Research Proposal Essay

Overview This dissertation aids in identifying the fundamental, extrinsic aspects influencing the dynamics of employee turnover and how it affects the surrounding atmosphere including internal and external behaviour of an organization. Employee turnover is one of the much talked challenges faced by employers which hinders an organization’s sustainable growth and generates negative synergy among other employees. This review can assist in analyzing strategy for retention and reduction of employee turnover in both public and private sector organizations. Organizations invest immensely in recruiting and developing their employees as it relates to continuous success of the organisation. Hence employee turnover is a potential loss for any firm. HR managers try to prevent the employee turnover by implementing effective retention strategies. Employee turnover is a common issue in Indian IT sector, though the trend has been reduced for the interim due to the recession. This dissertation helps in suggesting productive retention strategy in the organizations; and make recommendations to management of the organizations on how to effectively retain employees and reduce turnover. This review focuses on labor cost being a quintessential factor in the employee turnover process. In order to minimize the costs associated with the turnover, firms are implementing various strategies. Considering the fluctuation in direct and indirect costs of labour turnover, therefore, management does incessant studies to recognize the reasons why people leave organizations so that appropriate action can be undertaken by the management. Providing competitive salaries and other benefits, empowerment, providing stock options, flexible work hours are few of such strategies adopted by the firms to retain their staff. But how significant are these strategies to the employees? (James and Mathew: 2012. 79,page 1) Bussin (2002) asserts that constant training and development of emplo yees’ skills can actually aids employee early turnover rather than strengthening their retention. Providing employees with the latest training and development opportunities enhances the employee skills leading to escalating their chances of mobility. (Samuel and Chipunza; 2009) Our discussion proceeds in following steps. First, we investigate the aspect of money being the main motivator of employee turnover or could there be other motives. Next we identify the role of management to achieve a self- actualised employee and understand the factors that lead to this phenomenon.The final section of this dissertation discusses the results of the study and the conclusion. One of the main challenges to Emiratisation in the private sector is related to adapting the legal framework to accommodate national jobseekers’ needs. While they are well protected and privileged in the public sector, Emiratis find themselves vulnerable in private sector jobs. This is mainly due to a stricter legal framework that is mainly designed for the transient expatriate workforce in the private sector. A simple comparison between the contents of the Labour Law No. 8 of 1980 (and its amendments), which governs the employment relationship in the private sector and the employment legislations in the government sector reveal vast differences in favour of citizens who work in the public sector, as opposed to those working in the private sector. In general, employment legislation in the government sector stipulates in detail various rights and obligations of workers, while much of the employment relationship in the private sector is left to be determined through contractual agreements between employers and employees. Also, residence permits tend to tie expatriates to one specific employer, tipping the balance in labour turnover unfavourably against citizens, who are not tied in this way (Mellahi and Wood, 2002). A study by Abdalla et al. (2010) examining the determinants of employment and wage levels in the UAE found evidence to support the notion of a dual labour market that is segmented by sectors (public versus private) and nationality of workers (citizens versus expatriates). The experience of UAE citizens, who until recently had easy access to public sector jobs with wages inconsistent with the market value of their human capital, makes their expectations regarding wages and working conditions unrealistically high. This makes them unattractive to profit-oriented employers in the private sector. As a result, GCC citizens often prefer to wait for a government job rather than take a private sector job, even if they are aware that the wait might last many years (Shaban et al., 1995) Another 23 per cent of the respondents indicated they would take a private sector job as a temporary measure to earn a salary until finding employment in the public sector. In total, half of the interviewees indicated that they see no future career for themselves in the private sector at all. These answers were consistent across all three groups of interviewees. Respondents were very clear about the factors that make them prefer one sector over the other. For those who prefer the public sector, the main factors were job security (39.5 per cent), salary levels (31.5 per cent), and advancement opportunities (30 per cent). Other significant, but less frequently cited reasons to prefer the public sector, were more vacations (10 per cent) and relatively less working hours (8.3 per cent). When asked what a private sector organisation would need to do to make her apply for a job, a female graduate in our sample answered: â€Å"I don’t want to sign my death paper. The salary, the wor king hours and the contractual conditions I would sign would equal that.