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2. Literature Review

The rate of
turnover varies from country to country and company to company. The highest
level of turnover normally found in private sectors than public sectors. The
levels of turnover also vary from region to region. The maximum rates are found
where unemployment rate is lower and where it is easy for people to get substitute
employment. Now and then employee turnover benefits organizations absolutely.
This might occur when a poor performer is replace by a more expert employee and
when a retire employee replaced by a younger one. Employee turnover may also be
expensive as it requires different cost to take account such as administrative
costs of recruitment, cost of covering during the period in which there is a
vacancy, training cost for the new employee etc. Turnover occurs for many
different reasons. Sometimes new job attract employees and pull them to depart
the old one. In opposite employee also push to leave job due to the displeasure
in their present workplace or by domestic circumstances when someone
reallocates with their other half or partner. A poor relationship with the organization
can be an important reason for the employees to leave their jobs. It is comparatively
unusual for people to leave jobs in which they are happy even offered by higher
salary elsewhere. A need of correct training and development is
also major cause for voluntary turnover. Employees have a first choice for
security of their jobs. Turnover could be minimizing through considering
different preventive measures by the management. These may include providing
training to the line managers for an efficient supervision before appointing or
improvement them, providing security of jobs with good working environment etc.
There may be an offer for re-training the accessible managers who have a poor
record at keeping their staff happily. Supervise managers could be responsible
for employee turnover in their teams. Maximization of opportunities for
individual employees such as accommodation individual preferences on working
hours, regular appraisals, providing as much job security as possible can help
to reduce turnover. Employee turnover can be tremendously devastating for any
company. It makes the employers hard to maintain a steady and successful
operation. Management should have their rating on employee turnover and dimension
how this affects organizations performance. Losing a solitary key worker can
decrease the likelihood of a project’s success and can reduce investors self-assurance
in the firm. Many academic scholars pointed out turnover as the correlation
between job displeasure and decreased organizational commitment. The stronger
the feeling of discontent in one’s job, the more likely one is to begin a hunt
for an alternative job. This perspective on turnover highlights the role of emotion
and attitudes as previous circumstances of behavior. When an employee leaves an
organization, it can have a assortment of effects that not only impact on the
organization, but also the individual employee and the society. Turnover is a guide
of organizational effectiveness and as such it authorizes attention and some
understanding of itself. In addition, however information on turnover can help
the planning, prediction and control of resources. In spite of an enormous
literature on turnover in organizations, there is as yet no universally
accepted account or framework for why people choose to leave. The observable
fact of turnover is of interest to organizations and theorists because it is
significant, potentially costly and relatively clear cut. It also describes the
end result of a decision process. The goal of ‘effective management of
turnover’ dictate that a high level of complexity, and thereby particularity,
needs to be achieved by organizations in order to selectively influence the
turnover process. However, the phenomenon has not so far proved amenable to
prediction.

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WorldLink
Communication Private Limited has been chosen for the study. The researcher has
taken only four years in this subject from the company. The description
submitted by the researcher has been done consulted and their relevant
findings, issues, arguments, logic and suggestion have been studied. Likewise
various famous books, journals, publication a paper has been reviewed for this
purpose.

2.1 Human Resource Management Defined

Before going to discuss issue related to the
issue let, define the topic. Human resource management is defined as a
strategic and coherent approach to the management of an organization has most
valued assets the people working there who individually and collectively
contribute to the achievement of its objectives (Armstrong, 2006).

