ASSESSMENT OF TURNOVER ON ORGANIZATIONAL

PRODUCTIVITY: A CASE OF MESFIN INDUSTRIAL ENGINEERING,

MEKELLE, ETHIOPIA

A SENIOR ESSAY SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENT FOR THE AWARD OF BACHELOR OF ARTS DEGREE
IN MANAGEMENT

BY: EDEN GETACHEW

Id. No: UR0223/03

ADVISOR: TAMENE GIRMA (ATO)

DEPARTEMENT OF MANAGEMENT
COLLEGE OF BUSINESS AND ECONOMICS
MEKELLE UNIVERSITY
MEKELLE, ETHIOPIA

JUNE, 2013
 Acknowledgment

First of all I would like to thank God for everything he has done for me. I would also like to

express my deepest gratitude to my Advisor Tamene for his constructive and valuable comments

and suggestions which have greatly helped me for the successful accomplishment of this paper.

I am also grateful to Mesfin Industrial Engineering and its staff members for their cooperation by

providing information especially Ato Dagnew Kassa for his support by providing me the

necessary information and materials.

Finally I would like to express my sincere and deepest gratitude to my family for their invaluable

moral and financial support throughout all this years and for the completion of this research

paper. I also thank all who assisted in the fulfillment of this paper.
 Abstract
This research is conducted on the Assessment of Turnover on organizational productivity on

Mesfin Industrial Engineering. The research has been carried out mainly to find the major causes

of employee turnover at MIE as well as its impact on the overall organizational performance.

This company has been facing a problem of continuous employee turnover. It is obvious that

turnover takes away talented, competent, and experienced employees. Realizing this problem,

this study’s main objective was to identify the major causes of employee turnover at the Mesfin

Industrial Engineering and to recommend measures to overcome this problem. In order to

undertake the study questionnaire was distributed to the existing staff taking 81employees as a

sample size to fill the questionnaire. The data obtained were analyzed using statistical methods

such as tabulations and percentages. Finally conclusion was made and possible suggestions and

recommendations were provided.

 Table of contents
Contents Page

1. Chapter One: Introduction

1.1 Background of the study…………………………………………………………………..….1

1.2 Statement of the problem…………………………………………………………………...2

1.3 Objective of the study………………………………………………………………………..2

1.3.1 General objective……………………………………………………………….2

1.3.2 Specific objective………………………………………………………………..2

1.4 Significance of the study……………………………………………………………………..3

1.5 Research methodology……………………………………………………………………….3

1.5.1 Data type and source………………………………………………………….3

1.5.2 Sample size and sampling techniques…………………………………….…….3

1.5.3 Data collection technique……………………………………………………….5

1.5.4 Methods of data processing, presentation

& analys……………………………………………………………………………....5

1.6 Scope and limitation of the study……………………………………………………….5

1.6.3 Scope of the study……………………………………………………………5

1.6.4 Limitation of the study………………….……………………………………..5

2. Chapter Two: Review Literature

2.1 Overview of Employee Turnover…………………………………………………….6

2.2 Definition of Employee Turnover………………………………………………………....6

2.3 Classification of Employee Turnover……….…………………………………………….…7

2.4 The causes for Employee Turnover………………………………………………………….7

2.5 Cost of Employee Turnover………………………………………………………………..8

2.6 Measurement of Turnover………………………………………………………9

2.7 Factors affecting Employee Turnover…………………………………………………..9

2.8 Control of Turnover………………………………………………………………….10

2.9 Establishing the causes of Employee Turnover………………………………………….….11

Chapter Three: Data presentation & Analysis

3.1 Respondents characteristics

3.2 Trend of Turnover & its consequences

3.3 Employees job satisfaction

3.4 Promotion & reward system

3.5 Reasons for employee Turnover

Chapter Four: Conclusion and Recommendation

4.1 Conclusion

4.2 Recommendation

Bibliography

Appendix
 List of tables

Table 2.1: Sampling distribution for each department

Table 3.1: Respondents distribution by Sex & Age

Table 3.2: Respondents distribution by Educational background

Table 3.3: Respondents distribution by Years of Service

Table 3.4: Consequence of Turnover on organizational growth

Table 3.5: Employee Turnover in MIE

Table 3.6: Educational qualification & Job fitness

Table 3.7: Job satisfaction, Employees’ salary compared with other organizations

Table 3.8: Promotion and Reward

Table 3.9: Respondents view about the intention to leave the organization

Table 3.10: Causes of Employee Turnover

Table 3.11: Measures taken to overcome employee Turnover

 CHAPTER-ONE: INTRODUCTION

1.1 Background of the study

An organization needs to combine resources in order to produce goods/services and also to

achieve the overall organizational goals. When assessing productivity, it is important to fully
understand each of the resources that affect productivity. A change in one resource will have an
effect on others. Among the resources, human resource is a fundamental factor.

The practice of human resource management is concerned with all aspects of how people are
employed and managed in an organization (Armstrong, 2009). Since it contributes a lot for the
existence of the organization, it is very important that its employees are the most effective and
efficient.