† It is interesting to note that while a small number of respondents (15 per cent) indicated that they would prefer to work in the private sector, many (38 per cent) said that good career opportunities exist in the private sector. Those who prefer the private over the public sector cited advancement opportunities (44 per cent) and finding a job consistent with one’s specialisation (33 per cent) as the reason for their preference. However, these attributes were not sufficient to attract many Emiratis to pursue employment in the private sector due to several structural barriers reflected in inferior salary levels and employment conditions in the private sector compared to the public sector. In addition to the basic preference for public sector employment, it was also clear that this preference is supported by a strong sense of entitlement to such jobs and the salary levels coming with it, as one male student puts it: â€Å"We are a rich country – Thank God – and the government pays well because it can afford to do so. It is our right as nationals to have jobs that pay well.† This sense of entitlement (Al Gergawi, 2008) is deeply rooted in the existing social contract, changes to which Forstenlechner and Rutledge (2010) argue need to be communicated urgently if citizens are no longer able to be employed in the public sector at current levels. When asked about factors affecting their decision to accept a job offer from an employer, respondents gave the highest rating to employee rights (48.3 per cent) and job security (45 per cent). These were followed by working conditions and availability of advancement opportunities. Table I further shows that Emiratis in general are unwilling to take risks with regard to their job and career choices. Job security and protection of employee rights are their top priority, followed by working hours and advancement opportunities. Despite the importance of salary and benefits, these were not on the top of the list as shown in Table I. Salary: Salary expectations Our findings support the contention that one of the major barriers to Emiratisation in the private sector is the high reservation wage required by Emirati job seekers. When asked what minimum monthly net salary they would work for, 38 per cent indicated that they would accept 6,000-10,000 dirhams[1]. However, 32 per cent had a reservation wage of 10,000-15,000 and a further 12 per cent said they require 15,000-20,000. The remaining 18 per cent said their required salary would be above 20,000. However, when asked what they think they should get paid, respondents’ answers were higher than their individual reservation wage. In this case only one female respondent said she considered a monthly salary of 6,000-10,000 fair. 37 per cent of respondents said they should get 10,000-15,000, 20 per cent indicated that they should get 15,000-20,000 and 8 per cent said fair pay would be 20,000-25,000 monthly. The remaining 30 per cent, however, considered a fair wage to be upwards of 25,000 monthly, with 10 per cent actually expecting a monthly net salary between 35,000 and 50,000[2]. These expectations are clearly driven by public sector (welfare) wages, as one male student explained: Salary expectations Our findings indicate that young Emirati jobseekers on average have a higher expected salary than their – already relatively high – individual reservation wage. This points to several somewhat troubling conclusions: . The average reservation wage for young Emirati job seekers is high compared to the expatriates they are competing against in both sectors, confirming previous research (Bremmer, 2004; Godwin, 2006; Mellahi, 2007). . The perceived fair pay for young Emirati job seekers is higher than their reservation wage, which means they are likely to experience pay dissatisfaction even when they accept job offers in the generally lower paying private sector. . The perceived fair pay and the reservation wage required by the majority of Emirati job seekers interviewed in this study is comparable to the going rates in the public sector for national employees of similar calibre. This clearly indicates the need to consider the potential impact of pay policies in the public sector on Emiratisation efforts and policies, as they effectively hinder private sector employment. We see the roots of such expectations in the structure of the labour market, where public and private sector are governed by different considerations and different rules and regulations. Therefore, one of the key hindrances remains the salary difference between the public and the private sector. As it is unrealistic that public sector pay will be lowered, as recommended by the IMF (2004), and just as unrealistic to expect the private sector to match public sector salaries and benefits in the context of the UAE, we therefore support a recommendation made by Abdalla et al. (2010) to revise the wage-setting mechanism in the public sector. They suggest to separate