, skills and
customer defection are more destructive to an organisation than direct costs
because the latter constitute a formidable weapon for competitor organisations
with which to gain trade secrets and competitive advantage. This is particularly
true in a situation where an organisation is losing employees to direct
competitors or where customers have developed a relationship with individual
employees as is the case in many professional services organisations.
Meanwhile, many organisations do not have the expertise to determine or
calculate the rate of turnover in their organisations. It is therefore important for
managers to keep statistical records of retention and turnover for the purpose of
human resource planning and formulation of retention policy. The next section
will focus on commonly used formulae for measuring employee retention and
turnover.
2.9 Measuring employee turnover
The Chartered Institute of Personnel and Development (CIPD) in the United
Kingdom developed a simple and most common way of measuring employee
turnover. The method, according to the CIPD (2007: 1) is to measure the number
of leavers in a period as a percentage of the number employed during the same
period, usually on a quarterly or annual basis. This is sometimes called the
separation rate (SR). This is expressed as follows:
Number of leavers x 100 = separation rate
Average number working
The CIPD (2007:1) further states that, unless there are special circumstances
such as a sudden large increases in the size of the workforce, the average
number working is usually taken to be the number working at the start of the
period added to the number working at the end, the total is then divided by two.
For instance, if there are 210 workers at the start of the period under study, 222
at the end of the period, and 72 leavers during the period, then the separation
rate therefore, is:
72
210 + 222 x 100 = 33. 3%
2
This simple index is useful in comparing one organisation’s employee turnover
with that of a local employer’s, or with that of the industry as a whole. A crude
turnover method involves most organisations simply tracking their crude turnover
rates on a month by month or year by year basis. The formula is simply
calculated as:
Total number of leavers over period x100
Average total number employed over period
The total figure includes all leavers, even people who leave voluntarily, dismissal,
redundancy or retirement. The weakness of this method is that it does not
distinguish between categories of employees, e.g. by length of service, or
whether turnover was voluntary or involuntary.
It is also important for organisational practitioners to take a record of the retention
rate for experienced employees. This is also referred to as the stability index (SI)
and is calculated as:
Number of staff with one or more years in service x 100
Number employed a year ago
The stability index formula stated above is consistent with the one devised by the
CIPD which is calculated as follows:
Number of employees with one year’s service (or more) now x100 = S. I
Number of employees one year ago
For instance, if 160 current employees have been employed for one year or
longer, and the total number of employees a year ago was 250, the stability index
is:
160 x 100 = 64%
250
The stability index is most useful in comparisons over a period or with other
similar organisations. Measuring employee retention rate and the costs of
turnover to the organisation is vital in building a business case for thorough and
effective recruitment and retention initiatives. This costing can be a part of
performance appraisal ratings especially for line managers and gain top
management support for employee management activities. However, it is not all
turnovers that attract costs to the organisation; some are indeed beneficial and
cost effective as discussed in the next section.
2. 10 Turnover as cost benefit to organisations
A recent study by the United Kingdom Chartered Institute of Personnel and
Development (2007:2) reveals that not all turnovers are harmful to organisations.
Some turnovers impact positively and are cost effective. This happens mostly
whenever a poor performer is replaced by a more effective and efficient
employee. According to Mello (2006: 569), turnover allows the organisation to
hire new employees with more current training who are not locked into existing
ways of doing things. Fresh ideas from outsiders can be crucial to organisations
that have become stagnant and are in need of innovation. Turnover can also
lower the average tenure of employees and translate into lower payroll expenses.
Mello (2006: 569) further contends that turnover may allow the organisation to
find an even better performer than the employee who left, possibly at a lower
salary. The UK based Braun Consulting (2005: 1) suggests that managing
turnover in terms of keeping it low just for the sake of having a low rate is not
necessarily the most profitable practice for organisations. Instead of managing
turnover and giving equal value to all employees, the effort should be geared
towards certain categories of employees rather than across the board. For
example, some employers do not reward managers for keeping turnover low;
rather, they reward them for keeping turnover low for high performing employees.
Braun Consulting (2005: 1) also reveals that employees in some organisations
are divided into three categories such as: the top 20%, the middle 60%, and the
bottom 20%. (The 20/60/20 approach). With this approach, retention efforts of
managers are directed at the top 80% of employees while there are no retention
goals for the bottom 20%. Many of those in the bottom 20% may leave and be
replaced by a new group of employees, some of whom may turn out to become
high performers.
Braun Consulting (2005:1) affirms that some organisations are now moving
towards semi-annual or even quarterly reviews to speed up the process of
terminating low performers who cannot meet the performance target of the
organisation. This will allow for the recruitment of new talent, and cost savings
through the resetting of salaries and other financial benefits. In some cases,
employers must replace old skills with new ones as technology or the customer
base changes, or for a different demographic mix or a better distribution of age
groups. As employees at the high end of the pay structure leave, cost savings
are typically seen when a new persin is employed at a lower rate. Another area
of cost savings is in employee benefit programmes such as health care
premiums which are age related. Hale (1998: 50) estimates the total benefit costs
for older employees to be generally around 20% higher than those of younger
employees. Braun Consulting (2005: 3) argues that too much recruitment and
training costs employer’s money, so does a workforce stacked with stale
managers and unmotivated employees. However, it must be noted that these
research findings will be apply better in an economy with static labour markets
and low quit rates rather than in an emerging economy such as South Africa with
high job openings and acute shortage of skilled manpower.
Some employees are difficult to replace when they leave due to the acute
scarcity of their skills and their expertise. Retention strategies for such
employees might involve additional career development opportunities, incentive
compensation that rewards high performance, or innovative benefits that are
tailored to the needs of the employee. Accordingly, Mello (2006: 569) suggests
that back-ups should be developed by the organisation for employees who would
be difficult to replace. The strategy for managing turnover involves keeping high
performers rewarded through innovative compensation and recognition and
reward programmes while engaging HR planning to ensure that as few
employees as possible occupy positions that will make them difficult to replace.
Insights from the above discussion present a clear departure from the traditional
thinking among managers about whether organisations should consider turnover
as a serious personnel issue. To them, turnover is harmful and must be avoided
at all costs. However, recent thinking in organisational development suggests
that not all turnover is harmful to the organisation; indeed, for organisations to
constantly retain a vibrant and resourceful employee portfolio, regular employee
purges must be effected to replace redundant employees with more productive
ones. It is equally important for organisations to perfect a workable succession
plan especially for employees with scarce skills and whose positions would be
difficult to fill in case of a sudden withdrawal by such employees.
2.11 Concluding remarks
The above chapter explained retention and turnover and presented a global
overview and the South African perspective on the subject matter. The influence
of global and national economies on retention and turnover in South Africa were
also discussed along with the relationships between recruitment sources,
retention and turnover. Some factors have been identified to be responsible for
employee turnover. These factors (pull and push), and their effects on retention
and turnover were discussed. The chapter gave a comprehensive evaluation of
costs that are usually associated with turnover and provided various methods
that are used in the calculation and measurement of turnover costs and rates
respectively. The chapter concluded by discussing the positive side of turnover in
reducing costs and how in some cases it is initiated by employers to rejuvenate
the workforce.
The next chapter discusses the various strategies that can be used by
organisations in managing retention and turnover. Issues relating to employee
motivation, job satisfaction and selected theories of motivation as they relate to
retention and turnover will be examined.
CHAPTER 3
STRATEGIES FOR MANAGING EMPLOYEE RETENTION AND TURN OVER
IN ORGANISATIONS
3 .1 Introduction
The last chapter examined various definitions of retention and turnover and
presented a global as well as a South African perspective of the two concepts.
Influences that motivate retention and turnover in South African organisations
were discussed together with the relationships between recruitment sources as
they affect retention and turnover. The chapter also discussed factors that initiate
turnover among employees. Costs that are related to turnover were evaluated
together with methods being used in measuring and calculating turnover rates.
Turnover is not totally bad for organisations and it can be used by employers to
save costs and inject new employees with fresh ideas into the workforce.
Information revealed by the literature reviewed in this chapter will assist
managers in both the public and private sector organisations in South Africa in
formulating good retention policies.
The present chapter examines strategies that can be used in managing retention
and turnover in public and private sector organisations and the various
motivational variables that are involved. Two motivational theories (Vroom, 1964
Expectancy theory & Maslow, 1943 Hierarchy of needs theory) as cited in Riggio
(2003:193) will be reviewed in the chapter to provide a theoretical base for the
present study. Job satisfaction/dissatisfaction as a predictor of turnover intentions
is examined while the two-factor theory (Herzberg, 1959) as cited in Bassett-
Jones and Lloyd (2005: 929) which is widely used as job satisfaction model is
also reviewed.
3.2 Management of retention and turnover by publ ic and private sector
organisations in South Africa
High performing employees are critical in for South African organisations to
achieve effective service delivery and successfully attain their goals and
objectives. In order to achieve these goals and objectives, both the public and
private sector organisations in South Africa have devised various strategies and
policies with which to enhance retention practices that will assist them in
retaining key employees to drive service delivery. These strategies include
various legislations by government to make the public service attractive to talent
and also device strategies to retain these talented employees. The private sector
managers are also designing and implementing retention strategies that position
their organisations as employers of choice. However, a general overview of
retention strategies will be examined before discussing some of the policies and
legislations that have been put in place by the government to manage employee
retention and turnover.
3.2.1 An overview of employee retention strategy
Retention strategies are attempts by organisations to reduce the incidence of
turnover. Retention strategies should be viewed by top management as part of its
strategic responsibility given the realisation that the long-term loyalty of highly
skilled employees to an organisation is no longer the norm considering the high
mobility rate of skilled employees. This is as a result of the myriad of job
opportunities that are opened to them. Top management and HR practitioners
should therefore have a long-term plan with the realisation and the acceptance of
the changing labour market for highly skilled employees as the cornerstone of all
retention strategies.
While the government is enacting legislations that are aimed at promoting good
retention practices in its departments and parastatals, private sector
organisations are also devising retention strategies that will not only attract
critical skills and high performers, but also retain them for optimal utilisation.
Branch (1998: 104) contends that the objective of retention strategies should be
to identify and retain committed employee for as long as is mutually profitable to
the organisation and the employee. It is widely accepted that skilled employees
contribute greatly to organisational success and indeed make the difference in
service delivery and overall organisational performance. Good HR practice
therefore demands that organisations put in place retention policies that will
attract and encourage talent to stay. The Corporate Leadership Council in the
United States of America (1998: 108) concurs that, as market pull increases and
retention costs climb, expectations should shift from indefinite retention to a
posture of retaining talent incrementally longer. The report further states that
organisations should also focus on capturing the intellectual capital of the
organisation to reduce the impact of turnover.
Loss of organisational memory can disrupt operations and increase costs of
employee training and development. In order to protect itself against the
disruptive loss of skilled employees, Olivera (2000: 810) suggests that each
organisation needs to capture its knowledge on a continuing basis and not
merely try to transmit it once an employee is about to quit. By this time such an
employee is unlikely to feel a commitment or loyalty to the organisational goal.
Storing and using stored knowledge/experience effectively can buffer the
organisation against the disruptive effects of turnover. Similarly, Capelli (2000:
106) suggests the need to store organisational memory that employees would
otherwise take with them when they leave. In some cases, high performing
employees do not quit organisations with their knowledge and expertise alone,
they quit with some valuable customers/clients who, in the course of their
employment, have established confidence and loyalty in the individual employee
rather than the organisation. To avoid such a scenario, the Corporate Leadership
Council (1998:108) recommends that a retention strategy that includes the
inevitable loss of talent must include other mechanisms for reducing the impact
of talent turnover. One of these mechanisms is to ensure customer retention.
Bendapuli and Leone (2001: 106) suggest that a range of systems must be put in
place to ensure that, in the event that a high performing employee leaves,
especially those who have strong relationships with customers/clients, the loyalty
and patronage of the customer must be kept. Capelli (2000: 106) offers other
solutions to minimising the impact of turnover via organisational design options
such as outsourcing, job standardisation, and cross training through job rotation.
Turnover can also be controlled through an effective and sustainable retention
policy that builds in an efficient recruitment practice. Such practice enables job
candidates with a high turnover tendency to be identified and avoided through
recruitment process. In this regard, Ettore (1997: 49) canvasses for “strategic
staffing” which is a combination of how to keep high potential employees and
those who are critically important and capable, while hiring new ones who are not
likely to leave quickly. In a Harvard University study reported by Mengel (2001:
8), it was revealed that nearly 80% of employee turnover is due to hiring
mistakes. To avoid these mistakes, Handfield-Jones (2000: 80) believes that
increased honesty during the hiring process will bridge the expectation gap that
often results in turnover of skilled employees. According to Milkovich and
Boudreau (1997) cited in Sutherland (2004: 40), realistic job previews in the
hiring process can reduce turnover by 9%. Line managers should be involved in
the job preview process since they understand the job conditions better than the
HR practitioners. Welch (2001: 38) also suggests that one way of ensuring that
managers take more responsibility for retention is by increasing their involvement
in the selection processes.
Another approach to the formulation of a realistic retention policy is by
conducting exit interviews and root cause analyses. Dibble (1999) as cited in
Sutherland (2004: 41) emphasises that exit interviews are an important part of
the retention cycle and need to be taken more seriously. Dibble emphasises
further that exit interviews are a good feedback mechanism for organisations
trying to install change, particularly change in retention patterns. According to
Momana cited in Harris (2008: 22) the information from exit interviews is passed
on to executives in different areas to come up with retention strategies that better
suit their areas. The (USA) Corporate Leadership Council survey (2002: 88)
found that 70% of all information from exit interviews can be used to benefit the
organisation but only 13% of such information is ever acted upon. Branch (1998:
102) argues that organisations are aware they are losing good employees, but
they do not know who is leaving, or why, or even where they are going. This is
where an honestly conducted exit interview becomes very useful.
The Harvard Management Update (USA) (2001: 4) posits that the root cause
analyses should be used as opposed to the exit interview data which is fraught
with subjectivity, time and validity problems. A root cause analysis involves
continuous probing of a departing key employee on why they are leaving until
root causes are uncovered. Branch (1998: 102) also supports the practice of
interviewing departed key employees six months after departing. This, according
to Branch (1998: 102) will provide more accurate exit information than at the
point of departure.
The desirability, validity and reliability of exit interviews have come under
criticism with some authors arguing that departing employees do not usually give
the true reason they are withdrawing from an organisation for fear of
unfavourable reference reports from their managers. Others contend that exit
interviews should be conducted by managers other than those who will give
reference reports on these employees. Critics of exit interviews suggests that a
root- cause analysis will remove the biases associated with exit interviews. The
concern, however, is that managers cannot be sure that information given by
departing employees as a result of persistent pressure actually represents the
real reasons they are leaving since there are no ways of determining the validity
and reliability of such data. Again, the availability and willingness of departed
employees to respond to exit interviews six months after resignation can also not
be guaranteed since these employees no longer have obligatory loyalty to their
former employers.
An emerging strategy in retention management is that retention devices should
not be aimed at all categories of employees but rather at critical ones. Woodruffe
(1999) as cited in Sutherland (2004: 41) asserts that roles in an organisation
should be separated into core and periphery. The core roles are vital and those
employees in this category must be retained at all costs, while those employees
in peripheral roles can come and go as they are more easily replaced. Capelli
(2000: 110) strongly recommends that only key employees should have retention
goals while recommending three retention categories as: those employees that
the organisation will want to keep indefinitely; those with specific skills that are
currently in short supply; and those that are in easy-to-fill jobs where investment
in retention is not required. Bussin (2002: 13) suggests that key employees who
have high value to the organisation or are at high risk of leaving should be
identified and then targeted for special retention strategies such as specialised
salary structure.
Having considered retention strategies that organisations can adopt to retain key
employees, it becomes obvious that none of these strategies on its own can
guarantee the continuous loyalty of talent because of the high mobility nature of
this category of employees. Availability of alternative employment especially in a
growing economy that is characterised by a skills shortage like we have in South
Africa also facilitates the mobility rate of such employees. Rather than attempting
to develop a retention strategy that will seek to keep key employees perpetually,
organisations should rather put in place a strategy that will retain talented
employees for optimal utilisation as long as is mutually profitable to the
organisation and the individual employee. It is imperative for organisations to
develop a comprehensive retention programme that will keep key employees
until such a time when they would have justified the huge investment made in
them by their employers. Managers should also utilise these employees optimally
in order for them to contribute meaningfully to the successful realisation of
organisational goals and objectives.
3.2.2 Policy approach by government in public sector organisations
The South African government has put in place policies and legislations that
would enable managers in the public sector organisations to retain critical
employees and attract others to join the public service. Hendricks (2006: 8) name
such policies and legislations as the Public Service Regulations, 2001 (part VC3)
and (part 111 section D): Employment Equity Act (Act 53 of 1998); and Skills
Development Act (Act 97 of 1998). Section 3(5) and, 7(3) of the Public Service
Regulations, 2001 gives heads of departments the responsibility to ensure that
human resources are managed effectively. Departments can deploy and use
employees in ways that will improve their chances of keeping them. The laws
and policies governing employment allow for changes to normal practices when
these are necessary to find or keep people with scarce skills. For example,
Section 37(2) of the Employment Equity Act, 1998 and the Public Service
Regulations, 2001(Chapter1, part V111F & G) allow for employees to be
rewarded either financially or otherwise for good performance and valuable
suggestions or improvements. The salary and/ or salary level for a post can be
set at a higher notch or level than usual if necessary to recruit or retain an
employee with scarce skills. This can be effected through Chapter 1, part VC. 3
of the Public Service Regulation, 2001.
