Employee turnover has been a problem that a number of companies are trying to solve. Losing employees can result in high costs but nothing is worse than losing them to the competitors, knowing that they are gaining the knowledge you lost at your own expense. Locus has observed a high turnover in recent year, and as system integration / IT consulting company, it is costly when well-trained employees who govern intellectual assets leave.
Studies show a strong correlation between low turnover, high job satisfaction and high retention. Locus’s turnover is caused by uncompetitive benefit programs, work-life imbalance, the lack of career advancement opportunities and employee engagement. In order to reduce turnover, we aim to retain employees by increasing their job satisfaction in these mentioned criteria. Because different issues require different approaches to solve, multiple solutions will be applied. The solutions include compensation package, work-life balance and training program to maximize career opportunities and employee engagement. In order for this to success, the cooperation from every department is required: the CEO and other c-suite positions, Human Resources department, manager-level positions, and employees, essentially everyone in the company. The implementation plan will start at the beginning of next year. Although it would take time to see the actual result, if the solutions work, the wait is worth it. By implementing these solutions, Locus can expect to see higher retention and lower turnover rate.
Reduce Employee Turnover, Increase Employee Retention
Background
The famous organizational development professional, Tara Blythe, says “Good employees don’t leave good organizations, they leave poor managers.” Employees are one of company’s most valuable assets and investments because corporate success and stability rely on its employees’ performance. One recent study shows that the average voluntary turnover rate in 2016 is approximately 12.8% (Bares, 2017), however, Locus Telecommunication Incorporation’s rate is considerably higher. Companies should make sure that the talented, skilled and well-trained personnel stay with them as long as possible.
Turnover negatively impacts both the company’s costs and sustainability as well as its employee morale (Guha & Chakrabarti, 2016). Causes of turnover are varied but studies show that low turnover is highly associated with high employee retention and job satisfaction (Griffeth & Hom, 2001). For this reason, this paper will focus on the solutions that help increase job satisfaction and employee retention to lower turnover intention.
Description of issues affecting turnover at Locus
Employees survey and behavioral assessment conducted in the earlier stage show that benefit programs, work-life balance, the lack of career advancement opportunities and employee engagement were the factors that affect job satisfaction and turnover intention.
First, Locus fails to provide competitive benefit plans and work-life balance. Due to the insufficient number of employees, the company expects employees to finish the assigned work and often extra tasks, which require them to work longer hours without the company’s provision of extra bonuses or other compensation. This affects employees’ work-life balance, value and efficiencies (Nica, 2016). They might be willing to complete those extra tasks at first but they will ultimately feel exhausted, undervalued, and exploited in the long-term.
Second, career development and employee engagement are the significant elements that employees seek for in the company they want to work for (Bender, Contacos-Sawyer & Thomas, 2013). A study by Beynon, Jones, Pickernell and Packham (2014) suggests that organizations those invested in the employees training and engagement were likely to benefit from lower employee turnover, while companies that offer a learning environment and career paths that support employees in their career development would receive higher employee retention. Failing to provide adequate career development plans or engagement program can lead to a decline in job satisfaction, job performance and an increased turnover intention (Goldstein, Pulakos, Passmore, & Semedo, 2017). These problems need to be addressed immediately to prevent the further financial and intellectual losses.
Solutions found in research
Because each specific issue requires specific solutions to address, there are four possible solutions including improved compensation package, work-life balance plan, career development program and engagement program.
Compensation package. The research done by Michael, Prince and Chackco (2016) portrays the impact of compensation package on employee retention. Every organization should have competitive compensation package to keep their employees motivated, which can be in forms of bonuses, benefits or incentives (Michael et al., 2016). Providing the compensation package would engender the employees’ sense of belonging and responsibility for the organization (Michael et al., 2016). The study further shows that it is important for an organization to appreciate employees’ opinions. Locus could give employees the opportunity to express their expectations regarding compensation package by allowing them to participate in the compensation package revision (Michael et al., 2016). This will foster a sense of unity in the organization (Goldstein, Pulakos, Passmore, & Semedo, 2017; Hee & Ling, 2011).
Work-life balance. Work-life balance practices directly relate to employees’ decisions to stay (Armache, 2013). The study done by Riđić, Avdibegović and Bušatlić (2016) shows that any flexible work time and work location would positively impact employees’ work-life balance and efficiencies. Three-step solution is suggested: 1. Fifty-fifty solution: Company allows employees to have flexible work time whereby employees would be in the office fifty percent of their time, while they would have flexibility to schedule the remaining fifty percent of their time. This way, employees will have less stress and feel happier. 2. Company allows employees to use flexible work location whenever possible. This proved to provide employees more flexibility and would make them feel that employer is taking care of their well-being. 3. Managers would be trained to measure their subordinates’ efficiency according to their work, not the time they spend in the office (Riđić et al., 2016).