the total public sector wage into two parts: pay related to market considerations and productivity of workers (efficiency wage); and (2) a portion motivated by the desire to improve the standards of living and wealth distribution for citizens (welfare). They assume that, in the UAE, only part of the wage paid to national workers in the public sector is related to the value of their human capital or their work performance, while the other part is a transfer payment to raise the standards of living for citizens. Separating the two components has two advantages: (1) it sends the right signal to national workers about the realistic value of their human capital; and (2) it helps to remove the distortion of labour market mechanisms in setting wages according to market forces. Mechanisms to extend the welfare component of pay to those citizens working in the private sector will need to be implemented. Subsidizing wages of citizens in the private sector to bridge the gap between the efficiency and welfare components of pay might be a reasonable alternative. Funding of these subsidies can be secured through fees imposed on employers who recruit foreign workers. Selective application of such fees on employers depending on number of foreigners recruited and affordability to pay might be needed to ensure fairness and avoid excessive burdens on certain employers. As mentioned previously, salary is, of course, not the only aspect where expectations are driven by the public sector. The same is true for days off work, as one male student puts it: â€Å"All I am asking for is normal vacations†, with â€Å"normal† in this case meaning those vacations the public sector offers. Recommendations for further research Further research is needed to clarify the perspective of private sector employers on localisation, for example the perceived threshold of tolerable legislative changes and their perception and intention of compliance. Also, research is needed to analyse the potential effects of employment laws and regulations on the effectiveness of workforce localisation policy and the legislative changes that might be needed to enhance its outcomes. Further quantitative, large-scale testing of some of the conclusions regarding the attitude of jobseekers would also be beneficial to further investigate the perceptions of jobseekers, possibly by delivering a survey to a large number of students enrolled in the higher education system. Understanding the process of employee turnover has been interpreted differently by various researchers depending on the controlling factors of the socio-cultural environment. This is because different factors have been found useful when it comes to interpreting employee turnover, and these have been used to model turnover in a range of different organizational and occupational settings. They include: job satisfaction (Hom and Kinicki, 2001); labour market variables (Kirschenbaum and Mano-Negrin, 1999); various forms of commitment (see Meyer, 2001 for a review); equity (Aquino et al., 1997); psychological contract (Morrison and Robinson, 1997); and many others (see Morrell et al. (2001a) for a review). S. Wren (1980) also suggested that to reduce employee turnover the company should keep employees informed on company matters, encourage employee innovation and setting clear communication channels between top management and lower employees. Also Inge, Peter , Arnold and Jan (2003), sugg ested that work motivation is related to emotional exhaustion which in turn induces employee turnover rate in their longitudinal study. Considering the prolonging economic downturn, the primary stimulating factor impacting employee turnover has been money, as consequently it affects both employees and their respective organizations. However, organizations try to implement other strategies to keep employee turnover to a minimum level by rewarding their employees with better incentives and bonuses. Research has portrayed that even when people’s main motivation for work is not money, if they are offered a higher salary by other organizations, they would not be hesitant to leave their current job, thus leading to high employee turnover. In response, researchers have recently turned their attention towards employee work motivation as predictors for employee turnover (Richer et al., 2002), as motivational sources have been found to influence employee turnover beyond job satisfaction and organizational commitment (e.g. Mitchell et al., 2001). In fact, some authors proclaim that the primary aim of incentives is to enhance better motivation by satisfying an individual employee’s needs indirectly through means of pay and bonuses (Anthony and Govindarajan, 2007; Kunz and Pfaff, 2002). Some UAE scholars pointed out that â€Å"Motivation is an important subject area for researchers and practitioners all over the world. ( Abubakr M and Nawal , p 86)† It is an ongoing universal argument if money is the main motivation causing high employee turnover within an organization. Therefore, this literature review is based on theory testing evidenced by past studies on staff turnover and retention, not supported by theory building. All these theories consolidated as one forecasts potential costs of organizations in diversifying pay, mainly through two kinds of de-motivating factors: first, individuals that don’t earn