The Public Service Regulation, 2001 (Chapter 1, part V11 C 2.5) allows
departments to deploy employees to other posts horizontally if this addresses
their career development expectations. According to the Public Service Co-
ordinating Bargaining Council (PSCBC) Resolution number 7 of 2000, employees
can be granted special leave for developmental purposes. This can be in the
form of paid or unpaid leave, depending on the department. Public Service
Regulation, 2001 (Chapter 1, part 1X) enjoins departments to provide employees
with ongoing access to training that supports their work performance and career
development. Bursaries can also be granted to employees to improve their levels
of education. The PSCBC Resolution 3 of 1999 allows for a once off amount to
be paid to recruits from abroad for their relocation costs to South Africa. This is
done to the enable the government source for scarce skills from outside the
country.
Provisions of Chapter 1, part V111F of the Public Service Regulation Act (2001)
are aimed at managing turnover in public sector organisations. The provision
stipulates that employees who leave an organisation before completing 12
months of service will lose their service bonus. Also, employees who resign their
appointments before completing 12 months of service and were paid money for
relocating will have to pay back the costs incurred. The regulation also provides
that employees serve at least, 12 months in a rank before qualifying for
assessment for pay progression. The above legislations by the government are
aimed at retaining key employees in the public service and making frequent
turnover difficult and unattractive in order to achieve efficiency in service delivery.
Legislation is one approach to the problem of retention by the government
especially in public sector organisations. Private sector organisations are also
devising strategies and policies to attract and retain quality employees. Such
strategies, according to Hendricks (2006: 8) should focus on the skills required
by an organisation at a particular time. Secondly, such strategy should be
informed by the availability and demand for a particular skill within an
organisation and in the broader labour market. Such policies should also be
supported by senior management within a clearly defined framework of authority,
execution and role responsibility. Lastly, such a policy should be implemented
through collaboration between line managers and the human resources
department. Policies must be based on a sound human resource strategy and
execution plan. HR practitioners should take steps that will enhance good
retention practices and position their organisations as employers of first choice.
Apart from managing retention and turnover using legislation, Hendricks (2006:
8) identifies necessary steps that managers can adopt for an effective retention
programme. One of the steps, according to Hendricks (2006: 8) is the analysis of
employee mobility and turnover trends using the following information:
assessment of employee morale and conducting an exit interview. Job
candidates who turned down employment offers should also be interviewed to
elicit why such applicant(s) turned down the offer. If, for example the reason
given for leaving involves inadequate base salary and other financial incentives,
it implies that the organisation is paying below market rate. The possibility exists
that many more candidates (particularly those with scarce skills) will continue to
turn down job offers from the organisation and for others who are already in the
organisation to leave. Accurate records of employee statistics should be kept and
this should include retention and turnover rates, particularly those of key
employees who voluntarily quit. Their retention rate can be calculated using the
stability index formula developed by the Chartered Institute for Personnel
Development, UK as discussed in chapter 2 of this study. Statistical records of
recruitment frequency, information from exit interviews and those who turned
down job offers will assist the organisation in conducting an HR audit and provide
useful input in the formulation of an effective retention policy.
The next step identified by Hendricks (2006: 6) is to identify skills to be retained.
It is not all employees’ skills that are needed by the organisation. Some skills
might become obsolete due to change or advancement in technology,
diversification in customer base or product line thereby rendering employees who
cannot adapt to the new trend redundant. Employees in this category should be
identified and retrenched in order to reduce overhead costs and allow for the
recruitment of fresh candidates with the relevant skills. Employees with relevant
and critical skills should also be identified in consultation with line managers and
classified into scarce, valued and high risk categories. This classification should
form the retention goals for each category of employees.
Lastly, Hendricks (2006: 6) suggests that monitoring and evaluation mechanisms
should be identified right at the start of the programme and should be part of the
retention strategy. Such mechanisms should include periodic assessment of
turnover within a targeted skills or occupational class. Movement of skills within
the sector should be constantly assessed and monitored. The impact of a
retention strategy should also be assessed and comprehensively evaluated over
longer periods. The steps discussed above will provide organisational managers
with the necessary tools in formulating an effective and realistic retention
strategy.
The section below evaluates some motivational variables that are useful in
designing an effective retention strategy that will enhance turnover management
in organisations.
3.3 Motivational strategies
Motivation is defined by Robbins (1998: 206) as “the willingness to exert high
levels of effort toward organisational goals, conditioned by the effort’s ability to
satisfy some individual needs”. According to Steers and Porcter (1983) as cited
in Riggio (2003: 84), motivation is a force that serves three functions: It energises
or causes people to act; it directs behaviour toward the attainment of specific
goals; and it sustains the effort expended in reaching these goals. If employees
perceive that their best interests are closely linked to that of the organisation they
work for, they will possibly be motivated to remain in that organisation. To
achieve this linkage therefore, managers have the responsibility of devising
strategies that will align the interest of the organisation to that of employees in
order to retain them.
Strategies, according to the Web online dictionary, are “a group of activities to
produce outputs required to achieve planned outcomes”. Strategies usually
comprise several activities and outputs. Motivational strategies, in the context of
the present study include motivational variables that will combine and interact to
attract and motivate an employee to remain and consider his/her organisation as
an employer of choice. Organisations like Accenture, Alexander Forbes, Deloitte
& Touche, Eli Lilly (SA) (Pty) Ltd, and Coronation Fund Managers have been
mentioned in the past as some of the best organisations to work for in South
Africa. According to Smit and Cronje (2002: 344) the organisations mentioned
above were evaluated using motivational variables such as employee education,
training and development, career growth, and also for working atmosphere and
environs. These are critical motivational variables that can sustain retention.
Apart from the aforementioned motivational factors, there are other factors that
enhance retention practice and they include goal setting technique,
management/ leadership ability and style, job advancement, cutting edge
technology, salary and other financial benefits. Some of these variables will be
evaluated in the present study in relation to employee retention and turnover.
3.3.1 Goal setting technique
Davidson (2001: 5) asserts that one of the strategies adopted by leading
organisations in the area of top employee retention include instituting goal
setting, performance measurement, and skill development programmes to
ensure that employees always know where they stand. According to Latham
(1984), Locke (1968) cited in Staw (2001: 54), goal setting is the idea of
assigning employees a specific amount of work to be accomplished - a specific
task, a quota, a performance standard, an objective, or a deadline. This will
enable an employee to know his/her level of contribution to organisational goals.
Riggio (2003: 193) and Staw (2001: 54) argue that for employees to be
motivated, goals must be clear, specific, attainable, and wherever possible,
quantified. Goals should have two main characteristics - they should be specific
and not vague. For example, ‘increase sales by 10%’ rather than ‘try to increase
sales’. Secondly, there should be a time limit for goal accomplishment, like ‘cut
costs by 3% in the next six months’. Riggio (2003: 194) in concurring with Staw
(2001; 54) contends that goals should also be challenging and yet, attainable. If
accepted, difficult goals lead to better performance than easy goals.
Furthermore, Staw (2001: 54) states that whether goals are set participatively or
assigned, the support of the supervisor is crucial. Supervisors must assist
subordinates to achieve tasks with the necessary expertise and the needed
technology. Supportive supervisors do not use goals to threaten subordinates.
Employees get feelings of pride and satisfaction from the experience of reaching
a challenging but fair performance goal. Staw (2001: 62) posits that success in
attaining a goal also reinforces acceptance of future goals and assist in retention.
However, DeCenzo and Robin (2007: 256) argue that employees resist goals for
lack of confidence, ability and knowledge. Similarly, employees resist goals when
there are no internal benefits such as personal pride, or external rewards like
money, promotion, or recognition in attaining a goal. In order to overcome the
factors identified by DeCenzo and Robin (2007: 256) regarding goal resistance
by employees, Staw (2001: 63) suggests that organisations should conduct
training to raise employee’s level of skill and self confidence. It is also important
to allow subordinates to participate in goal setting and offer monetary bonuses or
promotion, recognition, and time-off for reaching goals. This is consistent with the
position of Ramlall (2004: 52) who proposes that supervisors must introduce
support elements such as money, equipment, time, help as well as freedom to
their subordinates in order to attain goals. Managers must ensure that
organisational policies do not impede goal attainment. Employees must equally
be provided with feedback on the degree to which they are attaining or falling
short of their goal in order to adjust the level of effort or strategy accordingly.
Goal attainment should be a critical aspect of the performance appraisal system.
According to DeCenzo and Robin (2007: 256) performance appraisal must
convey to employees how well they have performed on established goals. It is
also desirable to have these goals and performance measures mutually set
between the employee and the supervisor. Without proper two-way feedback
about an employee’s effort and its effect on performance, management runs the
risk of decreasing the employee’s motivation. It is envisaged that goal setting
techniques, when combined with other motivational strategies such as those
discussed below will provide organisations with a good mix retention strategy.
3.3.2 Training, education and development opportunities
In today’s competitive global market, Wan (2007: 297) argues that the only
strategy for organisations to improve workforce productivity radically and
enhance retention is to seek to optimise their workforce through comprehensive
training and development programmes. To accomplish this undertaking,
organisations will have to invest vast resources to ensure that employees have
the information, skills, and competencies they need to work effectively in a
rapidly changing and complex work environment. Wan (2007: 298) therefore
suggests that it is important for organisations to invest in their human resource or
human capital development, which, in general terms, is the process of helping
employees become better at their tasks, their knowledge, their experiences, and
add value to their lives. The main method of achieving this is through training,
education, and development. Smith (1992) as cited in Wan (2007: 298) defines
training as “a planned process to modify attitudes, knowledge or skill behaviour
through learning experience to achieve effective performance in an activity or
range of activities”. The Web Online dictionary defines training as “activities or
deliverables designed to enable an end user to learn and use new processes,
procedures, systems and other tools effectively and efficiently in the performance
of their work”. According to Schermerhorn, Hunt and Osborn (2004: 109), training
is a set of activities that provides the opportunity to acquire and improve job-
related skills. In addition to initial training, training to improve employees’ skills is
important in order to enhance employees’ performance in the organisation. The
purpose of training in the work context is to develop the abilities of the individual
and to satisfy the current and future manpower needs of the organisation.
Smith (1992) as cited in Wan (2007: 298) defines development as the growth of
realisation of a person’s ability, through conscious or unconscious learning.
Smith (1992) also defines education as “activities which are aimed at developing
the knowledge, skills, moral values and understanding required in all aspects of
life, rather than a knowledge and skill relating to only a limited field of activity”.
Employees consider training, education and development as crucial to their
overall career growth and goal attainment and will be motivated to remain and
build a career path in an organisation that offers them such opportunity.
Training comes in different dimensions and can take the form of on or off- the job
methods. On-the job (internal) training techniques include mentoring, self-
learning, and attaching an employee to learn a new skill under a colleague or a
superior. Organisations also organise in-house training for their employees
where they are specifically trained on the job requirements peculiar to the
organisation. Off-the job (external) training techniques include seminars,
workshops, lectures, and case studies that are conducted outside the premises
of the organisation. Many organisations encourage their employees to add value
to themselves through acquisition of additional education by approving study
leaves with or without pay or through part-time studies. Such programmes are
usually conducted by institutions of higher learning. Thomas, Lashley and Eaglen
(2000: 336) report that low levels of training give rise to high levels of employee
turnover and that the provision of good training has a positive effect on employee
retention. This assertion might have informed the decision of the Old Mutual
Investment Group in South Africa to provide a variety of skills, leadership and
personal development programmes to its employees. According to the
organisation’s 2002 Annual Report, R89million was spent on training,
representing 6.7% of payroll. Specific training programmes are also put in place
by the organisation to grow actuarial and accounting skills among black
employees.
Organisations enrich their Human Capital asset and the quality of their
operations through training and development. Studies by Pate and Martin (2000:
150) and Oosterbeck (1998: 266) show that organisations that are committed to
employee training are realising the rewards of increased skill-sets, motivation,
higher productivity and knowledge transfer of their employees. In particular,
Acton and Golden (2003: 138) note that job-related training increases an
employee’s ability to perform job-related tasks. Banakus, Yavas, Karatepe and
Avci (2003: 278) report that organisations that provide training send a strong
signal to employees regarding management commitment to their retention and
customer service. Training employees has also been found, in studies by
Strasser, Cotton and Tittle (1986) as cited in Choo and Bowley (2007: 341), to
result in facilitating the updating of skills, increasing professionalism and
increasing employee commitment and satisfaction. A related study by Burke
(1995) as cited in Choo and Bowley (2007: 341) found that participation in
internal and external training is beneficial to organisations and their employees,
and these make employees feel better about remaining in the organisation.
Research by Choo and Bowley (2007: 341) reveals that training and
development ranked amongst the highest retention factors mentioned by
employees. The research also confirms that opportunities for training and
development improve employee skills to work with up-to-date technologies. Lack
of job-related skills and out dated technologies will jeopardise efficiency and
result in early turnover. Providing employees with quality training through
external programmes will equip them with new skills required to operate the
latest technology or simply an opportunity to refresh existing skills.
While internal training is important and can be valuable in some areas of
development; external training can add interest and promote interpersonal
relationship among employees across the industry and beyond. In today’s
employee-driven labour market, the provision of training is important in order to
retain existing employees as well as attract new recruits. Managers have the
responsibility of providing assistance to help their subordinates identify the
training and development needs. Training and development should be a
continuous process with periodic review and managers giving employees the
necessary feedback. Choo and Bowley (2007: 316) state that a thorough
understanding of the job scope and career path is necessary to help managers
and employees identify human capital development needs that are essential for
career advancement within the organisation. These are instrumental in keeping
employees on the right track in the development of their careers. This, according
to Choo and Bowley (2007: 316) will not only reduce turnover, but will also help
in succession planning, as employees would stay if there is a well defined career
progression within the organisation.
3.3.3 Career growth and promotion opportunities
Career minded employees consider career growth and development as a crucial
deciding factor in their decision to remain in an organisation or leave. Where
career growth and development cannot be guaranteed, employees leave for
alternative employment. Choo and Bowley (2007: 315) argue that providing
employees with internal job opportunities is a means of demonstrating that they
can realise their career goals inside rather than outside of the organisation. Choo
and Bowley (2007: 315) further argue that career growth help employees to plan
for the future and to be better equipped with the right skills in order to remain
competitive. In a related literature, Agho (1998: 1007) states that opportunities for
mobility within organisations are determinants of employee satisfaction. As
vacancies occur, employees must be given equal opportunity and necessary
encouragement to apply alongside external candidates for higher positions within
the organisation. When employees have the opportunity to be promoted, they
tend to build their career life around the organisation because they know that
they can achieve their career goals within the organisation and this can inform
their decision to remain. Managers should also focus on helping employees
progress in their career and encourage their professional development.
Inexperienced young employees who are unable to get on with their jobs are
likely to leave the organisation for another job which they consider offers better
prospects. This would be a loss to the organisation as these young employees
may have the potential to make significant contributions to the organisation in the
long run.
An emerging concept in career development is the mentor-mentee system.
Orpen (1997: 53) defines mentoring “as the process whereby managers provide
informal assistance and support to particular subordinates on an individual basis,
to help them in their efforts to be successful within the organisation”. Successful
professionals who have made their marks in their various careers are
encouraged to adopt young and up-coming professionals as mentees in order to
groom and help them build and achieve their career goals. This practice is
common in some of the organisations that have been mentioned in the past as
organisations of choice in South Africa. They include organisations like
Accenture, Deloitte and Trouche, Coronation Managers, Alexander Forbes and
others. Young professionals are attached to more experienced managers who
help them develop realistic career goals and motivate them through guidance,
counseling as well as putting the mentees through the technical aspects of the
job. Mentor–mentee development programmes foster good working and
interpersonal relationships and motivate the mentee to remain with his/her
mentor in the organisation. These successful mentees eventually adopt the
management styles of their mentors and this often leads to successful
management succession.
3.3.4 Management style
One of the critical roles of management is to create a work environment that will
endear the organisation to employees. It also includes influencing these
employees’ decision to be committed and remain with the organisation even
when other job opportunities exist outside the organisation. Studies by Maertz et
al. (2003: 111) and Maertz and Griffeth (2004: 668) emphasise the importance of
pay, work organisation and work conditions in shaping job satisfaction and
retention. Taplin and Winterton (2007: 6) pursue in detail the specific role of
managers who influence employees’ attitudes directly and indirectly through work
structure. Managers have the responsibility to structure the workplace and
provide employees with an environment that enables them resist external
attractions such as higher pay in other organisations. Apart from providing an
exciting working environment, Taplin and Winterton (2007: 8) further submit that
the salient feature of a low turnover organisation in an industry where high
turnover rates are the norm is a style of management that is considerate of
work/family issues. Such a management style also provides requisite levels of
training and support for employees to meet their performance (and earnings
potential) and is based upon open communication. All these facilitate employee
attachment to their leaders and the organisation as a whole.
One retention strategy that engages management attention is work autonomy. In
contemporary organisations, Amar (2004: 97) observes that managers are busy
removing controls in the form of organisational policies that create hurdles,
obstacles, and barriers in the way of employees’ creativity in their jobs. While it is
true that management has to place controls to guide and monitor activities in the
organisation, Amar (1998: 98) contends that management must also recognise
that controls can, and mostly do go against motivation and impede creativity.