One of the problems in human resource management is turn over. “Turnover is the net result of
some employees and entrance of others to the work organization” (Ivancevich 2003). According
to encyclopedia of business 1995:514 “turnover is the voluntary leaving of significant number of
employees from a business usually, but not always against the wishes of employer”. Under
manageable situation, labor mobility is normal. But high turnover can affect the organization’s
productivity in loss of efficient and effective employees.

Currently, there is a dynamic technological change in business environment. Organizations must

have intellectual work force to assist on productivity. Hence, being cost conscious, the
organization makes sure that employees with high human capital do not leave their organization.

In developing countries, controlling turnover is a major challenge. Employees often move to

where there is a better opportunities. Therefore organizations are expected to have a better
working environment with good benefits to keep its employees satisfied. In Mesfin Industrial
Engineering, there is high amount of staff turnover. This in turn affects the efficiency and
productivity of the organization.

This research study is mainly emphasized particularly on the assessment of employee turnover
on organizational performance in the case of Mesfin Industrial Engineering.
1.2 Statement of the problem

As modern analysis emphasizes, human beings are the most unpredictable resources that are
creative and that contributes beyond labor to organizational productivity. Organizations are often
experiencing high rate of turnover. Looking over the production of manufacturing organizations,
they are greatly influenced by labor turnover. In the context of our country, most manufacturing
industries and organizations are facing this problem. A high percentage of turnovers may cause
considerable amount of production lost. In manufacturing organizations employee turnover has
caused a loss on production, loss on experienced and professional employees, hiring costs that
consume resources such as time finance and facilities for recruitment and also it is a symptom of
other difficulties. Hence, it is affecting the overall service and organizational productivity.

This study tries to answer the following basic questions.

 Does turnover has relationship with organizational productivity?

 What is the trend of turnover in the organization?
 What are the causes of employees’ turnover in the organization?
 What is the role of Human Resource Management in controlling employee turnover?
1.3 Objective of the study

1.3.1 General objective

The general objective of this study is to assess employee turnover on organizational performance
and forward possible recommendation to the Human resource management of Mesfin Industrial
Engineering based on the findings of the study.

1.3.2 Specific objectives

This study achieved the following specific objectives:-

 To identify the relationship of turnover with organizational productivity.

 To assess the trend of turnover in the organization
 To point out cause of employee turnover within the organization
 To identify the role of HRM in controlling turnover
1.4 Significance of the study

This study aimed to aid the organization specifically the human resource management. Since the
research has identified problem areas and suggested possible solutions, enabled to reduce
turnover rate and enhance the productivity of the organization. It also supports the human
resource management of the organization to detect its drawbacks and take corrective action. This
in turn benefited the organization by assisting on organizational efficiency and profitability. In
addition, this study created a better understanding on how turnover should be managed and its
influence on the overall performance of the organization. Moreover, it contributed as a source of
information for further research in relation with this subject.

1.5. Research methodology

1.5.1. Data Type and Source

In order to conduct this research the researcher used both qualitative and quantitative data types.
The source of data for this research is obtained from both primary and secondary sources.

Primary data- is collected through questionnaire.

Secondary data- is gathered from organizational records, books and principles that are related
to this topic.

1.5.2. Sample Size and Sampling Techniques

So as to select a sample that represents the whole population, the researcher used stratified
sampling technique. This technique is selected due to the heterogeneity of the population with
different positions, responsibilities, and also with varying specializations. To gather the
information with respect to the employees’ turnover, a sample is selected from production
department (manufacturing, design & technology center, industrial manufacturing center &
electrical works, planning & monitoring, and mechanical works & civil construction
departments).

With the purpose of selecting the sample size, from the total of 427 employees, a sample of 81
employees was requested to fill the questionnaire and provide genuine information.
Table 2.1 Sampling distribution for each department

Department Employees Computation Sample size

Manufacturing 283 283x81/427 54

department

Mechanical works & 20 20x81/427 4

civil construction
department

Industrial 74 74x81/427 14
manufacturing center
& Electrical works
department

Planning & 10 10x81/427 2

monitoring
department

Design & Technology 40 40x81/427 7

center

Total 427 81 81
1.5.3 Data Collection Technique

The research involved both qualitative and quantitative data types. The primary data is collected
through questionnaires. The questionnaire contains both open and closed ended questions so it
enabled the respondents to fill with accuracy and provide actuality response. Secondary data is
collected through organizations records, publications, books and other sources.

1.5.4 Methods of data Processing, Presentation and analysis

The gathered data is analyzed and presented by using tabulation and percentage. It is interpreted
appropriately based on the responses of the respondents and is carried out by relating the
percentage of the respondents who provide the information.

1.6 Scope and limitation of the study

1.6.1. Scope of the Study

Since the human resource management activities are too broad to be covered by this study, the
scope is limited to the assessment of turnover aspect in particular. This study concentrated on the
production area of the organization because this department is experiencing high turnover rate
than others departments. The method used for conducting this research is descriptive survey.
And a stratified sampling technique is chosen to represent employees with different
responsibilities and specialization.

