Cost of Employee Turnover on Organizational Profit: A Study on ASDA

This research aims to analyze the cost of employee turnover on organizational profit, with a focus on ASDA. The study examines the concept of employee turnover, its impact on profitability and image, and the positive impact of low employee turnover on competitiveness. The literature review discusses the causes of employee turnover and strategies to reduce it.

CW1 Dissertation
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Chapter 1: Introduction....................................................................................................................3
Background to research topic.................................................................................................4
Background to research organization.....................................................................................4
Research aims and objectives.................................................................................................5
Research aim.........................................................................................................................5
Research question (s)..............................................................................................................5
Research rationale..................................................................................................................5
Chapter 2: Literature review............................................................................................................6
Introduction of literature review.............................................................................................6
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Chapter 1: Introduction
Employee turnover is defined as a concept which refers to the total number of employees
who leaves in organization over a certain period of time. High employee turnover is define as a
situation in which higher number of employees leaves in organization, that can be due to lack of
communication, organization culture, support and many other factors (Chiat and Panatik, 2019).
While on the other hand, low employee turnover is basically defined as a situation in which
organization relatively have small number of employees those who leave during a given period
of time. In terms with today’s business environment there is significantly high competition
among rivals in every industry. This makes organization to significantly implement strategies in
order to make sure that employees are highly satisfied and engaged within organization, as
negligence of this will lead organization to face the issue of high employee turnover which can
affect organization in number of ways such as decrease in productivity, profitability, lack of
competition from other rivals in industry and damage to company image in market (De Winne,
2019). Understanding the causes of employee turnover can help businesses make the necessary
changes to maintain their workforce at the desired level. Because of the many variables affecting
turnover, benchmarks for acceptable or ideal turnover vary. It’s important for organizations to
take individual and industry-related factors into account as they pinpoint their target turnover
rate, study the reasons behind their voluntary and involuntary turnover, and make changes to
impact the employee turnover rate for their own workforce (Zimmerman, Swider and Boswell,
2019). With the help of implementing strategies and practices to satisfy employees company can
lower down the increase in the rate of high turnover. Employees are one of the most important
asset for any organization irrespective of its size and scope. In this it is essential for business
organization to make sure that they are highly satisfied and engaged within organization as it not
only help company to have a positive image in the market segment but also allow them to make
less investments on hiring new employees and overall selection procedure of a new worker.
Present research is conducted on the topic of the cost of employees higher turnover rate on
organizational productivity. It has been analysed that there is a direct link associated to the
employee turnover rate and the organization productivity, as high turnover of employees affects
productivity and profitability of organization in adverse manner. While on the other hand low
turnover helps in enhancing company productivity and their investment on hiring and selecting
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cost of new workers. With this research the concept of employee turnover is being analysed in an
effective manner. Along with this the cost of employee turnover rate on company profitability
and image within market is also been analysed, along with the positive impact of employee
turnover which allow company to gain overall competitiveness and advantages in industry.
Present research report is conducted ASDA which is one of the leading organization of
breeding in retail industrial sector in the provinces of United Kingdom. This organization is
British supermarket headquartered in Leeds, England, United Kingdom and offer wide range of
production services to consumers. This company is having an aim to provide high quality
services to customers in order to ensure higher competitiveness in industry. For this company the
respective organization is facing the issue of high employee turnover which is affecting their
profitability. This research helps in analysing the strategies through which company can
overcome this challenge and can gain more competitive advantage over other rivals.
Background to research topic
Business organization nowadays are operating its roles and responsibilities in a highly
competitive business environment which is inclusive of number of complexities. In this
employees are facing many challenges which is affecting organisations productivity and
performance in an adverse manner (Ekhsan, M., 2019). The issue of high employee turnover
include low productivity within company and its also affecting organization to assure higher
growth and competitiveness in environment. Present research is duly conducted to analyse the
cost of employees turnover rate on organizational profit. It has been analysed that the cost of
employee turnover is mainly associated to management expenses and advertising expenses and
other forms of expenses which have tendency to affect overall budget of organizations.
Present research include discussion on the concept of employee turnover within
organization along with its impact on company productivity profitability and its image in market.
