The problem of Managerial turnover and retention

Published Date: 23 Mar 2015 Last Modified: 27 Apr 2017

Managerial Turnover: A Problem? Retention: Deciding to Act

1. Is the loss of 30 managers out of 120 in one year cause for concern?

Employees' turnover can be caused by different reasons. Every organization management should be concerned about it as employees with value may be lost in its event. HCLC should be concerned about the loss of 30 site managers because they may be leaving the organization due to job dissatisfaction. Proper research should be conducted so that it can be established the reason why these employees are leaving HCLC. Though this turnover is a quarter of the managers present in the organization, ascertaining, tracking and recording of reasons as to why managers are leaving must be a concern so that this can be used in future to measure and analyze turnover. Each manager exit must always be classified as either downsizing, discharge or voluntary exit so that in the end, the calculation of turnover rates becomes possible (Heneman, 2009). They may be leaving HCLC because there is low motivation. External conditions in comparison to what is offered in HCLC may be another contributory factor to this turnover. It should thus be analyzed so that we can know what is that managers are going for out there in the market that we are not offering. Unless we become concerned about this, we may miss the opportunity to retain some of those managers who may have become quality workers in future. An even higher turnover may be experienced if we don't address the issue at the present. This may even taint the image of our organization such that even securing contracts may become a problem. This is because prospective will always associate HCLC with instability of tenure.

Several costs accrue as a result of turnover. HCLC may experience several challenges and risks due to time, legal, performance, revenue, severance and material costs if the trend will persist to the future. Those managers who are leaving may even leave with other employees where the resultant effect will be decline in performance, talent losses, and disruptive discipline. Later, we may be unable to locate, attract or hire high quality managers able to help the organization achieve its strategic objectives.

2. What additional data should we try to gather to learn more about our managerial turnover?

The kind of organizations and their work environment those who leave HCLC join proves to be very relevant in understanding our current problem. There may be something that they are pursuing in those organizations that we are not offering. This may be attractive packages offered by our competitors and thus we may end up recommending for pay rises. All managers should be listed down with the main reason as to why they left HCLC so that we can analyze the major causes of managerial turnover. It's said that most of the times employees in any organization will quit their bosses but not their jobs (CSL solutions, 2009). This is because of the relationships that exist between the managers and their CEOs. We must thus conduct extensive research and collect data on the relationships that our site managers share with the manager of operations, Tyrone Williams. We need this in order to know whether a good percentage of them leave because of poor hierarchical relationships. We will be required to benchmark HCLC's managerial turnover rates both externally and internally. Reasons as to why these managers leave should be analyzed through post exit surveys, exit interviews and managerial satisfaction surveys. Costs and benefits of our managerial turnover should be conducted. Cost categories should be known in terms of separation, training and replacement and all the financial non-financial costs estimated. We must weigh the benefits associated with our managerial turnover costs. This is the kind of information that will assist us to design retention strategies and tactics. The development needs (needs assessment) of managers should be identified regularly.

3. What are the costs of this turnover? Might there be any benefits?

There are many cots associated with the managerial turnover. One of them is separation costs. Separation costs can be in form of either financial or non financial. This can be in form of early retirement package, voluntary severance package, involuntary severance package; contract buyouts for fulfillment of guarantees, higher unemployment insurance premiums, change in control, loss of critical employees, other employees leave (contagion), increased level of job insecurity and difficulty to attract any other new employees. There will be time, material, severance, performance and revenue and legal costs that will come forth as a result. Human costs like the ones of relationships that are frayed, losses of critical talents. Decline in individual performance for those left coupled with discipline that may be disruptive for HCLC. There will be disruption in social and communication patterns. Production levels will go down in such a case. Levels of service offered to HCLC customers may go down coupled with negative effects on experience and value. Several intangible costs will be experienced which will include transaction costs. These are costs associated with quality loss, loss of decision making and business acumen loss and hiatus in organizational leadership. Replacement for the vacant posts left by these managers prompts use of advertisement. Placing adverts adds to the operational costs which consequently impacts on the profits margin. This means that if this is not addressed to curb the high levels of turnover, a significant percentage of the profit may go towards replacement costs instead of furthering the business operations. Human resources will spend a lot of time interviewing and selecting other managers (Wilkinson, 2005). Apart from the costs of interviewing and selecting new managers, HCLC HR will have to incur extra costs of time and resources in training the new site manager recruits. Sometimes it calls for the management to use agencies in recruitment. Some of them will demand a lot of money in terms of compensation. Generally, the whole process of replacing managers is very costly.

