Employee Retention

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Employee Retention
PEOPLE MANAGEMENT - 983523

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Employee Retention
Table of Contents
Introduction..............................................................................................................................3
Employee Retention........................................................................................................................3
Company Background....................................................................................................................3
Literature Review......................................................................................................................4
Conclusion................................................................................................................................6
Recommendations.....................................................................................................................6
Performance Management.............................................................................................................7
Selection Process.............................................................................................................................8
Conclusion..............................................................................................................................11
References...............................................................................................................................12

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Employee Retention
Introduction
Employee Retention
Employee retention, in simple words, is defined as the ability of a business organisation to
retain its employees for a long run (Goldstein, Goldstein, Pulakos, Passmore, & Semedo,
2017). The contemporary business world is changing at a rapid pace and the spread of
globalization has increased the level of competition amongst rival firms. The increase in
competition has increased the reliability of business organizations on their human resources
for achieving market competencies (Cloutier, Felusiak, Hill, & Pemberton-Jones, 2015). As a
result, they are trying their best to attract, recruit and retain a larger pool of talented
employees. In order to develop a competent workforce, business organizations are poaching
talented employees working in their rival companies, which is increasing the labour turnover
rates in almost all industries (Lewis & Sequeira, 2012).
Company Background
ABC Company Pvt. Ltd. is an Australian company that provides software and hardware
related services and solutions throughout the globe. The company has 4 subsidiaries in India,
Malaysia, Canada & America, while its headquarters are based in Sydney. The company was
founded in 2003 and has been able to grab a good market share since then. The company has
around 1,700 employees working for it. Recently, the human resource management
department of the company has identified a rise in its employee turnover rates, which has
resulted because of the inability to retain employees. As a result, the CEO of the company has
decided to look into the matter and study the mediating effects of selection process and
performance management in dealing with retention issues.

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Employee Retention
Literature Review
As discussed above, retention of employees has become an important function for human
resource managers as lack of retention can create a number of issues for their organizations.
Employee retention is one of the critical issues that the global industry is facing. Long gone
are the days when a recruited employee used to stay with a company till retirement (Suresh &
Krishnaraj, 2015). Employees are important for running a business. In case of staff shortages,
it can become impossible for business organizations to carry out their day to day operations
and tasks. According to Surji (2013), high employee turnover or lack of retention can cause a
substantial loss of finances for a business organisation. Lack of retention creates a void in the
human resources, which creates an urgency for business organizations to carry out
recruitment and selection drives more often. A number of researches carried out in the field
of employee turnovers and retention have concluded that the cost of replacing an outgoing
employee can be as much as 30-40% of the outgoing employee’s salary. According to Nasir
& Mahmood (2018), lack of retention can have a number of negative effects on an
organisation. The loss of talent not only has a cost disadvantage for a business but can also
result in a loss of productivity, efficiency and overall competency. For a new employee,
reaching the same productivity level of an outgoing employee can sometimes takes years as
business organizations have to train and develop them to achieve the same level of
productivity.
Performance management is a strategic approach that allows business organizations to create,
assess and monitor performance objectives for their employees (Noe, Hollenbeck, Gerhart, &
Wright, 2017). Performance management can foster a workplace environment where the
workforce is driven by performance and is ready to go an extra mile for the achievement of
organisational goals and objectives. Krishnan (2013) states that performance management