Furthermore positive impact of employee turnover within Asda which help them to gain
competitive advantage is also discussed in this research. The selected topic is analysed with the
help of literature review in which view point of various authors, articles is being evaluated along
with the selection of suitable research methodologies.
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Background to research organization
ASDA is operating its business roles and responsibilities as a British supermarket chain and was
founded in the year 1949. This organization headquarters in Leeds, United Kingdom and offer
wide range of products and services to consumers which is inclusive of general merchandise,
grocery and financial services (Jones and Comfort, 2019). This organization is having a mission
to be Britain’s best value retailer exceeding consumer needs always. Furthermore this company
is conducting its roles and responsibilities with a vision to encourage everyone to be open and
honest. The main value of this organization lies within providing transparent high quality and
affordable services and products to customers.
It has been analysed that this company is significantly conducting their operations with more
than 165,000 employees around the different locations around the globe (Jones and Comfort,
2020). This company is currently facing the issue of high employee turnover which is affecting
its overall profitability. This research is conducted to analyse in concept of employee turnover
and the positive impact of low employee turnover on organization to assure higher competitive
growth and advantage in industry.
Research aims and objectives
Research aim
To analyse the cost of employee’s high turnover rate on the organisational profit. A study
on ASDA.
Research Objectives
 To understand the concept of employee's turnover within an organisation?
 To examine the cost of employee's turnover rate on ASDA profitability and image within
market?
 To determine the positive impact of employee's turnover within ASDA that help the
company to gain competitive adequate and well connected?
Research question (s)
 What is the concept of employee's turnover within an organisation?
 What are the cost of employee's turnover rate on ASDA profitability and image within
market?
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 What are the positive impacts of employee's turnover within ASDA that help the
company to gain competitive advantage?
Research rationale
The selection of present research topic is rational as it is conducted on cost of employee’s high
turnover rate on the organisational profit. High turnover rate indicated of low employee
satisfaction as well as morale ( Kurniawaty, Ramly and Ramlawati, 2019). This research is
conducted on the topic if proper examination of the cost of employee turnover on company
profitability alone with its image in market is being determined. The positive impact of employee
turnover within company along with the manner in which it helps organization to gain
competitiveness in market is also being discussed. Strategies which help organizations in same
industry to implement those strategies and further overcome the challenges of high employee
turnover and increase productivity and profitability is also being included. This research is
conducted with the help of collecting professional data and information associated to the topic.
In addition to this present research also helps in building skills, knowledge and ability of
researchers such as public speaking, communication, data collection method and more and also
benefit investigator to conduct future research with appropriate professional skills.
In addition to this, the primary reason for the present research is to make sure that
company have methods and tendency to reduce the high employee turnover and enhance
employee satisfaction with appropriate methods and techniques in order to enhance overall
competitiveness in environment profitability.
Chapter 2: Literature review
Introduction of literature review
Literature review is mainly defined as in written overview of major writings as well as other
sources on a selected topic. This is mainly a survey of scholarly articles, books and other forms
of sources which is associated to the selected issue (Lyons and Bandura, 2019). Literature review
plays important role for a research as it allows researcher to identify the relationship works in
context of its contribution to the topic and to other work. It provide foundation of knowledge on
topic. In addition to this, it also identify areas of prior scholarship to prevent duplication and give
credit to other researchers. With the help of literature review researcher have tendency to
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summarise as well as synthesise the argument as well as ideas of existing knowledge in a
particular selected topic (Yingjie, Deng and Pan, 2019). Mentioned below literature review on
the present topic is being conducted in which viewpoint of various authors, articles books is
being generalized in a well defined and effective manner.