From another perspective, the turnover may improve HCLC's performance. Some of these managers may be poor performing employees. This means that we will be left with only those employees who are performing excellently and ardent on their work. Since shared values are high in HCLC, we may experience several positive consequences despite this turnover. This includes better communication and cooperation, increased personal investment, increase in satisfaction and commitment coupled with greater organizational support. This may also be associated with displacement of poor performers in the organization. New knowledge may come in the organization which may stimulate changes in policies and practices in the organization. There are also opportunities for cost reduction and consolidation. Managerial turnover lowers the payroll of the organization.

4. Are there any lurking legal problems?

There are several letters that were left by some of the managers who were leaving. They were addressed to the manager of operations. It was evident from the letter that these site managers were not happy with his leadership. In the near future, some of these managers may launch claims in court that they were mistreated. They may claim that they left the organization because of discrimination, poor working conditions and many other legal issues (Fitz-enz, 2009). Some employees who had long term contracts may continue to claim insurance compensation and health schemes that they had been enjoying since they joined HCLC. Management should be concerned about separation laws and regulations. Since these managers are conversant with these laws, efforts should be made to make sure that the correct procedures were followed in the effect of separation. Letters left by some of the managers may result in court cases with complaints that employees in our organization are not being treated fairly and consistently thus the turnover. All the laws governing separation process will affect the organization in the coming future if this turnover rate remains a trend. Other legal issues associated with this turnover may be affirmative action requirements, public policy restrictions and recruitment at will, civil service regulations and laws, labor contract provisions and other employment contract provisions.

5. If retention is a serious problem for HCLC, what are the main ways we might attack it?

Those who remain with us in the organization should be provided with perfect programs that will meet their overall needs. Communication programs in our hierarchy should be enhanced. We should engineer several events that will boost the morale of the remaining employees (Kuzmicki, 2006). This is because turnover usually has the adverse effect on those employees who are left. They usually have high levels of stress and 'survivor sicknesses'. They have the effect of feeling that they may also leave the organization as they may not be compatible with their new bosses. We should promote the EAPs. Together with this, more emphasis should be placed on the provision of training that will reduce stress in our remaining employees. Efforts are supposed to be made in order for us to retain our most senior employees while cutting the number of the least senior employees in all our work units. All our decisions concerning retention should be based on performance. We should have a track record of past and present performance appraisals of all employees. This will enable us to retain only the employees who are high quality performers increasing the effectiveness of HCLC. Our strategy should be to work tirelessly to retain only high value employees and reduce the number of low value employees. Intrinsic and extrinsic rewards should be given to those who remain with us. These rewards must have a link with retention behaviors and performance. An employee who is to be retained must be provided with a reward that is unique, meaningful and that matches his individual preferences (Taylor and Chartered Institute of Personnel and Development, 2002). Senior managers in the organization must be people who are capable of providing a positive/conducive working environment. Systems to reward those who are to be retained should be fairly designed.

Retention: Deciding to Act

1. Do we think turnover is a problem?

According to raw data that Wally has, he thinks that the 65% of turnover for his attendants and 20% for customer service specialists is a figure that has been increasing and expects that to continue. Managers in all the facilities have been complaining to Wally about this. This turnover is creating problems especially in trying to fulfill the customer-service orientation. In comparison to the external industry, most of these employees are complaining that pay is not competitive enough. They have thus opted to go for the greener pastures. They also claim that training is not at its best, limited promotion opportunities, no feedback and coaching from the managers and that they are being mistreated by customers frequently. This thus tells us that turnover for WWW is a concern and needs to be addressed. This turnover is evidently becoming a problem to the customer service as the customer base cannot be effectively served by the ever decreasing number of attendants. This has also become a threat to Wally's expansion strategy. Our final analysis on the comparison of benefits and costs associated with this turnover shows that customer service is being affected adversely. Replacing these attendants and custom service specialists will cost Wally. This company is loosing its experienced staff to other competitors in the industry. It shows that there is poor communication between the attendants and individual facility managers. Though the payroll will be lowered by the departure of these employees, the costs will by far outweigh the benefits for Wally. We will thus conclude that turnover for Wally is supposed to be a concern.

2. How might we attack the problem?

The 65% turnover for attendants and 20% for customer specialists gives an indication that there is high desirability of leaving. This can be tackled by increasing the organizational justice. Those who are leaving are claiming that they are not being paid an attractive package that is in harmony with other similar companies in this industry. Job satisfaction should be on the spotlight. Training should be a must for all the employees. This will keep enhancing employee development for Wally. Managers should have a duty to coach their subordinates and provide quality feedback whenever required. The social environment at Wally requires to be enhanced so that communication between the attendants and the managers can be effective to cut down on the increasing levels of turnover (CSL solutions, 2009). Our aim should be to provide Wally with organization specific KSAOs. Since the ones who are leaving WWW are complaining that the pay does not match the ones in other companies in the same industry, we should raise the pay for our employees to tackle these alternatives they are favoring. More motivational events will act as a good idea to reduce turnover. More senior positions should be created and they are reserved for promotional activities. Transfers should also be used. Extensive research on the main reasons for departure should be documented and we should not be depending on raw data. Competitors should be studied to make sure that we have a clear understanding of why they are being favored by some of our employees. This research may give us a go ahead on the idea of retaining our experienced workers. Strategies should be developed to make leaving a costly exercise.

