Analysis of the employee turnover crisis in Kelly Club

Executive Summary

Kelly Club has been operating since 2009 and providing “the very best” before and after schools programmer that keep the children engaged in co – curricular developmental programmer. There is enough participatory enthusiasm regarding the work the employees are asked to do. Still, there is a significant turnover ratio in the organization. Two types of factors mainly affect the turnover, namely, voluntary and involuntary. The factors affecting voluntary turnover have been identified as Career prospects and aspirations, intent to travel or move overseas and seeking more sustainable and steady source of income. The factors affecting involuntary turnover are identified as, lack of clear communication regarding future prospects on part of the organization, inability to set fixed employment routines or guaranteed work hours. Career prospects in the future and the work hours currently have been identified as the key limitations that propel the high rate of employee turnover. This is further compounded by the fact that there is a clear lack of communication on part of the organization to emphasize the importance of these employees and establish sufficient reward system for their work. Unless significant steps are taken to mitigate these factors affecting turnover, it could mean a high degree of volatility in the human resource section for the company.

Part 1

1.1 Introduction

1.1.1 Kelly Club

Kelly Club is a platform which supplies OSCAR before-cares, aftercare and holiday programmers all over New Zealand. Their objective is not to just give “a childcare facility”, but to build a safe surrounding for the children where they can learn and enjoy at the same time. Kelly Club has been operating since 2009 and providing “the very best” before and after schools programmers that keep the children engaged in co – curricular developmental programmer. They provide a diverse mix of “entertainment, education and relaxation” (kellyclub.co.nz, 2019).

The organization however has been facing the issue of high employee turnover in the recent times. This report has been generated as a response to this development, so as to be able to understand the reasons behind the rise in employee turnover, specifically “voluntary employee turnover” in the organization and then qualitatively identify the scope of impact that various organizational and personal factors have on the rate of turnover in the organization, to develop and design recommendations that could help in mitigating the factors that are affecting the turnover ratio in the organization.

1.1.2 Defining Turnover

In order to clearly understand the implications of employee turnover, there needs to be maintained a clear understanding regarding its definition. In defining employee turnover, there needs to be addressed a number of key issues. The most important among them all being the nature of turnover. Traditionally, turnover has been classified broadly into two categories based on the factors affecting the process, namely voluntary turnover and involuntary turnover (McBoy and Karakowsky, 2000; Price, 1977; Rodrigues, 2008). Voluntary turnover refers to those in which the employee takes a conscious decision to terminate their employment based on factors that are affecting them specifically (McEvoy and Cascio, 1987). Involuntary turnover, on the other hand, refers to termination of employment resulting from factors that are not in control of the particular employee themselves, like organization downsizing, organization underperformance, etc. (Allen, 2000). Therefore, special attention needs to be made while analyzing employee turnover in any organization so as not to collate the two types of turnover in the study as that might dilute the relevance of the study (Rodrigues, 2008). Therefore for the purposes of this report, the definition of turnover that is being considered is one indicated by Price (1977) which states that employee turnover means the “voluntary cessation of membership’ of an organization by an employee of that organization.” So, from here on, “turnover” or “employee turnover” in the context of this report would refer to voluntary turnover only, unless otherwise specified.

Morrell, et al. (2004) have elucidated that turnover could cause significant costs in terms of the resources invested which could otherwise have been avoided by the use of better human resource management, provision of opportunity, training and adequate reward structure. There, further, needs to be an assessment of the turnover in terms of whether it was “avoidable” or not.

Further, in studying the employee turnover of an organization, it might not be feasible to study the employees that have already ceased their membership to the organization and hence, there needs to be identified precursors to turnover while the employees still remain participant members (Cohen and Golan, 2007). Employees’ intent which informs their behavioral patterns has been found to be the most potent predictor of eventual turnover (Firth, et al., 2004). This in fact forms the underlying rationale of this report to analyses the behavior of the current employees of Kelly Club and to decipher intent and the various underlying factors responsible for that.