Career advancement program. When organizations provide career development to their employees, job performance will increase and employee’s commitment to the organization will also be improved (Armache, 2013; Rose & K.G 2016). The study by Beynon, Jones, Pickernell, and Packhamthe (2014) demonstrates the positive association between the provision of training and employee retention and loyalty. However, the company should refrain from conducting the training through private training provider outside of the workplace and distance learning as they are regarded as providing less benefit and creating more distant relationship between organization and employees (Beynon et al., 2014).
Employee engagement program. Employee engagement is a method used to ensure that employees are committed to their organization’s mission, vision, and goals (Amarine et al., 2017). Positive engagement of employees helps build trust and relationship and improve their performance and efficiency, which contribute to an organization’s overall success. The study suggests three areas to improve employee engagement namely communication, employee recognition, employee involvement in decision-making (Amerine, 2017) which will be incorporate into two of the suggested solutions.
Recommended solution
Although researches suggest many ways in which a company could improve job satisfaction, maximize retention, and minimize turnover intention, not every solution works the same way for every company due to culture differences of companies. The following suggested solution is a combination of three of the above mentioned possible solutions which is the best-practice for Locus.
First, Locus should not only offer a competitive and fair compensation package which would help increase employees job satisfaction but also allow employees to express their expectations regarding compensation package as it will create a sense of belonging to the company. Although Locus’s salary is considered competitive, the company has to make sure that it periodically benchmark with other companies in the same industry to prevent voluntary turnover from this. Locus should also consider raising bonus and allowance, provide generous paid leave policies and offer financial awards for employees whose performance exceeds company’s goal and to those who stay with the company for certain period of time. These things would make employees feel that they are valued by the organization.
Second, Locus should provide the work-life balance plan by implementing the fifty-fifty flexible work time and flexible workplace method. This solution is essential to retaining employees and it is in high possibility of working due to the nature of work that is similar to an IT company in the research. Also Microsoft has been using a similar strategy extensively and proved to be successful as the flexibility allows their employees to enjoy job success, simultaneously a healthy and balanced lifestyle (Courtois, 2012).
Third, the problems of lacking career development opportunities and employee engagement will be solved by providing career advancement plan but not through training programs provided by other companies because the studies by Beynon et al. suggests the negative effect on employee loyalty and is seen as assisting the employees to the develop new skillsets which is beneficial for the individual to find a new job (Beynon et al., 2017). However, employees would still be trained but instead by their supervisors who already are the expertise in the fields and been to multiple trainings in the past. This knowledge transfer not only helps increase employee skills but would also foster a stronger relationship and engagement between managers and employees and among employees themselves.
These solutions would be simultaneously implemented to increasing employee satisfaction and retention as each solution addresses different issue and every aspect is equally critical. To ensure that the solutions are working and that employees are happier with their work, employee survey will be provided after a year of implementation to measure employee job satisfaction in terms of benefit plans, work-life balance, career development opportunities and engagement.
Implementation plan
The implementation plan is divided into three steps: preparation and training, execution and assessment. The whole implementation process will take approximately 15 months in total (details of the timeline can be found in the Appendix on page 12).
Step 1: Preparation and training. Before actually executing the solutions, the company should take advantage of the time it has to build a strong foundation to welcome the incoming change. This stage would finish before the actual implementation plan start. First, the CEO would make an announcement regarding this plan and the new policies to his employees in the company’s upcoming meeting. Second, the HR team conduct research to benchmark salary and benefit packages with other companies in the same industry (and make sure to do this consistently at least once every six months). Third, the HR team compiles a new employee guidebook explaining about the benefit packages and flexible work time and place policies in detail. Last, management attends the training in their specific areas of expertise and prepares to transfer the knowledge onto their subordinates.
Step 2: Execution. Starting from January 3 of 2018, the work-life plan will be implemented. Employees are required to come into office three days a week: one of which is required to be Monday where team meeting is regularly conducted, while the other two days are their choices and they could choose the time and place for the other two days as long as they get the job done. For employee training and career development, the management team will alternatively conduct company training on the last Friday of every month. Human Resources department schedule individual sit-down conversation with employees regarding their career path and discuss over their past performance and the development opportunities.
Step 3: Assessment. Official assessment forms will be handed out to everyone in the company to assess whether the plan is working. Moreover, employee survey will be conducted at the end of December 2018 for company to obtain feedback from employees. Employees can give confidential feedback on their opinions of the company in terms of job satisfaction in terms of benefit plans, work-life balance, career development opportunities and engagement over the year 2018, and suggestions on how their jobs and work environment could be improved. The official assessment and surveys will be the indicators of accomplishments of the plan over the year.
Conclusion
The recommended solutions are considered the best fit to the specific problems and nature of work at Locus Telecommunication Incorporation. By following the steps, the company is expected to increase employee satisfaction and retention which in turn signifies the lower turnover. The most important aspect to allow the plan to work is not the plan itself but rather together with the courage and commitment to make a change from everybody and every department to work together for the company better.