The Impact of Employee Turnover on Productivity and Performance of an Organisation: A Literature Review

This literature review analyses the causes of high employee turnover, its impact on productivity and performance of an organisation, and strategies to minimise it. It also discusses the negative impacts of high employee turnover on productivity, recruitment costs, company morale, sales, and competitive growth.

LITERATURE
REVIEW
(The impact of employee turnover on the
productivity and performance of an
organisation)

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
The causes of high employee turnover within an organisation....................................................1
The impact of high employee turnover on productivity and performance of an organisation....2
The strategies that could be used by an organisation to minimise employee turnover within the
organisation..................................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
A literature review involves a summary, an overview as well as an evaluation of the
present state knowledge about the particular area of research. It used to discusses published
information related to the research topic (Rosalina, Dupre and Wang, 2021). It is an important
part of an research for gaining an understanding of the present research as well as debating
relevant to a particular area or topic of the research. It also help in presenting that knowledge in
the form of a written report. The present literature review is to conducted to analyse the opinion
and view of authors regarding causes of employee turnover, its impact on productivity and
performance of the company along with the strategies that could be used by the company for
minimising employee turnover within the organisation.
MAIN BODY
The causes of high employee turnover within an organisation
According to the view of Martinelli (2017) employee turnover rate define as the
percentage of employees that leave an organisation as well as required to be replaced within a
certain period of time. High employee turnover is more costly for every organisation as it need
precious time and money of the company that can result in a loss of staff. There are many reason
that cause high employee turnover in the organisation. Some of them are explained below:
Lack of growth and progression- Growth and development opportunities for employees
are considered as most important element for an organisation in order to retain good employees
in the organisation that work more effectively in the workplace (Adhami and Timur, 2022). It an
organisation failed in providing these opportunities to their employees so, they feels trapped in a
dead-end position and they look towards the another company for the chance that improve their
income and status.
Being overworked- At the time of economic pressure, company ask their employees to
take on extra responsibility to deal with this pressure in better manner. Company may need to let
people go as well as remaining employees to choose in between working longer hours or even in
weekends also. If the company ask their employees to choose between personal life and work life
that may affects the company. It make employees frustrated and cause high employee turnover in
the organisation.
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Lack of feedback and recognition- If the company failed in providing feedback to their
employees, they may be pushing their employees away. Feedback is the important aspect for the
company that ensure employee success, so avoiding this process can be detrimental to their
success (Poorani and Krishnan, 2021). If an employee struggling in the workplace, then the
honest feedback may hep them to manage their workload and refocus. Similarly, if the good
work of the employee is not recognised by the manager that also leads high employee turnover in
the organisation. The manager need to recognised or appreciate employee's good work so, they
perform effectively as well as retain in the organisation for longer term.
Little opportunity for decision making- If the company over manage their employees
then they are likely to grow frustrated with the lack of freedom that contributes to high employee
turnover in the organisation. The company need to trust their employees so, they perform well
and allow them some freedom so, they feel good while working in the organisation (Bhardwaj
and Jain, 2018). Company can also involve their employees in decision making so, they provide
effective ideas that help company to operate their business in better manner.
Poor employees selection- Recruiting and hiring perfect employees in the organisation
are not an easy task for the company, but forcing a match with an employee which is also not
clearly right for the company. For filling a vacant position, picking a poorly matched employees
is bad for the company as well as employees also. No one employee perform their work in better
manner when they are unhappy as well as an incompatible employees is mainly to be content
with their new position (Gupta, Bhatia and Bhagat, 2022).
The impact of high employee turnover on productivity and performance of an organisation
As per the view of Jain and Nayyar (2018) it has been analysed that high employee
turnover provides negative impact on the productivity and performance of an organisation. When
the company losses their talented and experienced employees in the organisation then they faced
problems in operating their different functions in better manner. The major impacts that company
faces due to high employee turnover within their workplace are described below:
Decreased productivity- Employee productivity are most important aspect for an
organisation in order to achieve more success and goals. High employee turnover within the
organisation can cause reduction in employee productivity rates which states that the business
may fall short of its goals if employee turnover becomes an issue. If the employee turnover rate
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of an organisation is very high, they need to spend more money on replacement costs and
employee recruitment instead of focusing on their efforts on increasing employee productivity.
