MZUMBE UNIVERSITY - MBEYA CAMPUS COLLEGE

DEPARTMENT OF BUSINESS STUDIES

PROGRAME : MBA CORPORATE MANAGEMENT

INSTRUCTOR : DR. MOROPE G.
COURSE NAME : ORGANIZATION BEHAVIOR AND HRM

COURSE CODE : PUB 5012

TASK : TERM PAPER

NATURE : INDIVIDUAL ASSIGNMENT

DATE : 10th FEBRUARY, 2021

NAME OF STUDENT : DAMAS PETER

REG. NO : 31414046/T.19

QUESTION
Employee retention is among of a Human Resource Management challenges that spread to most
of Public Institutions not limited to Higher Learning Institutions in Tanzania.

Required
As a manager of particular organization critically discuss its causes and propose strategies that
will cater for the said challenge.

1. Introduction
The role of managers is becoming increasingly complex due to the variety of forms of contract by
which employees and contractors are employed. Managing a departmental team of full-time

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workers is becoming a thing of the past as managers are increasingly required to act as a bond
between an organization and workers of all kinds.

The nature of the individuals being managed is changing too. Highly skilled knowledge workers
generally do not take kindly to being managed, and are very critical of management if their needs
are not met. Managers then have the tricky task of managing performance, raising standards and
gaining commitment from people on whom the business depends for results and whose technical
skills are likely to be superior to those of the manager (Holbeche, 2009).

Thus, employee retention is among Human Resource Management (HRM) challenges that spread
not only to private but to most of Public Institutions in Tanzania. This paper discusses its causes
and purpose strategies that will cater for the said challenge.

2. Definition of Key Terms.

2.1. Human Resources Management
According to Gary Dessler (2005), Human Resource Management is the process of acquiring,
training, appraising, and compensating employees, and attending to their labor relations, health,
safety and fairness concerns.

Byars and Rue (2006) explain that Human resource management encompasses those activities
designed to provide for and coordinate the human resources of an organization Human resource
functions refer to those tasks and duties performed in organizations to provide for and coordinate
human resources.

Ivancevich and Glueck in the book “Foundations of personnel: human resource management”,
define human resource as the function performed in organizations that facilitate the most
effective use of people (employees) to achieve organizational and individual goals
Additionally, Human Resource Management (HRM) can be defined as the process of managing
people which involves recruiting, training and developing employees so that they can reach their
maxim potentials in terms of knowledge, skills and creativity and enable the organization to
achieve its objectives.

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 2.2. Employee Retention
Workforce Planning for Wisconsin State Government (2005) defined employee retention as a
systematic effort to create and foster environment that encourages employees to remain
employed by having policies and practices in place that employee that address their diverse
needs.
It is a process in which the employees are encouraged to remain with the organization for the
maximum period of time or until the completion of the objectives (Singh & Dixit, 2011)

Mita (2014) defined employee retention as a technique adopted by businesses to maintain an

effective workforce and at the same time meet operational requirements

Employee retention can also be defined as the initiatives done by an organization to make sure
that it remains the best employer of its current employees through policies and practices that
ensures employees’ satisfactions are met.

3. Concept of employee’s retentions

Employee retention refers to the various policies and practices which let the employees stick to
an organization for a longer period of time. Every organization invests time and money to groom
a new employee, make him a corporate ready material and bring him at par with the existing
employees. The organization is completely at loss when the employees leave their job once they
are fully trained. Employee retention takes into account the various measures taken so that an
individual stays in an organization for the maximum period of time

People leave jobs for a variety of different reasons, many of which are wholly outside the power
of the organization to influence thus making it even harder for employers to manage the problem.

Torrington (2008) gives the following categories of reasons for people leaving the organization
 Outside factors

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Outside factors relate to situations in which someone leaves for reasons that are largely unrelated
to their work. The most common instances involve people moving away when a spouse or
partner is relocated. Others include the wish to fulfil a long-term ambition to travel, pressures
associated with juggling the needs of work and family and illness. To an extent such turnover is
unavoidable, although it is possible to reduce it somewhat through the provision of career breaks,
forms of flexible working and/or childcare facilities.

 Functional turnover
The functional turnover category includes all resignations which are welcomed by both employer
and employee alike. The major examples are those which stem from an individual’s poor work
performance or failure to fit in comfortably with an organizational or departmental culture.
While such resignations are less damaging than others from an organization’s point of view they
should still be regarded as lost opportunities and as an unnecessary cost. The main solution to the
reduction of functional turnover lies in improving recruitment and selection procedures so that
fewer people in the category are appointed in the first place. However, some poorly engineered
change management schemes are also sometimes to blame, especially where they result in new
work pressures or workplace ethics.