3. What do we need to decide?

We should come up with decisions to always hold our managers responsible for turnover. Specific responsibilities should be set for our Human Resources and any supervisors on their specific roles in employee retention. Wally must train managers so that they can understand the factors that contribute to employee job satisfaction and retention. Managers should be held responsible for retention in their facilities. We should set turnover goals for all our facility managers as we endeavor to track this accordingly. Managers whose behavior is consistent with the organization's philosophies and values should be promoted (Davidson, 2005). All the turnover goals set should be targeted at specific work units and other relevant work groups. Our focus should be to rate all our employees so that we can differentiate between the low value and high value employees. After we have identified the high value employees, our focus should now be on them. Our aim should be to always retain the high value employees and do away with the low value ones. A decision must be made in the long run on whether we should match, lag or lead the market. In this case, deciding to lag the market may leave WWW at a condition where it may be always dealing with replacement of employees as most of them will depart and search for greener pastures elsewhere. By leading the market we may experience extra costs that may surpass our returns since we have a big employee base. The decision for Wally will be to match the market so that the employees won't see the difference between us and the competitors who are becoming their alternatives.

Concrete decisions should be made to make all people in the workplace to feel appreciated. We need not only to pay our attendants and customer service specialists well but we also need to treat them with respect and appreciation. We should provide creative ways that will always make Wally employees to feel good about their job. Peer recognition should be introduced in this organization where individuals will be rewarding each other for any job well done (Smith, 2006). Attitudes of our workforce should be measured consistently so that any signs of leaving can be detected. We don't have to wait until we are given a resignation letter by an angry employee as the moment he leaves Wally compound, our corporate image is now at risk. In order to maintain a high retention, employee climate assessment should be conducted annually. Our focus should be on individual employees. Since the attendants have a very important task of talking to the customers and to ask them if they are satisfied with the service provided to them, we should from now henceforth consider their positions as very vital. These are the job positions at WWW that have the most significant effect on profitability.

4. Should we proceed?

The decision to proceed will depend on a number of factors. In the first place, we have to develop judgments on whether the ideas we have generated are feasible in terms of implementation. If there is no positive signs of implementation, decisions to proceed should not be taken. However, in this case WWW has got no option but to proceed since there is no way we can allow all these employees to be leaving our organization. Deciding not to proceed will result in creation of a negative corporate image for Wally considering there are several competitors who will take this advantage. We should develop programs that we know will be easy to implement so that it won't hinder us from proceeding. We will have made the judgments about the probability of success (Association of College and Research Libraries, 2002). Proceeding will be possible since we already have set our turnover goals that are targeted at several work units and groups. All managers have been given the accountability for turnover in their departments. Where turnover goals have been set, it will be known what is expected of us in the organization as we embark on the exercise to curb more turnovers for attendants and customer-service specialists. We need to have a time framework that is meaningful. We may think that the strategy is feasible, a probable success and can thus be implemented but we have to understand that a retention program may not have to be launched immediately. There are however no signs in the labor markets that turnover problems will loose urgency. It shows that this level will probably increase in the coming years. There are no indications that high turnover may reduce just after Wally has developed retention initiative programs. Our retention initiatives may be costly but this does not guarantee us to take the decision not to proceed.

5. How should we evaluate the initiatives?

Several criteria will be used to evaluate the set retention initiatives. There is turnover that is said to be voluntary. Since this is created by the conditions which are mostly within the organization, it is easy to avoid it. We can thus evaluate our retention initiatives by looking at the levels of turnover that is avoidable. Just in case it is in low levels, we will be able to understand that our initiatives will probably work effectively. We should evaluate our initiatives by looking at whether the turnover is decreasing or it's low when compared to our benchmarks. We should have benchmarks that we can compare our turnover with the initiatives so that the necessary course of action can be taken. There are cases where retention complains are experienced. Initiatives must be evaluated by the use of data on whether there were few or even no complains about problems of retention. We were making the decision on whether to take turnover as a concern for the organization by looking at the level of turnover and the caliber of employees who are leaving. Initiatives in this case should therefore be evaluated by use of information on whether we have fewer number of high value employees who are leaving Wally (Heneman and Judge, 2009). In the same point, the comparison of costs to benefits associated with turnover was used to determine whether turnover should be taken as a concern. Any outweighing of benefits by the costs will call for the organization to adopt programs to retain its employees. For evaluation of initiatives, we will be required to indicate whether the costs of turnover are lower compared to the benefits. Our initiatives should work if the benefits are outweighing the costs and the vice versa is also true.