1.1.3 Rationale for Turnover Research

Labour is one of the most fundamental aspects that is essential for any organization that wants to “improve effectiveness and / or increase productivity by relying solely on a basic economic model” (Sauian, 2002) and even more so in such business as Kelly Club wherein the primary product or service offered is based solely on the human resource that the company can boast of. Employees have to be at the very foundation of successful approaches and they alone are responsible in developing a significant institutional competitive advantage (Pfeffer, 1994) in such businesses. The activity of “control, cultivate and maintain” employees has over time developed into a “science” (Jackson and Schuler, 1987) which needs to be analytically studied. Employee turnover by itself is damaging to the organization, but additionally it can have cascading effects that not only impact the organization and the employee but also the “wider collegial team” (Clarke, 2001). An in – depth analysis and understanding of the impact of labour turnover could improve the understanding of the degree to which institutions and the employees within those institutions can adapt to, be nimble and contain the turnover process (Booth and Hammer, 2007; Rodrigues, 2008; Jackson and Schuler, 1995). There is abundant literature relating to the process of turnover in businesses and organizations (Price, 1977; Mobley, 1982), there has not been any models of measurement relating to the reasons why the employees decide to leave that is universally accepted (Rodrigues, 2008; Lee and Mitchell, 1994). A comprehensive study into this matter is beyond the scope of this report, however, a localized study specifically contained to the Kelly Club can be done so as to derive generalizations that would be beneficial for both designing specific recommendations for the company and also for devising generalizations that could have broader implications.

1.1.4 Factors Influencing Employee Turnover

Employee turnover is a phenomenon that has been studied extensively over the years. The earliest studies conducted to analyses the factors affecting turnover can be dated back to the 1900s. Over the years, multivariate models which combine a multitude of variables that impact turnover have been developed by researchers. These models have subsequently been empirically tested in order to develop prediction mechanisms in determining why individuals might choose to withdraw membership from an organization. However, inspire of this availability of information, the studies themselves are constrained to a relatively small number of variables that do not adequately take into consideration the complex psychological processes that are intrinsic to the turnover process and the underlying “intent to turnover” decisions. (Rodrigues, 2008)

Over the years researchers have developed multiple models on the topic employee turnover hence it is a widely discussed and much studied phenomenon worldwide. Back in mid 1900s there was even a famous literature on the various causes of voluntary employee turnover that have attained some prominent attention. The multivariate models initiated on the topic by various researches have successfully lead to a vast combination of a number of factors that have significantly contributed to the factors of turnover. These models were further been tested empirically to predict why an employee leaves an organization mid way. In spite of these rich information represented by the models, there are still various models and studies which are not based on much eminent information and thus represent a small number of variables which further fails to provide definite explanations due to their limited focus. However, the entire subject matter of employee turnover and the intentions to turnover decision is very complex and cannot be nullified in just black and white. This is one of the main reasons why there are so many studies on this subject but still many fail to address the core reasons of it and these further leads to a line of criticism of turnover studies that fails to express the complex psychological processes in the individual turnover.

Several studies were conducted on this topic, some of them are by Brooke (2003); Lockwood & Ansari (1999), Mano-Negrin (2001) have tried to explain the core reasons of why individuals leave their job. One of the recent studies in the context of  New Zealand employees, conducted by  Boxall, Macky, and Rasmusses (2003) have tried to recapitulate that the drive for job-change includes several reasons and cannot be justified by a single statement. Hence, it is multi-faceted and just one reason cannot explain the entire phenomenon. However, over the years several studies have highlighted number of factors that have appeared to be linked to employee turnover. Mobley, Griffeth, Hand and Meglino (1979) have also conducted a study on the same and a review of it have revealed that factors such as age, tenure, job content, satisfaction, and commitment are all responsible for employee turnover. All these factors are negatively related to the matter. To put it straight, higher the variables, lower shall be the turnover. Griffeth, Hom, and Gaerther (2000) have conducted an analysis of  800 employees turnover studies and stated some well established findings on the various factors which have influenced employee turnover. Some of them have been explained bellow.

Comparison between actual and perceived alternate opportunities

Mark and Simon’s (1958) seminal work on ease of movement have marked the link between the actual and perceived alternative opportunities to employee turnover on an employee level. Over the following years many research were aimed to focus on the relationship between different subject such as employee turnover, perceived alternative opportunities and job satisfaction. It was only in recent times that the role of both actual and perceived alternative opportunities has come into the limelight and has become a subject of debate and concern in the context of explaining employee turnover.

Kirschenbaum and Mano-Negrin (1999) research in the 1990s indicated that an actual job opportunity has better offers on confirmation of actual employee turnover behavior than that of the perceived alternative employment market opportunities. The author, in his study, on medical units  have used perceived and actual job opportunities in both external and internal market and hence the author concluded that for actual turnover behavior, actual job opportunities were the best set of predictors than that of perceived internal or external employment market opportunities.