 Push factors
With push factors the problem is dissatisfaction with work or the organization, leading to
unwanted turnover. A wide range of issues can be cited to explain such resignations. Insufficient
development opportunities, boredom, ineffective supervision, poor levels of employee
involvement and straightforward personality clashes are the most common precipitating factors.
Organizations can readily address all of these issues. The main reason that so many fail to do so
is the absence of mechanisms for picking up signs of dissatisfaction. If there is no opportunity to
voice concerns, employees who are unhappy will inevitably start looking elsewhere.

 Pull factors

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The opposite side of the coin is the attraction of rival employers. Salary levels are often a factor
here, employees leaving in order to improve their living standards. In addition, there are broader
notions of career development, the wish to move into new areas of work for which there are
better opportunities elsewhere, the chance to work with particular people, and more practical
questions such as commuting time. For the employer losing people as a result of such factors
there are two main lines of attack. First, there is a need to be aware of what other employers are
offering and to ensure that as far as possible this is matched – or at least that a broadly
comparable package of pay and opportunities is offered.

4. Background of the problem

Staff turnover always rises when the economy is strong and jobs are plentiful because there are
more opportunities available for people to change employers. Conversely, during recessions staff
turnover falls because relatively few attractive permanent positions are advertised (Torrington et
al, 2008)

Prachi Juneja from Management Study Guide Studies shows that researches say that most of the
employees leave an organization out of frustration and constant friction with their superiors or
other team members. However, low salaries, absence or limited growth opportunities and
motivational issues are also contributing to high employee turnover rate.

According to interview done by Taylor et al, (2002) with people who had recently changed the
employers enquiring the reason they decided to leave their previous job, it was found that push
factors (lack of development opportunities, boredom, ineffective supervision, poor level of
employee involvement and personal conflicts) were more prevalent that pull factors (salary
levels, improving living standard and career development) as reason for resignation.

Below are the major factors causing challenges on employee retention;

 Compensation
 Reward and recognition
 Promotion and opportunity for growth
 Job security

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  Work-life balance
 Training and development

5. Effect of the problem

Employee retention challenges are affecting employing organizations that how they affect the
employee themselves. Employee loyalty has a direct cost to businesses when employee turnover
is the consequence of a lessening of loyalty. These costs are not only the losses incurred by the
cost of recruiting and training replacements but also the loss of productivity and decreased
customer satisfaction when valued employees leave.

High turnover can be a serious obstacle to productivity, quality and profitability at firms of all
sizes. Employee turnover has direct and indirect costs that have to be taken into account in order
to measure the impact that it has over the companies.

However, even the employees specifically those who remains in their employment are also
affected by the problems caused by the employee retention challenges. This point was also made
by IRS (2000) that rates of labor turnover provide a graphic illustration of the turbulence within
an organization. High rates of attrition can destabilize a business and demotivate those who
attempt to maintain levels of service and output against a background of vacant posts,
inexperienced staff and general discontent.

Below are the major effect of the problem to the organization:

5.1. Hiring Cost to employer.
Recruiting is a time-consuming process and involves financial costs. It involves shortlisting and
interview of candidates the process which sometimes the employer subcontract to recruitment
agents and pays huge sum of money.

5.2. Risk of exiting employee to join the competitor.

Most of the people leave their current jobs for the reasons of pay packages, work environment
and promotion and development rather than desire to change career.

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This imposes a high possibility of the leaving employees to join competitors. If that happens it
affects the losing organization as the exiting employee will leave with crucial information about
the company like marketing strategies and tactics that can benefit the competitor.

5.3. Adaption
Employers invest in invests time and money in grooming an individual and make him ready to
work and understand the corporate culture. A new employee is completely raw and the
management really has to work hard to train him for his overall development. It is a complete
wastage of time and money when an individual leaves an organization all of a sudden.

Furthermore, every individual need time to adjust with others. One needs time to know his team
members well, be friendly with them and eventually trust them. Organizations are always
benefited when the employees are compatible with each other and discuss things among
themselves to come out with something beneficial for all. This is lost when employee lease the
organization.