This is consistent with the position of Kinnear and Sutherland (2001: 17) who
emphasise the need for skilled employees to be given space to act independently
and freedom to plan and execute work the way they choose. The removal of
structures and beuracracies which hinder employee freedom can help retention
practice in organisations with high turnover resulting from the application of rigid
organisational policy. Amar (2004: 97) submits that reduced – or a lack of –
control can free employees and give them a sense of empowerment. For
instance, the biggest motivator of the younger generation of employees,
according to Amar (2004: 97) is a lack of control on them. This frees their minds
and allows them to engage in activities that bring about innovation. In some
organisations, management extends the lack of control concept to dress and
behaviour codes (Hays, 1999: 46) which also extends to work flexibility.
A study by Taplin and Winterton (2007: 8) reveals reasons why most employees
remain with their various organisations despite better employment opportunities
elsewhere. The study observed that it is imperative for management to introduce
initiatives that ease work/family conflicts (flexible working hours, ignoring
occasional lateness, providing transportation for employees) and systematic
attempts to solicit information from employees about potential domestic
concerns. The study further noted that management should maintain open
communication in order to identify problems before they disrupt operation and
result in avoidable turnover. Cross-training of employee is crucial to enable other
employees stand in for absent colleagues. These management behaviours are
considered a commitment to employees by management.
Managers have the responsibility of stimulating the work environment to achieve
efficiency and create attraction for employees. Taplin and Winterton (2007: 8)
show in their research the importance of management responding appropriately
to employee’s needs and complaints. The research also reveals that many
employees remain with their organisations as a result of the pleasant social
atmosphere that exists in the organisation. This social atmosphere includes a
friendly and happy environment reminiscent of a family. Most employees find
such work environment and management disposition attractive and this makes it
difficult for them to leave. This is supported by Cappelli (2000: 108), Mitchell,
Holtom and Lee (2001: 98) who argue that social friendships at work act as
drivers for employee retention. Similarly, Rolando (2000) as cited in Ferreira
(2008: 76) posits that a fat salary is down the list of things that the modern
employees are looking for. “The things that make people really are not money
and short-lived experiences of happiness; the most important things are
engagement, relationships with other people and finding purpose and meaning in
one’s life”. In reporting the reaction of employees during their research, Taplin
and Winterton (2007: 8) found that the management was always there whenever
the employees had problems thus enhancing the employees’ commitment to the
organisation. Employees in the study agreed that they were satisfied with their
jobs and described their work as generally interesting, challenging, and of high
standard that demanded a whole range of skills.
Similarly, in a Deloitte and Trouche survey, Conradie (2008) cited in Ferreira
(2008: 78) reports that the single most important factor that elongates
employee’s stay in an organisation is management style – “the quality of the
relationship an employee has with his or her immediate manager”. Sherman et
al. (2006: 8) also found in their research that the majority of employees in the
organisations surveyed planned to remain with their organisations at least for the
next five years because of the prevailing culture of management care. In today’s
supply constrained labour environment, as presently witnessed in South Africa, it
is important for managers to integrate employees’ work and family life and create
a sustainable social environment in the organisation that will bond employees
and management together. This contemporary management style is fast
replacing the autocratic style of management which sees employees as mere
economic tools that must be exploited to achieve organisational goals.
Empirical evidence by Taplin and Winterton (2007: 11) showed that managers in
high turnover organisations believe that employees are not to be trusted; that
they are expendable and therefore turnover is somewhat inevitable. Management
in these organisations is always reluctant to invest in new employees other than
minimal training assistance and do not place any importance on the work/family
life of employees. In a study by Sherman et al. (2006: 8), between 60% and 70%
of the workforce believed that their managers did not assist them in developing
their career ambitions. This neglect on the part of management was found to be
driving employees to quit in their thousands, and this cost organisations millions
of rands per year (turnover costs).
Given the huge costs associated with turnover, it is important for HR practitioners
to adopt a pro-active managerial approach that views turnover as a costly,
disruptive but avoidable work phenomenon that impact negatively on service
delivery and profitability. Management should recognise retention practices that
structure work to facilitate maximum earnings for employees, especially new
ones who should also be extensively trained and motivated in order to enlist their
commitment to the organisation. This will reduce turnover intentions. Managers
should identify each employee’s potential and skill and assign them jobs that are
commensurate with their skills and potentials in order to make work pleasurable.
Top management should evolve policies and practices that encourage
employees to approach their supervisors freely whenever they run into problems,
whether work or family related. It is imperative for managers to establish a good
working relationship with employees in order to create room for effective two-way
communication. This, according to Taplin and Winterton (2007: 14) is a good
retention strategy that must be encouraged by managers. Such approachable
management, combined with sympathetic supervision and good interpersonal
relations clearly help in labour retention. Such behavior by management reflects
genuine concern for creating an effective work environment based on information
sharing, incentive pay, training and skill development, and relative job security.
Most of these factors according to Taplin and Winterton (2007: 14) are sources of
sustained competitive advantage through people. Good management practices
also entail that salary and other financial benefits for employees are set at market
or above market values in order to gain a competitive advantage. These are
discussed in the section that follows.
3.3.5 Compensation and other financial packages
The remark of Kinnear and Sutherland (2001:17) that employers should not be
deceived that money doesn’t matter in retention strategy any longer is very
instructive. This remark emphasises the importance of money in attracting,
motivating and retaining quality employees in the organisation. Kinnear and
Sutherland (2001: 17) further remark that skilled employees in South Africa are
achievement oriented and want their achievements rewarded with money. Locke
(1980) cited in Tietjen and Myers (1998: 227) reviewed four methods of
motivating employees toward improved performance as money, goal-setting,
participation in decision making, and job redesign. Locke (1968) found that
money was overwhelmingly the most important motivator. Robbins (1983) as
cited in Meudell and Rodham (1998: 128) suggests that money can be
considered to act as both a “scorecard” which enables employees to assess the
value the organisation places on them in comparison to others, and as a medium
of exchange in that an individual can purchase whatever he/she needs. However,
a lot of controversies have surrounded the use of money as the utmost variable
in employee motivation and retention.
In a comparative analysis, organisational practitioners observe that in
organisations experiencing turnover, compensation was the most common
reason given for leaving. However, in organisations with low turnover,
compensation was not the reason for staying – instead, most employees stayed
because of intrinsic reasons such as job satisfaction and good relationships with
their managers and other employees (www.reliable surveys.com). This suggests
that the cause of dissatisfaction is not the same thing that determines satisfaction
on the job. This assertion is consistent with both Herzberg’s and Maslow’s
theories of motivation, which propose that compensation and other financial
benefits satisfy only lower level needs, but motivation and satisfaction result from
higher needs being met. Amar (2004: 96) argues that money has not remained
as good a motivator as it was in the past. The efficiency of money as a motivator
of skilled employees is quite low. Hays (1999: 48) advises that if managers
reward performance with only money, they will be losing the substance of
retention because there are other more powerful ways of motivating quality
employees and these include freedom and flexibility in the organisation. It can be
argued that the use of money as a motivator in the skilled labour environment
would depend on how it is deployed. For employees to be effectively motivated,
Karp, Sirias and Arnold (1999: 45) propose that the bulk of rewards that
organisations offer their employees should be expanded to include non-financial
incentives. These incentives should include issues such as work/life benefits,
training and development opportunities, promotion and autonomy.
Birt, Wallis and Winternitz (2004: 29) disclose that challenging and meaningful
work, advancement opportunities, high manager integrity, and new
opportunities/challenges rank among the highest variables that are considered
important to the retention of South African talent. These are intrinsic rather than
extrinsic factor thus supporting Herzberg’s (1968) theory of motivation which
states that motivation is internally-generated, and not externally-stimulated. It is
upon this distinction that Herzberg restated the utility of his earlier theory where
he classified money as a dissatisfier. In their own argument, Kohn, Lee and
Lawrence (1985) as cited in Meudell and Rodham (1998: 128) conclude that pay
schemes produce only temporary compliance and are ineffective at producing
long-term attitudinal and behavioural changes. They stressed further that
rewards merely motivate individuals to seek more rewards and can undermine
intrinsic interest in the job which is then perceived as being merely a means to an
end – an expensive and short-term motivator. Amar (2004: 96) contends that the
practice of using money to motivate performance and redirect behaviour appears
to have limited application in contemporary retention practice. However, while
money cannot be totally discountenanced as a motivator, the attention of
managers should be redirected at rewarding performance using commissions,
performance bonuses, merit pay, incentive schemes, and others rather than
raising salaries across the board. In designing retention programmes, managers
should, therefore, identify the needs of individual employees and tailor a
compensation package towards those needs rather than applying or imposing a
package that will not be valued by employees no matter how costly it may
appear.
The above section articulated a practical working relationship between various
motivational strategies that can assist in retention and turnover management.
There is no one motivational strategy that can sustain any meaningful retention
practice. It is therefore imperative for top management, HR practitioners and line
managers to consider a combined strategy that will produce a comprehensive
and effective retention initiative. Organisations should focus their attention on
intrinsic rather than extrinsic factors in designing and implementing retention
policies since motivation comes from within and not from outside. This however
does not suggest that extrinsic factors such as money should not be a prominent
consideration in the motivation and retention mix.
No retention mix will be effective without incorporating the job satisfaction
element which has been acknowledged over time as an important indicator of
turnover decisions. The next section will therefore look at job satisfaction and its
measurement together with the related theory of job satisfaction.
3.4 Job satisfaction
Job satisfaction has long been recognised as an important variable in explaining
turnover intentions. Certain factors are responsible for job satisfaction/
dissatisfaction which are a determinant of employee retention or turnover.
However, the inability of managers to identify these factors has led to a high rate
of turnover in organisations. Riggio (2003: 215) describes job satisfaction as
consisting of the feelings and attitudes one has about one’s job including all
aspects of a particular job, good and bad, positive and negative, which are likely
to contribute to the development of feelings of satisfaction or dissatisfaction or
turnover intentions. This is consistent with Schermerhorn, Hunt and Osborn
(2004: 100) who formally defined job satisfaction as “…. the degree to which
individuals feel positively or negatively about their jobs”. It is an attitude or
emotional response to ones tasks, as well as to the physical and social
conditions of the organisation.
Job satisfaction or dissatifaction is predicated upon certain organisational factors
and does not exist as an abstract phenomenon. These factors revolve around the
work itself or the environmental and human aspect of the organisation. Results of
a study by Groot and Brink (1999: 347) found that employees are highly satisfied
with the content of the job, flexible work arrangement and interpersonal
relationship amongst employees. On the other hand, employees are dissatisfied
with the workload, number of hours they work, and the supervisor. The findings
by Groot and Brink (2000: 347) show that both intrinsic and extrinsic variables
are important determinants of job satisfaction/ dissatisfaction. The research
however concludes that intrinsic factors motivate employees more significantly
than extrinsic factors. The research conclusion by Groot and Brink (2000: 347)
represents one of the objectives of the present study which sought to determine
the extent to which intrinsic and extrinsic variables influence employees’ retention
in their organisations.
According to Saari and Judge (2004: 395), job satisfaction can be an important
indicator of how employees feel about their jobs and a predictor of work
behaviours such as absenteeism and turnover. It shows the extent to which
employees like their work and this informs an employee’s decision to belong –
that is, to join and remain a member of an organisation. Managers can then
assume that employees who are satisfied with their jobs are more likely to remain
with the organisation longer than those that are dissatisfied with their jobs.
Managers should therefore device ways of determining the level of job
satisfaction among employees, especially high performing employees, in order to
predict and prevent their turnover. Managers should investigate employee
withdrawal behaviours such as lateness, preventable industrial accidents,
sabotage and drop in employee productivity. These are symptoms of
dissatisfaction among employees which should be addressed before they result
in turniover. Porter and Steers (1991) as cited in Hwang and Kuo (2006: 255)
argue that the extent of employee job satisfaction reflects the cumulative level of
“met worker expectations”; that is, the extent of employee’s expectation that their
job will provide a mix of features such as pay, promotion, or autonomy, and for
which each employee has certain preferential values. When the accumulation of
unmet expectations becomes sufficiently large, Pearson (1983) as cited in
Hwang and Kuo (2006: 255) concludes that there is less job satisfaction and
greater possibility of withdrawal behaviour.
It is a generally accepted assumption that nearly every employee seeks
satisfaction in their work. Jepsen and Sheu (2003: 165) also posit that if a person
becomes engaged in work that matches his/her occupational choice, such an
employee is likely to experience job satisfaction. According to Locke (1976) cited
in Tietjen and Myers (1998: 227), there are three interactive causes of employee
turnover which are: physical-economic (physical working conditions), social
(supervision and cohesive work groups), and nature of work (mentally
challenging tasks and work-related variables). Absence of these interactive
variables in a work situation will result in job dissatisfaction which facilitates
turnover. Motivational variables as an important component of job satisfaction,
which, in effect is a predictor of turnover are further emphasised by Agho
(1997:1020). Agho (1997: 1020) states that the determinants of employee
satisfaction are working with friendly people, fair rewards, opportunities for
mobility within the organisation, and working for supervisors who actively assist
their subordinates to address job-related problems. These are intrinsic and
extrinsic variables that influence employee’s decision to quit or remain in an
organisation at a particular time. Spector (1997: 28) shares the same view by
stating that popular job satisfaction instruments include facets such as rewards
(pay, benefits), other people (co-workers, supervisors), the nature of the work
itself and the organisation. These are extrinsic (hygiene) factors which, according
to Herzberg must be present in the job. Even though they do not motivate, they
nevertheless make employees to be happy and satisfied with their employers
thereby enhancing retention. Research findings by Groot and Brink (2000: 347)
however did not support Herzberg’s hygeine theory. Apart from the content of the
job, Groot and Brink (1999: 347) found that other factors that determine overall
job satisfaction are, in order of importance: satisfaction with co- employees,
satisfaction with the supervisor, and satisfaction with early retirement
arrangement (job security). These are dissatisfiers, according to Herzberg but
which have been found by Groot and Brink (1999: 347) as high determinants of
job satisfaction.
Literature by Goldfarb Consultants (1999: 12) lists the top five most important
factors to be those that have more to do with interpersonal relationships (i.e.
quality of decision makers, communication and relations between managers and
employees). Others are the atmosphere in the organisation (i.e. ethic, level of
innovation and physical environment) and a sense of personal achievement (i.e.
personal growth opportunities and level and range of responsibility). However,
survey findings by the Society of Human Resource Management (SHRM) in the
USA (reported in Wan, 2007: 298) differs considerably from the list provided by
Goldfarb Consultants (1999: 12). The top five factors in attaining job satisfaction,
according to the SHRM are compensation/pay, benefits, job security, flexibility to
balance life and work issues, and feeling safe in the work environment. In
another research, Lermusi (2006:1) found that meaningfulness of work and job
variety are two areas that employees value while HR emphasises the relationship
with the supervisor and the recognition that management gives regarding job
performance. In their research report, Balkin and Gomez- Mejia (1990) as cited in
Wan (2007: 301) emphasise that compensation systems are likely the key factors
that can elicit and reinforce behaviours such as performance and turnover.
Similarly, Peccei (2004: 21) argues that job satisfaction is high if employees feel
that they have a good wage-effort bargain and feel that, on the balance, they are
well paid for what they do. The arguments canvassed in the various literature
reinforce the importance of money as a key determinant of job satisfaction and
employee retention especially in developing and underdeveloped economies in
Africa.
The literature reviewed above shows inconsistencies in rating the top variables
that stimulate job satisfaction. While Goldfarb Consultants (reported by
Pohlmann, 1999: 12) suggest interpersonal relationship, work atmosphere,
personal achievement, and other factors, the Society for Human Resource
Management, USA, Peccei (2004: 1), and Heathfield (2006: 2) rank pay,
benefits, job security, flexibility to balance life and work issues, and safety work
environment as most important. The disparities in ranking can be attributed to the
social- economic and cultural environment in which these research studies were
conducted. What motivates an employee in America or Britain, for example, may
differ considerably from that of employees in Africa. Over time, the spate of
strikes embarked upon by labour unions in Africa centred on money. The general
strike that was embarked upon in June, 2007 by the Coalition of South African
Trade Unions (COSATU) was essentially on the need for a salary increase for
employees. Similarly, the Nigerian Union of Teachers (NUT) in Nigeria declared
an industrial action in July, 2008 to force the federal government to increase
teachers’ pay because, according to the teachers, their take home pay could no
longer take them home. Reasons often given for labour migration from South and
indeed other African countries to developed economies relate to better
remuneration. Retention will be enhanced and rate of turnover reduced if
managers are able to identify properly and apply variables that determine job
satisfaction amongst employees.
3.4.1 Measuring Job satisfaction
Job satisfaction relates to emotion and attitude and this makes it difficult to
measure. Most instruments designed for measuring job satisfaction consists of
items such as pay, working condition, and relationship with supervisors and co-
employees. However, Ostroff, Scarpello and Vandenberg (1993) as cited in
Riggio (2003: 215) contend that variables such as pre-employment expectations,
individual personality characteristics, and the fit between the organisation or job
and the employee may also affect employee satisfaction. These variables are not
included in job satisfaction survey instruments thereby affecting the degree of
validity and reliability of such instruments. Job satisfaction measure can assist
managers in identifying possible cause(s) of problems within an organisation. An
organisation witnessing a high rate of turnover, for instance, may assume the
cause to be inadequate salary, but may discover that the problem persist after
increasing salary without recourse to a job satisfaction measure. Management
may spend time and resources on a problem that does not exist. Job satisfaction
is difficult to measure because it is mediated by the perception of individual
employees as different employees may perceive the same job differently. In
concurring with this assertion, Gardner and Pierce (1998: 48) argue that it is
these individual perceptions that determine whether or not an employee is
satisfied with the job or not. For example, improving the working environment
may affect satisfaction for some employees but not for others, because not
everyone is dissatisfied with the work environment.