1.6.2. Limitation

In dealing with this research, limitations were:-

 This study was conducted on the production department of the organization in specific, if
another research would be conducted to the whole departments, a different outcome may
be resulted.
 The researcher used stratified sampling technique, which take a sample of a specific
departments, but if the researcher took the total population as a sample it would be a
better representative.
 CHAPTER TWO: REVIEW LITERATURE
2.1. Overview of Employee Turnover

Form the late 1990s and in to the 21 century, there is a great deal of literature supporting the
notion of an “employees” but are also having a difficult time keeping them (Harkins, 1998).
While morale plummets recruiting and training costs increases and organizations can find itself
in a negative spiral. Labor turnover is sagging morale in both the public and private sector
(Abassi, 2000).

Turnover can influence organizational effectiveness because fewer employees have experience
as knowledge walks out the door (Koys, 2001).

2.2. Definition of Employee Turnover

There are various definitions of turnover that have been given by different scholars. Turnover is
the willingness of employees to leave one organization for another creates a special challenge for
human resource development. Because these departures are largely unpredictable, development
activities must, prepare employees to succeed those who leave (Dalton, 1981).

Employee turnover is defined as permanent movement of employees beyond the organization

(Macy and Mirvis, 1983) this definition distinguishes turnover from temporary layoffs as well as
from intra-organizational promotions or transfers. Employee turnover is the net result of the exit
of some employees and entrance of others to the organization (Ivancivich, 1989). Employee
turnover is the process in which employees leave the organization and have to be replaced
(Mathis, 1997).

Employee turnover is the movement into and out of an organization by workforce (Flippo, 1998).
Turnover is when employees leave permanently (Franklin, 2000). Turnover is the movement of
people or employees in and out of the firm on the assumption that the leaver is eventually
replaced b a new employee (Graham, 1998).
2.3. Classification of Employee Turnover

Most studies often have classified employee turnover as voluntary or involuntary in nature.

1. Voluntary Turnover:- voluntary turnover occurs when an employee leaves by his or her
own choice (Mathis, 1997). It refers to termination initiated by employees (such as
resignation). It is often viewed as undesirable, although this is not always true. From the
individual perspective, turnover is a major way to improve employment opportunities.
Employee initiated turnover may have positive benefits for the organization if poor
performers are the ones most likely to leave (Graham, 1998).
Simply categorizing turnover as voluntary and involuntary tends to overstate the turnover
problems and the degree to which it is manageable by the organization. Voluntary
turnover should instead be categorized as functional and dysfunctional or avoidable and
unavoidable (Dalton, 1981).
2. Involuntary turnover: - is initiated by the employer through such actions as layoffs and
dismissals. The reasons for dismissals include incompetence; inability to get along with
co-workers; dishonest or lying, negative attitude; lack of motivation; and failure or
refusal to follow instructions (Flippo, 1988).
2.4. The causes for Employee Turnover
Some of the most universally accepted causes include a perception of poor supervision,
unchallenging (uninteresting) positions, limited advancement opportunities, lack of recognition,
limited control over work, perceived pay inequity, and the perception of better opportunities
elsewhere (Jardine, 2001). Causes of employee turnover included lack of challenge, better
opportunity elsewhere, pay supervision, geography, and pressure (Mathis, 1997). Inevitably the
reason employees give for leaving vary: dissatisfaction with compensation and supervision,
complaints about the crowded workplace, lack of workers cooperation, and excessive
“bureaucratic” rules and red tapes, and a desire to take greater job challenge and enjoy better
advancement opportunities elsewhere. Most theories of turnover maintain that employees leave
their jobs when their needs are not being satisfied at their present place of work and an
alternative job becomes available which the employees believe will satisfy more of their needs.
Job attitudes are extremely important in the decision to leave an organization (Ivancevich 1989).
Voluntary choice to leave an organization depends on an individual’s perception of both the
desirability of the movement and the ease of the movement. An interaction of these two key
variables such that actual choice to leave one’s organization will depend upon both wanting to
leave and being able to leave. Among all groups of employees, the three top causes of employee
turnover are personal problems, dissatisfaction with compensation, and dissatisfaction with job
opportunities (Koys, 2001).

Realistic job previews close the physiological gap between what new corners expected and what
they find. This difference between what one expects and what one finds is called cognitive
dissonance (dissatisfaction). If it is too high, people take actions. For new employees, that action
may mean quitting. Other potential causes of dissatisfaction exit besides the job itself. New
employees may not like work relate policies, co-workers supervision, or other aspects of their
employment relationship (Mathis, 1997).

Employees leave an organization because of management problems such as: lack of preparedness
for the firm to compete in the future because it does not provide training and career development
opportunities for employees to be equipped with the needed competencies to succeed on the job
and to move in to higher value added roles, a lack of organizational competencies because
compensation programs are not attractive and do not provide incentives for individuals to
improve their performance and a lack of human resource management skills in the firm to
respond quickly to employee needs (Harkins, 1998).

It is very hard to offer balanced promotion opportunities for employees. In smaller organizations,
there might not be sufficient opportunity for an employee to progress as quickly as they would
like. The employee may have to resign work for a different organization in order to continue
their career progression.

