BUSN20019 Impact of Employee Turnover and Retention on the Sustainable Development

BUSN20019 Impact of Employee Turnover and Retention on the Sustainable Development Assignment 2020

Executive Summary

The central aim of this thesis is to conduct a study on the impact of Employee Turnover and Retention on the Sustainable Development in the context of BHP Billiton Limited in the mining sector.

The study identified the reason of these issues and their impact on the sustainable development of the mining organisation and identified and discussed the appropriate strategies for employee retention.

To accomplish the aim, a secondary research was carried out combined with review of existing literature.

For this, quantitative research design, use of secondary data collection methods and excel spreadsheet and content analysis method for data analysis were employed by the researcher to answer the research questions.

The secondary findings were correlated with the literature review.

The findings of this research put forward that the impact of employee retention/ turnover is majorly financial impact which affects the organisational ability to participate and contribute in the area of sustainable development.

It is also found that the reason of age and gender of workforce, mining work and environment safety aspects and no major change in compensation related to employee turnover.

The findings points towards developing great leaders and building positive financial and social reputation under retention strategies for sustainable development of BHP.

It is recommended to the mining organisation to changes in compensation package, and focus the retention strategy on younger workforce and above 49 years age group on and enhancing safety performance and culture.

The limitation is related to the use of secondary data an analysis which limits the understanding of the research questions from fresh perspective.

Project title: A Study on the Impact of Employee Turnover and Retention on the Sustainable Development of BHP Billiton Limited.

  1. Introduction

In this competitive business environment, the focus of companies has been lifted on an effective management and utilisation of human resources and related policies to retain the skilled employees.

This is a differentiating factor for the most of the companies in the situation of an increasing employee turnover.

Turnover is the ratio of employee who left the organization with the average number of organisation employees in a given time period (Hom et al., 2017) while retention is the organisation ability to develop environment or condition to ensure employee remain and engage with the company for a longer period of time (Dickie & Dwyer, 2011).

Thus, the employee retention and employee turnover are the different facet of the same coin which has been an ongoing concern for the managers in relation to the organisation sustainable development, sustainable growth and business sustainability.

Here, sustainable development is defined to adoption of strategies/ actions to protect the human and other resources to meet the need of stakeholders as well as organisation today and enhancing the human resources to meet the need for future (Bennett et al., 2015).

There is a need for creating a sustainable environment for sustainable development which can be achieved by retaining employees and reducing the turnover intentions.

In particularly mining sector, the companies are highly dependent on the employees/ workers competence and skills to gain an advantage over competitors, develop competitiveness, to sustain their business and also to ensure long-term profitable growth.

However, it is also known from the previous studies that employee retention is a difficult task for managers as other organisations are making effort to attract them by offering better compensation, incentive schemes, employee friendly policies and better work condition/ environment (Jerome, 2013).

Thus, this situation is an indicative of the fact that there is loss of valuable and productive workers to competing companies unless and until the manager understand the impact of employee turnover and employee retention of the sustainable development of a company to identify the suitable ways to retain them and reduce the frequent turnover intentions/ rate in the mining industry.

One of the most prominent companies in mining industry is BHP Billiton Limited in Australia having strong workforce strength over 62,000 employees which is dealing in the mining resources, metals and petroleum (BHP Billiton, 2018).

Thus, the employee retention and lowering turnover is a complex task for BHP managers in fly-in fly-out (FIFO) mining operations and other mining work arrangements which impact the company performance/ productivity and long- term growth and survival (Vojnovic et al., 2014).

Thus, the employee retention and turnover needs to be addressed in a proper way for sustainable development of the organisation.

1.1 Research Aim & Objectives

The central aim of this study is to critically analysis the impact of employee turnover and employee retention on the sustainable development practices in context to BHP Billiton Limited.

The following objectives are identified to achieve the aim.