Another major obstacle in the measurement of job satisfaction is the reliance on
respondents self-reports. Employees may intentionally fail to report their true
feelings about the job as happens during exit interviews where departing
employees, in most cases, do not give true reasons for leaving the organisation
for fear of getting bad reference reports. Strategies for measuring job satisfaction
include interviews, group meetings, rating scales and questionnaires. Riggio
(2003: 218) however suggests that employee anonymity may help employees to
be more candid than in a face-to-face interview. It has been suggested that
meetings and interviews can provide rich information because interviewers can
ask follow-up questions, or request further explanation or clarification to answers.
In addition, biases and ambiguous items that employees may interprete
differently may seriously damage the validity of a questionnaire on job
satisfaction measure.
Many organisations design their own interviews, scales or surveys to measure
employee job satisfaction. These can be designed to measure specific issues
relevant to each organisation’s employees, but their results may be difficult to
interprete. One of the problems inherent in self developed scales is that such
scales may not be reliable or valid. It is also costly to engage experts in survey
development and measurement techniques. It takes quite a bit of research,
according to Riggio (2003: 219) to establish the reliability and validity of a job
satisfaction measure. It is very difficult to know what a particular rating or scoring
means since there are no standard of comparison. Because of these problems in
creating and interpreting in-house job satisfaction measures, many organisations
use standardised, published surveys. These are cost effective and provide
normative data that permit the comparison of ratings with those from similar
groups of employees in other organisations that have completed the survey. A
job satisfaction measure also allows organisations to discover whether the job
satisfaction levels of their employees are low, high or in the normal range as
compared to employees in other organisations. The practice enables researchers
to investigate the various organisational factors that cause job satisfaction or
dissatisfaction in order to put corrective measures in place to forestall turnover.
3.4.2 Herzberg (1959) two – factor theory and job satisfaction
One of the earliest researchers in the area of job redesign as it affects motivation
was Herzberg (1959) cited in Bassett-Jones and Lloyd (2005: 929) who
formulated the two-factor theory. The theory attempts to explain satisfaction and
motivation in organisations by stating that satisfaction and dissatisfaction are
driven by different factors (i.e. motivation and hygiene factors) respectively.
Motivators are those aspects of the job that make people want to perform and
provide people with satisfaction. These motivators are considered intrinsic to the
content of the job and include variables such as achievement, recognition, the
work itself, responsibility, advancement, and growth. Conversely, dissatisfying
experiences, called “hygiene” factors, largely results from extrinsic, non-job
related factors such as company policies, salary, co-worker relations, and
supervisory styles. Herzberg argues that eliminating the causes of dissatisfaction
(through hygiene factors) would not result in a state of satisfaction; instead, it
would result in a neutral state. Satisfaction (and motivation) would occur only as
a result of the use of intrinsic motivational variables.
The concept of the present study is essentially to use motivational variables as a
strategy for retention and turnover in organisations. The two-factor theory
therefore provides useful guides in identifying variables (intrinsic factors) that
truly motivate an individual employee and give them satisfaction on their jobs.
One of the motivators, according to Herzberg, is the job itself. Managers can
enrich an employee’s job by effecting basic changes in the nature of jobs to allow
for increased challenges and responsibility, opportunities for advancement,
personal growth, and recognition. Managers must however pursue extrinsic
factors in order to maintain peace and industrial harmony in their organisations.
Some of the major causes of industrial actions in organisations include
insufficient pay and poor working conditions. Even though they don’t motivate
employees, managers must put these variables in place in order to make
employees happy and avoid job disruption and withdrawal from the organisation.
While Herzberg’s model has stimulated much research like Locke (1976) cited in
Tietjen and Myers (1998: 227), researchers have been unable to prove reliably
empirically the workability of the model. House and Wigdor (1967) cited in
Graham and Messner (1999: 196) critised Herzberg’s original formulation of the
model which they described as a methodological error. Second, raters are
required to evaluate behaviours of respondents, which may result in rater
contamination. Third, Herzberg’s research lacked a measure of overall
satisfaction and finally, situational variables were not treated in defining the
relationship between satisfaction and productivity. Nedler and Lawler (1979) cited
in Graham and Messner (1999: 196) contend that Herzberg’s theory does not
consider individual differences, conversely predicting all employees will react in
an identical manner to changes in motivation/hygiene factors. Second,
Herzberg’s model does not specify how motivation/hygiene factors are to be
measured as is done in job satisfaction. Finally, Nedler and Lawler (1979)
criticized Herzberg’s model for prescribing that there is one best way of doing
work.
Regardless of the criticisms of Herzberg’s theory, it has made a significant
contribution to the discussion of job satisfaction. Managers will find the model
useful in the area of job enrichment using intrinsic factors. Industrial relations
practitioners will also find the knowledge of the theory helpful in identifying
extrinsic factors that may not necessarily motivate employees to greater
performance, but bring about industrial peace and harmony in the organisations.
One of the challenges of the theory that the critics of Herzberg did not resolve is
designing a measuring instrument for motivator and hygiene factors as we have
in job satisfaction. Organisational development practitioners may consider this
gap as a challenge to develop a measuring instrument in this regard.
Besides Herzberg’s theory, motivation as an essential tool in directing employee
behaviour also received attention from different authors of content theories which
managers need to understand. This will enable them to utilise appropriately the
substance of these theories to achieve the desired retention and turnover results.
Relevant theories of motivation are reviewed as they relate to this study in the
following section.
3.5 Theoretical framework on employee motivation
Research into work motivation was an off-shoot of the early management
theories pioneered by Taylor (Scientific School, 1900s), and Fayol (Human
Relation Movement, 1930). The Scientific School, according to Smit and Cronje
(2002: 250) views people as production tools with which to accomplish tasks, and
as basically lazy and do not like work. They have to be coerced to work, and
motivating them is a matter of external stimulation. The human relations
movement however suggests that people must be treated with respect and are
motivated to work well for the sake of the work as well as for the social and
monetary benefits they receive, and that their motivation is internally stimulated.
From these pioneering schools of thought emerged the early and contemporary
motivational researchers and theorists such as Maslow (1954), Vroom (1964),
Herzberg (1959), Alderfer (1972), McClelland (1961), and Locke (1976). Others
include McGregor (1960), Adams (1965), Porter and Lawler (1961) as cited in
(Smit & Cronje, 2002: 356; Staw, 2001: 44) and many other great contributors to
the theories of work motivation.
The present study uses three of these theories (Maslow, 1954; Herzberg, 1959;
and Vroom, 1964) to support the issues of retention and turnover in
organisations.
3.5.1 Expectancy theory (Vroom, 1964)
Vroom’s 1964 Expectancy theory is presently considered by Smit and Cronje
(2002: 356) as well as Staw (2001; 44) as the most comprehensive, valued and
useful approach to understanding motivation. Kreitner and Kinicki (1999: 227)
and Smit and Cronje (2002: 356) posit that the theory holds that people are
expected to behave in ways that produce desired combinations of expected
outcomes. They further state that people will act according to (1) their perception
that their efforts will lead to certain performance and outcome and (2) by how
much they value the outcome. Thus, employees’ effort will lead to performance,
and performance will lead to rewards. Rewards may be either positive or
negative; the more positive the reward, the more likely an employee is to be
motivated. On the other hand, the more negative the reward, the less likely an
employee is to be motivated.
The theory argues that an individual’s work motivation is determined by the
elements that are herewith discussed. Expectancy (effort- performance
relationship). Expectancy is the belief of an individual that a particular level of
effort will be followed by a particular level of performance. For an example,
expectancy will be high when a sales person is sure that he/she will be able to
sell more units (performance) of a product if he/she works overtime (effort).
Expectancy will be low if the sales person is convinced that, even if she/he works
overtime, more units will not be sold. High expectations generally attract high
motivation than low expectations do. Instrumentality (performance – reward
relationship) refers to the degree to which an individual believes that a certain
level of performance will lead to the attainment of a desired outcome.
Instrumentality will be high if the sales person believes a bonus will be paid if
more units are sold and low if no bonus will be paid even after selling more units.
Valence (reward – personal goal relationship) is the value or importance that an
individual attaches to various work outcomes. For motivation to be high,
employees must value the outcomes they will receive for their performance (Smit
& Cronje, 2002: 357: Schultz & Schultz, 2006: 228). Managers must link
performance to reward in order to encourage high performing employees and
also to motivate employees that are under performing.
Individual employees come to an organisation with different needs and expect
that the organisation through its structures will meet those needs. When such
expectations are constantly met, the employee feels secure and builds a career
path around the organisation. When valence is static or low, as in the public
service where salaries are fixed irrespective of an individual’s contribution to
work outcome, productivity and morale are low. This partly explains why public
sector managers are finding it difficult to attract high performing job candidates to
their organisations while those already in their employment are leaving for the
private sector. The specific assumptions in the expectancy theory as identified by
Lawler, Kuleck, Rhode, and Sorenson (1975) provide a clear prediction for
turnover. Individual employees decide the level of effort they want to put into the
job and whether to remain or quit the organisation. These decisions are based on
the fulfillment of an employee’s expectation and when these expectations are not
met by the organisation, the individual employee sets in motion a turnover
process by searching for alternative employment.
The expectancy theory remains relevant in present day organisational
management as it is important for managers to figure out what outcomes each
employee values. Managers must determine what kind of outcomes/rewards
have valence for individual employees. This, according to Lawler et al. (1975)
cited in Ramlall (2004: 58) can be revealed by structured questionnaires, by
observing employees’ reaction to different situations or rewards, or by asking
what kind of rewards individual employees want or kinds of career goals they
have. Managers must specify the kinds of behaviours they want and back them
up with adequate valences in order to motivate high performing employees to
remain.
Vroom also argues that outcomes should be large enough to motivate significant
behaviour. There must be equity in the organisations’ reward system. Good
performers should get more desired rewards than average or poor performers
and other employees in the organisation should know about it in order to
motivate them to higher performance also. According to Kreitner and Kinicki
(1998: 227) equity in this case must be differentiated from equality where all are
rewarded equally with no regard to performance. A system of equality is
guaranteed to produce low motivation. A common practice in most organisations
today is to reward employees through pay structure by seniority rather than
performance. Managers both in the public and private sector organisations
should integrate this aspect of the Expectancy theory into their reward system as
a way of motivating innovative and high performing employees. That is,
employees should be rewarded based on performance rather than the scoring
method in the appraisal form with ratings on cleanliness, honesty and other traits.
Group influence on individual employee’s motivation and performance should not
be over sighted by managers. Managers should recognise the importance of
group dynamics as both formal and informal groups are powerful and potent
sources of desired outcomes for individuals. Groups can provide or withhold
acceptance, approval, affection, skill, training, needed information, assistance
and other necessary tools that can make individuals accomplish goals. They are
a powerful force in the total motivational environment of individuals. Managers
must therefore be trained to appreciate the influence of groups on individual
employee behaviour.
Within an organisation, immediate supervisors should create, monitor and
maintain the expectancies and reward structures which will lead to good
performance. Supervisors should motivate subordinates by defining clear goals,
setting clear reward expectancies, and providing the right rewards for different
employees. Management has the responsibility to provide supervisors with an
awareness of the nature of motivation as well as the tools (control over
organisational rewards, skill in administering those rewards) in order to create
positive motivation. The Expectancy theory as simplified by Staw (2001: 44) also
suggests that individual employees should be allowed to choose the type of
rewards they prefer since different people have different needs and valences.
Effective motivation must come through the recognition that not all employees
are alike and that organisations need to be flexible in order to accommodate
individual differences. This implies the building in of choice for employees in
many areas, such as reward systems, fringe benefits, job assignments and
others. Individual employees should be allowed to choose the fringe benefits they
want, rather than those imposed by the organisation which may not be attractive
to the employee no matter how expensive they may appear.
The Expectancy theory provides a strong background for HR practitioners in the
design and application of organisational rewards. Employees should equally
have the opportunity of deciding the type of reward they prefer rather than a
general application since individuals are motivated by different valences.
Rewards can be made optional thereby giving an employee the opportunity to
decide the type of reward that gives maximum valence within a variety of rewards
with the same value. For example, where a reward for long service in an
organisation is an all expenses paid holiday abroad. Such awards should come
with an option of commutment to cash which may be more valuable to the
employee than a holiday abroad. Reward systems should be designed with input
from individual employees whose needs vary according to socio-cultural,
psychological, environmental and economic backgrounds.
3.5.2 The Hierarchy of Needs theory (Maslow, 1943)
Maslow’s hierarchy of needs theory remains one of the best known approaches
to employee motivation. Maslow hypothesised that within every human being
there exists a hierarchy of five needs as follows:
� Physiological – hunger, thirst, shelter, sex, and other bodily needs.
� Safety – security, protection from physical and emotional harm.
� Social – affection, sense of belonging, acceptance, and friendship.
� Esteem – internal factors such as self-respect, autonomy and
achievement; and external factors such as status, recognition, and
attention.
� Self-actualisation – the drive to become what one is capable of becoming
like personal growth, achieving one’s potential and self-fulfillment.
According to Maslow, as each of these needs becomes substantially satisfied,
the next need becomes dominant. Champagne and McAfee (1989) as cited in
Ramlall (2004: 60) suggest some potential ways of satisfying employees’ needs
as follows: Physical needs – employers can build cafeteria and drinking
fountains. For security needs, employers should provide economic solution
through wages and salaries, fringe benefits, retirement benefits, and medical
benefits, and physiological solution through the provision of job descriptions,
good working conditions, heating and ventilation, and a rest period. To provide a
solution for social needs, organisations must encourage social interaction, create
a team spirit, facilitate outside social activities such as social club membership,
and allow participation in trade unions. To satisfy esteem needs, managers
should design challenging jobs, use praise and awards, delegate responsibility,
give training and encourage participation in decision making. Self-actualisation
should be satisfied using executive training, provide challenges, and encourage
creativity.
Ramlall (2004: 63) suggests that in order to motivate employees to higher
productivity and reduce turnover, organisations must devise programmes or
practices that are aimed at satisfying emerging or unmet needs. Management
should also implement support programmes and focus groups to help employees
deal with stress, especially during more challenging times. Various organisations
today organise wellness programmes for their employees to keep them fit and
make them feel that their employers show concern about their state of health.
Kreitner and Kinicki (1998: 120) also suggest that managers take time to
understand that employees have different need categories, appreciate that some
needs take priority over the others and devise means of solving them. Managers
should appreciate equally the importance of employee growth and self
actualisation. It is becoming increasingly important for managers to create a
proper climate in which employees can develop to their fullest potential. Failure
to provide such a climate would, in the opinion of Ramlall (2004: 54) increase
employee frustration and result in poorer performance, lower job satisfaction and
increased withdrawal from the organisation.
Maslow’s hierarchy of needs theory provides a useful guide for managers toward
motivating and retaining their employees. In order for organisations to be able to
retain high performing employees, managers should ensure that key employees
enjoy satisfaction with their jobs as job satisfaction/ dissatisfaction is known to be
positively related to retention and turnover.
3. 6 Concluding remarks
This chapter discussed various strategies that can be used by organisations in
the management of retention and turnover. Existing legislations by the South
African government to enhance retention practices in the public sector
organisations were also discussed. Both public and private sector organisations
design programmes and policies which they use to attract and retain quality
employees who will help in achieving organisational success. Motivation
constitutes an important strategy in this regard. The way and manner in which
motivational variables can be combined to produce a good retention programme
that will reduce turnover in organisations was discussed to conclude the chapter.
The next chapter discusses the methods used in carrying out this research.
CHAPTER FOUR
RESEARCH METHODOLOGY
4.1 Introduction
Chapter three presented a general overview of retention strategies and the
various legislations and policies that are put in place by the government in order
to attract, retain and manage turnover in various organisations. Motivational
variables that can be used by organisations to retain high performing employees
were discussed. The chapter also reviewed relevant theories of motivation that
were used to support the discussion on retention and turnover in organisations.
The present chapter discusses the methods used in carrying out the present
study. Research issues such as the design, population, sample, sampling
procedure, research questionnaire, and statistical analysis are presented.
4.2 Research Design
The term research design and research methodology are often used
interchangeably even by researchers to mean the same thing. The two
terminologies are however different. According to Mouton and Prozesky (2005:
74) a research design is “a plan or a blue print of how a researcher intends to
conduct a study”. This involves plans for data collection, the instrument for
gathering information, how information gathered would be processed and
analysed to give meaning to a research finding. Ghauri and Gronhaug (2005: 56)
state that a “research design should be effective in producing the wanted
information within the constraints put on the researcher”. Such constraints
include time, budget, and skills. Similarly, Blanche, Durrheim and Painter (2006:
36) define research design as a “strategic framework, a plan that guides research
activity to ensure that sound conclusions are reached”.
The essence of research a design is to guide the researcher on the type of data
to collect, how to collect process and analyse them in order to answer the
research problem(s). A research design can be descriptive, exploratory or
causal. Research methodology on the other hand describes how something will
be done. Ghauri and Gronhaug (2005: 108) describe research methodology as “a
systematic, focused and orderly collection of data for the purpose of obtaining
information from them, to solve or answer a particular research problem or
question”. They are rules or systems which show how the researcher has
obtained his/her findings thereby enabling others to examine and evaluate it.
Research methodology is therefore wider in scope and it encompasses the
research design. It provides the general direction for the research and a logical
conclusion or solution to a research problem.