Recruitment costs- High turnover may increases the recruitment costs of the
organisation. It means that the company need to hire and train new employees, paying them
higher salaries for a longer time before they become more efficient and experienced for the
organisation (Agus and Selvaraj, 2020). When large number of employees leaves the
organisation for several reasons, company need to recruit and hire new employees for fulfilling
that vacant position so, their operations become smoother just like earlier. But the company need
to spend more time, money and efforts to find new talented and effective employees that actively
performed in the organisation.
Lower company morale- It refers as one of major issues that companies faced due to
high employee turnover in the organisation is low employee morale. When an employees leaves
the company, it is essential for those who remain at the organisation to boost and try their own
morale so, that it does not spread just like wildfire as well as cause additional employee turnover
in the organisation (Jehanzeb and Mohanty, 2018). When there is a high employee turnover in
the organisation, remaining employees feels bored and decrease their morale because they think
that the other employees get better opportunities elsewhere and they also need to seek these
opportunities for themselves. It is also a reason that affects organisational performance and
productivity when large number of employee leave the organisation at same time.
Lost sales- It becomes more difficult for the company to achieve organisational goals
when there is a high employee turnover at the workplace. Due to high employee turnover,
employee productivity decrease that create problems for the company to get revenue that could
only be gained through an efficient workforce. When there is not proper workforce in the
organisation, then they could not achieved their target as well as fulfil their customers wants on
time. Due to which sales of the company is also decreases and decrease their profitability also
(Lin and Huang, 2020).
More employee turnover- If the company has very employee retention in the
organisation, then employee turnover can happen even if workers leave for reasons that have
nothing to conduct within the workplace at all. If an employee having personal issues or want to
move away from their present location which means that they find job elsewhere. Not matter
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what the reason but the employee turnover is the problem for the company to recruit and hire
new employees in the organisation.
Decreases competitive growth- Competition is an another important issues that the
company faces in order to survive in the market. Today's competition is very high for the
companies where the high employee turnover directly affects their competitive growth. Talented
employees are important assets for the company as they help in providing effective goods and
services to target market that leads competitive advantage for the company. High employee
turnover rate decrease competitive growth of the company because company will not able to
provide effective service to their customers (Hom, Allen and Griffeth, 2019).
The strategies that could be used by an organisation to minimise employee turnover within the
organisation
According to the view of Poorani and Krishnan (2021) high employee turnover rate of an
organisation is not only affecting its productivity and performance but also its sales and
profitability. As today's corporate world is very competitive and high employee turnover in the
organisation may affects success of the company and also create difficulty for the company to
survive in the market. It become important for the company to use effective strategies that
minimise high employee turnover within the organisation. Some of these strategies are defined
below:
Invest more in employees- Every employees want to know that they are valuable part of
their team or not in an organisation. Investment in the success of employees by the company play
an active part in their professional development and it will increase their loyalty towards them.
Promoting development opportunity continually within their workplace help company to
improve their workforce and increase their capability also.
Reward and compensate employees- Employees also wants to know that their
contribution is valued in the organisation. Company need to make a conscious effort to
particularly recognise the successes of their employees as well as rewards their efforts (Haque,
Fernando and Caputi, 2021). Celebrating their successes and offerings rewards may be not that
important for the company, but will increases staff loyalty and make them effective to perform
their work more effectively. Money is not the main reason for high employee turnover in the
organisation, but the company need to ensure that to pay fair wages for their employees. By
doing all these things ensure company that their employees do not seek better offer elsewhere.
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Perfect their selection process- The company need to make their interview process
perfect so, they hire talented or perfect candidates that perform their work more effectively in the
organisation. For getting ensure that the company get the right candidates in their workplace they
need to define the role more clearly, clarify whether the candidates has the desired skills as well
as knowledge and ensure that the candidates fits the company culture (Wang, 2018). By doing
so, company can improve their selection process and hire right candidates that may minimise the
employee turnover within their workplace.
Provide thorough and considerate feedback- Providing well-considered and
appropriate feedback to employees is a major contributor that ensure success of an organisation.
Feedback help employees to acknowledge areas for improvement, reflect on their performance as
well as develop and improve their skills (Smith, 2021). When the company skip the opportunity
of providing feedback to their workers may hinders their growth and leads employee turnover. It
makes important for the company to provide appropriate feedback to their employees so, they
improve their performance as well as retain in the organisation for longer term.
Ensure a Good work-life balance- Work-life balance of employees is important for the
company in order to minimise the high employee turnover. If the employees are bogged down
with their work which means that they are going to be unhappy (Choubey, Sharma and Yadav,
2019). The company need to encourage their employees to take proper lunch break as well as
ensure that their workload is properly manageable enough so, they are not forced to stay late or
start early all the time.