as much as they feel their work deserves may perceive that they are less-well valued than their higher-paid counterparts; and second, higher-paid individuals may perceive that they are more valuable than they actually are (Kohn, 1998; Carr, 2004). In reference to (Abdulla j., Djebarni R. and Mellahi K, 2011, p138) employees in the UAE put a strong emphasis on salary and incentives especially for non-UAE nationals because of their impact on living standards and importance in providing a sense of security where perceived job security is very low. Furthermore, the high importance of salaries and incentives could be due to the high cost of living in Dubai compared to other Middle Eastern emirates. Having reviewing the EU countries such as Greece, extrinsic rewards such as pay give better outcome in the organizations and their governments actually want to convince private sectors on the importance of intrinsic rewards where workers are motivated to work without expecting a reward and love what they do. (Manolopoulos D., 2008) Crucial factors like employee involvement and the process of performance rewarding impacts the degree to which employees are included in decision-making processes. Are they occasionally asked for input or feedback? Or are they authorized and challenged to make a difference? Obviously, the greater an employee’s level of involvement in the decision-making process, the greater the sense of ownership for the outcomes of such decisions, which, in turn, assures employees that he/she is a part of the organization as a whole. (Dell’Agnese, 2001; Mintzberg, 1994a,b,c, 2001a,b; Pfeffer, 2001a,b; Piggott, 1997). One of the effective ways of reducing staff turnover is making more effective use of existing staff resources and in attempting to put together a pay package which attracts and retains staff, through rewarding them fairly for their performance (A. Baines, (1991) pp. 8 – 10). According to one source (Curtis S. and Dennis W. 2001, p.59), the cost of replacing an employee is higher than recruiting a new staff. This is because of accumulated cost of the loss of skills, knowledge, experience and the investment in training. There is also the disruption to the work and staff, when a new employee is recruited, there are barriers like new challenges of adopting to the culture of the organization, personality conflicts, time taken to familiarize with the job description etc. Also, many other administrative cost associate with the employee turnover process like agency fees for recruitment firms, wasted time in exit interview process and administrative process of recruitment being time consuming and expensive etc. As further discussed by (Curtis S. and Dennis W., 2001, p.61-62), to get employees committed quickly, they should feel emotionally attached to the organization and feel that resigning would be a personal sacrifice for them where they would have an obligation and responsibility to stay. One of the interesting fast track employee commitment mentioned is offering flexible hours. Organizations should have improved retention schemes through flexible working options implementing other family-friendly policies like baby-sitting facilities, special consideration for new mothers and expecting mothers etc. Other initiatives might include workshops aimed at achieving a better work-life balance, access to a range of domestic services, extended maternity leaves, paid vacation breaks and extended parental leave. Since, the UAE is a family oriented culture, majority of employees would appreciate having easygoing strategies in their work place which allows them to have a work-life balanced with fami ly life. A worker lacking motivation is a problem waiting to happen. That’s why companies need to be able to ensure that their workers are fully motivated to do their jobs. If this isn’t the case then all that knowledge that they may possess isn’t fully utilized as a result of them not putting in 100percent (Maria C. Osteraker, 1999, pp. 73 – 77). Money as the sole motivation for work or production isn’t exactly the right solution. As portrayed within the proposal it is an important aspect, but should not be classified as highly crucial, since it is evident that other factors are arising. Taking into consideration that employees may transfer to other companies for a higher rise in money, however the effect is only temporary as behavioral aspects is also taken into account. Therefore it’s a balance of both. As Carolyn Wiley put it, Motivation is not a fixed trait; it is a combination of various aspects. (Wiley C., 1997, pp. 263 – 280). Going by this article (Industrial and Commercial Training, 1975, pp. 508 – 508). It details that it was Herzberg in the 1960’s who determined that money was not the sole motivator. It also goes on to state how the issue of money could be mixed. Both negative and positive, a worker will not accept a job that pays less simply because the all-round package was better. However he/she may accept a similar paying job if other aspects were improved. In other words they are looking for the right balance between the two. The dissertation is crucial because it shows the organizations the reasons behind employee turnover; it explains why it is happening in an organization. The main purpose of this dissertation was examining the impact of the retention on