Research design can be quantitative or qualitative. The present study used the
quantitative research design which Strauss and Corbin (1990) cited in
Shaughnessy and Zechmeister (1997: 22) describe as “studies whose findings
are mainly the product of statistical summary and analysis”. The main feature of
quantitative research is the heavy reliance of the researcher on data analysis to
arrive at findings or conclusions. Numbers are assigned to the properties in the
phenomena to represent their qualities. Qualitative research on the other hand is
also referred to by Shaughnessy and Zechmeister (1997: 22) as “that research
which produces research findings that are not arrived at by statistical summary or
analysis and lack quantification altogether”. They are most commonly obtained
from interviews and observations and can be used to describe individuals,
groups or social movements.
Shaughnessy and Zechmeister (1997: 22) locate the main difference between
quantitative and qualitative researches in the procedure rather than quality. In
qualitative research, findings are not arrived at by statistical methods or other
methods of quantification. Qualitative research is mostly characterised by
masses of data much of which may be irrelevant to the study whereas
quantitative research is usually associated with numbers which possess specific
characteristics which make them very useful for analytical purposes. Ghauri and
Gronghaug (2005: 204) view quantitative research as an efficient way to
represent information and meanings. Rubin (2005: 145) notes that qualitative
research allows for in-depth, more open and detailed study of selected issues
while quantitative research is more generalised. Follow-up questions can be
asked during interviews or focus groups in qualitative research whereas
quantitative research does not provide respondents with such an option. In
quantitative research, Ghauri and Gronhaug (2005: 204) further noted that
analyses are conducted through the use of diagrams and statistics unlike in
qualitative research which uses conceptualisation.
The choice of a quantitative research design for this study was informed by its
primary strengths because, according to Blanche et al. (2006: 132) “the findings
are generaliseable and the data are objective”. Ghauri and Gronhaug (2005: 109)
also assert that a quantitative research design is more scientific than a qualitative
research design.
4.3 Research Strategy
The survey research strategy was used for the present study. Ghauri and
Gronhaug (2005: 124) refer to surveys as a method of data collection that utilises
questionnaires or interview techniques for recording the verbal behaviour of
respondents. Mouton and Prozesky (2005: 236) also describe survey research
strategy as involving the administration of questionnaire to a sample of
respondents selected from some population. Survey research is especially
appropriate for descriptive research of this nature. In descriptive research, the
research problem, according to Ghauri and Gronhaug (2005: 58) is structured
and well understood as demonstrated in chapter one of this study. The problem
to be resolved through the research process is clear from the onset. This is in
contrast to causal research which equally structures the problem under research
but focuses on cause-and-effect problems (Ghauri & Gronhaug, 2005: 58).
The survey is an effective tool to get opinions, attitudes and descriptions as well
as getting cause-and-effect relationships. Ghauri and Gronhaug (2005: 125)
describe surveys and questionnaires as among the most popular data collection
methods in business and social science research. Surveys are chiefly used in
studies that have individual people as the units of analysis. Although Mouton
and Prozesky (2005: 232) note that surveys can also be used for other units of
analysis such as groups or interactions, some individual persons must serve as
respondents or informants. Mouton and Prozesky (2005: 232) contend that the
survey research strategy is probably the best method available to the social
scientist interested in collecting original data for describing a population too large
to be observed directly. Mouton and Gronhaug (2005: 126) reveal that in
surveys, a review of earlier research and literature is important to determine what
kind of questions to be included in the questionnaire. Surveys are used to
understand behaviours of employees with regard to motivation, job satisfaction,
grievances among other phenomena. The present study used the survey
strategy in order to understand and evaluate the extent to which motivational
variables are being used to influence employee retention and turnover in both
public and private sector organisations.
4.4 Target Population
Asika (2000: 39) defines the population of a research as “all conceivable
elements, subjects or observations relating to a particular phenomenon of
interest to the researcher”. A research population according to Ghauri and
Gronhaug (2005: 147) relate to the total universe of units from which the sample
is to be selected. The target population of the present research comprised all
employees in the selected (2) government departments in Bisho representing
public sector organisations and selected (2) manufacturing organisations in East
London representing private sector organisations. The two public sector
organisations had a total population of 1490 employees while the private sector
organisations had a total population of 310 employees.
4.4.1 Sample Frame
Sample frame, according to Mouton and Prozesky (2005: 174) is the actual list
from which the final people are selected. This is the specific list of all members of
the population from which the sample will be ultimately selected. The
organisations surveyed for this study consisted of two government departments
and two private sector organisations with an employee number of 1490 and 310,
respectively. The sample frame consisted of employees who had served in the
organisations for a period of, at least, one year.
4.5 Sample
Bless and Higson-Smith (2000: 86) define a sample as “a sub-set of a population
which must have properties which make it representative of the whole”. Similarly,
Bryman and Bell (2003: 93) refer to samples as the population that is selected for
investigation. Samples involve collecting information from a portion of the larger
group, and on this basis, infer something about the larger group (population). A
representative sample is crucial to quantitative research and must reflect the
population accurately so that inferences can be drawn. Shaughnessy and
Zechmeister (1997: 136) argue that the ability to generalise from a sample of the
population depends critically on the representativeness of the sample; otherwise,
the sample becomes biased. Mouton and Prozesky (2005: 170) describe a
sampling bias to mean that those selected are not typical or representative of the
larger population they have been chosen from. This could be as a result of over-
representation of some segment of the population or the exclusion or under-
representation of a significant segment. Shaughnessy and Zechmeister (1997:
136) contend that a sample will be representative of the population from which it
is selected if the aggregate characteristics of the sample closely approximate
those same aggregate characteristics in the population.
4.5.1 Sample Size
The main concern in sampling is representativeness. Another concern mentioned
by Blanche et al. (2006: 49) is the sample size. The sample should be large
enough to allow inferences to be made about the population. A very small
random sample, Blanche et al. (2006: 49) note may be quite unrepresentative,
and the same is true for a large non random sample. Sample size is determined
in part by practical constraints such as the number of the population, finance and
the time available. Struwig and Stead (2001: 118) provide some factors that
should be taken into consideration when deciding on a sample size:
� The basic characteristics of the population
A small sample will be sufficiently representative in a homogenous population. In
such a case, a sample of one respondent would be enough to measure the
characteristics of others. Conversely, a large sample will be required in a
heterogeneous population. The researcher should therefore enlarge the sample
in a heterogeneous population and contend with a small sample size where the
population has the same characteristics.
� Objective(s) of the research
The objective(s) of the research play(s) a role in deciding the sample size that
produces the right quality and quantity of information needed. Thus, in drawing a
sample, the researcher must ensure that the characteristics of the population are
well represented in order to make meaningful inferences.
� Data analysis, credibility, time and financial constraints
Time and financial constraints often limit the sample size to a manageable
proportion even though a larger size is recommended. Struwig and Stead (2001:
118) suggest a sample size of 150 – 200 regardless of the study population
provided a correct and reliable sampling procedure has been followed. This also
allows for a meaningful statistical analysis.
� Non – response factor
This, according to Bryman and Bell (2003: 93) occurs whenever some members
of the sample refuse to cooperate, cannot be contacted or cannot supply the
required data. When the non – response rate is high, it is recommended that a
larger sample size be used.
� Statistical precision
Research designs that are less concerned with statistical accuracy (e. g.
qualitative, interpretative, exploratory etc) typically do not draw large or random
samples. However, the right size of the sample must be amenable to
mathematical calculation especially in the case of random sampling techniques.
� Sample size on the basis of judgment
Previous researches provide a researcher with an empirical and comparative
benchmark upon which the researcher can base his/her judgments. The sample
size previously used by a researcher can serve as a guide as to the sample size
that will be adequate for the purpose of a research. The sample size of the
present study comprised of 94 employees from two public sector organisations
and 51 employees from two private sector organisations. The sample size was
determined by the researcher using simple random sampling method.
4.6 Sampling error
Errors are always associated with using sample properties to estimate population
parameters. A repeated random sample of the same population size may likely
give a somewhat different sample. A sampling error is therefore defined by
Bryman and Bell (2003: 93) as “the difference between a sample and the
population from which it is selected even though a probability sample has been
selected”. Mugo (2007: 3) identifies the two types of sampling errors as non –
sampling and sampling errors. Non – sampling errors occur when respondents
give different interpretations to questions, definitional difficulties and inability of
respondents to remember information on the subject matter. A sampling error on
the other hand occurs when estimates are derived from the sample rather than
the population. Samples are selected by chance and any member of the
population has the chance of being selected. Samples would therefore never be
the same and would always produce some degree of differences even when the
same questionnaire and instructions are given, the results would still be different.
Sampling errors cannot be completely eliminated but can be minimised by
researcher.
4.7Sampling procedure
Sampling procedure according to Blanche et al. (2006: 133) refers to the process
of selecting elements to be observed. Ghauri and Gronhaug (2005: 146) broadly
divide sampling procedure into probability and non – probability sampling.
Probability sampling is a sample that has been selected using random selection
so that each unit in the population has a known chance of being selected for the
sample. That is, each element in the sampling frame has an equal and
independent chance of being selected for the sample. The aim of probability
sampling is to keep sampling error to a minimum. This aspect of probability
sampling procedure permits statistical inferences. Blanche et al. (2006: 134) give
examples of probability sampling to include systematic sampling, stratified
sampling, cluster and simple random samplings.
In systematic sampling, Blanche et al. (2006: 135) note that after a random start,
the nth element is selected and thereafter, every other nth element is
systematically selected on the list to be included in the sample (sampling
interval). The list can be a register of all employees of an organisation. For
example, the sampling interval of a sample of 1200 out of a sample frame of
12000 is calculated as – 12000/1200 = 10. Therefore, after selecting the first
element randomly, every other 10th element is selected until a sample of 1200 is
achieved. Struwig and Stead (2001: 116) give one of the disadvantages of this
method to include a situation where a faulty member appears after a certain
interval; this can lead to a defective sample. The method is however easy to
understand and apply but a complete sampling frame is required and this may be
costly to obtain especially in a geographically dispersed population.
Stratified sampling involves dividing a population into a mutually exclusive and
exhaustive subset whereby a simple random sample of units is chosen
independently from each subset (Ghauri & Gronhaug, 2005: 150). The
advantage of stratified sampling is that every part of the population (i.e. every
stratum) gets a better representation. There is a smaller sampling variation which
means that more stable results in repeated samples would be obtained as
against using simple random sampling. Cluster sampling is mostly used when a
large population is involved and a sampling frame is not available. The
population in cluster sampling (Ghauri & Gronhaug, 2005: 151) is divided into
mutually exclusive subsets and then a random sample of the subsets is selected.
The major advantage of cluster sampling is that a complete frame of the
sampling unit is not required as in simple random sampling thereby minimising
costs. However, the method can yield poor precision if there is large variation
between clusters in the variables to be examined.
Blanche et al. (2006: 139) define non – probability sampling as “any kind of
sampling where the selection of elements is not determined by the statistical
principle of randomness”. Examples of non random sampling include
convenience, purposive and snowball sampling. In convenience sampling, the
researcher uses volunteers who are willing and available to participate in the
research. This is most useful in a homogeneous population. This method is
economical and does not require the population list. The main disadvantage is
that variability and bias of estimates cannot be measured or controlled. In
purposive sampling, dependence is not only on availability and willingness to
participate, but on cases that are typical of the population are selected. For
example, to recruit participants in an HIV/aids campaign, health professionals in
clinics, hospitals, NGOs can be contacted for willing participants in the study. The
researcher in the above example may even ask to be directed by the participants
to their professional colleagues. This process of gradually accumulating a
sufficiently large sample through contacts and references is described by
Blanche et al. (2006: 139) as snowball sampling. The advantages of purposive
and snowball sampling methods is that they are economical and do not require a
list of the population.
From the above discussion, probability sampling procedure using simple random
sampling appears to be the most popular method used by researchers because it
allow generalisation to the population. The present study used the probability
sampling procedure using simple random sampling method because of its merit
over other sampling procedures.
4.8 Data collection
Data collection is the process of gathering relevant information about the subject
from research participants. According to Martins, Loubster and Van Wyk (1999:
90), the data gathering process may vary from relatively simple observation at a
specific location to an extensive survey of large corporations across the world.
Various methods used in data gathering, especially in the social sciences and
business include questionnaires, interviews, focus group discussions and
observation of participants (www.answers.yahoo.com). Each of the methods of
data collection has its own, unique advantages and disadvantages. Some of the
advantages of the questionnaire method include cost efficiency, easy
administration and easy analysis especially in a quantitative study. The present
study used the questionnaire method of data collection because of its numerous
advantages and its ability to yield the most satisfactory range of reliable data.
Questionnaires are most suitable in a quantitative study such as the present one.
4.8.1 The research questionnaire
Vogt (1993) cited in Blanche et al. (2006: 484) defines a questionnaire as “a
group of written questions used to gather information from respondents” and it is
regarded as one of the most common tools for gathering data in the social
sciences and business. A questionnaire usually consists of a number of
measurement scales and elicits demographic information from respondents.
According to Struwig and Stead (2001: 89) questions asked in questionnaires
come from a review of available literature on the subject matter and interviewing
people. Ghauri and Gronhaug (2005: 127) suggest that the questions and design
of the questionnaire should be adapted to the educational levels and background
of the respondents.
A questionnaire has its advantages and shortcomings. Answers international
(www.answers.yahoo.com) states that questionnaires are easier to administer
thereby making it possible to reach a large population. The costs of printing and
distributing questionnaires are also affordable for researchers. Questionnaires
are also easy to analyse especially in quantitative studies. With questionnaires,
the researcher has a written record of people’s responses. Most questionnaires
do not require the identity of respondents thereby encouraging honest opinions
from them. A researcher is able to design questionnaires in a way that will
simplify analysis (e.g. Likert scale format, open or closed ended format, multiple
choice and others). On the other hand, a questionnaire requires some level of
expertise to develop. Some respondents may not be honest in their answers
thereby distorting the overall findings of the study. Also, some respondents may
not fully understand some aspects of the questions while some may misinterpret
the question as the researcher may not be around to clarify or respond to
respondents’ queries. Another setback to survey questionnaire is that
participation on the part of respondents is voluntary so many people may refuse
to complete the questionnaire while some may not return completed
questionnaires. A poor return rate can negatively affect the findings of the
research. Open ended questions may generate a large volume of data that can
take a long time to process and analyse.
4.8.2 Description of the research questionnaire
A survey questionnaire was used to collect data from respondents in the present
study. The research questionnaire was divided into two sections comprising of 23
questions. Section A sought demographic information from respondents. Section
B comprised questions that enabled respondents to evaluate the extent to which
the management was using selected motivational variables to influence
employees’ retention in the organisations. The items were measured on a (5)
point Likert scale with anchors, “strongly agree” (5), “Agree” (4), “Neutral” (3),
“Disagree” (2), “Strongly disagree” (1). The questions were developed by the
researcher from reviewed literature. The questions were short and simple to
understand in line with the recommendations of Blanche et al. (2006: 490) that a
short and simple questionnaire is preferred because it yields a high response
rate.
4.8.3 Reliability of the questionnaire
Shaughnessy and Zechmeister (1997: 127) refer to reliability as “the ability of an
instrument to produce similar results at different times with the same group of
respondents”. The reliability of the scales used in the study was measured using
Cronbach’s alpha. Struwig and Stead (2001: 133) describe Cronbach’s alpha as
a measurement of how well a set of items measure a single one-dimensional
talent construct. When data have a one-dimensional structure, Cronbach’s alpha
will usually be low. According to Nunnally (1978) as cited in Struwig and Stead
(2001: 133), for consistency to be present, the alpha must be above 0.7, but not
higher than 0.9. The Cronbach’s alpha result for the questionnaire used in
collecting data for the present study was 0.85 thus confirming the reliability of the
research questionnaire.
4.8.4 Administration of the questionnaire
Different methods of administering questionnaires are open to a researcher.
According to Shaughnessy and Zechmeister (1997: 141) questionnaires can be
administered through postal mail, telephone interviews, internet or self –
administered. Whatever method the researcher uses places a responsibility on
the researcher who bears the costs of getting the questionnaires across to the
respondents. Each of these methods also has its strengths and weaknesses. For
example, Shaughnessy and Zechmeister (1997: 141) give some of the
disadvantages of the postal mail to include a low response rate because some
respondents may be too busy or not interested enough in the study to return a
completed questionnaire. The questionnaire must be completely self explanatory
because the respondent may not be able to seek clarifications from the
researcher. As a result of response bias, the typical return rate estimated by
Shaughnessy and Zechmeister (1997: 144) is only 30%. Costs of postage can
also be a problem to the researcher.
In telephone administration, a possible selection bias exists as respondents are
limited to those who have a telephone. Apart from this, there is a limit to how long
respondents are willing to stay on the phone and respondents may respond
differently when they are talking to a faceless interviewer. There is also the
problem of costs especially for a student researcher. The Self administered
questionnaire which is the most popular amongst student researchers, requires
the respondent to be literate. It also requires some form of reasoning as the
researcher may not be available to make clarifications when respondents are
responding to the questionnaires (www.ukmi/nhs.uk). However, self –
administered questionnaires are known to have a high return rate since the
researcher, in some instances, personally distributes the questionnaire to
respondents. In some instances also, the researcher can distribute the
questionnaires through a responsible unit of the organisation (e.g. the human
resources department). In either of the cases, the researcher or the HR
employee can follow up constantly to make sure respondents return the
questionnaires.