In larger organizations, employees might feel that they have been overlooked for promotion and
so have to leave in order to achieve the recognition they feel they deserve. They may see a
colleague promoted ahead of them, and fell that it is unfair (Mathis, 1997).
2.5 Cost of Employee Turnover

Excessive turnover can be a very costly problem, one with a major influence on productivity. But
cost is not the only reason turnover is important. Lengthy training times, interrupted schedules,
overtime for others, mistakes and not having knowledgeable employees in place are some of the
frustrations associated with excessive turnover (Mathis, 1997).

When the human resource department helps employees meet their personal objectives, employee
satisfaction tends to improve; this may benefit the organization through lover turnover costs. The
expenses not only of recruiting and selection but also of creating new employee records in
include disruption of customer relations, vacancy costs, disruption of workflow and the erosion
of morale and stability for those left behind (Abassi, 2000).Visible and hidden costs have also
been called hard and soft costs. Like hidden costs, soft costs are hard to quantify. Some
examples of soft costs in supermarket industry include change making errors, paper work
mistakes, damaging products...etc. When experienced, long service employees quit, the loss may
be incalculable because of the training, knowledge, and skills that these workers take with them
(Joinson, 2000).

2.6 Measurement of Turnover

The turnover rate from an organization can be computed in a number of different ways. The
following formula is expressed as separation rate (percentage). i.e. separation is people who left
the organization (Pigors and Myers, 1981).

Common turnover figures range from almost zero to over 100% per year, and normal turnover
rates vary among industries. Organizations that require entry- level employees to have few skills
are likely to have high turnover rates among those employees than managerial personnel. As a
result, it is important that turnover rates be computed by work units (Mathis, 1997).
2.7. Factors affecting Employee Turnover

There is a tendency for turnover to be higher in larger, highly centralized organization and lower
in small companies. There also seems to be a slight tendency for turnover to be higher in urban
areas and lower in rural areas, even within the same industry (Harkins, 1998).

Analysis of length of service often indicated that a large percentage of voluntary quits occur in
the first six months of employment, a fact that suggests errors in placement and orientation.
Moreover , a study of quits and stays in an organization indicates that stable employees (in
relation to turnover) where over the age of 29 at hiring, owned their own homes, had prior work
experience, and had now more that nine years of formal schooling. While some may leave after
experiences or simply to seek variety. However, although more workers will leave at the early
stage of employment, loss of trained and experience workers may in fact be more costly to the
organization (Flippo, 1988).

Pay is perhaps most frequently assumed to be the reason for workers leaving but it is rarely the
only reason. Where workers can compare their earnings unfavorably with those of others in the
same industry of the same locality, then pay levels do affect labor turnover. Once a high level of
labor turnover has been reached, however, low rates of pay make it much more difficult to
reverse the trend.

Deaths and retirements also affect labor turnover positively. The higher the number of deaths
and retirement there are in an organization, the higher will be the rate of labor turnover. Deaths
and retirements are involuntary turnover; however, the personnel department of an organization
can cope with retirements by making a recruitment plan (Abassi, 2000).

2.8. Control of Turnover

Turnover can be controlled in a number of ways. During the recruiting process, the job should be
outlines and a realistic preview of the job presented so that the reality of the job matches the
expectations of the new employee. A good way to eliminate voluntary turnover is to improve
selection and to better match applicants to jobs. By fine tuning the selection process and hiring
people who will not have disciplinary problems and low performance, employers can reduce
involuntary turnover.

i. Good Employee Orientation

Good employee orientation also will help reduce turnover, because new employees are more
likely to leave than employees who have been on the job longer. Also, employees who are
properly inducted into the company and are well trained trend to be less likely to leave if people
receive some basic information about the company and the job to be performed, they can
determine early whether they want to stay.

ii. Compensation

A fair and equitable pay system can help prevent turnover. An employee who is under paid
relative to employees in other jobs with similar skills may leave if there is an inviting alternative
job available. An awareness of employee problems and dissatisfaction may provide a manager
with opportunities to resolve them before they become so severe that employee’s leave.

The HR perspective discusses findings that inadequate rewards may lead to voluntary turnover,
especially with employees such as sales people, whose compensation is tied directly to their
performance.

iii. Career planning and internal promotion

Career planning and internal promotion can help an organization keep employees, because if
individuals believe they have no opportunities for career advancement, they may leave the
organization. One study identified career “shocks” that may lead to turnover. Shocks include
being turned down for a promotion, being transferred to a new location without adequate
training, and believing that the immediate supervisor will not be fair as a result of a negative
performance review. Some voluntary turnover may involve people who “voluntary quit” because
they recognize that their performance deficiencies cold result in their employment being
terminated in the near future.
Finally, voluntary turnover may be linked to personal factors that are not controllable by the
organization. This is particularly true with part time workers. Among the many reasons
employees quit that cannot be controlled by the organization are the following:

1. The employee moves out of the geographic area.

2. The employee decides to stay home for family reasons.
3. The employees spouse is transferred, or
4. A student employee graduates from college.

Organizations must take steps to control turnover, particularly which is caused by organizational
factors such as poor supervising, inadequate training and inconsistent policies. HR activities
should be examined as part of turnover control efforts (Mathis, 1997).

2.9 Establishing the causes of employee turnover

The views of individual workers can help to point out problem areas. There are two main
approaches in which these may be obtained.