Concept of employee's turnover within an organisation
According to the viewpoint of Aburumman, Oma and Abadi, 2020 employee turnover is
defined as the total number of employees those who leave organization over a certain period of
time. It also includes those employees who exit voluntarily as well as employees those who are
laid off or fired. It has been underlined that employee turnover is usually calculated on a yearly
basis. This phenomenon is having certain negative impact on organization, if the rate of
employee turnover is high in a year. Furthermore, according to the viewpoint of Chiat and
Panatik, 2019 it has been underlined that employee turnover is basically a serious problem in
number of industries and acts as a global phenomenon but it need a significant attention from
organization. This fact cannot be denied that if a certain number of percentage of workers leave
organization then they are replaced by new talent or employees that will provide organization
advantage in terms of fresh talent and more. However high employee turnover can significantly
lead organization to face many challenges surgery cost to provide training to new workers,
decrease in productivity and less consumer satisfaction. Furthermore according to the perception
of Haque, Fernando and Caputi, 2019 turnover or employee turnover or labour turnover is
basically termed as a rate at which an organization loses. Employees turnover is mainly
measured for company and their industry as a whole. It has been analysed that there are number
of factors which is affecting turnover such as where employees view themselves as under valued
and they get low pay then they tend to leave the position. In addition to this rate of turnover also
increase when a worker feel that they are not treated with respect. Furthermore it has been
underlined that lack of flexible work scheduling especially for women is the major cause of
employee turnover. In addition to this it has been underlined that the rate of turnover also tend to
increase when the there is a change in organization higher level of stress and pressure also
increases employee turnover. It is essential for an organization to significantly emphasise on the
factors which is leading towards higher employee turnover as this is the serious issue which can
affect organization in number of ways. It is essential for a company to make sure that employees
are highly satisfied that can be effectively undertaken with the help of undertaking feedback
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from workers on regular basis. Negligence of considering needs and demands of employees and
continuous pressure affect organization in terms of higher employee turnover which can create
negative image of company in industry and can lead them to face lack of satisfaction from
customers. With the help of emphasising on providing satisfaction to employees business
organization can reduce the rate of employee turnover and can further provide maximum
satisfaction to employees. With the help of this company can effectively manage employees in a
well defined and effective manner. It is essential for organization to make sure that employees
are highly satisfied and they are not feeling the sense of disrespect, stressed and frustrated as it
can be the major reason of employee turnover. According to the perception of Zimmerman,
Swider and Boswell, 2019 it has been underlined that for any organization in any industry it is
essential to consider employees needs and demand and make sure that they are not stressed or
frustrated, as this can affect them in terms of negative image in market segment which restrict
them to influence more number of consumers and employees. Furthermore, it has been evaluated
that employee turnover is the measurement of the number of employees who leave an
organization during a specified time, typically one year. While an organization usually measures
the total number of employees who leave, turnover can also apply to subcategories within an
organization like individual departments or demographic groups. The turnover includes any
employee departure, including resignations, layoffs, terminations, retirements, location transfers,
or even deaths. In addition to this, it has been evaluated that employee turnover is unavoidable as
employees will always leave for better opportunities, studies, resignations, dismissals, or
retirement. However, these factors cause a small amount of employee turnover rate and may
even be advantageous for a company. The benefit appears because it will lead to new personnel's
injection of new ideas and different perspectives.
High employee turnover is, however, undesirable as it can destroy a company's structure.
Furthermore, as per the view point of Hayes and Stazyk, 2019 Employee turnover is something
that every business with workers experiences, and is present in every organisation. Even my own
businesses experience employee turnover. Employees come and go. When employees leave, it’s
costly for your business. It takes time, money and efforts to find and train a replacement. That’s
why it’s best for businesses to reduce their turnover as much as possible. It is important to reduce
employee turnover. Thus according to the analysis it has been underlined that employee turnover
within an organization is a major cause if there is a significant increase in the number of
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employees those who quit organization, as it lead organization to face lack of positive
environment and also affect them in terms of bad image in industry along with lack of
satisfaction among consumers. Furthermore it has been evaluated that employee turnover rate
plays important role in uncovering hidden issues within organization (Kang and Sung, 2019). It
has been underlined that a high turnover rate acts as a warning sign which is essential for leaders
turn managers to consider. Negligence of this will lead them to face major problems that can
affect overall growth and productivity of employees. In this it is essential for leaders and
managers within organization to consider the early warning sign of high turnover rate and
undertake process such as reviewing recruitment process, making change in benefit plan and
compensation, implement succession planning policy and improve organization employee
satisfaction system to retain great employees.