  • To determine the employee turnover and retention impact on the sustainable development.
  • To find out the reasons for employee turnover problem and for retaining employees for sustainable development and growth
  • To identify the apt retention strategies to promote sustainable development of the chosen compony

1.2 Research Questions

  1. How employee turnover and retention impact on the sustainable development?
  2. What are the reasons for employee retention and turnover problem for company sustainable development and growth?
  3. What are the apt retention strategies for the mining company?

1.3 Research Rationale

In this study, the concept of employee retention and turnover, their value/ importance and role is focused in supporting sustainable development at BHP Billiton is identified and analysed.

This study also finds out the causes and fact of the employee turnover issue on sustainable growth and development of this organization and to identify the retention strategies of other global organisations which can be applied to chosen company to lower the employee turnover for its sustainable growth and development.

Thus, the study emphasise on knowledge development in relation to the impact of the employee turnover and the employee retention towards sustainable development of the organisation (Langdon et al., 2016).

The study is valuable for the multiple individuals who include researchers, academicians, scholar, field experts, HR managers and other managers in the mining industry in enhancing their understanding and knowledge towards the impact of employee retention and turnover on their organisation sustainable growth and development.

The study can be helpful as a reference in reviewing and comparing similar organisations in the mining industry with regards to the employee turnover and retention domain.

The study also contribute in existing literature and can be use an reference for other researchers in taking forwards the research in other organisations in same or different sector for dealing with these issues for the achievement of the organization sustainability.

  1. Literature review

BUSN20019 Impact of Employee Turnover and Retention on the Sustainable Development

2.1 Impact of employee turnover and retention on sustainable development

According to Jerome (2013), the impact of high turnover rate poses financial consequences for the company by increasing the cost of new hires.

The study of Abdali (2011) confirms the impact of low retention rate and high turnover on the financial impact of company as cost of recruitment, separation and training adds up.

Similarly, Langdon et al. (2016) consider the impact of turnover puts financial burden on the company in terms of administration costs, vacancy costs, recruitment costs, and induction and training costs.

It can be said that a number of studies have focused the impact of turnover only on recruitment related costs and not on long term survival of the company.

Differently, Paillé et al. (2014) put forward that impact of high turnover reduces the ability of company to contribute in sustainable development.

This argument indicates that sustainable development not only applies to natural resources management but also to human capital (workforce component) which can be related to the mining industry.

Jerome (2013) considers the employee turnover consequences is high on sustainability as it develop a negative impact on the human resource system and affects the efficiency and performance capability of organizational members.

Bennett et al., (2015) elaborates that problem of employee turnover and retention impact on the sustainability of the employees in areas of staffing and motivation.

It can be said that this brings instability in maintaining workforce strength and organizational cost.

On the other hand, Kramar (2014) argue the consequences of the human capital development due to high turnover which can result in unsafe work conditions/ environment, discourage workforce to remain committed to workplace and focus on opportunities from other companies.

From the existing literature, it can be said that the majority of existing studies have taken into consideration the issue of employee turnover alone and less emphasised on the employee retention aspects (Cloutier et al., 2015).

2.2 Reasons for employee retention and turnover problem in mining sector

The study of Langdon et al. (2016) stated that the health and safety standards in the mining sector form a major reason for turnover intentions.

In support of this, Vojnovic et al. (2014) found that the lack of provisions for safety training, less PPE (personal protective equipments), poor quality of control and warning system and unsafe procedures results in departing of employees from mining business.

However, Susomrith et al.

(2013) argue that the personal and demographic characteristic of workers form a major reason for organisation exit in mining sector which includes age, gender, experience, qualification and marital status.

Thus, it can be said that there can be difference among turnover intentions of each individual based on the demographic characteristics.

Several researchers also relate job dissatisfaction, low/average compensation and poor/ unsafe work conditions and environment with resignations (Kuranchie-Mensah & Amponsah-Tawiah, 2016).

Thus, it can be said that there is clear reciprocal relationship among job satisfaction and employee turnover.

McKenzie (2011) viewed that worker perception of fair compensation level, distributive justice (equality) towards pay, rewards, recognition and benefits helps in retention and lowering turnover intentions.