1. Through exit interview, and

2. Specific questionnaires and survey
I. Exit interviews

The primary purpose of exit interview is to find out why employees are leaving. Exit interviews
are viewed as a basis for improving the overall work environment by highlighting problem areas
within the organization so that management can take steps to alleviate those problems.

The problems of concern may be related to the job itself, supervision and management, pay and
other conditions of work,, training and career prospect with the organization, working conditions
and amenities, opportunity for further education, equal opportunities etc. However, workers
might not always disclose the real reasons for leaving or their true views about the organization.
To minimize such “distortion”, it is advisable to:

 Have the interview carried out by a person other than immediate line manager, (in most
cases by employment recruiters). Using employment recruiters as exit interviewers seems
advantageous for two reasons.
Firstly, employees become more open in their commitment when speaking on a
confidential basis, with someone with whom they have had previous contact at a time of
hire. Secondly, recruiters are usually experienced interviewers, and skilled in obtaining
meaningful information.
 Conduct the interview away from normal place of work.
 Explain that the interview is confidential.
 Explain the reason for the interview.
 Confirm that the reasons for leaving will not affect any future references or offers to
work again for the organization.
 Conduct them during the final week of employment, specifically on the last day. This is
because in the earlier week most employees going through clearance procedures are
usually more interested in completing the process and obtaining their payment than
discussing at length their reason (s) for leaving.

Collecting extensive exit interview information is of little or no value unless that information
is used as a basis upon which management can remedy existing problems. Research shows
that surprisingly, most organizations do nothing with exit interview. Some research indicates
that information obtained from exit interview is not used by the organizations because of the
following reasons:

 Employees leave for reasons over which the organization has no control, such as personal
problems, illness or relocation.
i. By the time problems are identified in exit interviews new and more critical ones
already arisen and
ii. The sample included in the exit interviews is not representative of the total
workforce.
 iii. On the contrary other organizations have made significant changes as a result of
exit interviews. These changes include pay increases; redesign of work areas,
alleviations of overcrowded working conditions and dismissal of supervisory who
could not deal effectively with their subordinates (Mathis, 1997).
II. Specific Questionnaires and survey
If other measurement methods highlight particular areas of concern, you may wish to use
questionnaires or surveys to investigate further. For example, suppose that a number of
exit interviews have attributed stress as a major reason for leaving the organization. An
examination of staff records has highlighted that there are at least twenty more employees
undertaking similar roles. You will need to establish quickly and effectively whether the
other twenty employees are feeling the pressures of the pressures role, and whether this
stress is likely to cause them to leave the organization. In this example, you could use a
survey or questionnaire that asks employees about:-

 The level of perceived stress that accompany the role

 How will each member of staff feels they are coping with the pressure
 What employees are doing to handle the pressures
 What the organization could do to alleviate the problem
 How likely employees are to leave the organization as a result of the pressures
involved.

Questionnaires and surveys could be undertaken confidentially or even anonymously, in order to

be sure that employees are open and honest with their comments and answers (Joinson, 2000).
 CHAPTER THREE: DATA PRESENTATION AND ANALYSIS

In order to assess the actual situation and to gather the opinions of the employees 81
questionnaires were distributed. Out of this the researcher collected 71 questionnaires and the
rest was not collected due to different reasons.

The information collected is presented and interpreted as follows:

3.1 Respondents characteristics

Table 3.1: Respondents distribution by Sex and Age

Age classification

Sex 20-25 25-30 30-35 36-40 Above 40 %

Male 22 20 16 5 1 88.8

Female 3 3 2 - - 11.2

Total 25 23 18 5 1 100

Source: Own Survey, 2013

As this table indicates, the age composition of respondents which directs the majority of the
respondents is between the age group 20-25. And also, it is observed that the male population is
dominant over females’ population. Out of the total number of respondents male accounts 88.8%
where as the female respondents’ account 11.2%.

Table 3.2: Respondents distribution by educational background

Educational background Male Female Total %

Certificate 1 - 1 1.3

College diploma 16 3 17 25.7

 1st degree 46 6 49 70.3

≥2nd degree 2 - 2 2.7

Total 65 9 71 100

Source: Own Survey, 2013

Regarding the educational background of the employees in MIE the data shows that there is
adequate professional workforce in the organization. From the total respondents, 1.3% of the
respondents are certificate holders and 25.7% of the respondents possessed college diploma. First
degree accounts 70.3% of the total respondents and 2.7% of the respondents have 2 nd degree and
above.

Table 3.3: Respondents distribution by years of service

Years of service No. %

0-5 52 73.2

6-10 14 19.7

11-15 5 7.1

Above >15 - -

Total 71 100

Source: Own Survey, 2013

The table above implies that a maximum number of employees do not stay longer than 5 years. It
is shown that 74.3% of respondents have worked 0-5 years. The other 18.9% of the respondents
have worked 6-10years and the remaining 6.8% of the respondents worked 11-15years.

3.2 Trend of turnover and its consequence

Table3. 4: Consequence of turnover on organizational growth

Do you think employee’s No. %

turnover has consequences on
the growth of the organization?