 

HRM is concerned with the human beings in an
organization. “The management of man” is a very important and challenging job
because of the dynamic nature of the people. No two people are similar in
mental ability, tacticians, sentiment, and behaviors; they differ widely also
as a group and are subject to many varied influence. People are open, they feel,
think and act therefore they cannot be operated like a machine or shifted and changed
like template in a room layout. They therefore need a thoughtful handing by
management personnel. HRM is the process of managing people of an organization
with a human approach. Human resources approach to manpower enables the manager
to view the people as an important resource. It is the approach through which
organization can make use of the manpower not only for the benefits of the
organization but for the growth, development and self satisfaction of the
concerned people. Thus, HRM is a system that focuses on human resources
development on one hand and effective management of people on the other hand so
that people will enjoy human self-esteem in their employment. HRM is involved
in providing human dignity to the employees taking into account their capacity,
potentially, talents, accomplishment, motivation, skill, commitment, great
abilities, and so on. So, that their personalities are recognized as precious
human beings. If an organization can belief, depend and draw from their bank
account on the strength of their capital assets, they can trust, depend and
draw more on their committed, talented, enthusiastic and capable people. This
is what the HRM is involved in every business, managerial action or
introduction.

 

John Storey (1989) cited in Armstrong, 2006),
believes that Human resource management can be regarded as a ‘set of
interrelated policies with an ideological and philosophical underpinning’. He
suggests four aspects that constitute the meaningful version of human resource
management:

·        
A particular constellation of beliefs and
assumptions;

·        
A strategic thrust informing decisions about
people management;

·        
The central involvement of line managers;

·        
Reliance upon a set of ‘levers’ to shape the
employment relationship

 

2.1.1
The matching model of Human Resource Management

The
first explicit statements of the HRM concept were ended by the Michigan School
(Fombrun et al 1984 cited in
Armstrong, 2006). They held that Human Resource systems and the organization
structure should be managed in a way that is similar with organizational
strategy (hence the name ‘matching model’). They further explained that there
is a human resource cycle which consists of four generic processes or functions
that are performed in all organizations. These are:

·        
Selection: matching available human resources to jobs;

·        
Appraisal (performance management);

·        
Rewards : ‘the reward system is one of the most under-utilized and mishandled
managerial tools for driving organizational performance’; it must reward short
as well as long term achievements, bearing in mind that ‘business must perform
in the present to succeed in the future’;

·        
Development: developing high-quality employees.

 

2.2 The
Recruitment and Selection Process

When HR
planning indicates the need for additional labor, organizations have a number
of choices to make. This may be the first step in a full-scale recruitment and
selection process, but sometimes hiring additional employees is not the best
method to obtain additional labor. It may be appropriate for an organization to
consider alternatives to recruiting, such as outsourcing or contingent labor,
instead of hiring regular employees. If this is a temporary fluctuation in work
volume, the simplest solution may be part-time labor or overtime by existing
employees. The costs of recruitment and selection can be staggering; hiring new
employees should occur only after careful consideration and only when the
organization anticipates a long-term need for additional labor. Estimates on
the cost to replace supervisory, technical and management employees run from 50
percent to several hundred percent of employee salaries. Careful HR planning
must consider the overall growth prospects of the organization and accurate
forecasting of future labor needs. Recruitment planning begins only when other
alternatives have been considered and eliminated.

 

Over
all plan of the recruitment and selection process should be to acquire at
minimum cost the number and quality of employees requisite to satisfy the human
resource needs of the company. There are three stages of recruitment and
selection dealt in this chapter:

1. Defining requirements: prepare job
descriptions and specifications; decide terms and conditions of employment;

2. Attracting candidates: review
and evaluate option sources of applicants, inside and outside of the company,
advertising, using agency and consultant;

3. Selecting candidates: sifting application,
interview, testing, assessing candidates, assessment centers, offering service,
obtain references; preparing contracts of employment.

 

 2.3
The employees Turnover: Definition and concepts

Turnover
refers to retirement, resignation and redundancy. Employee turnover is
considered to be one of the persisting problems in organizations. The turnover means that another
organization may gain a new knowledge employee who can become its competitive
advantage. The loss of knowledge thus is a threat for the former organization,
which increases the significance of knowledge continuity. Internal factors such
as facilities in the organization and external factors (attractive factors such
as salary and other benefit packages in external market) should be taken in
account to reduce the turnover rate. More specifically, the following points
stated as causes of turnover. Ineffective communication about job expectations,
inability to listen well and ask the right questions respectfully, wage
problems, under-utilization of skills, adverse working conditions, and lack of
opportunity for advancement through seniority, lack of well-organized training
program (Pertrillose, 1998).