6. Empirical evidence of the problem

Studies undertaken annually by the Chartered Institute of Personnel and Development
persistently show retailing and catering to be the sectors with the highest turnover levels, with
rates averaging over 40 per cent in recent years (Torrington, 2008)

It has also been observed that younger workers are likely to switch jobs than the older
colleagues. Macaulay (2003) calculated what proportion of employees had completed more than
a year’s service with their employer. For the over-fifties the figure was 86 per cent, for the 18–24
age group it was only 51 per cent. This can be witnessed by looking at telecommunication
companies like MIC Tanzania Limited (Tigo) which experiences a high level of turnover for its
freelancers.

Some chains of fast-food restaurants, for example, are widely reported to have turnover rates in
excess of 300 per cent. This means that the average tenure for each employee is only four months
(Ritzer 1996, p. 130; Cappelli 2000, p. 106).

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7. Attempts made to solve the problem
For an organization to do well and earn high profits it is essential that potential employees are
retained for a longer period and deliver effectively. It is understood that employees who spend a
considerable amount of time with an organization tend to be devoted and committed to the
organization.

Understanding the importance of employee retention, employers have taken several attempts to
solve the problem of employee retention. These attempts include:

7.1. Involving Employees in Decision Making

High involvement of employees in the organization decision making will enable them to have
clear understanding of the organization and improve their performance and ultimately will
enhance their commitment to their work and to the organization.

For an organization to be successful it should involve its people in decision making process not
just because of the retention objective but because employees are the important individuals who
knows better how the organization works.

7.2. Promotion
Promotion means an advancement of employee to a better job in terms of greater responsibility,
more prestige or status, greater skills and of cause, increased salary.

7.3. Good Salary Packages

Salary is one of the rewards to hard word by employee. When the effort deployed by the
employee to an organization does not match what he/she perceive he/she deserves to receive as
salary, it is likely that employee will leave the organization.

Good salary packages which includes allowances and in-kind employment benefit are used by
employers as a means to retain employees and Torrington (2008), suggests that the more highly
paid a person is, the less likely they are to switch jobs.

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 7.4. Good Working Condition
Good or conducive work environment seems to be an essential factor in employee retention.
Spence, Leiter, Day, and Gilin (2009) gathered evidence supporting the fact that favorable
working environment contributes to employee retention. A conducive environment can be
defined as a flexible atmosphere where working experience is enjoyable, resources are
adequately provided

7.5. Motivation
Employee motivation is defined as the level of energy, commitment, persistence and creativity
that a company's workers bring to their jobs which means higher employee motivation gives a
better engagement and commitment to what employees do and to the organization. Employers
then strives to enhance employee motivation through appreciation and recognition, good
communication and by enhancing creativity and free working environment.

7.6. Induction
Another process often credited with the reduction of turnover early in the employment
relationship is the presence of effective and timely induction. It is very easy to overlook in the
rush to get people into key posts quickly and it is often carried out badly, but it is essential if
avoidable early turnover is to be kept to a minimum (Torrington, 2008)

8. Strategies to solve the problem

The analysis of the numbers of people leaving the organization (labor turnover or wastage)
provides data for use in supply forecasting, so that calculations can be made on the number of
people lost who may have to be replaced. More importantly, however, the analysis of the
numbers of leavers and the reasons why they leave provides information that will indicate
whether any action is required to improve retention rates. It can prompt further investigations to
establish underlying causes and identify remedies (Armstrong, 2006).

8.1. Human resourcing strategies

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The objective of HRM resourcing strategy, as expressed by Keep (1989), is to obtain the right
basic material in the form of a workforce endowed with the appropriate qualities, skills,
knowledge and potential for future training. One of the components of resourcing strategy is
Resourcing plans which involves preparing plans for finding people from within the organization
and/or for training programs to help people learn new skills. If needs cannot be satisfied from
within the organization, preparing longer term plans for meeting them by attracting high quality
candidates as the ‘employer of choice’.

Also, under resourcing strategies there are Retention plans where the organization prepares plans
for retaining the people it needs and there are also flexibility plans which aims at increasing
flexibility in the use of human resources to enable the organization to make the best use of
people and adapt to the changing circumstances (Armstrong, 2006)

8.2. Employer Branding

Employer branding is how an organization markets what it has to offer to both to potential and
existing employees (Holbeche, 2009). An employer brand is a set of attributes and qualities
(often intangible) that make an organization distinctive, promise a particular kind of employment
experience, and appeal to those people who will thrive and perform to their best in its culture
(Walker, 2007).

8.3. Recruitment and Selection Process

According to Holbeche (2009), A well-designed recruitment process can attract good candidates
and give the employer useful indications of future performance. Candidates are usually more
positive about the organization if they can see a clear link between the recruitment process and
the job. Structured interviews, using behavioral and critical incident interviewing, can be helpful
as they allow specific job-related areas such as team leadership and customer service to be
explored.

