Factors affecting employee retention what do engineers think by jal11416

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									                                                                              MANAGEMENT today




 Factors affecting
 employee retention:
 what do engineers think?
 Much has been made of the skills shortage in South Africa.
 One of the main factors sited for the government’s inability to
 get on top of the backlog in infrastructure is the lack of skills
 in the country. In addition to this, the skills shortage is believed
 to have an adverse impact on the country’s growth rate.

                                                        Dr Abedian was quoted as saying that the
                                                   most common obstacle that he encountered in
                                                   South African boardrooms was the lack of skills.
                                                        The Department of Labour had prepared a list
                                                   of scarce and critical skills to facilitate importation
                                                   of these skills into the country. This was published
                                                   in a Government Gazette where the number of
                                                   scarce and critical skills was estimated at 55 000.
                                                   Of these 41% were in engineering sectors.
                                                        Haffajee quoted a government study that
                                                   highlighted skills shortages in 33 sectors of the
                                                   economy. Occupational categories listed included
                                                   managers, professionals, technicians and artisans.
                                                   Among professionals, engineers, specifically elec-
                                                   trical, mechanical and chemical engineers were
                                                   identified as being in short supply.

                                                   The importance of employee retention
                                                   Employee retention is important for a number of
                                                   reasons. Some of these are discussed below.

                                                   Strategic reasons
Prof Karel Stanz is Head of the Depart-            Kaye and Jordan-Evans point out that retention
                                                   was increasingly important as a result of:
ment of Human Resource Management
                                                   • the lack of skilled workers,
at the University of Pretoria.
                                                   • changes in employee attitudes,
                                                   • the availability of new employment options,
Haffajee who quoted a study done by Dr Iraj         • the high costs associated with hiring new talent
Abedian, former Standard Bank Chief Economist        and
and currently Managing Director of Pan-African     • the fact that in the new economy having talented
Investment and Research Services, who estimat-       employees was a key differentiator.
ed that a skills shortage of between 200 000 and        Harari quoted entrepreneur, George Soros, as
500 000 positions existed in South Africa.         saying that the new global economy was charac-