Employees’
turnover is a much studied phenomenon Shaw et al. (1998).But there is no
standard reason why people leave organization. Employee turnover is the
rotation of workers around the labour market; between firms, jobs and
occupations; and between the states of employment and unemployment Abassi et
al. (2000). The term “turnover” is defined by Price (1977) as: the ratio of the
number of organizational members who have left during the period being
considered divided by the average number of people in that organization during
the period. Frequently, managers refer to turnover as the entire process
associated with filling a vacancy: Each time a position is vacated, either
voluntarily or involuntarily, a new employee must be hired and trained. This
replacement cycle is known as turnover Woods (1995). This term is also often
utilized in efforts to measure relationships of employees in an organization as
they leave, regardless of reason. “Unfolding model” of voluntary turnover
represents a divergence from traditional thinking (Hom and Griffeth, 1995) by
focusing more on the decisional aspect of employee turnover, in other words,
showing instances of voluntary turnover as decisions to quit. Indeed, the model
is based on a theory of decision making, image theory Beach, (1990). The image
theory describes the process of how individuals process information during
decision making. The underlying premise of the model is that people leave
organizations after they have analyzed the reasons for quitting. Beach (1990)
argues that individuals seldom have the cognitive resources to systematically
evaluate all incoming information, so individuals instead of simply and quickly
compare incoming information to more heuristic-type decision making
alternatives.

Corporate culture and workers involvement in
the decision making process. The labor market gets smaller, companies become
more competitive in their compensation structure making corporate culture more
important than ever. Employees are less loyal to their organizations, they want
more involvement in decision making and they see in their work a realization of
themselves and this is a fundamental reason for their leave in case their job
doesn’t satisfy them (Surline, 1999).

Employee
turnover is the replacement cycle each time a position is vacated either
voluntarily or involuntarily (Woods, 2006). The term “turnover” is defined by
Price (1977) as: the ratio of the number of organizational members who have
left during the period being considered divided by the average number of people
in that organization during the period. Voluntary turnover is when an employee
chooses to quit their job. When the company ends the working relationship
through either layoff or discharge, this is an involuntary turnover. Not all
employee turnovers can be controlled by the company but the rate of voluntary
turnover can and should be a priority for managers.

Griffeth
and Hom (2001) offer to focus on the part of turnover that is of real concern
to an organization by differentiating between voluntary and involuntary
turnover. In other words, did the employee choose to leave the job or was it a
decision made by the employer? Then, voluntary resignations are further
distinguished between functional (exit of substandard performers) and
dysfunctional (exit of effective performers). Finally, unavoidable resignations
over which the employer has no influence are also left aside (family move,
childbirth, serious illness or death). This leaves the group of avoidable
resignations as the key focus. It also implies that to allow an informed
decision, turnover rates have to be calculated down to department level, to
identify which areas are most problematic. Based on this issues employee
turnover may be classified into five categories:

 

 

A. Functional Vs Dysfunctional
Turnover:

Functional
turnover is defined as “A turnover in which poor performer leaves”. Functional turnover occurs
when people departure the firm are underperformers. This is common in large consult,
accounting and law firms that employ an “up or out” viewpoint.
Employees in such a company must build up and get better to move up in the
ranks. Those who are unable to development are allowed to go. Consequently,
these firms have high turnover, but the employees who remain are the best and brilliant.

 

Dysfunctional turnover is defined as “A turnover in
which good performer leaves”. Dysfunctional turnover is the accurate opposite of
functional turnover, as the best employees leave. This can happen for a variety
of reasons, but a common cause is low possible to advance. If, for example, a
company fills its management position with external candidate and does not
offer them to internal employees, employees are likely to seek external opportunity
for progression.

 

B. Avoidable Vs Unavoidable
Turnover:

A turnover that happens in avoidable
circumstances is called ‘Avoidable Turnover’, where as “A turnover that happens
in unavoidable circumstances is called ‘Unavoidable Turnover’

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