2.3 Retention strategies in mining sector to support organisation sustainable development

Vojnovic et al. (2014) and Parker et al. (2017) suggest a flexible work environment to the employees for work-life balance to deal with employee turnover and retention issue.

Kramar (2014) puts forward the improvement in job design and scope that brings employee development and advancement opportunities to keep them satisfied and motivated in their current job and with current employer for a long period of time to achieve sustainable organisation growth.

Alternatively, the study of Langdon et al. (2016) argued towards improving the compensation to retain employees as it is believed by the author that employee in mining sector are dissatisfied with the salary and can be motivated by monetary benefits.

Vojnovic et al.

(2014) also viewed that developing a health and safety culture by improving the work conditions along with compensation related to retaining employees in mining sector.

Likewise, Hutchings et al. (2011) and Street et al. (2019) mention appealing reward and compensation policy and developing safe work practices/ environment to retain employees in high workload and risky work environment.

Similarly, Dickie & Dwyer (2011) viewed attractive compensation packages with incentive schemes and fringe benefits are positive for retaining employee who has intentions to leave the organization.

Thus, most of the existing studies have focused on the two aspects i.e. monetary element and safety component under the retention strategies for lowering the turnover for achieving sustainability in this sector.

  1. Methods

For this study, the quantitative research design was preferred which has given shape to the investigation process in less time and allowed the researcher to obtain measurable data.

For this research, the dependent variables were employee turnover and retention and the independent variable was sustainable development of the organization.

According to Choy (2014), the quantitative research design helps in undertaking the reasoning for the research from a broad perspective to specific perspectives.

It was also useful in understanding the link among the employee turnover/ retention and organization sustainable development to generate reliable outcomes.

The method of investigation included secondary research to find answer to the research questions combined with literature review to gain theoretical knowledge about the research topic.

The secondary research allowed the researcher to obtain already existing data which was collected by other researcher using primary or mixed method research for related or different purpose (Gray, 2013).

Thus, the secondary method of data collection was adopted to source and collect the existing data as per the requirement of the study.

The population of interest for the secondary research was defined as to be BHP Billiton Limited organisational members.

The secondary data was identified by the use of key themes to measure the variables by answering the research questions.

These include employee strengths, company profits, employee turnover rates, employee demographics, remuneration, economic contribution, occupational illness, safety performance, employee ratings and retention strategy.

The data was collected from the internet; online available market research articles (Mckinsey), job advert site (Seek), authentic website (Statista), journal from Google scholar, and company sustainability reports for 2017 and 2018.

Also, the existing data and information (researchers’ findings and arguments) was gathered to review the literature from journal, and articles.

The data analysis of the collected secondary data was undertaken with the use of content analysis to interpret and get consequential information to address the research questions (Goodwin, 2012).

The content data analysis helped in interpretation of the text information and the use of MS excel spreadsheet software was use for preparation and evaluation of graphs and charts to make valid inferences.

4.Secondary Data analysis and Findings

4.1 Impact of employee turnover and retention on the sustainable development

Figure 1: Region-wise employees numbers from 2012 to 2018 at BHP Billiton Limited (Statista, 2019)

The above graph 1 represents the employee turnover and retention in BHP from the financial year 2012 to 2018.

Among different regions, the company has the highest employees share in Australia as seen in year 2012.

However, the employee share has reduced in recent years in Australia and other regions since 2012 which highlights the sustainability of the employees.

Figure 2: Sustainable development road map of BHP Billiton

The above figure 2 highlights the road map towards achieving sustainable development in BHP Billiton which initiates with conformity towards developing innovation culture and strategic alignment as the business mature.

Figure 3: BHP Billiton revenue statistics (Statista, 2019)

The figure 3highlights the downward trend in revenue since 2012 and growth in annual revenue from 2016 but this record is less than previous years from 2007 to 2014.