Yes 67 94.4

No 4 5.6

Total 71 100

If your answer is ‘yes’, what

do you think the possible
consequences?

Increased work load 8 11.3

Exit interview cost 2 2.8

Overtime costs 3 4.2

Replacement cost(recruiting) 5 7

Loss of productivity 10 14.1

Influence on organizational 8 11.3

performance

Increased work load & 9 12.7

Overtime costs

Loss on productivity & 14 19.7

Influence on organizational
performance

Loss on productivity & 9 12.7

 Increased work load

Replacement cost & Training 3 4.2

costs

Total 71 100

Source: Own Survey, 2013

In accordance with the above table 94.7% of the respondents approved that employee’s turnover
has a consequence on the growth of the organization. Only a small portion of the respondents
(5.6%) doubts turnover’s consequence on organizational growth.

According to the responses obtained from the respondents’ loss on productivity, increased work
load, and its influence on organizational performance are the major consequences for the
productivity of the organization. Others like exit interview cost, overtime costs, replacement
costs (like recruiting), can also contribute for the consequences of the organizational growth.

Table 3.5: Employee turnover in MIE

Do you think MIE is No. %

facing employee
turnover?

Yes 56 78.9

No 15 21.1

Total 71 100

Source: Own Survey, 2013

According to the above table it is indicated that 78.9% of the respondents approved that MIE is
experiencing employee turnover. Other respondents (21.1%) disagree that MIE is having
problems with employee’s turnover. This indicates the existence of turnover within the
organization.
3.3 Employee’s job satisfaction

Table 3.6: Educational qualification and job fitness

Does your educational No. %

qualification fit with
your job?

Yes 67 94.4

No 4 5.6

Total 71 100

Source: Own Survey, 2013

About 94.4% of the respondents feel that their educational qualification best suits their
profession. This implies the majority of the respondents are comfortable with job fitness related
issues. Only 5.6% of the respondents do not think their educational qualification fit with their
job.

Table 3.7: Job satisfaction, employees’ salary compared with other organizations

Are you satisfied with No. %

your job?

Yes 11 15.5

No 38 53.5

Indifferent 22 31

Total 71 100

Compared to other
organizations what do
you think of your
 salary?

Good 42 59.2

Very good 6 8.5

Not good 23 32.3

Total 71 100

Source: Own Survey, 2013

The above table illustrates that most of the employees are unsatisfied with their job. This table
indicates 15.5% of the respondents are satisfied with their job, whereas 53.5% of the respondents
are not. The remaining 31% of the respondents are indifferent.

In comparison with other industrial companies 59.2% of the respondents indicated that the salary
they get is good and fair. The other 8.5% of the respondents said their salary is very good in
comparison with other organizations. The remaining 32.3% of the respondents think their salary
is inadequate and insufficient for their cost of living.

3.4 Promotion and reward system

Table 3.8: Promotion and reward

 How many times did No. %
you get promotion?

Once 22 31

Twice 15 21.1

Three and above 5 7.1

None 29 40.8

Total 71 100

Do you feel that you

are adequately
rewarded?

Yes 41 57.7

No 30 42.3

Total 71 100

Source: Own Survey, 2013

According to the above table, the numbers of employees that do not get any promotion at all
have the largest number. And some employees get promotion only once. This implies the
organization does not give much emphasis on empowering employees. According to the above
information 31% of the respondents get promotion once. While 21.1% of the respondents
achieved upgrade twice. The respondents who get the opportunity of promotion three times and
above are 7.1%. The remaining percent which is 40.8% encompasses those who are never
promoted.

About 57.7% of the respondents believe they are adequately rewarded. The rest 42.3% think they
did not get the reward that they deserve and they doubt the criteria used to reward employees.
Table 3.9: Respondents view about the intention to leave the organization

Do you have an No. %

intension to leave the
organization?

Yes 46 64.8

No 11 15.5

Indifferent 14 19.7

Total 71 100

Source: Own Survey, 2013

Employees who have an intension to leave the organization are 64.8% of the total population.
This implies that employees do not want to stay longer in the organization. It is because of
the reasons that there is low opportunity for advancement; the location of the company is in a
remote area, lack of attractive salary and their need on the industry market influence them for
searching better opportunity. Consequently, they will have an intension to leave the
organization. On the other hand, 15.5% of the respondents replied they do not have an
intension to leave the organization and they are comfortable with the working conditions.
19.7% of the respondents are indifferent.
3.5 Reasons of employee turnover

Table 3.10: Causes of employee’s turnover

What do you think the No. %

possible cause for
employee turnover?