The computer assisted electronic method of administering questionnaire is fast
becoming popular among researchers. The major setback of this method is a
response bias as respondents will be limited to people who have access to
computers and are computer literate. Internet facilities are available mainly in
urban areas and many people who have access to internet facilities may not
want to spend their money responding to questionnaires more especially when
there are no direct benefits to be derived. The method is however fast and
anonymity of respondent is better assured. This encourages respondents to be
as honest as possible when responding to the questions. Internet method
enables the researcher to collect information from any part of the world within a
short time and limited costs (www.ukmi/nhs.uk).
The questionnaires in this study were self – administered. The researcher, with
the help of employees from the HR departments of the participating organisations
randomly administered the questionnaires to employees who had served in the
organisations for a period of one year or more. The researcher explained all
questions on the questionnaire to the HR employees who in turn explained them
to the respondents. Several follow – up telephone calls were made by the
researcher to the HR employees who assisted in administering the
questionnaires. A total of 300 questionnaires were administered to respondents
as follows: 200 questionnaires were distributed to respondents in the two public
sector organisations while 100 were distributed to respondents in the two private
sector organisations. The difference in the number of questionnaires that were
administered in the two sectors was based on the population size of the
organisations. A total of 145 – that is, 94 and 51 completed questionnaires were
returned by respondents in both the public and private sector organisations,
respectively, thus giving a return rate of 48.33%. The return rate of 48.33%
achieved in the present study is adequate in line with the 30% estimated return
rate recommended by Shaughnessy and Zechmeister (1997: 144).
4.9 Statistical analysis
The main objective of data analysis is to, according to Blanche et al. (2006: 52)
transform information (data) into a meaningful form in order to answer the original
research question(s). Data analysis procedure can be divided into two:
quantitative and qualitative techniques. Qualitative data analysis uses subjective
judgment based on non-quantifiable information like the intuition of the
researcher. On the other hand, quantitative data analysis relies exclusively on
the analysis of numerical or quantifiable data (www.answers.com). Blanche et al.
(2006: 188) state that a quantitative data analysis transforms data statistically to
help the researcher to describe the data more succinctly and make conclusions
about the characteristics of populations on the basis of data from samples. A
quantitative data analysis technique was used for the present study since the
research design was quantitative.
The Statistical Package for Social Sciences (SPSS) was used in analysing the
data. The Chi-square test of association was used in testing the hypothesis of the
study. The Chi-square test, according to Martins et al. (1999. 342) applies to
nominal data and is concerned with whether the differences between an
observed set of frequencies and a theoretically expected set of frequencies are
significant. The statistical method was used to examine the association between
the variables in the data. All the tests were carried out at alpha level of 0.05
significance. Altman (1996: 112) states that the Chi-square statistic is suitable for
randomly selected samples provided the samples are not biased. A critical
assumption for a Chi-square is independence of observations, that is, the
response of one participant does not affect the choice of the second participant.
4.10 Concluding remark
The present chapter discussed the methodology used in answering the main
research question and testing research hypotheses. A quantitative research
design was used and the research strategy was also discussed. The reliability of
the questionnaire and sample procedure was discussed. The next chapter
presents the data analysis and interpretation of results.
CHAPTER 5
DATA ANALYSIS, RESULTS AND DISCUSSION
5.1 Introduction
Chapter four discussed the design and methodology of the present study. The
research population, sample size and sampling procedure were discussed. The
chapter also described the research questionnaires and the method used in
administering them. The present chapter presents the data analysis, research
findings and discussions of the research findings.
5.2 Demographic results of the respondents in the p ublic sector
Demographic results of the respondents are presented below using frequency
distribution charts:
Figure 1: Gender distribution of the respondents
35%
65%
Male
Figure 1 above shows that 33(35%) of the respondents were males while
61(65%) were females.
Figure 2: Age distribution of the respondents
Figure 2 indicate that 24(26%) of employers who participated in the study were
between the ages of 18 – 25, 52(55%) falls between 25 – 40 years of age while
18(19%) of the respondents were between 40 – 55 years of age. No employee
above 55 years of age participated in the study.
%
26
55
19
0
10
20
30
40
50
60
18-25 25-40 40-55
Age
Figure 3: Highest educational qualification of resp ondents
As shown in Figure 3, 14(15%) of the respondents had postgraduate degrees,
52(56%) had first degrees, 20(22%) had diplomas while 7(8%) of the
respondents had qualifications that are below diploma certificates.
Figure 4: Duration of employment of the respondents
43%
54%
3%
Years in service
1--5
6--10
above 10
15
56
25
8
0
10
20
30
40
50
60
Postgraduate 1st degree Diploma Others
Educational qualification
%
40(43%) of the respondents had between 1 – 5 years working service, 51(54%)
had worked between 6 – 10 years, while 3(3%) had served their organisations for
more than 10 years.
Figure 5: Position of the respondents in their orga nisations
Figure 5 illustrates that 38(41%) of the respondents occupied top management
positions while 55(59%) of the respondents occupied other positions in the
organisations.
5.3 Demographic results of the respondents in the p rivate sector
As in the public sector organisations, demographic results in the private sector
organisations were presented using descriptive statistics. Frequency distribution
was used to generate percentages and the demographic information is presented
below:
41%
59%
Management
Non management
Figure 6: Gender distribution of the respondents
Figure 6 above shows that 28(55%) of the respondents in the private sector were
males while 23(45%) were females.
Figure 7: Age distribution of the respondents
55%
45% Male
Female
14
68
180
10
20
30
40
50
60
70
80
18-25 25-40 40-55
Age in years
%
Figure 7 indicates that 7(14%) of the respondents were between the ages of 18 –
25; 35(68%) were between the ages of 25 – 40 while 9(18%) were between the
ages of 40 – 55.
Figure 8: Highest educational qualifications of the respondents
As shown in Figure 8, 14(27%) of the respondents had postgraduate
qualifications, 21(41%) had first degrees, 15(30%) had diploma certificates while
only 1(2%) of the respondents had other qualification.
27%
41%
30%
2%
Educ.qualificati
onsPostgrad
1st degree
Diploma
Figure 9: Duration of employment of the respondents
38(74%) of the respondents in the private sector had 1 -5 years of working
experience, 12(24%) had 6 – 10 years working experience while only 1(2%) had
above 10 years of working experience.
Figure 10: Position of the respondents in the organ isations
74
24 2
010 20 30 40 50 60 70 80
Percentage
1--5 6--10 Above 10
Years
31%
69%
Management
Non Management
Figure 10 shows that 16(31%) of the respondents occupied management
positions while 35(69%) of the respondents were non management employees.
5.4 Reliability of the questionnaire
The reliability of both the public and private sector scales were measured using
the Cronbach’s alpha. Cronbach’s alpha is used as a measure of the reliability of
a psychometric instrument. According to Wikipedia online dictionary, Cronbach’s
alpha measures how well a set of items or variables measures a single
unidimensional latent construct. Cronbach’s alpha is not a statistical test; rather,
it is a coefficient of reliability (i.e. consistency). For consistency to be present,
Nunnally (1978) as cited in Struwig and Stead (2001: 133) recommends that the
alpha must be above 0.7, but not much higher than 0.9. The result of the
Cronbach’s alpha used in measuring how well each items in the scales correlates
with all others shows that the alpha was high. The results of the reliability of the
scales used in this study are presented in Table below:
Table 5.1: Cronbach’s alpha results
Scale Reliability Number of items
Various E mployees 0.85 19
Results in Table 5.1 show that the scale was reliable with a Cronbach alpha of
0.85.
5.5 Testing of Hypothesis
Research hypothesis: Intrinsic and extrinsic motivational variables are not
significantly used to influence employees’ retention and turnover in either the
public or private sector organisations.
Pearson Chi-Square was used to test the levels of significance of each of the
intrinsic and extrinsic motivational variables in relation to employee retention and
turnover in both public and private sector organisations. The results are
presented in Tables 5.2 and 5.3 respectively.
Table 5.2: Levels of significance between the overa ll variable and intrinsic
motivational variables.
Motivational variables
Public Sector Private Sector
p-value x 2 value p-value x 2 value
1
Sense of belonging to the
organisation
0.04
9.91
0.02
12.23
2 Freedom for innovative thinking
0.00
15.35
0.03
9.16
3 Provision of health & wellness
programmes
0.00
14.18
0.61
1.81
4
Setting performance target for
Subordinates
0.13
7.07
0.00
20.52
5 Job security 0.04 8.15 0.04 9.90
6
Training & development
opportunities
0.02
11.41
0.03
10.59
7
Recognition/reward for good
performance
0.10
7.76
0.00
19.81
8
Promotion based on performance
0.28
5.08
0.05
7.44
9 Work autonomy 0.98 0.41 0.56 3.02
10 Mentoring 0.42 3.90 0.00 20.54
11 Challenging/interesting work 0.03 11.09 0.03 10.71
12 Participation in decision making
0.08
8.27
0.79
1.71
13 Flexible work arrangement 0.24 5.46 0.04 9.90
� P<0.05 level of significance
Table 5.3: Levels of significance between the overa ll variable and extrinsic
motivational variables.
Motivational variables Public sector Private sec tor
p-value x 2 value p-value x 2 value
1 Salary package 0.00 22.99 0.25 4.03
2
Performance
bonus/commission
0.72
2.11
0.00
39.93
3 Good terminal
benefit/pension
0.00
94.00
0.98
0.19
4 4 Cutting-edge technology 0.06 9.19 0.00 13.13
5 5 Interpersonal relationships
0.06
9.01
0.56
2.98
� P<0.05 level of significance
5.6 Presentation and discussion of results
The results in Table 5.2 show that the following intrinsic motivational variables
significantly influence retention amongst employees in both public and private
sectors organisations:
� The Chi-square value for training and development in the public sector is
X²(4) = 11.41 with an associated p-value of 0.02 while the private sector
has a Chi-square value of X²(4) = 10.59 and a p-value of 0.03. The result
provides strong evidence of an association between training and
development and employee retention.
Training and development opportunity strongly influenced retention amongst
employees in both public and private sector organisations. For employees to be
effective in the performance of their jobs, they must be constantly trained and
developed. Employees perceive investment in their training and development by
employers as a strong sign of commitment on the part of management to retain
them. Some of the best organisations to work for in South Africa, according to
Smit and Cronje (2002: 344) use training and development as one of the major
retention strategies. Some of these organisations include Deloitte and Trouche
Corps, Alexander Forbes, Eli Lilly (SA) (Pty) Ltd and others. Hay (2001: 15)
found that lack of training and development of employees’ skills was the largest
determinant of turnover.
Existing literature is however not consistent with the position stated by Smit and
Cronje (2002: 344). For example, Bussin (2001: 15) argues that training and
development of employees can indeed facilitate their early turnover instead of
reinforcing their retention. Accordingly, Bussin (2001: 15) states that… “Ironically,
providing employees with the latest development opportunities raises their
market value” and that this may in turn lead to increased turnover. The findings of
the present study can also be explained in terms of the importance attached to
employee training and development by the South African government. South
Africa has developed one of the most comprehensive national skills development
systems in the world with legislations and policies put in place to enhance
employee training and development. Such legislations and policies include the
Skills Development Act (Act 97 of 1998); the Skills Development Levies Act (Act
9 of 1999); the National Skills Development Strategy (2000) amongst others. The
Sector Training and Education Agencies (SETA) were also established to
monitor and enforce workforce training and skills development in various
organisations in South Africa. Notwithstanding Bussin (2001: 15) argument,
investment in employees’ training and development remain a strong retention
factor.
� A sense of belonging to the organisation in the private sector has a Chi-
square value of X²(4) = 12.23 and an associated p-value of 0.02. The
variable has a Chi-square value of X²(4) = 9.91 and an associated p-value
of 0.04 in the public sector. The result also provides strong evidence of
association between encouraging a sense of belonging in the organisation
and employee retention.
The result of the present study shows that a sense of belonging to the
organisation significantly influenced retention in both public and private sector
organisations. A sense of belonging is an internal push that is predicated upon
the ability of the organisation to provide an employee with job satisfaction and a
friendly working environment. Management should create a work environment in
which employees feel free and are treated with dignity in order for them to be
affectively attached to the organisation. People who identify with and are more
committed to the mission and values of the organisation are likely to stay even
when better job opportunities exist elsewhere. Managers should create a friendly
work environment, a good public image and an organisational culture with a
sound financial base that will hold them out as one of the best organisations to
work for. Such a corporate image presents an effective tool in attracting and
retaining talent.
� There is also strong evidence of an association between job security and
employee retention. In the public service, job security has a Chi-square
value of X²(4) = 8.15 and an associated p-value of 0.04 while the private
sector has X²(4) = 9.90 and an associated p-value of 0.04.
One important retention variable that significantly influenced retention in both
public and private sector organisations is job security. Employees place great
importance on their jobs because it provides them with the source of income with
which socio-economic stability and psychological well-being are achieved.
Regardless of the importance attached to job security by employees as reflected
in the result of the present study, existing literature provides a contrary view.
Some literature argues that job security at present has a different valence to
different generations of employees. Supporting this assertion, Amar (2004: 97)
posits that job security is not a retention antecedent for the new generation of
skilled employees. Their expectations in the organisation do not include long-
term employment. They see job security as a positive feedback of their labour
market worth and therefore look for a daily proof that their work matters. In this
way, skilled employees create for themselves a sense of security every day,
meaning that, if they are doing a good job, they are secure, if not with their
present employers, then with another one. Notwithstanding the position of the
reviewed literature, job security will continue to be a crucial motivation and
retention driver, particularly in under-developed and developing economies like
South Africa with high incidence of poverty.
� Challenging/interesting work in the public sector has a Chi-square value of
X²(4) = 11.09 and an associated p-value of 0.03 while the private sector
has a Chi-square value of X²(4) = 10.71with an associated p-value of 0.03.
The result provides strong evidence of an association between
challenging/interesting work and employee retention.
Challenging and interesting work was found to have a significant influence on
retention and turnover in the present study. The finding concurs with the
argument of Herzberg (1954) that motivators are those aspects of the job that
make people want to perform and provide employees with satisfaction. According
to Herzberg, challenging and interesting jobs should be designed in such a way
that boredom is removed. Job characteristics should be able to arouse
employee’s motivation to take on the job because it is exciting, satisfying, or
personally challenging. Hackman and Oldman (1980) as cited in Ramlall (2004:
57) stress that employees will experience internal motivation from their jobs when
that job generates three critical psychological states. Firstly, the employee must
feel personally responsible for the outcomes of the job. Secondly, the work must
be experienced as meaningful by the employee. This is where the employee
feels that his/her contribution significantly affects the overall effectiveness of the
organisation. The third aspect deals with the employee being aware of how
effective he/she is in converting effort into performance. The various job
characteristics discussed in the reviewed literature must have been experienced
by employees in the organisations that were surveyed in the present study,
hence, the result.
� Freedom for innovative thinking in the public sector has a Chi-square
value of X²(4) = 15.35 and an associated p-value of 0.00. The variable has
a Chi-square value of X²(4) =9.16 and an associated p-value of 0.03 in the
private sector. The result also shows strong evidence of an association
between freedom for innovative thinking amongst employees and their
retention in the organisations.
Table 5.2 shows that the following intrinsic motivational variables significantly
influence retention in one of the sectors without a corresponding influence on the
other sector:
� Provision of health and wellness programmes significantly influenced
retention in the public sector at a Chi-square value of X²(4) = 14.18 and an
associated p-value of 0.00. Retention in the private sector was not
significantly influenced by this variable with a Chi-square value of X²(4) =
1.81 and an associated p-value of 0.61.
Organisations are beginning to realise that their employees’ wellbeing impact on
productivity as well as influence employees’ decision to quit or remain in the
organisation. The philosophy behind employee wellness, according to Harris
(2008: 2) is to view employees as complex individuals who are most productive
when they are well – physically, mentally and even financially. Gyms at work and
healthy canteen food are some of the ways to address physical wellbeing.
Wellness programmes, in recent times have been expanded to include issues
such as financial wellness of employees. Wyborn (2008) reported in Harris
(2008: 2) note that financial wellbeing programme is an integral part of a total
wellness programme because financial worries often lead to psycho-social and
other health problems. Indebtedness can lead to absenteeism, low morale and in
some cases result in early resignation in order to enable the employee have
access to his/her pensions. Although health and wellness programmes are in
reality becoming a popular practice in public and private sector organisations, the
result of the present study suggest otherwise in the private sector organisations.
� Employees in the private sector were significantly influenced by setting
performance targets for subordinates with a Chi-square value of X²(4) =
20.52 and an associated p-value of 0.00. The variable has no significant
influence in the public sector with a Chi-square value of X²(4) = 7.07 with
an associated p-value of 0.13.
The use of goal setting technique as a retention strategy is becoming more
popular among private sector organisations. Davidson (2001: 5) asserts that one
of the strategies adopted by leading organisations in the area of top employee
retention involve instituting goal setting, performance measurement, and skill
development programmes to ensure that employees always know where they
stand. This practice enables individual employees to assess their contribution to
the attainment of the organisational goal. High performing employees can use
this technique as a basis to negotiate for higher salaries or accelerated
promotion while employers also can increase overall productivity using the
technique. Public sector organisations may not be motivated by this technique
due to the bureaucratic nature of the sector which is characterised by fixed salary
incremental rate and promotion based on seniority.
� Recognition/reward for good performance significantly influenced retention
in the private sector at a Chi-square value of 19.81 and an associated p-
value of 0.00 while the variable did not significantly influenced retention in
the public sector at a Chi-square value of X²(4) = 7.76 and an associated
p-value of 0.10 in the public sector.