Good recruitment process provides the candidate with a chance to assess the role and to gather
information about the company’s approach to doing business and also can be used as a means to
convey the message to candidates that they are considered an important part of the organization’s

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future. This will ultimately give employees an impression of long stay with the company from
the first day.

8.4. Getting the Right Fit

One of the factors that imposes challenge in employee retention is job satisfaction. Employee
may decide to leave an organization when they find it difficult to fulfil their obligations to the
employer’s expectation. This is sometimes resulted from unclear job descriptions from the
employer and incompetence (lack of required knowledge and skills) of employees.

In essence, the successful attracting and recruiting of new talent means that the needs and offers
of both the organization and the individual need to marry up. The ‘fit’ has to be right – in terms
of skills and experience as well as values and needs (Holbeche, 2009).

To eradicate the problem of employee turnover, it is therefore important that both parties are as
open as possible from the recruitment process which will inevitably involves a process of
negotiation around those respective needs, usually over pay or the type and level of work on
offer.

8.5. Delivering the Promise.

To ensure employee retention, employers should ensure that promises given to employees when
joining an organization are met. When the successful candidate joins the organization, each side
will be monitoring the situation to ensure that the other party is living up to their promises.

There is plenty of evidence that the more help and support provided to candidates in the first few
months, the more likely it is that the candidate will be able to perform satisfactorily. Similarly,
candidates often feel more inclined to stay in an organization where support and interest has been
offered (Holbeche, 2009)

9. Recommendations

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To minimize the problem employee retention, it should be well understood that it the
responsibility of the line managers as well as the management to ensure that the employees are
satisfied with their roles and responsibilities and the job is offering them a new challenge and
learning every day.

Managers should establish mechanisms to evaluate employees’ job satisfaction and there should
dialogues between managers and staff so as management can get on time feedback from the staff
on various matters that can cause dissatisfaction.

Exit interview with leaving employees should not aim at persuading them to stay, but rather they
should focus on understanding the reason for their exit so as immediate measures can be taken by
the organization to eradicate the problem.

Conclusion

Though employee retention has been a challenge, but according to Torrington (2008), it is fair to
say that organization need to be rejuvenated with fresh blood from time to time if they are to
avoid becoming stale and stunted as new faces brings new ideas and experiences which help
making the organization more dynamic.

Torrington (2008) further argues that, it is possible to argue that a degree of turnover helps
managers to keep firmer control over labor costs than would otherwise be the case. This is
particularly true of organizations which are subject to regular and unpredictable changes in
business levels. When income falls it is possible to hold back from replacing leavers until such
time as it begins to pick up again. In this way organizations are able to minimize staffing budgets
while maintaining profit levels during leaner periods. Redundancy bills are also lower in
organizations with relatively high staff turnover because they are able to use natural wastage as
the main means of reducing their workforce before compulsory lay-offs are needed.

It can also be reasonably argued that some employee turnover is ‘functional’ rather than
‘dysfunctional’ because it results in the loss of poor performers and their replacement with more
effective employees (Torrington,2008)

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Reference
Gary Dessler (2005). Human Resources Management, Tenth Edition, Prentice Hall Inc.

Linda Holbeche (2009). Aligning Human Resources and Business Strategy, Second Edition,
Elsevier Ltd

John M Ivancevich; William F Glueck (1989), Foundations of personnel: human resource

management, fourth edition, Homewood, IL: BPI/Irwin

Lloyd L. Byars, Leslie W. Rue (2006). Human Resource Management, McGraw-Hill/Irwin

Mita, M., Aarti K. and Ravneeta, D. (2014) Study on Employee Retention and Commitment.
International Journal of Advance Research in Computer Science and Management Studies, 2,
154-164

Michael Armstrong (2006), Human Resource Management Practice, Tenth Edition, Kogan Page
Limited.

Beer, M., Spector, B., Lawrence, P.R., Mills, D.Q. and Walton, R. (1984) Managing human
assets in a conceptual review of HRM. Harvard Business Review, 84: 15 – 38

Taylor, S. (2002) The Employee Retention Handbook. London: CIPD

Delaney, J.T. and Huselid, M.A. (1996) The impact of Human Resource Management practices
on perceptions of organizational performance. Academy of Management Journal, 39, No. 4,949
– 969

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Torrington D., Hall L and Taylor S (2008), Human Resource Management, Seventh Edition,
Pearson Education Limited

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