Lack of attractive 9 12.7

salary

Bad working 8 11.3

 conditions

No opportunity for 12 16.9

advancement

Job dissatisfaction 7 9.8

Poor supervision of the 9 12.7

management

Problem related with 5 7

fringe benefits

Bad working 6 8.5

conditions & Job
dissatisfaction

No opportunity for 15 21.1

advancement & Poor
supervision of the
management

Total 71 100

Source: Own Survey, 2013

As we can perceive in table 3.5: MIE is facing a high rate employee turnover. Looking at the
possible causes, the greatest number of the respondents believes that there is no opportunity for
advancement. This means that the company does not provide an opportunity due to its location;
its management lacks the habit of power delegation and further advancement. From the
respondents 9.8% are unsatisfied with their job and 11.3% of the respondents claim that there is
a bad working condition, and inhospitable working environment. Moreover, 12.7% of the
respondents think lack of attractive salary is the possible cause of employees’ turnover. In
addition, 12.7% of the respondents set poor supervision of the management as the reason of
employees’ turnover. The remaining 7% of the respondents think the problem related with fringe
benefits is one of the possible reasons. Furthermore, 8.5% of respondents replied both bad
working conditions and job dissatisfaction are the causes where as 21.1 of them said no
opportunity for advancement and poor supervision of the management are believed to be major
causes of employee’s turnover.

Other causes that the respondents indicated are the beginning of the train construction and it has
given an opportunity for the engineers to take the course for free. The other possible reason is the
location of the company is more of in remote area and does not provide a better opportunity
comparing with the capital city (Addis Ababa). The political influence is also mentioned as an
excuse to leave the organization and also the company fails to update its technology and compete
in the current market. Furthermore, most of the engineers left the organization to learn marine
engineering which is a new course to the country and creates a better chance for the employees
to stay competitive.

Table 3.11: Measures taken to overcome employee turnover

Has MIE been taking No. %

any measures to
control/reduce
employee turnover?

Yes 24 33.8

No 47 66.2

Total 71 100

Source: Own Survey, 2013

Surprisingly, 66.2% of the respondents said that MIE has not been taking any measures to
control or reduce the employee turnover; this shows the management is giving a little concern in
controlling labor turnover. While only 33.8% of the respondents said MIE is taking action in
order to reduce the turnover rate.
Table 3.12: Uncontrollable factors and measures to be used

Is there any uncontrollable factor of employee turnover?

What measures do you suggest in order to control employees’ turnover?

Source: Own Survey, 2013

The respondents have suggested possible solutions and uncontrollable factors, which the
company must give emphasis in order to retain its competent and professional man power in the
organization. Among the uncontrollable factors the respondents mentioned:-

 The current market in Ethiopia for skilled and technical persons.

 The employee attitude towards self employment.
 Current salary standard of the country.
 The nature of the job is more of contractual hence; employees leave as soon as they end
their agreement.

The respondents suggested what the organization must carry out in order to control or decrease
the rate of employees’ turnover, such as:-

 Giving opportunity for advancement (i.e. as a trend one employee will have this
opportunity per two years so, the time required should not be this much long).
 The management has to motivate its workforce by paying attractive salary, giving
training, introducing incentive work and providing suitable working conditions.
 Must standardize its salary with the current market and give an opportunity to advance
educational level.
 Should restructure and upgrade the supervision of management and smoothing the
relationship between employee and management.
 Setting performance based promotion and reduction of work load. Additionally, the
company must encourage innovative ideas.
 So as to create job satisfaction, the Human resource management should assign the right
person on the right position without any discrimination.
  The management has to allow participation of the staff at different level in the decision
making process.

CHAPTER FOUR: CONCLUSION AND RECOMMENDATION

4.1 Conclusion

This study focuses on the analysis of employee turnover on the performance of Mesfin Industrial
Engineering. The research has been conducted mainly to find the major causes of employee
turnover at MIE as well as its impact on the overall organizational performance. This study is
done due to the increased issue of employee turnover in the Mesfin industrial Engineering, which
is facing a relatively high staff turnover.

Above all factors manpower is the most important for the success or failure of an organization. It
is the backbone, the life-blood of an organization. It also determines the well being of the
society.

Mesfin Industrial Engineering has been facing a problem of continuous employee turnover. It is
obvious that turnover takes away talented, competent, and experienced employees. Realizing this
problem, this study’s main objective was to identify the major causes of employee turnover at the
Mesfin Industrial Engineering and to recommend measures to overcome this problem.

In order to undertake the study questionnaire was employed. This method has been done to
obtain the views and comments of existing employees. So as to obtain the views and comments
of the existing staff 81 of them was selected to fill the questionnaire. The data obtained were
analyzed using statistical methods such as tabulations and percentages.

The study indicates the existence of undesirable staff turnover at the company. And it is believed
that it has a great influence on the productivity and growth of the organization. Further analysis
has indicated that the company is giving a little concern for labor turnover within the
organization.

The study has also indicated that the majority of terminates were by voluntary resignation. And
maximum number of employees does not stay longer than 5years. It is found that majority of
employees who has left the company were degree holders and above. This shows that the
company has been losing well-educated and professional staff members.

Because of the organization does not give much emphasis on empowering employees, potential
and skilled staff members leave the organization for searching an opportunity for development.
Moreover, beginning of the train construction in the country and the opportunity to learn marine
engineering for free are found to be the main reasons for the termination of engineers in the
organization.

Further, the study indicates that the major drawbacks of the company which induces the
employees to leave are lack of motivation, lack of further educational opportunity, lack of
creating job satisfaction for the employees, lack of competitive pay, lack of recognition of
employees in respect of performance and the location of the organization.