Recognition and reward for good performance was seen in the present study as
having significant influence in retaining private sector employees. Employees,
especially those with esteem and self-actualisation motives want to be
appreciated and rewarded, not necessarily with money, but openly
acknowledging their achievements and contribution. The finding in the present
study is supported by a similar research finding in South Africa, Zambia, Italy,
and Israel by Herzberg as cited in Bassett-Jones and Lloyd (2005: 933).
Herzberg used the research findings to argue robustly that motivation is based
on growth needs and as a result, individuals do not require incremental
incentives to drive internal motivation. Accordingly, motivation is founded upon
satisfaction derived from a sense of achievement, recognition for achievement,
responsibility and personal growth. Forrest (1999: 46) notes that a critical
retention motivation for key employees is the visible appreciation of their
contribution to the organisation and respect for their skills.
Management should, as part of its organisational culture, institutionalise the
practice of appreciating and rewarding individual employees with outstanding
performances that are above set standards or when valuable suggestions
translate to increased productivity or profitability. A lack of such an organisational
culture may inhibit the retention of such high performers. Research findings by
Johnson (2000: 60) show that two thirds of respondents admitted that lack of
appreciation was the major factor in driving them to leave their organisations.
Recognition and reward for good performance did not however have a significant
influence on retention in the public sector. Public sector managers may not
consider this variable as a serious retention strategy since the Public Service
Regulations, 2000 (Chapter 1, part V111F & G) allow for employees to be
rewarded financially for good performance and valuable suggestions. Public
sector employees with growth need may therefore not be motivated by this
variable.
� Performance based promotion significantly influenced retention in the
private sector at a Chi-square value of X²(4) = 7.44 and an associated p-
value of 0.05. The variable did not significantly influenced retention in the
public sector at a Chi-square value of X²(4) = 5.08 and an associated p-
value of 0.28.
Performance- based promotion is another variable with significant influence in
retaining private sector employees. This important retention variable strangely
did not significantly influenced public sector employees. Promotion or lack of it is
one of the intrinsic variables that are generally acknowledged as a predictor of
retention and turnover. Choo.and Bowley (2007: 315) posits that providing
employees with internal job opportunities is a means of demonstrating that they
can realise their career goals inside rather than outside of the organisation.
Organisational structure should be designed in a way that promotes upward
mobility of high performing employees without inhibiting factors such as seniority.
The practice in contemporary organisations, particularly the private sector, is
such that high performing employees agreed with their immediate supervisor on
set goals upon which their performance assessment will be based. Once these
goals are achieved, the employee is promoted rather than queuing in seniority
based promotion system. The result of the present study regarding performance
based promotion may have been informed by this practice.
� In the private sector, mentoring has a Chi-square value of X²(4) = 20.54
and an associated p-value of 0.00 to show a significant influence while the
public sector has a Chi-square value of X²(4) = 3.90 and an associated p-
value of 0.42 which does not show significant influence.
Another variable that significantly influenced retention in the private sector
without a corresponding influence in the public sector is mentoring. Mentoring is
defined by Orpen (1997: 53) as the process whereby managers provide informal
assistance and support to particular subordinates on an individual basis, to help
them in their efforts to be successful within the organisation. Mentoring is an
emerging management practice and is more prevalent in the private sector. This
might have explained why the variable has significant influence in the private but
not the public sector. However, the practice is spreading across both public and
private sectors as part of an organisation-wide initiative to reduce the turnover of
productive employees and to encourage succession planning in organisations.
� A flexible work arrangement influenced retention in the private sector at a
Chi-square value of X²(4) = 9.90 and an associated p-value of 0.04 without
a corresponding influence in the public sector with a Chi-square value of
X²(4) = 5.46 and an associated p-value of 0.24 in the public service.
The following intrinsic variables did not show significant influence on retention
either in the public or private sectors:
� Work autonomy with a Chi-square value of X²(4) = 0.41 and an associated
p-value of 0.98 and Chi-square value of X²(4) = 3.02 and an associated p-
value of 0.56 in both the public and private sectors respectively.
� Participation in decision making did not have significant influence on
retention in the public sector at a Chi-square value of X²(4) = 8.27 and an
associated p-value of 0.08 and in the private sector with a Chi-square
value of X²(4) = 1.71 and an associated p-value of 0.79 in the private
sector.
Participation in decision making and work autonomy were found not to have
significant influence on retention in both public and private sector organisations.
Public sector organisations are bureaucratic in structure and decisions are, most
often taken by the management board (and in some cases by government).
Established rules, regulations and procedures are strictly followed and
employees operate within those rules, regulations and procedures without having
inputs in the decision making process. Although the decision making process in
the private sector structure is not totally bureaucratic, strategic decisions are
mostly taken by top management while lower level managers take tactical
decisions. Tasks are designed by top management for employees to execute
without an opportunity for employees to work independently. The result of the
present study is consistent with the views of Hellriegel; Jackson; Slocum; Staude;
Amos; Klopper; Louw, and Oosthuizen (2006: 384) who state that in bureaucratic
organisations, top managers take responsibility for making decisions, directing
operations, and achieving organisational goals. Employees are treated as simply
another factor in production, along with capital and equipment. They often
perform routine tasks that give them little opportunity to share in decision-making
and execute tasks independently.
The results presented in Table 5.3 show that the following extrinsic motivational
variables influenced retention significantly in only one sector rather than in both.
� Salary package significantly influenced retention in the public sector at a
Chi-square value of X²(4) = 22.99 and an associated p-value of 0.00. The
variable has a Chi-square value of X²(4) = 4.03 and an associated p-value
of 0.25 in the private sector meaning that the variable did not have any
significant influence on retention.
� Performance bonus/commission has a Chi-square value of X²(4) = 39.93
and an associated p-value of 0.00 showing a significant influence on
retention in the private sector. The variable however did not significantly
influenced retention in the public sector at a Chi-square value of X²( (4) =
2.11 and an associated p-value of 0.72.
� The results also show that terminal/pension benefits have significant
influence on retention in the public sector at a Chi-square value of x2(4) =
94.00 and an associated p-value of 0.00 without a corresponding
significance in the private sector at a Chi-square value of X²(4) = 0.19 and
an associated p-value of 0.98 respectively.
The use of financial benefits such as base pay, performance bonuses and
commissions and retirement benefits as motivational and retention variables
have generated a lot of academic debates. While some scholars regard money
as a primary motivator, others consider it as the least effective among motivation
and retention variables. The position expressed above is reflected in the findings
of the present study which showed mixed results. While financial consideration
significantly influenced retention in the public sector, it did not do so in the private
sector unlike variables such as training and development opportunities which
significantly influenced retention in both sectors. In emphasising the use of
money as a critical driver of retention in organisations, Kinnear and Sutherland
(2001: 17) argues that managers should not be deceived that money no longer
matters in retaining employees any longer. Kinnear and Sutherland (2001: 17)
further argue that employees in South Africa want their achievements rewarded
with money.
Several authors have, however expressed dissenting opinions to the argument of
Kinnear and Sutherland (2001: 17). Money, in the opinion of Amar (2004: 96) has
been the obvious and most important outcome from employment and, until a
couple of decades back, was the only outcome that employers offered to their
employees. That practice has changed. The efficiency of money as a motivator of
talent is quite low. In contemporary organisations, Hay (1999: 46) contends that if
managers reward performance with only money, in many ways, they lose the
retention war, because there are other more powerful motivators of talent, such
as freedom and flexibility in the organisation. Concurring with Hay (1999: 46),
Dess et al. (2008: 127) state that money cannot be ignored, but it shouldn’t be
the primary mechanism to attract and retain talent because employees who
come for money will leave for money. The present study partly supports and
partly rejects Herzberg’s (1954) theory which classified money as a hygiene
factor which does not motivate employees. The controversy surrounding the use
of money as a strong retention factor will persist for a long time to come as most
labour union agitations in South Africa and other parts of Africa in recent times
were motivated by increase in salary package.
� Cutting-edge technology significantly influenced retention in the private
sector at a Chi-square value of X²(4) = 13.13 and an associated p-value of
0.00. The variable did not significantly influence retention in the public
service at a Chi-square value of X²(4) = 9.19 and an associated p-value of
0.06 in the public service.
Although cutting-edge technology did not significantly influenced retention in the
public sector, the result (p<0.06) in the present study shows that the variable is
crucial to retention in both sectors. Technology is an important motivator for
talent and in some instances; employees may be more loyal to the technology
than the organisation itself. According to Kinnear and Sutherland (2001: 17),
organisations need to think of the return on investment in technology not only in
terms of business profits but also in terms of attracting and retaining key
employees. Organisations all over the world are placing high priority on
technology in order to enhance their global competitiveness and South Africa is
no exception.
� Interpersonal relationship did not influence retention in both the public and
private sectors at Chi-square values of X²(4) = 9.01 and an associated p-
value of 0.06 and of X²(4)= 2.98 and an associated p-value of 0.56
respectively.
Interpersonal relationships did not significantly influenced retention in the present
study despite the fact that literature identified the variable as a basis for the
creation of social capital in organisations. Many employees view working with
friends as crucial to maximising their productive effectiveness and this can
reduce significantly the decision to leave. For employees to satisfy their affiliation
needs, Maslow (1954) theorised that managers must encourage social
interaction, create a team spirit and facilitate outside social activities amongst
employees. Likert (1961) cited in Hamer (2007: 300) suggests the principle of
supportive relationships in agreement with Maslow (1954) that people value a
positive response from others as this helps to build and maintain self-esteem.
Interpersonal relationships among employees encourage friendship and create a
less stressful environment, increase self-motivation and lead to employees
enjoying their work and remaining with the organisation. With a good
interpersonal relationship among employees, employees support one another
emotionally and physically. Work overloads are shared and this support allows
employees to do a job better, reduces the amount of pressure or stress on
individual employees and thus makes jobs more manageable. The process of
social integration and workforce diversity in South Africa after the Apartheid
regime is on-going and may have accounted for the inconsistency in the finding
of the present study and the reviewed literature.
The findings of the present study and the discussion thereof have substantially
addressed the objectives of the study and provided answers to the fundamental
research question. The results of the study could not totally accept or reject the
hypothesis of the study as stated in chapter one. Both intrinsic and extrinsic
retention variable items in the data collection instrument were found to have
either significantly influenced, or did not significantly influenced retention in both
the public and private sector organisations.
5.7 Concluding remarks
The chapter aimed at analysing collected data, interpreting and discussing them
against the background of the problem statement. The hypothesis of the study
was tested and discussed. The next chapter presents the conclusions,
recommendations, limitations and suggestion for further research directions.
CHAPTER 6
CONCLUSIONS, RECOMMENDATIONS, LIMITATIONS AND SUGGE STIONS
FOR FURTHER RESEARCH DIRECTIONS
6.1 INTRODUCTION
The rate at which employees enter and voluntarily withdraw from organisations
has become a source of concern to HR managers given the damaging effect
frequent turnover could have on organisations. In order to reduce the rate of
turnover in organisations, the present study sought to identify motivational
variables that managers could use in order to influence employees’ retention.
The study covered two organisations each from both the public and private
sectors in the Eastern Cape Province of South Africa.
The research problem revolves around the rate at which employees voluntarily
quit their jobs and the inability of organisation managers to device means of
retaining key employees. A significant amount of an organisations value is
reposes in its employees and when these employees leave, they take this value
away with them. Frequent employee turnover is costly to organisations and
destructive to the attainment of organisational goals. Many organisations are not
been able to identify properly the real reason(s) key employees leave. Most
managers believe that increasing financial benefits of employees would motivate
them to remain while others provide attractive working environment as a
retention strategy. The present study therefore sought to determine the extent to
which selected motivational variables (Combination of intrinsic and extrinsic
variables) were being applied and were influencing employees’ decision to
remain or quit an organisation. Many contemporary studies still consider
monetary reward as the best way of influencing employees’ retention. This has
prompted many HR managers to tailor their retention policies around financial
benefits without taking into consideration research findings which suggest that
employees are better motivated by intrinsic rather than extrinsic values as
revealed by Rolando (2000) in Ferreira (2008: 76).
The following research objectives and hypotheses were formulated to provide a
guide for the study:
Objectives of the study
The research was aimed at achieving the following objectives:
� Identify and establish the key intrinsic and extrinsic motivational variables being
used by the selected public and private sector organisations in retaining their
employees.
� Determine the extent to which the identified intrinsic and extrinsic motivational
variables influence employee retention and turnover in the selected
public and private sector organisations, and,
� Make recommendations to management of the selected public and private sector
organisations on how to effectively retain employees and reduce turnover.
Research hypothesis
The research hypothesis formulated to provide a guide for the study was:
Intrinsic and extrinsic motivational variables are not significantly used to influence
employees’ retention and turnover in either the public or private sector
organisations.
Review of related literature discussed the concept of retention and turnover in
organisations. The literature also presented a global overview and the South
Africa perspective of the subject matter. Frequent turnover is associated with
enormous costs, some of which managers ignore at the expense of their
organisations. These costs were discussed in the literature review. Lastly,
various motivational variables used by managers as retention strategies were
discussed in the concluding part of the literature review. Evidence from previous
research shows that most managers apply wrong retention strategies while
others use retention programmes that are not comprehensive enough to motivate
key employees to remain in their organisations.
6.2 Conclusions
The findings of the study indicated the following:
� That all employees in the selected public and private sector organisations
were motivated to a very large extent by a combination of intrinsic and
extrinsic factors.
� Motivational variables such as training and development,
recognition/reward for good performance, a competitive salary package
and job security were the most important variables that motivated
employees in the selected organisations.
� Employees in the public sector organisations did not have opportunity to
earn performance bonuses/commissions.
� Public sector employees did not have autonomy in the execution of tasks
and participation in decision making process.
� Recognition and reward for good performance did not motivate public
sector employees in the selected organisations.
6.3 Recommendations
In the global market place, organisations worldwide rely on their employees in
order to compete favourably and gain competitive advantage. There is a growing
need for public sector organisations in South Africa to improve on service
delivery. To be able to do this effectively, managers in public sector organisations
must device a practical means of retaining key employees whose expertise is
critical to service delivery. One way of achieving this is to motivate these
employees through comprehensive and proactive retention programmes. Private
sector employers too must design retention strategies that can keep their talent
rather than losing these talented employees to overseas competitors in the global
market. The following recommendations are suggested in view of the findings of
the present study:
� Retention policy in the public sector should incorporate some aspects of
the private sector practices which encourage retention and enhance
productivity. Such practices include the introduction of a performance
based promotion system rather than the present situation in which
employees are promoted based on seniority rather than performance. The
practice can demotivate young, innovative and hard working professionals
to leave for the private sector. Opportunity for public sector employees to
earn performance bonuses should also be devised. This will encourage
productivity and enhance retention.
� Organisations should invest heavily in the education, training and
development of their employees. Training and development appealed
greatly to employees in both sectors and remain one of the best ways of
retaining key employees. Employees’ performances are enhanced through
training and development and this encourages retention especially in a
programmed training system where the training programme is tailored
towards employees’ career progression in the organisation. Some of these
training programmes can be designed for self-actualisation in order to
appeal to executive career officers who are no longer motivated by money
but by their status in society. Employee training is also an indication of
management commitment to building a life-long relationship with the
employees thereby influencing their turnover decisions.
� Management in private sector organisations should encourage goal-
setting technique and work autonomy in the execution of tasks by
employees. This will provide a more objective performance appraisal
method and present employees with challenging work opportunities and
make employees more innovative and independent in the execution of
their tasks.
� Employees in public sector organisations are better influenced by salary
package than those in the private sector as shown in the present study. In
other words, public sector employees are better remunerated than their
counterparts in the private sector. In order to avoid losing key employees
to the public sector, private sector organisations must not only pay
salaries and wages that are industry competitive, but those that equally
compete with the public sector. This will create external equity and reduce
turnover tendency among employees. Private sector organisations are
profit oriented and they are therefore expected to pay their employees
higher remunerations. Turnover of private sector employees will be
facilitated if the public sector pays higher salaries than the private sector.
� The present study found that sense of a belonging was one of the
variables that significantly influenced retention in both public and private
sector organisations. Managers in both sectors can improve on this by
creating structures that make employees proud of and identify with the
organisation. At organisational level, managers should build a respectable
corporate culture and image that will position their organisations as
employers of first choice where prospective and incumbent talent will be
proud to work and build a long lasting career. Such structures include
corporate social responsibility, ethical practices, employee welfare, and
advancement of the general good and development of the larger society.
At individual employee level, private sector organisations can encourage
retention using the employee equity participation programme in the share
holding of the organisation. Employees can be encouraged to buy shares
in the organisation thereby making them shareholders. This would create
confidence; enhance loyalty and a general sense of belonging in the
employees thereby influencing their retention.
� Health and wellness programmes were also found to have significantly
motivated and influenced employees’ retention particularly in public sector
organisations. The practice is becoming a strong motivational and
retention variable that influences employee’s turnover decision. The
design and maintenance of a work organisation that both supports the
organisation’s objective and provides an environment that is safe and
healthy for its employees will certainly help in their retention. These
programmes send a strong message to employees that management is
interested in their health and well-being and those of their families. These
programmes possess the potentials to reduce both work and family
related stress in employees. This can be complimented with a medical
insurance scheme and an in-house medical facility for employees. Health
and wellness clubs can be established within the organisation with
periodic activities. Apart from keeping employees fit in the performance of
their jobs and providing them with a safe and healthy work environment; it
also enhances social cohesion amongst employees and promote social
capital.