employee turnover; high employee turnover leads to collision on the competence and continuation within the organization. It is seen that many organizations features these kinds of issues with the labor turnover because it can lead to loss of the organizations, time consuming of the management and stress in the workforce plans. The study portrays that; pay can be one of the main motives for staff turnovers, also culture of the organizations and the job satisfactions. These three factors lead to labor turnover within the organization. Employee would stay in the organization if retention strategies are available like training sessions, good work timings, and employee’s proposal. Welfare benefits can be assigned as one of the main motives; as penetration after employee retirement and insurances. And other factors like personal and job satisfaction. (Employee Retention Strategies: IT Industry, Leena James and Lissy Mathew, July-Sept2011), (the impact of career motivation and polychronicity on job satisfaction and turnover intention among hotel industry employees, Jichul Jang, B.S, August 2008) This paper can be applied to the UAE. This is because almost half of the UAE population made up of expatriates. As a result the workplace is incredibly varied. So the question is why these people come from far and wide just to seek employment. Is it money or just a better work environment? Judging by the influx of new foreigners each year it is most likely a combination of the two. Humans are different in their own way so one person’s needs may differ from another, however if there’s one thing that’s been proven it is that money cannot be the only factor when selecting a job as then no-one really benefits. References 1. Alan D. Smith, William T. Rupp, (2003),†Knowledge workers: exploring the link among performance rating, pay and motivational aspects†, Journal of Knowledge Management, Vol. 7 Iss: 1 pp. 107 – 124 2. Carolyn Stringer, Jeni Didham, Paul Theivananthampillai, (2011),†Motivation, pay satisfaction, and job satisfaction of front-line employees†, Qualitative Research in Accounting & Management, Vol. 8 Iss: 2 pp. 161 – 179 3. Anders Dysvik, BaÌŠrd Kuvaas, (2010),†Exploring the relative and combined influence of mastery-approach goals and work intrinsic motivation on employee turnover intention†, Personnel Review, Vol. 39 Iss: 5 pp. 622 – 638 4. Kevin M. Morrell, John Loan-Clarke, Adrian J. Wilkinson, (2004),†Organisational change and employee turnover†, Personnel Review, Vol. 33 Iss: 2 pp. 161 – 173 5. Abubakr M. Sulaiman and Nawal Al-Sabri (2009), Surviving through the global downtown; employee motivation and performance in healthcare industries, the open business journal. Vol. 2 Iss: 2 pp. 86 – 94 6. Stuart C. Carr, Matthew R. Hodgson, Duncan H. Vent, Ian P. Purcell, (2005),†Pay diversity across work teams: doubly de-motivating influences?†, Journal of Managerial Psychology, Vol. 20 Iss: 5 pp. 417 7. Susan Curtis, and Dennis Wright (2001), â€Å"Retaining Employees – The Fast Track to Commitment†, Management Research News, Vol 24 p.59-61 8. Jassem Abdulla, Ramdane Djebarni, Kamel Mellahi, (2011),†Determinants of job satisfaction in the UAE: A case study of the Dubai police†, Personnel Review, Vol. 40 Iss: 1 pp. 126 – 146 9. Golnaz Sadri, Brian Lees, (2001) â€Å"Developing corporate culture as a competitive advantage†, Journal of Management Development, Vol. 20 Iss: 10, pp.853 – 859 10. Dimitris Manolopoulos, (2008),†An evaluation of employee motivation in the extended public sector in Greece†, Employee Relations, Vol. 30 Iss: 1 pp. 63 – 85 11. Maria C. Osteraker, (1999),†Measuring motivation in a learning organization†, Journal of Workplace Learning, Vol. 11 Iss: 2 pp. 73 – 77 12. Industrial and Commercial Training, (1975),†Money as a motivator†, , Vol. 7 Iss: 12 pp. 508 – 508 13. Stephen Flynn, (2011),†Can you directly motivate employees? Exploding the myth†, Development and Learning in Organizations, Vol. 25 Iss: 1 pp. 11 – 15 14. A. Baines, (1991),†Appraisal-based Pay†, Work Study, Vol. 40 Iss: 2 pp. 8 – 10 15. S. Wren (1980), â€Å"Motivation is the key to reducing turnover† ,ABA Banking journal. Vol.72 Iss:9 pp.28 16. Houkes, Inge; Janssen, Peter P. M.; de Jonge, Jan; Bakker, Arnold B. (Dec 2003), â€Å"Specific determinants of intrinsic work motivation emotional exhaustion and turnover intention: A multi sample longitudinal study†, Journal of Occupational & Organizational Psychology, Vol. 76 Issue 4, p427-450. 24p. 17. Carolyn Wiley, (1997),†What motivates employees according to over 40 years of motivation surveys†, International Journal of Manpower, Vol. 18 Iss: 3 pp. 263 – 280 18. SCMS Journal of Indian Management July-September 2012, Employee Retention Strategies: IT Industry Leena James and Lissy Mathew 19. The impact of career motivation and polychonicity in job satisafaction and turnover intention among hotel industry employees, Jichul Jang, B.S., August 2008) 20. (Employee retention and turnover: Using motivational variables as a panacea; African Journal of Business Management Vol.3 (8), pp. 410-415, September, 2009 DOI: 10.5897/AJBM09.125 ISSN 1993-8233,2009; Michael O. Samuel* and Crispen Chipunza) Mohammed A. Al-Waqfi and Ingo Forstenlechner, The case of young citizens in an oil-rich Arabian Gulf economy. Of private sector fear and prejudice Vol. 41 No. 5, 2012 pp. 609-629