Cost of employee's turnover rate on ASDA profitability and image within market
According to the viewpoint of Olubiyi, Luckel and Melaragno, 2019 employee turnover
is define as the number of workers who quit the organization or forced to leave and get replaced
by new employees. This is done on making calculation on yearly basis. It has been underlined
that there are many reasons of employee turnover which include lack of satisfaction of the pay
scale, feeling of undervalued, increase in stress and more. It has been underlined that the cost
associated with employee turnover include covering the advertising and vacancy of the new
position and training new hires. It has been underlined that the loss of experienced employees
can also lead organization to face the cost associated to brain drain and also decrease company
competitiveness in industry. Furthermore it has been evaluated that these are obvious cost and
there are some other form of hidden cost of employee turnover which include stress on existing
workers who have to cover the position, reduced consumer service and lower productivity. It is
essential for an business organization to consult employees to identify what makes them unhappy
and determine the actual reason of their frustration. With the help of this management, company
can deal appropriately with employees discipline and grievances. In addition to this with the help
of taking advantage of incentive programs and offering flexible work hours this problem can be
overcome in effective manner. Furthermore it has been underlined that the cost of replacing
employees is significant driver in business incentives which further reduce both voluntary and
involuntary turnover.
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Addition to this it has been underlined that high employee turnover also lead towards
number of financial loss of organization in terms of providing training and development course
to new employees. It also result towards loss of productivity as it either halt ongoing project or
affect the accomplishment of overall project (Yao, Qiu and Wei, 2019). In addition to this it has
been underlined that the cost of employee turnover rate on ASDA profitability and image in
market. It is associated to depleted employee morale significant increase in the rate of employee
turnover impact on the overall level of motivation and morale on other employees which affect
Asda profitability and also hamper their image in a market segment. It is essential for company
to emphasise on the actual cause of employee turnover and the factors which are making
employee unhappy. This will benefit organization to significantly retain talented and skilled
employees for a longer period of time.
In addition to this there are number of other costs of employee turnover that can affect
ASDA profitability and image in a market segment as high turn over increase organization toxic
company culture from miles away and also restrict their ability to attract more workers from
market. It also create a bad organizational culture which affect the satisfaction level of other
workers. Negligence of emphasising on the factors which is leading high employee turnover rate
plays greater role in terms of affecting profitability and image of company in market. It is
essential for Asda human resource managers leaders to identify actual cause of increase in
employee turnover rate as negligence of this will affect ASDA profitability and adverse manner.
While keeping employee turnover rate low allow company to build a successful and positive
image in market and also allow them to attract more talented and efficient workers. Furthermore
it has been underlined that by lowering employees turnover low will benefit ASDA to conduct
their business roles and responsibilities with experienced and talented workers and also benefit
them to influence higher rate of employees in organization growth on simultaneous basis.
Thus according to the above mentioned analysis it has been identified that it is essential
for organization like ASDA which is operating as a leading organization to identify the actual
cost of employee turnover as it can affect their profitability an image in market. It is essential for
organization to identify the actual cause of employee turnover and further hire new and talented
employees according to situation in order to be competitive in market segment.
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Positive impacts of employee's turnover within ASDA that help the company to gain
competitive advantage
According to the viewpoint of Zhang, Xu and Xu, 2019 a team is a group of individuals
in which different members are having different skills knowledge and talent and perform their
job roles and responsibilities towards a common objective. It has been evaluated that employee
turnover can sometime act as an indicator of moving an organization towards success, as it has
been underlying that when a company foster continuous growth there is a give and take situation.
It has been underlined that some employees will meet the challenge which comes within the
higher growth and make themselves adaptable and continue to fit the culture while on the other
hand remaining employees hit setback and feel themselves disconnected from the strategy. It is
essential for a business organization to provide employees training to be adaptable towards the
challenging situation it has been underlying that ASDA is operating as a leading organization
and offer wide range of production services to customers. This company is facing stiff
competition from many rivals in industry like Tesco, Sainsbury those who are implementing
strategies techniques for continuous growth and profitability. Furthermore it has been underlined
at Asda is also facing higher competition from many local and small scale organization those
who are creating competitive force within industry. In this it is essential for Asda to implement
changes according to the consumer trends and demands and further provide satisfaction to
customers. In this employee turn over is the situation in which employees those who do not make
them feel fit in the changing culture leave organization (Zimmerman, Swider and Boswell,
2019). This can however affect organization but it can be act as a positive impact within
company and also allow them to gain competitive advantage, as it provides advantage to
company in terms of hire more talented and skilled workers those who can adopt changes with
higher qualification. It also benefits company to make changes in their hiring in selecting
strategy which benefit them for longer period of time.
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References
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