Griffeth et al. (2000) in contrast, have concluded in an updated meta-analysis that employee turnover can be significantly predicted by a perceived alternative job opportunity. However, actual opportunity does appear as a better predictor of turnover but there are some valid justifications of the relationship between actual turnover and perceived alternative opportunities. Thus, to recapitulate, prominent literature states that actual job opportunity has a strong relationship with turnover and thus is a factor that influence employee turnover.

Intent to leave membership

Several empirical researches have been conducted on employee turnover, which have solely focused on actual turnover. However, studies have found that perceived alternative opportunities are highly associated with the intent to quit but not the actual turnover. Hellman’s (1997) research has further supported the statement and observed that link between one’s intention to quit is basically stronger to job satisfaction and not for the actual turnover. Mobley et al. (1979) in their research study presented the view that even though the link between intention to quit and turnover is persistent; it only stands for a less than a quarter of the variability in turnover. Hence, it is clear to understand that there are some practical difficulties that follows when turnover research are been done among individuals who have quit an organization.

Firth et el. (2004) in his study on the subject have stated that the behavioral patterns in employees can highly be influenced by the managers of the organization and thus this can further influence ones intention to quit. This hypothesis was further supported by some relevant study delivered by Ming, Mellor, Siong, Moore and firth (2006) who is of the same view that if the management is not supportive and willing to resolve employees problems than this can severely affect the job satisfaction and can further lead to an increase in stress level that can influence the employees to quit.  Hence there is a strong relationship between intention to quit and perceived alternatives as it have been reflected in literatures several times.

Job Satisfaction

Over two decades, numerous turnover studies have been spanning around where the relationship between job satisfaction and turnover have been highlighted vigorously. Mobley et al. (1979) has conducted a research where it has clearly stated that job satisfaction is negatively linked to turnover but little have been expressed in terms of variability in employee turnover. Thus, Griffeth et al. (2000) have further presented a picture in comparison where it states that the turnover is moderately been predicted by job satisfaction. A New Zealand based study which is considered to be quiet fresh by Boxall et al. (2003) revealed that one of the main reason for individuals leaving their job is finding a new one which is more interesting in nature. Over some extended period the studies were conducted, but however, the results were quit contrasting as it states that job satisfaction has a valid connection to turnover.  But it must be noted that if job satisfaction as a single variable cannot have much influence on employee turnover as it is contingent on other variables such as economic and psychological factors in order to possess explanatory and predicative power. ( Lum, Kervin, Clark, Reid & Sirola, 1998)

Organizational commitment

Previous studies have significantly brought to light correlations between the parameters of organizational commitment and the intent to turnover among employees (Cohen & Hudecek, 1993; Lum et al. 1998). There exist various different kinds or types of organizational commitment. Allen and Meyer (1990) in their paper studied the correlations between “intent to turnover” and what they identified as the three attributes of attitudinal commitment of an organization, namely, “affective”, “continuance” and “normative.” Here, affective continuance refers to the emotional attachment of the member or employee to the specific organization that they are working for; continuance commitment refers to the “need of the employee” to continue his job in the specific organization based on the associated Costs to Organization (CTO); and finally, normative commitment refers to the obligatory feelings that a member can develop which gives them a sense of retaining with the organization (ibid.). Allan and Meyer (2010) further showed that all of these three components resulted in a negative to the intent to turnover.

Personal characteristics of the employee

Although a vast number of studies have been done to identify the various characteristic traits that affect the turnover statistics, however, only a few characteristic traits have been identified which have been identified to “meaningfully predict employee turnover” (Cotton & Tuttle, 1986; Mobley et al. 1979). Among all the factors studied, only age, number of dependents, gender, and tenure were deemed to be negatively associated to turnover (ibid.). For example, female employees who were young, had lesser number of dependents, and had fewer years of experience in an organization had more likelihood of turnover as opposed to a older person, who has been with the organization for a longer tenure, who is also progressively less likely to turnover, as length of service or tenure has been found to be one of the best predictors of turnover.