                                                                             SEPTEMBER 2009         17
MANAGEMENT today

terised by the free flow of goods and services,      tual costs incurred in hiring a new person such      • interesting work – 6,
but, more importantly, by the free movement         as the cost of advertisements, recruitment fees,     • meaningful work/making a contribution – 6,
of information and ideas (knowledge). He went       relocation expenses and promotional material.        • seeing a result from your work/project work –
on to say that the companies that were going to     Costs also included were the actual costs for the      5,
be successful in the knowledge economy were         HR staff that administered the process together       • feel part of a team – 5,
going to be those with the best people and not      with their supporting infrastructure costs.          • ability to use acquired skills – 3,
necessarily with the best plans.                         In a case study it was established what the     • close to home – 2,
     Based on consulting work that he had un-       factors were that led to staff retention:             • feel empowered – 2,
dertaken, the number one strategic challenge        • job satisfaction – 8,4,                            • being creative – 1,
among leading companies was how to attract          • positive organisational perceptions – 7,6,         • feel supported – 1,
and retain the best people. He quoted Mitch-        • growth and development – 7,4,                      • feel trusted – 1.
ell Schlimer, a radio show host who had inter-      • egocentric reasons – 7,2,                               According to these responses the top rea-
viewed successful entrepreneurs and leaders         • cultural and relationship issues – 6,8,            sons resulting in job satisfaction were growth
across all industries, who said that when you got   • external reasons – 6,7,                            opportunities, challenging work and recogni-
to the heart of the successful businessmen you      • average factor rating – 7,3.                       tion/appreciation.
discovered that the secret of their success was          The list below shows the results from the
to surround themselves with great people.           question relating to the top three reasons why
     These factors resulted in competition for      people were staying in their current jobs. This
talented individuals, resulting in increased la-    had been sorted in line with the six retention
bour costs and made it difficult to replace em-       factors and listed in order of the most number
ployees who left.                                   of mentions:
                                                    • job satisfaction – 42,
Implications for job satisfaction and               • growth and development – 12,
motivation                                          • egocentric reasons – 10,
Bednar mentioned that job satisfaction and staff     • cultural and relationship issues – 9,
turnover were strongly correlated. Addressing       • external reasons – 5,
the factors that led to increased turnover also     • positive organisational perceptions – 3,
led to improvements in job satisfaction and em-     • grand total – 81
ployee morale. This in turn led to improvements          From these results it appears that the most
in a number of other areas including reduced        important reason for engineers’ retention in the
absenteeism, lower work place stress, increased     study was job satisfaction.
organisational commitment and improved per-              When prompted, positive organisational
formance.                                           perceptions were rated very highly. In terms of
                                                    the top three factors this was, however, rated
Cost of employee turnover                           rather low.                                          Factors leading to turnover
Estimates for the cost of employee turnover sit-         This apparent anomaly could be explained        According to Flowers and Hughes the factors
ed in the literature vary widely. They range from   with reference to Herzberg’s motivator/hygiene       leading to turnover and those leading to reten-
one times an employee’s annual salary to seven      theory. If one considered positive organisational    tion, were not necessarily the same.
times the annual salary.                            perception to be a hygiene factor, it could be ar-         In interviews respondents were asked to re-
     Johnson split turnover costs into a number     gued that employees would have only listed this      spond to a number of statements on a four point
of components. These costs were pre-turnover,       factor in the event that they were asked about       Likert scale about items that would cause them
separation, vacancy, recruiting and new hire        factors leading to job dissatisfaction.              to resign. The results of this inquiry, categorised
processing.                                              Excluding positive organisational percep-       into the six retention factors, were:
     Pre-turnover costs are as a result of an em-   tions, the top three factors leading to retention    • job satisfaction – 2,86,
ployee’s slower work pace and higher absentee-      were job satisfaction, growth and development,       • growth and development – 2,85,
ism that occurs as an employee’s motivation         and egocentric reasons.                              • external reasons – 2,85,
starts to fall.                                                                                          • egocentric reasons – 2,59,
     Separation costs were incurred as part of      Factors leading to job satisfaction                  • positive organisational perceptions – 2,46,
the separation process. Apart from adminis-         The questionnaire asked respondents to list the      • cultural and relationship issues – 2.26,
trative costs they could include severance pay,     factors responsible for job satisfaction.            • average score – 2,62.
unemployment costs and, in extreme circum-               These responses were sorted into common               Roughly two thirds of employees surveyed
stances, litigation fees.                           themes and were:                                     had previously resigned from a job.
     Vacancy costs were the opportunity costs       • growth opportunities – 17,                               Those employees were asked to provide
incurred as a result of not having an employee      • challenging work – 14,                             reasons for their resigning. The reasons were
in the vacant position. These costs included lost   • recognition/appreciation – 12,                     initially sorted into similar groups and then cat-
sales as well as expenses such as overtime pay      • variety – 7,                                       egorised in line with the six retention factors
for the employees who had to be covered.            • autonomy/independence – 6,                         previously presented.
     Recruiting and hiring costs included the ac-   • pay/rewards – 6,                                         Below is a summary of the reasons, sorted



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                                                                                                                                 MANAGEMENT today

