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The major issue lies with every organization is the problem of high attrition rate. These unfavorable situations propel the firms to devise various strategies with a view to overcome these diverse conditions. Human resource plays a very significant role in almost all organizations (Pomoni, 2009). It is very easy to hire an individual as per the specifications of the job, but tough to retain them for a longer period of time. Therefore, this literature review would be exploring a range of reasons of high attrition rate in the firms as well as challenges imposed by the same in the company. This will going to help the firm in achieving their pre-determined aims and objectives and would support the company to grow as well. It is very costly affair to train the employees abruptly. So, analyzing and meeting their needs and demands will prove a better option for keeping employees within the business (Cascio, 2011).
Human Resource Management
According to Storey, “Human resource management is defined as that process which involves a set of inter-related policies which has a foundation of ideology and philosophy” (Storey, 2007). It is that element which represents the individual who together encompass as the labour force of the firms.
This term is also applied in labour economics like business sector (Thompson, 2011). Human resource performs various functions from time to time. One of their major responsibilities is managing the personnel by implementing strategies and policies on a regular basis. Manpower management term is being coined in late 1960’s. In past few decades, this function was known by the term ‘welfare management’ practices and scientific management principles were adopted to perform this function (Hargis and Bradley, 2011). But, soon after a year of coordination in relation with this process, ‘personnel management’ was begun to be known. Gradually this function gain popularity by the term human resource management as it is more strategic and quantitative approach (Lawler and Boudreau, 2009).
Human resource management is that methodology through which skills, knowledge, talent, abilities and aptitude of all the employees working in an organization is being managed (Cascio, 2011). There are numerous expressions available which depict man-power Management like labour administration, employee-employer relationship, labour management relationship, management of labour, industrial relationship, management of human capital and human assent management etc (Armstrong, 2009). However these terms can be used extensively, but they carry similar scope and nature.
Importance of Manpower in an organization
At times when organization starts visionize their business, their foremost priority is to recruit or hire competent manpower. All other resources in the company are largely dependent on its human resource. In absence of these, other elements remain worthless (Lawler and Boudreau, 2009). This can be articulated from the fact that without any human interventions, there is no one to plan, organize and manage the other valuable resources of the firm. Thus, manpower’s are indispensible part of the organization (Pomoni, 2009). There are many factors which indicate that human resource plays a significant role in the organization. One of them is the strategy. Human resource helps in improving the bottom lines of the organizations by its knowledge of how human capital affects the success of company. Those who have gained expertise in strategic management participate in corporate decision making, which underlines the current staffing analysis and anticipate future requirement (Importance of HRM for Organizational Success, 2008).
Challenges faced by HRM in an organization
Organizations encounter various manpower challenges and issues in their daily work schedule (3 Reasons Why Call Centers Have High Attrition Rate, 2012). These problems affect the level of commitment of both the employees and the management. Effective programs and strategies should be designed in order to overcome these problems so as to maintain the satisfaction level of staff. Some of the challenges faced by human resource management of the company are retaining talent in the organization, high rate of employee turnover, developing work ethics, managing workplace diversity, employee empowerment (Ingram, 2012), retrenchment and downsizing, limited resources of training.
Due to globalization and continuous changes in the business landscape, challenges for human resource management is evolving at a fast pace. With the occurrence of global advancement and fluctuating economy, many changes are taking place that affects most of the HR issues. Some of the leading challenges coming across the way of HRM are change management, development of leadership, measurement of HR effectiveness, compensation, succession planning, staffing, training and development and retention. From all above issues, high attrition rate is most crucial. It results in exit of potential and capable employees from the organization.
When talented employees leave the company, it cost very high to them like lower productivity costs, training costs, recruitment costs as well as the lost sales costs (3 Reasons Why Call Centers Have High Attrition Rate, 2012). The Future role of HR professionals will be very strategic and not just limited to administrative role. They are required to understand the international business practices and motivate their staff to work for the organization for an extended period of time. HR managers need to ensure that their initiatives and programs will yield productive results to the company..
Factors affecting employee’s commitment
Commitment of employees is considered as vital element for effective functioning of the organization. In fact in this modern world, it is one of the key factors that identify success of the firm. As competition is increasing at a fast pace, organization needs to have reliable and qualified personnel so as to maintain a strong position in the market (Luke, 2009). At the same time, effectiveness and productivity are also a major factor that contributes in progress of the company. Now days, financial stimuli solely cannot motivates staff to work efficiently. Such situation gives paramount importance to employee’s commitment because high commitment level of employees will give positive and better results to the firms (Ingram, 2012). On the other hand, lower level of commitment leads to poor functioning of entire organization.
According to John Mathis and Jackson, 2011, “Human resource planning function act as a pillars in the company through which initiation of the hiring process takes place” (Mathis and Jackson, 2011). Man power planning forecasts the future requirement of employees in the firm and makes needed arrangement for supplying right type of personnel at right time and quantity.