Working conditions

There are several factors intrinsic to this parameter and can be listed as such: wages satisfaction, job satisfaction, job performance, wages, supervision, promotional opportunities, work description and career commitment (Rodrigues, 2008). There have been conflicting studies in this regard, where some have suggested that wages have no relation to turnover (Mobley, et al, 1979), where as some have suggested that turnover is inversely related to the wages (Martin, 2003; Tang, et al., 2000) regardless of the job satisfaction parameter based on the importance that the specific member or employee places on monetary returns. Further, the correlation between the variables supervision, wage satisfaction and work description have been found to be negatively related to each other (Lima & Pereira, 2003) which indicates that the low wages prompted the members to be less satisfied with the supervision that they receive and also attain less satisfaction from the work, which in turn would prime them for turnover.

Career Progression and Training

Hansson (2007) has highlighted the fact that the members or employees perceive staff development and training as a motivational tool to make them more marketable. Forrier and Sels (2003) further established the connection between training and future employment, in that, the employees view their future employment dependent on the training and staff development procedures incorporated in an organization. In summation, organizations need to rationalize and tailor make the type of training provided in order to reduce intent to turnover and actual turnover (Rodrigues. 2008).

1.1.5 Aims and Objectives

Aims of the report

The main aim of the report is to clearly identify the factors affecting the increasing employee turnover ratio in Kelly Club and in doing so suggest recommendations of practice that could be utilized to reduce the “voluntary turnover rate” in the organization.

Objectives

• To analyses the voluntary employee turnover rate in Kelly Club and identify the factors affecting it.
• To design recommendations based on the findings that could be applied in practice by the organization to stifle the turnover rate.

Part 2

2.1 Methodology

2.1.1 Introduction

In order to satisfactorily undertake a research into understanding the employee turnover issue in Kelly Club, a primary data collection method  along with an emphasis on secondary data collection for context has been deemed to be the most prudent. The various considerations regarding the various specific aspects of this study have been discussed in details below.

2.1.2 Research paradigms

The research paradigm of interpretivism has been given preference over the paradigm of positivism. A positivist approach can help in understanding the cumulative perception of the sector however, the interpretivist method has been deemed more prudent in this case because it can provide a better understanding of the ingrained behavioural aspects in relation to the sector and also assist in the ground up analysis of the same. The table given below would provide a more apt differentiation of the two research paradigms.

Therefore, considering the requirements of this research, a paradigm of interpretivism has been selected for this study.

2.1.3 Research Approach

For research methodology based on the collection of primary data, the researcher first needs to evaluate the approach that the data analysis stage of the study would require. There are two distinct approaches that can be undertaken for the purposes of this research, namely, inductive and deductive (Schoonenboom and Johnson, 2017). The deductive approach incorporates the evaluation of existing theories to develop a new hypothesis and then designing the methodology of the research so as to be able to test the validity of the hypothesis (Wilson, 2010). On the other hand, inductive approach is initiated with specific observation being made first hand, and then specific or generalized conclusions are drawn through the process of the research. Given, the selection of the observation criterion have been considered and selected properly, then the generalizations can be extended to all other groups that are in similar conditions and situations (Zalaghi and Khazaei, 2016).

As such, for the purposes of this research, a more ground-up inductive research approach has been selected to be able to present a body of work from which further deductive hypothesis can be drawn.

2.1.4 Research Strategy

In order to devise the strategy for this research, the research paradigms and the approaches that have been selected as optimal for this study need to be carefully considered in designing a research strategy for the research at hand. In conducting a primary data collection methodology, the most prudent form that can be considered is that of the survey analysis. Survey analysis is a method of data collection that relies on targeted enquiries (Marsland, et.al., n.d.). These enquiries could be face – to – face, through forums or through long distance communication.

Having considered the requirements of this research at hand, and the paradigm of interpretivism that has been deemed prudent, survey analysis stands out as the most effective mode of data collection, where in specific structured queries can be made to a selected sample size so as to be able to record the responses.

2.1.5 Data collection Methods

Primary data collection refers to the collection of first hand data through a variety of methods (Kabir, 2016). There are two separate methods that can be utilized in the collection of primary data for the purposes of research, namely, quantitative and qualitative. Quantitative data collection refers to the collection of empirical data from the given sample population, where as qualitative data collection refers to the collection of primary data regarding the subjective opinions and observations from the surveys and derive their cumulative perspective on the subject matter at hand. These can be collected through structured interviews, semi – structured interviews, and some other methods as well. For this research, mostly the qualitative data collection methods have been taken into consideration, so as to be able to derive hypothesis that are reflective of the perspective of the surveys. This also allows for the researchers to be aware of the biases in responses that respondents might have and also adjust for those in the data analysis part of the process. This required a randomized collection of data from a sample size, the size and derivation of which has been detailed below.