4.2 Recommendations

 Since there is an increasing turnover rate through time, the company must understand
how deep employee turnover could affect the productivity and the well being of the
organization. Hence, Mesfin Industrial Engineering should work on solving the major
problems that are causing labor turnover.
 The Human resource department should motivate and retain its employees using a
number of different motivational methods besides paying attractive salary, offering
training, career development programs, educational opportunity, providing a safe and
 comfortable working environment and rewarding hard working individuals based on their
performance would create a better working environment.
 In view of the fact that the main problem for employee turnover is lack of opportunity,
MIE must provide different opportunities for further education and development that
would enable individual to specialize and the company will be benefited by having
qualified work force.
 Additionally, the company should implement a situation whereby employees will be
promoted according to their performance and experience. The company should also
communicate to all employees clearly that they have the right to come and check on
promotion results if they are uncertain about the promotional procedure. The company
should also practice job rotation in order to widen the promotion opportunities for its
employees. The company’s policies, procedures and practices should be transparent and
consistent regarding promotion, and promotion transfer.
 The company should also encourage team work which will let the employees to be
efficient and effective. Also, team work will allow sharing of opinions, skills, and
experience which is an advantage for the employees and the company at large.
 The company should administer salary scale objectively and fairly, and make the salary
scale competitive based on careful study on the labor market prices, the job, qualification,
competence of employees, and years of relevant experience. The present salary scale
should be revised and adjusted. While adjusting the salary scale the company should bear
in mind the current living costs. Therefore, the company should try to bring into balance
the salary scale and cost of living.
 The company’s management should have their ears open for the questions and
suggestions of the employees.
 Prior to an employee’s separation, the company should try to resolve the problems in
order to be productive and competitive in the market. Furthermore, the Human resource
department should understand that experienced work force means the basic resources of
the company and losing them is a great damage to the company. Therefore, the company
should investigate systematically the reason as to why the employees resign and take
appropriate actions to reduce turnover.
 Further, the company has to give its due attention to the turnover situation and discuss
openly what the reasons behind are; ignoring turnover and hiring new staff does not bring
a solution to the problem. Rather the company has to analyze why employees have left?
What are the problems? And what is the solution? Because retaining the existing staff is
more useful to the company. Looking for new employee is more costly than retaining the
existing staff. Therefore, Mesfin Industrial Engineering must try to satisfy its employees
and as a business organization it must try to satisfy its customers.

Bibliography

- Abassi (2000) Turnover: The real Bottom Line, London.

- Dalton (1981) Functional turnover an Empirical Assessment (University of London

press LTD) London.

- Flippo (1988) Personnel Management, 6th Edition (McGraw Hill Book Company)

London.

- Ivancevich (1989) Foundation of Personnel/Human Resource Management (Richard

DI. Inc.) United States of America.

- Joinson,C.(2000), “Capturizing Turnover costs” , Hoddor Headline,London,

- Koys D.J. (2001) The effect of Employee Satisfaction, organizational Citizenship

Behavior and turnover on organizational effectiveness (Academic Press) New York.

 - Mathis (1997) Human resource Management, 8th Edition (West Publishing Company)

United States of America.

APPENDIX

Mekelle University
Faculty of Business and Economics
Department of management

Questionnaires to be filled by Employees of Mesfin Industrial Engineering

Dear respondents,

This questionnaire is designed for preparing a senior essay under the title “Assessment of
turnover on organizational productivity” in Mesfin industrial engineering. I kindly request your
co-operation in filling this questionnaire. Your frank and honest opinion will have a contribution
to the success of this research. I assure you that any of the information you provide below will be
kept completely confidential and will not be used for any other purpose.

- No need to write your Name

 - Please put a tick (√) mark in the box to show your response

- Use the space provided for your suggestions.

Part I: General Information

1. Age

20-25 25-30 30-35 36-40 Above 40

2. Gender

Male Female

3. Educational background

Certificate College Diploma

1st Degree 2nd Degree and above

4. Year of service in the organization

0-5 years 6-10 years

11-15 years above 15 years

Part II: Detailed information

6. Do you think the employee’s turnover has consequences on the growth of the organization?
Yes No
7. If your answer for question no 16 is “yes” what do you think are the possible consequences?
(You can give more than one response)
Increased work load
Exit interview cost
Overtime costs
Replacement cost (recruiting)
Loss of productivity
Influence on organizational performance
8. Do you think MIE is facing employee turnover?
 Yes No
9. Does your educational qualification fit with your job?
Yes No
10. Are you satisfied with your job?
Yes No Indifferent
11. Compared to other organizations what do you think of your salary?
Good Very good Not good
12. How many times do you get promotion?
Once Twice Three and above None
13. Do you feel that you are adequately rewarded?
Yes No
14. Do you have an intension to leave the organization?
Yes No Indifferent
15. What you think the possible cause for employee turnover (you can give more than one
response)
Lack of attractive salary
Bad working conditions
No opportunity for advancement
Job dissatisfaction
Poor supervision of the management
Problem related with fringe benefits
Other causes ________________________________________________
16. Has MIE been taking any measures to control/ reduce employees’ turnover?
Yes No
17. Is there any uncontrollable factor of employee turnover?
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
18. What measures do you suggest in order to control employees’ turnover?
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________