From the above figure 4, it can be observed that there has been a high fluctuation and a drop in profit level of BHP Billiton since 2014 and more variation as compared to its other two competitors.

From the above figure 5, it can be seen that future level of employee retention is based on the employee perception towards the employer organisation.

Employees who consider the current employer better than former one will be around two years which is stated for over 90 percent employees.

 

4.2 Reasons for employee retention and turnover problem for company sustainable development and growth

 

Employees new hires and turnoverGenderAge GroupRegion
 MaleFemaleTotalUnder 3030-3940-49Over 49AsiaAustraliaEuropeNorth AmericaSouth America
Employee new hires24971864436114881644875354571282316244707

10.62%34.65%15.09%34.98%16.01%9.92%5.76%55.98%15.10%28.07%8.63%11.25%
Employee turnover23058323137654978759746191184111771323
 9.80%15.47%10.86%15.37%9.52%8.60%12.13%18.73%9.84%19.30%27.26%5.14%

 

Table 1: Demographic characteristic of BHP employees and employee turnover in 2017 (BHP, 2017)

From the above table1, the demographic features (age and gender) of employee can be related to the turnover issue from BHP. The women is observed to leave their jobs in BHP thus, employee turnover rate for women is higher than males. Similarly, it is observed that younger employees (under 30 years age group) is high than other age groups. It is also found that employees belonging to over 49 years age group have second highest turnover rate.

 Average basic salary (USD)Average total remuneration (USD)
Remuneration Ratio male to femaleRatio male to female
Asia1.912.05
Australia1.111.16
Europe1.291.35
North America1.251.29
South America0.870.96

 

Table 2: Remuneration in 2017 (BHP, 2019)

 

Average basic salary (USD)Average total remuneration (USD)
Remuneration Ratio male to femaleRatio male to female
Asia1.882.1
Australia1.111.15
Europe1.11.11
North America1.251.33
South America0.880.96

 

Table 3: Remuneration in 2018 (BHP, 2019)

From the above tables 2&3, it can be analysed and compared that there has been no significant changes in the average basic salary and total remuneration for both the years. In 2018, there has been slight decrease in the ratios male to female from previous year.

 

 

From the above information in figure 9, it can be observed that there has been a slight increase (US$0.3b) in the economic contribution made by the BHP Billiton toward the employees in terms of their salary, wages and incentives.

 

 

From the above figure 10, it can be analysed that the incidence of the occupational illness (noise-induced hearing loss (NIHL) and musculoskeletal illness) among the BHP employees was high in year 2017 as compared to previous year. It is stated that for per million hours worked accounted for 18 percent increase in incidence of the occupational illness from year 2016.

 

From the above figure 11, it can be analyzed that there has been a downward trend in the safety performance for the employees despite the aim to achieve zero fatalities in its one of key businesses (i.e. copper). There have been insignificant improvements in the TRIF (Total recordable injury frequency) since 2010.

 

4.3 The apt retention strategies for the mining company

 

 

The above figures 9 and 10 highlights the rating of 824 employees. It is found that employees have given lower rating for management and career development. However, the overall rating is 3.7 (Seek, 2018).

% employees satisfied when their companies deliver:

 

 

From the above figure 11, it is clear that high percent of employee feel satisfied when they are supported by great leaders that motivates, empower and emphasis on their development. Also, high percentage of employee also feel satisfied when company has good reputation as socially responsible. On the other hand, a good percentage of employees also consider wages, benefits and perks and recognition, promotion to be important for their satisfaction.

  1. Discussion of findings

5.1 Impact of employee turnover and retention on the sustainable development

It can be discussed from the sustainability road map that BHP Billiton has included risk assessment of the system and work procedure, developing responsible behaviour and more partnership and sustainable leadership to create and enhance value and protecting the created value which is important to achieve organisation sustainability from the impact of workforce. It can be discussed from the findings that the impact on the employee turnover and retention is clearly found as financial impact on BHP. This finding is in consensus with Abdali (2011), Jerome (2013) and Langdon et al. (2016) that put forwards financial consequences/ burden due to recruitment related costs arising from employee leaving and replacing their vacant position. Therefore, one of the major reason for the decrease in profits is lower productivity due to employee turnover as experienced employees leaves the organisation and their vacant position is replaced by the new member which slow down the productivity thus, affecting the business profitability and long term survival.