2.1.6 Ethical considerations

While undertaking an endeavor to collect primary data, there need to be made certain ethical considerations regarding the acquisition, publication and use of that data. In this case, special care had to be taken to ensure that the communication regarding the collection of data and its intended use had been made abundantly clear to the parties and had been made without any deception regarding the use of it. Further, it had to be made sure that all requests had been made formally to all the necessary parties and achievable assurance had been made regarding the publication of private information without the proper given consent. All the requests for anonymity have been adhered to. It has also been made sure that the private information that were deemed irrelevant have been destroyed after the completion of the data so as to not facilitate any untoward use of that data.

2.1.7 Strengths of the methodology

The main advantage of using a primary data collection method is that, verifiable and precise responses to the requisite queries can be collected from parties that are most involved in the matter. Their variances in perspectives can be accounted for and the appropriate control measures can be applied based on the necessities and requirements of the study at hand.

2.1.8 Weaknesses of the methodology

One of the major weaknesses of the methodology is that, this only accounts for the subjective opinions of the employees that are involved in the organization and does not allow for a detailed overall situational analysis of the sector. However, consistent with the aims and objectives of this project, this methodology is apt considering that we will be utilizing secondary data for contextual placement of the findings.

2.1.9 Summary

In conclusion, in reference to the research methodology, it can be summarily said that primary data collection methods were used for this study. The research paradigm of interpretivism was chosen over positivism. The approach for the design of the research has been decided to be inductive rather than deductive. As far as the research strategy is concerned, a Survey analysis method was deemed to be more appropriate for the study which would include mainly qualitative data collection methods. Finally all ethical considerations that would need to be considered have been discussed in this chapter. Following this, the strengths and weakness that are intrinsic to the selected research methodology have been discussed in this chapter which provides a more clear idea of the limitations of the study and scope thereof.

2.2 Data Analysis

Factors affecting Retention in the schooling sector in general

(Source: Education Counts, 2002)

Factors Affecting Retention in Kelly Club

2.3 Discussion

From the above two cases we can clearly see that, both in Kelly Club and the broader educational sector there is a distinct participatory enthusiasm among the employees to continue in the sector. However, the key difference being that the Kelly Club employees did not find the employment opportunities offered to them as being sustainable for their future. This represents a clear lack of initiative on part of the Kelly Club in their retention strategies and also a distinct lack of communication with their employees regarding their expectations from their jobs. Another factor that could affect the turnover ratio in the sector is the high mobility or intent to mobilize among those involved in the education sector which could also be a key factor that is affecting the retention of the employees.

Part 3

3.1 Findings

The training and recruitment of new employees in the sector and developing them into effective assets takes a lot of investment upfront moth monetary and time related. However, there has been identified a remarkable rate of turnover in Kelly Club employment. Several parameters could be identified through this report that affects this phenomenon. Those include some factors that are intrinsic to the employees themselves and also some that are beyond the control of the employees. This is what causes the turnover in both the “involuntary” and “voluntary” fashions. Career prospects and aspirations, intent to travel or move overseas and seeking more sustainable and steady source of income are key factors that affect the voluntary turnover. In addition to that, lack of clear communication regarding future prospects on part of the organization, inability to set fixed employment routines or guaranteed work hours are other factors that cause involuntary turnover in the organization.

3.2 Conclusion

Kelly Club has been operating since 2009 and providing “the very best” before and after schools programmers that keep the children engaged in co – curricular developmental programmer. There is enough participatory enthusiasm regarding the work the employees are asked to do. Still, there is a significant turnover ratio in the organization. Two types of factors mainly affect the turnover, namely, voluntary and involuntary. The factors affecting voluntary turnover have been identified as Career prospects and aspirations, intent to travel or move overseas and seeking more sustainable and steady source of income. The factors affecting involuntary turnover are identified as, lack of clear communication regarding future prospects on part of the organization, inability to set fixed employment routines or guaranteed work hours. Career prospects in the future and the work hours currently have been identified as the key limitations that propel the high rate of employee turnover. This is further compounded by the fact that there is a clear lack of communication on part of the organization to emphasize the importance of these employees and establish sufficient reward system for their work. Unless significant steps are taken to mitigate these factors affecting turnover, it could mean a high degree of volatility in the human resource section for the company.

References

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