� Public sector retention strategies should encourage reward and
recognition for deserving employees who served the public service with
distinction. Such recognition and reward may come in the form of national
honours conferred on such distinguished employees by the state rather
than monetary reward.
6.4 Limitations of the study
� The study used the Likert Scale questionnaire thus constraining
respondents from expressing their own ideas differently from that of the
researcher.
� The research was limited to organisations in the Eastern Cape Province.
Organisations in industrialised and urban provinces were not surveyed
due to financial and time constraints. This factor may therefore limit the
extent to which the findings of the present study can be generalised.
The following research areas can be considered for study by other researchers in
future:
6.5 Direction for future research
� Future research can be carried out to determine the effect of
demographics on retention and turnover in order to predict the turnover
tendencies of various groupings in the organisation.
� The present study was limited to selected departments and the
manufacturing sector. A comprehensive research that will encompass all
spheres of the public service (provincial, municipal and local governments)
and private sector industries may bring about a more generaliseable
outcome.
� There is a relationship between skills shortage, retention and turnover.
Research could be initiated to determine the effect of legislation (for
example The Employment Equity Act, 1998) as it affects the migration of
South African professionals (especially the Whites) abroad.
� The questionnaire used in this research could be expanded and modified
to develop a retention measuring instrument which can form the basis for
developing retention programme for organisations.
6.6 Concluding remarks
This chapter aimed at drawing conclusions in respect of the study and
suggested ways by which managers can improve retention practice and
reduce the rate of turnover in their organisations. The chapter also identified
some factors that limited the scope of the study. Recommendations were
made based on the findings of the study while suggestions for future research
direction were provided
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Annexure A
Employee Retention and Turnover Questionnaire
Dear Respondent,
My name is M. Olorunjuwon-Samuel. I am a postgraduate student in the Department of
Industrial Psychology/Human Resources Management at the University Of Fort Hare. I
am presently conducting a research in the area of employee retention and turnover in
organisations.
You are kindly requested to complete the attached questionnaire as honestly as
possible. The information being solicited from you is purely for academic purposes. All
information provided by you will be treated confidentially; hence, your name and that of
your organisation are not required. Your honest completion of this questionnaire will
assist in generating information that will help organisations to improve on their retention
and turnover management, enhance quality service delivery and improved productivity.
Thanking you for your co-operation.
Section A – Demographic Information Please mark (X) as appropriate 1. Gender
Male
Female
2. Age (years) 18-25
25-40 40-55 55-65 Above 65
3. Highest educational qualification Postgraduate
Degree Diploma Others
4. Present position in organisation
5. Years in service
Section B – Please evaluate the extent to which the management use the Following motivational variables to influence your retention in the organisation
Item Strongly disagree
Disagree Neutral Agree Strongly agree
1. Competitive salary package
1 2 3 4 5
2. Opportunity to earn performance bonus/commission/overtime
1 2 3 4 5
3. Good training & development opportunities
1 2 3 4 5
4. Recognition and reward for good performance
1 2 3 4 5
5. Promotion based on performance
1 2 3 4 5
6. Opportunity to work independently
1 2 3 4 5
7. Up to date technology to perform my job
1 2 3 4 5
8. Mentor who often
advices me on my job
1 2 3 4 5
9. Challenging & interesting job opportunities
1 2 3 4 5
10. Participation in decision making
1 2 3 4 5
process
11. Encouraging good working relationship amongst employees
1 2 3 4 5
12. Provision of good terminal/retirement benefits
1 2 3 4 5
13. Flexible work arrangement
1
2 3 4 5
14. Setting performance target for all subordinates
1
2 3 4 5
15. Provision of health/wellness programmes for all employees
1
2
3
4
5
16. Conditions of employment that guarantee job security
1
2
3
4
5
17. Strong sense of belonging to this organisation
1
2
3
4
5
18. Freedom for innovative thinking in executing tasks
1
2
3
4
5
19. On the overall, I consider all the above items as motivational variables used by the management to influence my retention in the organisation
1
2
3
4
5
Thank you for your participation.
Annexure B
Strong sense of belonging to this organisation * re tention in organisation * sector type
Freedom for innovative thinking in executing tasks * retention in
organisation * sector type
Crosstab
Count
1 1
3 3
13 13
4 24 28
6 6
5 46 51
1 1
2 2
7 16 23
9 25 34
1 33 34
17 77 94
strongly agree
disagree
neutral
agree
strongly agree
strong sense ofbelonging to thisorganization
Total
strongly agree
disagree
neutral
agree
strongly agree
strong sense ofbelonging to thisorganization
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
12.227a 4 .016
9.750 4 .045
.649 1 .420
51
9.907b 4 .042
12.275 4 .015
4.089 1 .043
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
7 cells (70.0%) have expected count less than 5. The minimumexpected count is .10.
a.
5 cells (50.0%) have expected count less than 5. The minimumexpected count is .18.
b.
Provision of health/wellness programme for all empl oyee * retention in organisation * sector type
Crosstab
Count
1 1 2
20 20
4 16 20
9 9
5 46 51
1 1
2 2
5 16 21
5 35 40
4 26 30
17 77 94
disagree
neutral
agree
strongly agree
freedom forinnovativethinking inexecutingtasks
Total
strongly agree
disagree
neutral
agree
strongly agree
freedom forinnovativethinking inexecutingtasks
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
9.158a 3 .027
9.928 3 .019
.095 1 .757
51
15.352b 4 .004
12.109 4 .017
6.871 1 .009
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
5 cells (62.5%) have expected count less than 5. The minimumexpected count is .20.
a.
5 cells (50.0%) have expected count less than 5. The minimumexpected count is .18.
b.
Setting performance target for all subordinates * r etention in
organisation * sector type
Crosstab
Count
1 3 4
2 18 20
2 18 20
7 7
5 46 51
1 1 2
2 7 9
9 13 22
4 27 31
1 29 30
17 77 94
disagree
neutral
agree
strongly agree
provision ofhealth/wellnessprogramme forallemployee
Total
strongly agree
disagree
neutral
agree
strongly agree
provision ofhealth/wellnessprogramme forallemployee
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
1.807a 3 .613
2.212 3 .530
1.216 1 .270
51
14.184b 4 .007
14.179 4 .007
9.478 1 .002
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
5 cells (62.5%) have expected count less than 5. The minimumexpected count is .39.
a.
4 cells (40.0%) have expected count less than 5. The minimumexpected count is .36.
b.
Conditions of employment that guarantee job securit y * retention in organisation * sector type
Crosstab
Count
3 3
1 5 6
11 11
2 27 29
2 2
5 46 51
5 13 18
2 6 8
6 14 20
4 33 37
11 11
17 77 94
strongly agree
disagree
neutral
agree
strongly agree
setting performancetarget forallsubordinates
Total
strongly agree
disagree
neutral
agree
strongly agree
setting performancetarget forallsubordinates
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
20.519a 4 .000
12.755 4 .013
2.069 1 .150
51
7.066b 4 .132
8.814 4 .066
4.832 1 .028
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
7 cells (70.0%) have expected count less than 5. The minimumexpected count is .20.
a.
4 cells (40.0%) have expected count less than 5. The minimumexpected count is 1.45.
b.
Good training and development opportunities * reten tion in organisation * sector type
Crosstab
Count
3 3
1 1
1 16 17
2 20 22
1 7 8
5 46 51
3 7 10
5 9 14
8 33 41
1 28 29
17 77 94
strongly agree
disagree
neutral
agree
strongly agree
conditions ofemploymentthat guaranteejob security
Total
disagree
neutral
agree
strongly agree
conditions ofemploymentthat guaranteejob security
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
9.900a 4 .042
5.678 4 .225
.000 1 .985
51
8.145b 3 .043
9.226 3 .026
6.678 1 .010
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
7 cells (70.0%) have expected count less than 5. The minimumexpected count is .10.
a.
2 cells (25.0%) have expected count less than 5. The minimumexpected count is 1.81.
b.
Recognition and reward for good performance * reten tion in organisation * sector type
Crosstab
Count
1 1
3 3
1 14 15
3 22 25
7 7
5 46 51
1 1
3 7 10
4 9 13
8 32 40
1 29 30
17 77 94
strongly agree
disagree
neutral
agree
strongly agree
good training anddevelopmentopprotunities
Total
strongly agree
disagree
neutral
agree
strongly agree
good training anddevelopmentopprotunities
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
10.590a 4 .032
7.023 4 .135
1.617 1 .204
51
11.405b 4 .022
11.798 4 .019
8.684 1 .003
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
7 cells (70.0%) have expected count less than 5. The minimumexpected count is .10.
a.
4 cells (40.0%) have expected count less than 5. The minimumexpected count is .18.
b.
Promotion based on performance * retention in organ isation * sector type
Crosstab
Count
1 1
1 1
1 9 10
2 25 27
12 12
5 46 51
1 1
1 1 2
4 10 14
5 33 38
6 33 39
17 77 94
strongly agree
disagree
neutral
agree
strongly agree
recognition andreward for goodperformance
Total
strongly agree
disagree
neutral
agree
strongly agree
recognition andreward for goodperformance
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
19.880a 4 .001
11.956 4 .018
10.365 1 .001
51
7.758b 4 .101
6.260 4 .181
3.926 1 .048
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
7 cells (70.0%) have expected count less than 5. The minimumexpected count is .10.
a.
5 cells (50.0%) have expected count less than 5. The minimumexpected count is .18.
b.
Opportunity to work independently * retention in or ganisation *
sector type
Crosstab
Count
2 3 5
8 8
1 24 25
2 11 13
5 46 51
6 17 23
1 2 3
4 14 18
5 20 25
1 24 25
17 77 94
disagree
neutral
agree
strongly agree
promotionbased onperformance
Total
strongly agree
disagree
neutral
agree
strongly agree
promotionbased onperformance
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
7.435a 3 .059
6.427 3 .093
.624 1 .430
51
5.083b 4 .279
6.156 4 .188
3.594 1 .058
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
5 cells (62.5%) have expected count less than 5. The minimumexpected count is .49.
a.
6 cells (60.0%) have expected count less than 5. The minimumexpected count is .54.
b.
Mentor who often advices me on my job * retention i n organisation * sector type
Crosstab
Count
2 2
1 4 5
13 13
3 16 19
1 11 12
5 46 51
1 1
2 7 9
5 23 28
7 30 37
3 16 19
17 77 94
strongly agree
disagree
neutral
agree
strongly agree
opportunity toworkindependently
Total
strongly agree
disagree
neutral
agree
strongly agree
opportunity toworkindependently
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
3.017a 4 .555
4.255 4 .373
.086 1 .769
51
.411b 4 .982
.586 4 .965
.027 1 .870
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
7 cells (70.0%) have expected count less than 5. The minimumexpected count is .20.
a.
4 cells (40.0%) have expected count less than 5. The minimumexpected count is .18.
b.
Challenging and interesting job opportunities * ret ention in organisation * sector type
Crosstab
Count
2 2
1 7 8
13 13
2 20 22
6 6
5 46 51
1 1 2
4 4
6 22 28
8 30 38
2 20 22
17 77 94
strongly agree
disagree
neutral
agree
strongly agree
mentor whooften advicesme on my job
Total
strongly agree
disagree
neutral
agree
strongly agree
mentor whooften advicesme on my job
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
20.544a 4 .000
13.285 4 .010
5.615 1 .018
51
3.897b 4 .420
4.477 4 .345
.958 1 .328
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
6 cells (60.0%) have expected count less than 5. The minimumexpected count is .20.
a.
5 cells (50.0%) have expected count less than 5. The minimumexpected count is .36.
b.
Participation in decision making process * retentio n in organisation * sector type
Crosstab
Count
1 1
3 3
1 15 16
3 21 24
7 7
5 46 51
1 1
3 7 10
4 10 14
8 31 39
1 29 30
17 77 94
strongly agree
disagree
neutral
agree
strongly agree
challenging andinteresting jobopportunities
Total
strongly agree
disagree
neutral
agree
strongly agree
challenging andinteresting jobopportunities
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
10.713a 4 .030
7.151 4 .128
1.471 1 .225
51
11.089b 4 .026
11.547 4 .021
8.321 1 .004
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
7 cells (70.0%) have expected count less than 5. The minimumexpected count is .10.
a.
4 cells (40.0%) have expected count less than 5. The minimumexpected count is .18.
b.
Crosstab
Count
5 5
1 7 8
2 14 16
2 13 15
7 7
5 46 51
5 14 19
3 2 5
3 17 20
2 18 20
4 26 30
17 77 94
strongly agree
disagree
neutral
agree
strongly agree
participation indecisionmaking process
Total
strongly agree
disagree
neutral
agree
strongly agree
participation indecisionmaking process
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
1.713a 4 .788
2.852 4 .583
.001 1 .975
51
8.267b 4 .082
6.761 4 .149
3.039 1 .081
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
6 cells (60.0%) have expected count less than 5. The minimumexpected count is .49.
a.
5 cells (50.0%) have expected count less than 5. The minimumexpected count is .90.
b.
Flexible work arrangement * retention in organisati on * sector type
Crosstab
Count
3 3
1 1
1 16 17
2 20 22
1 7 8
5 46 51
4 12 16
1 2 3
3 9 12
9 36 45
18 18
17 77 94
strongly agree
disagree
neutral
agree
strongly agree
flexible workarrangement
Total
strongly agree
disagree
neutral
agree
strongly agree
flexible workarrangement
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
9.900a 4 .042
5.678 4 .225
.000 1 .985
51
5.460b 4 .243
8.518 4 .074
2.862 1 .091
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
7 cells (70.0%) have expected count less than 5. The minimumexpected count is .10.
a.
5 cells (50.0%) have expected count less than 5. The minimumexpected count is .54.
b.
Annexure C Opportunity to earn performance bonus/commission/ov ertime *
retention in organization * sector type
Crosstab
Count
4 1 5
27 27
19 19
4 47 51
1 1
3 7 10
10 29 39
15 24 39
2 3 5
30 64 94
neutral
agree
strongly agree
opportunity to earnperformancebonus/commission/overtime
Total
strongly agree
disagree
neutral
agree
strongly agree
opportunity to earnperformancebonus/commission/overtime
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
39.932a 2 .000
23.038 2 .000
17.489 1 .000
51
2.112b 4 .715
2.410 4 .661
1.369 1 .242
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
4 cells (66.7%) have expected count less than 5. The minimumexpected count is .39.
a.
5 cells (50.0%) have expected count less than 5. The minimumexpected count is .32.
b.
Up to date technology to perform my job * retention in organization * sector type
Crosstab
Count
1 1
1 7 8
2 27 29
13 13
4 47 51
1 1
2 2
6 6 12
16 31 47
6 26 32
30 64 94
disagree
neutral
agree
strongly agree
up to datetechnologyto performmy job
Total
strongly agree
disagree
neutral
agree
strongly agree
up to datetechnologyto performmy job
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
13.132a 3 .004
7.458 3 .059
5.719 1 .017
51
9.192b 4 .056
9.926 4 .042
5.107 1 .024
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
5 cells (62.5%) have expected count less than 5. The minimumexpected count is .08.
a.
5 cells (50.0%) have expected count less than 5. The minimumexpected count is .32.
b.
Provision of good terminal/retirement benefit * ret ention in organization * sector type
Crosstab
Count
1 1
1 15 16
2 20 22
1 11 12
4 47 51
1 1
8 8
38 38
47 47
8 86 94
disagree
neutral
agree
strongly agree
provision of goodterminal/retirementbenefit
Total
disagree
neutral
agree
strongly agree
provision of goodterminal/retirementbenefit
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
.193a 3 .979
.273 3 .965
.096 1 .757
51
94.000b 3 .000
54.721 3 .000
35.543 1 .000
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
5 cells (62.5%) have expected count less than 5. The minimumexpected count is .08.
a.
5 cells (62.5%) have expected count less than 5. The minimumexpected count is .09.
b.
Encouraging good working relationship amongst emplo yee * retention in organization * sector type
Crosstab
Count
2 2
1 4 5
2 12 14
1 22 23
7 7
4 47 51
3 3
1 1
4 10 14
3 40 43
1 32 33
8 86 94
strongly agree
disagree
neutral
agree
strongly agree
encouraging goodworkingrelationshipamongst employee
Total
strongly agree
disagree
neutral
agree
strongly agree
encouraging goodworkingrelationshipamongst employee
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
2.981a 4 .561
3.328 4 .505
1.345 1 .246
51
9.011b 4 .061
7.245 4 .123
2.227 1 .136
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
7 cells (70.0%) have expected count less than 5. The minimumexpected count is .16.
a.
7 cells (70.0%) have expected count less than 5. The minimumexpected count is .09.
b.
Competitive salary package * retention in organizat ion * sector type
Crosstab
Count
1 1
1 3 4
7 11 18
5 7 12
7 9 16
20 31 51
2 2
12 12
1 48 49
1 30 31
2 92 94
strongly agree
disagree
neutral
agree
strongly agree
competitivesalarypackage
Total
disagree
neutral
agree
strongly agree
competitivesalarypackage
Total
sector typeprivate
public
no yes
retention inorganization
Total
Chi-Square Tests
4.031a 3 .258
4.314 3 .230
2.890 1 .089
51
22.989b 4 .000
6.906 4 .141
4.159 1 .041
94
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
Pearson Chi-Square
Likelihood Ratio
Linear-by-LinearAssociation
N of Valid Cases
sector typeprivate
public
Value dfAsymp. Sig.
(2-sided)
4 cells (50.0%) have expected count less than 5. The minimumexpected count is .39.
a.
7 cells (70.0%) have expected count less than 5. The minimumexpected count is .02.
b.
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