Impact Of Employee Turnover On Organization Performance

1.0                                                          INTRODUCTION

1.1       Background to the study

Labour turnover is a common phenomenon in business organizations, particularly now that Nigerian economy is fluctuating. In view of the economic realities in the country, there is the tendency for business organizations to lose their employees often. According to Marcel (2018), labour turnover is the rate at which an employer gain and lose employee and that turnover is measured for individual companies and for their industries as a whole. Moreover, Mabindisa as cited in Marcel (2018) noted that staff turnover includes employees who retire and employee who are discharged. Employee leaves the department over a set period and usually expressed as a percentage of total workforce numbers. Employees tend to leave an organization as a result of certain factors including salary (pay) dissatisfaction, absenteeism, lack of training and development, lack of motivation, work environment and so on. Labour turnover has many implications for the organization, employee and the society at large.

Organizations with high labour turnover are bound to incur high cost of recruitment and training of new staff and reduced productivity. Employees who leave their present job without hope of a new one are bound to remain unemployed and without pay until new jobs arc found. This leads to untold hardship and frustration on the individuals who may result to social vices such as armed robbery, kidnapping, substance abuse, prostitution and child trafficking. Bangi and Mgeni (2022) explain that employee turnover has been an issue of contemporary. This is because employees in the organization remain the most important and strategic of all other resources of the organization the employees are human beings who come into the organization with varying skills, knowledge, experience, intelligence, training and attitude for the aim of undertaking certain roles and activities in the organization (Ugoani 2016). As such, how they are managed, motivated and rewarded for higher performance is important for the success and overall performance of the organization. Chukwuezi, Okeke, Onwumere and Ani (2021) emphasized that employees are responsible for making the difference in services provided. They can either deliver good or bad service and this is where competitive edge comes from which will invariably affect all the stakeholders of the organization. This is because employees always seek new challenges, better welfare packages, benefits, safe environment and other rewards. This can cause them to leave for other organizations where they are sure of achieving these things.

Turnover can be involuntary resulting from death or termination of a workers appointment (Oladejo, 2017). Turnover rates of employees could be a cause of serious concern to organizations (Chukwuezi et al., 2021). However, some level of turnover is acceptable especially when it is planned and well managed was of the view that turnover has cost implications on the part of the organizations. This is because significant amount of money spent in training and developing employees are lost when they leave the organization. A lot of factors ranging from poor remuneration, work environment, poor relationship between employees and management etc are seen to cause employees to move from one organization to another. In the modern age, people want dynamism in his/her everyday life; new and challenging jobs and better working environment. To provide these to the employees is very difficult for the employer. Today’s competitive business environment, employee turnover is one of the most serious issue. It is very important task to manage employee turnover for any organization. Employee turnover can be defined as the rate at which an employer gains and losses employee, how long the staff tend to leave and join the organization. Basically every organization wants to have fewer turnovers, higher growth, productivity and profitability in the long run. Turnover of employee is seen almost in all organizations.

There are basically two types of employee turnover voluntary and involuntary. Sometimes employees either leave their jobs by their own decision or forced to leave by the decision of the employer. Each employee has his/her own set of expectations upon entering an organization. Should these expectations not be met, the individual will become dissatisfied and leave the organization. It is known as voluntary turnover. On the other hand involuntary turnover occurs when employers terminate an employee or ask an employee to resign. Samuel and Chipunza (2018) stated that it is very easy for competitors to gain access to knowledge and skill of another firm through separation and where it occur, it takes time before such an employee fits into the new job. Most of the managers believe that employee turnover reflects in product and service quality, increases in the client’s level of dissatisfaction. When employees leave continuously, it could reflect unfavorably on management and may become a serious problem for management.

Agyei, Sedegah, Hasford, Mensah and Alijina (2018) stated that excessively high labor turnover rates, has a negative consequence on the success and productivity of an organization. Studies show that firms suffer a lot if employees leave the organization most importantly the high performing employees. The cost of losing a high performing employee is greater than the cost of losing a low performing employee due to time for retraining. Organizations put in huge investment to develop employees in terms of training, research and development which forms part of its operating expenditure. Through training and development, employees gain knowledge and experience and the exit of such employees is a huge cost to the organization. The cost at the recruitment and selection level will also become a burden to the organization if employees leave their organization regularly.

Employee turnover affect workforce morale negatively. It is believed that, an organization is a system with various parts which works together as a whole. Agyei et al., (2018) stated in their study that, in the spirit of teamwork, employees get to perform best after working together for a while, and any employee turnover tends to affect the organization negatively. Where wages levels do not compare well with the competition, the urge to leave and earn more may be overwhelming (Weijie & Rusi, 2018). When people leave an organization, the organization has to do new recruitment which has an overhead cost to the organization. In the current trends of businesses, employees are likely to leave the organization if better conditions exist elsewhere. Many organizations are hunting seriously for skilled and productive labor force and the likelihood for these employees to leave their organization for better working condition of service is very high.