in line with the number of mentions and cat-               The impact of supervisors on resignation      respondents stayed in their current jobs.
egorised using the six retention factors:            intention when confronted with the question: I           This apparent anomaly was explained with
• lack of growth and development opportuni-          would resign from my job if I did not get along     reference to Herzberg’s motivator/hygiene
  ties – 11,                                         with my boss – 2,19. The average score from the     theory. If one considers positive organisational
• external reasons – 8,                              above question was less than the average score      perception to be a hygiene factor, it could be ar-
• lack of job satisfaction – 7,                      for all factors (2.62).                             gued that employees would have only listed this
• egocentric reasons – 5,                                  Respondent were also asked to list the        factor in the event that they were asked about
• cultural and relationship issues – 4,              management behaviours they believed would           factors leading to job dissatisfaction.
• lack of positive organisational perceptions – 2.   result in employee retention.                            For the interview respondents’ factors that
     Based on the respondents’ subjective view       • Manager competency:                               they rated as important for job satisfaction were
of factors that would cause them to resign, the         – fairness 13,                                   growth opportunities, challenging work and
top three factors, with almost identical scores,        – empowers employees 12,                         recognition/appreciation.
were:                                                   – honest and trustworthy 10,                          It was found that the main reasons men-
• a lack of growth and development opportuni-           – good communication skills 8,                   tioned leading to turnover were lack of growth
  ties,                                                 – takes an interest in and care for employees    and development opportunities, external rea-
                                                          8,                                             sons and a lack of job satisfaction.
                                                        – grows/develops subordinates 7,                      For the sample in question the importance
                                                        – technically competent 7,                       of supervisor behaviour in relation to retention
                                                        – knows what was required and provided clear     and turnover was not as important as predicted
                                                          direction 7,                                   by the literature study.
                                                        – accessible 6,                                       In comparing the factors leading to turn-
                                                        – showed leadership/takes decisions 6,           over and the factors leading to retention, the
                                                        – supportiveness 6,                              following comments can be made:
                                                        – reacted to concerns 5,                         • The factors leading to retention and turnover
                                                        – predictable/stable moods 4,                      are not exactly the same. This is in line with the
                                                        – Showed respect and consideration 4,              research presented by Flowers and Hughes.
                                                        – open minded 3,                                 • Growth and development are seen as a very
                                                        – provided recognition 3,                          important factor. They feature both as factors
                                                        – looked after employees financially 3,             enhancing employee retention and job satis-
                                                        – encouraged teamwork 2,                           faction as well as resulting in turnover inten-
                                                        – organised 1,                                     tion if not present. This is in line with results
                                                        – professional 1,                                  from the literature.
                                                        – provided regular feedback 1,                   • Job satisfaction features in terms of retention
                                                        – allowed for independence 1,                      and, if absent, features as a factor leading to
• a lack of job satisfaction and                        – provided the necessary resources 1.              turnover.
• external reasons.                                        For both the questions on ranking factors     • Although egocentric reasons and positive or-
      This was in agreement with the finding          in terms of importance and reasons to resign          ganisation perceptions make employees want
where the same three factors actually led to         below average rankings were given to factors          to stay with their employer, a lack thereof
resignations.                                        relating to supervisor behaviour.                     does not, for the sample in question, lead to
                                                           The implications of this were that, for the     turnover.
Impact of supervisor behaviour                       sample interviewed, management behaviour            • Contrary to information presented by Flowers
A number of authors reviewed as part of the          was not as important to engineers as was pre-         and Hughes, the interview respondents saw
literature survey argued that supervisor behav-      dicted by the literature survey.                      external reasons as a strong predictor of turn-
iour played a key role in retaining employees. A           Respondents nevertheless rated the follow-      over intention.
number of questions were included in the study       ing supervisor competencies as important when       For the sample interviewed the following con-
to test this assumption.                             it came to retention:                               slusions appear to be the case:
      Furthermore respondents were asked to          • empowering of employees and                       • Growth opportunities lead to increased job
list the supervisor’s behaviours that would lead     • being honest and trustworthy.                       satisfaction and employee retention whereas
to employee retention.                                                                                     the lack thereof leads to staff turnover.
      Respondents were also asked to rank fac-       Conclusions                                         • Job satisfaction leads to increased employee
tors of importance to them in terms of employ-       Factors of importance for employee retention          retention and the lack thereof to turnover.
ee retention. Results of this relating to supervi-   were job satisfaction, growth and development       • In addition to growth opportunities, job satis-
sor behaviour were:                                  opportunities and egocentric reasons. Positive        faction is increased through challenging work
• to have a great boss – 7,3,                        organisational perceptions featured as an im-         and recognition/appreciation.
• to have a great relationship with your boss –      portant factor when respondents were prompt-        • Positive organisation perceptions and ego-
   7,2.                                              ed with factors.                                      centric factors enhance retention, but their
      These ratings are below the weighted aver-         This was, however, hardly mentioned in re-        absence does not lead to turnover.
age rating for all the factors overall of 7,5.       sponse to the open ended question on why the        • External factors can lead to turnover.



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