CONCLUSION
From the above literature review, it has been concluded that employee turnover is the
major the issue for every organisation to survive in the market for longer term. It directly affects
the performance and productivity of the organisation in effective manner. There are several
reasons that causes employee turnover in the organisation. It involves lack of growth and
progression, being overworked, lack of feedback and recognition, little opportunity for decision
making, poor employee selection and many more. From the above, it has been analysed that
employee turnover provides negative impact on the performance and productivity of the
organisation. It also decrease decrease productivity of employees, increases recruitment cost,
decreases competitive growth, more employee turnover, lost sales and lower company morale.
The above literature review also analysed that there are several strategies which can be used by
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the company in order to minimise their employee turnover in the organisation. Effective
strategies are investing more in employees, rewarding and compensating employees, perfecting
their selection process, Providing thorough and considerate feedback as well as ensuring a good
work-life balance.
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REFERENCES
Books and Journals:
Rosalina, P.D., Dupre, K. and Wang, Y., 2021. Rural tourism: A systematic literature review on
definitions and challenges. Journal of Hospitality and Tourism Management, 47,
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Adhami, T. and Timur, T., 2022. Job Satisfaction and Turnover in Educational Institutions:
Reasons and Variables Affecting Job Satisfaction and the Turnover Decision. In New
Dynamics in Banking and Finance (pp. 85-100). Springer, Cham.
Poorani, S. and Krishnan, L.R.K., 2021. THE IMPACT OF BUSINESS CYCLES ON THE
EMPLOYEE TURNOVER PROCESS IN THE AUTOMOBILE INDUSTRY,
CHENNAI, INDIA. Journal of Management Information and Decision Sciences, 24(7),
pp.1-13.
Bhardwaj, S. and Jain, A., 2018. Analysis of factor responsible for employee turnover and
provide suitable remedies for small and medium-sized enterprises (SME's) of Delhi-
NCR region. Asian Journal of Multidimensional Research (AJMR), 7(6), pp.274-290.
Gupta, S.K., Bhatia, N. and Bhagat, M., 2022. A Review of Employee Turnover Models and
their Role in Evolution of Turnover Literature. The Indian Journal of Labour
Economics, pp.1-30.
Jain, R. and Nayyar, A., 2018, November. Predicting employee attrition using xgboost machine
learning approach. In 2018 international conference on system modeling &
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Agus, A. and Selvaraj, R., 2020. The mediating role of employee commitment in the relationship
between quality of work life and the intention to stay. Employee Relations: The
International Journal, 42(6), pp.1231-1248.
Jehanzeb, K. and Mohanty, J., 2018. Impact of employee development on job satisfaction and
organizational commitment: person–organization fit as moderator. International Journal
of Training and Development, 22(3), pp.171-191.
Lin, C.Y. and Huang, C.K., 2020. Employee turnover intentions and job performance from a
planned change: the effects of an organizational learning culture and job
satisfaction. International Journal of Manpower.
Hom, P.W., Allen, D.G. and Griffeth, R.W., 2019. Employee retention and turnover: Why
employees stay or leave. Routledge.
Poorani, S. and Krishnan, L.R.K., 2021. THE IMPACT OF BUSINESS CYCLES ON THE
EMPLOYEE TURNOVER PROCESS IN THE AUTOMOBILE INDUSTRY,
CHENNAI, INDIA. Journal of Management Information and Decision Sciences, 24(7),
pp.1-13.
Haque, A., Fernando, M. and Caputi, P., 2021. Responsible leadership and employee outcomes:
a systematic literature review, integration and propositions. Asia-Pacific Journal of
Business Administration, 13(3), pp.383-408.
Wang, J., 2018. Hours underemployment and employee turnover: the moderating role of human
resource practices. The International Journal of Human Resource Management, 29(9),
pp.1565-1587.
Smith, D., 2021. Research shows offering excellent compensation and job security makes South
Korean employees much less likely to quit jobs. Human Resource Management
International Digest, 29(5), pp.20-21.
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Choubey, S.K., Sharma, A. and Yadav, A., 2019. Organizational Brand Resonance for Job
Satisfaction of the Employees. In Proceedings of 10th International Conference on
Digital Strategies for Organizational Success.
Online:
Martinelli, K., 2017, [Online]. Available through:
<https://www.highspeedtraining.co.uk/hub/causes-of-employee-turnover/>
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