5.2 Reasons for employee retention and turnover problem for company sustainable development and growth

From the findings, it can be discussed that the safety issue indicates lack of proper implementation of administrative and engineering controls at BHP to deal with particularly musculoskeletal illnesses which can be reasons for turnover intentions relating to employee sickness, absenteeism, low morale, and reduce job satisfaction. There is also need to maximize the efforts towards developing/ improving safety performance to lower its TRIF. This finding can be related to Langdon et al. (2016) and Vojnovic et al. (2014) that put emphasis on safety component as reasons for employee turnover.  The finding also highlight age and gender to be underlying reason for employee turnover intentions which is in agreement with Susomrith et al. (2013) that consider employee demographic characteristic reason for organisation exit. It is conferred that the impact of employer performance is on the employee retention rate which can be considered for improving the employee retention at BHP Billiton along with improving the site conditions/ work environment. Also, it is argued from findings that no increase in salary and remunerations has consequences on employee retention as monetary form an important element of employee motivation and commitment towards work/ organisation.  This relates to the study of Langdon et al. (2016), Vojnovic et al. (2014) and Hutchings et al. (2011) that place relevance to compensation to remain employee in the mining sector.

5.3 The apt retention strategies for the mining company

It is argued from the findings that great leaders and good reputation as socially responsible in terms of its profits and offer great opportunity for their growth and advancement are elements need to be delivered by company in their retention strategies to lower the turnover rate.  These findings differ from the findings of Vojnovic et al. (2014), Langdon et al. (2016), Hutchings et al. (2011), Dickie & Dwyer (2011) and Street et al. (2019) as previous studies have focused on the monetary aspects of reward and compensation policy and the criteria of safe work practices/ environment to retain employees whereas the current study has considered the both financial and non-financial aspects to deal with high turnover and retention strategies for achieving sustainability in the mining sector.

  1. Conclusion

This study investigated the impact of employee retention/ turnover towards sustainable development in BHP Billiton. The findings points that the impact of these is seen as financial impact due to recruitment related cost, reduced productivity and efficiency of the BHP which affect its ability towards sustainable development. The reason for employee turnover can be related to safety aspects in the work environment, no significant change in compensation and age and gender factor. It was found that the improving safety performance, changes in compensation package, developing great leaders and good financial and social reputation are suitable retention strategies for sustainable development of BHP.

Recommendations: Based on the above sections, it can be recommended to BHP that to develop an attractive remuneration package or incentive scheme to retain their employee (Candra et al., 2018) with focus on younger talent and above 49 years age group experienced and productive workers. It is recommended to use invest in developing safety culture through safety training, hazard identification in work procedure, safe work demonstration to improve the safety standards to lower the turnover intentions associated with safety concerns. It is also recommended develop sustainable leadership to develop safety culture (Bode et al., 2015), motivate, empower and support employees to improve productivity/ performance outcomes for the organisation to retain the top employees who give high consideration for employer reputation, leadership, social contributions, and economic/ financial outcomes to remain with the organisation.

Limitations: It is identified to be time constraint and the use of secondary research over primary method which has developed boundary for achieving detailed understating of the research topic to a certain extent. The researcher could not obtain fresh data and information to make accurate and more consistent inferences which limits the reliability and validity aspect of the study by depending on only secondary data and information.

Future research: The study was pointed only at BHP Billiton therefore, the future research can be include more mining companies, petroleum and metal companies through primary research method and approach by use of survey or interview  to study the impact of employee retention and turnover on the organisation sustainable development. This will be helpful to generalising the study finding and to compare the secondary findings with primary findings to suggest appropriate retention strategies for this sector.

 

 

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