Human resource planning is sub-system of overall organizational planning. It is being regarded as an integral part of strategic management and thus it is acknowledged as ‘strategic manpower planning’. Consequently, the main objective Human resource planning is to identify the needs and demands of the personnel both in terms of quantity and quality. Human resource planning helps in making an inventory of manpower of the firm, which further helps in evaluating quality and quantity of staff available with the company (Caruth, Caruth and Pane, 2008). This is also being used to ascertain the untapped talent inside the organization.
It acts as an aid because it projects or anticipate future requirement of manpower. A comparison is made between the present supply and total demand of the workforce that determines deficiency or superfluous of the workers (Batt and Colvin, 2011).
According to Jane Newell Brown, “Employing personnel in the firm is regarded as a process that engage in discovering potential applicants for the purpose of fulfilling the present and future vacant jobs” (Brown, 2011).
The word ‘Selection’ itself implies its meaning. Opting specified individual for a particular job from a pool of candidates is defined as the selection process. Decisions of selection are always founded on the specifications required by the job and qualifications of applicants. Any wrong decision in selection of employees can ruin the performance and existence of the company.
According to Stone, “Selection is that process, which makes a distinction between the entire aspirants with a view to determine the likelihood of getting selected in a particular job” (Price, 2011). The nature of this process is negative, as it involves rejection of candidate; however recruitment is positive in nature, because there is no rejection of aspirants (Billsberry, 2008). Chances of selection of an applicant depend upon his abilities, skills and job specifications. If his abilities and qualification counterparts the disclaimer of required job, than he got selected and vice-versa (Mathis and Jackson, 2008).
Attrition is defined as the rate of gradual shrinkage in size of personnel and membership either through retirement, death or resignation (Attrition Rate, 2007). It is considered as normal and uncontrollable reduction of manpower because of relocation, sickness and retirement. The main drawback of attrition is that lessening of employees is often unpredictable which leaves a gap in an organization. High attrition rate causes huge loss to the company not only in terms of manpower but also in monetary terms (Madigan, 2010).
Attrition rate can be calculated by dividing number of employees leaving the organization in a particular period of time by average total number of employees over that same period.
Reasons of high attrition rate in an organization
There are many reasons attached for high attrition rate in an organization. One of the important factors among them is Workplace and environmental influences. Satisfaction among employees is majorly determined by their working hours and toughness of work (What is an Attrition Rate, n.d). If working hours is not suitable, worker will seek for better opportunities in market. Each and every employee wants to spend an appropriate time for both his personal life and family. More work pressure and rigidity in time makes him dissatisfies (Kaistha, 2012).
Another factor is ‘Training’. Organization does not invest more on “continuous training program” or “professional development program”. They are just limited towards induction and project training. If company evolves motivational training within the industry, employees will be highly motivated and work efficiently for the fulfillment of organizational objectives (Underdown and Talluri, 2012).
High attrition rate in the company also results from vague vision and values. Sometimes vision and values of the firm are not clear which creates ambiguity in the intellects of people. They feel highly disappointed and seek for superior prospects in the market. It is duty of the senior management to articulate a compelling apparition for the firm so as to succeed in near future (Madigan, 2010). People wish to work in those firms where they feel that their job is significant in the growth of firm. If management of firm is not prepared properly than they will communicate undesirable and vague messages. This will create apathy and frustration among employees, which can be detrimental for the development of the company.
Cost of attrition
Numerous costs are incurred by an organization at the time of hiring an employee. These costs can be in many terms like monetary, additional time required or it can be in terms of other intangible things. Many types of cost of attrition are present. The first one is the Recruitment costs. This cost encompasses many costs such as advertisements costs, cost of agency, internet posting costs, employee referral. There are many other costs which are intangible i.e. effort and time of internal recruiter's invested in understanding the requirements of position, developing and implementing strategies for sourcing etc (Critical Analysis of Attrition Rate, 2010). Other costs such as reviewing backgrounds of the applicants, preparing them for interviews, conducting interviews, organizing candidate assessments, reference checking, making offer of employment and notifying rejected candidates are also part of recruitment costs (Attrition Rate, 2007).
Role of Human Resource department in controlling high Attrition rate
If Attrition Rate is at normal level, it is considered good for the organization. This is because of the fact that company will be in a position to envisage new blood into the organization and will lead them to develop (Mathis and Jackson, 2011). But if the attrition rate is abnormal, than it becomes a severe problem. Therefore, HR Department plays a significant role in each and every firm. HR personnel always put their best efforts to bring right candidate for the right job at the time of conducting an interview (Ingram, 2012). Similarly, they play a major role in case when attrition is abnormal. There are many tips which can be adopted by HR department to reduce attrition rate: Some of them is, hiring those individuals who truly fit in the position vacant. This will dramatically increase the chances of employee satisfaction and will remain in a company for an extended period of time (Bohlander and Snell, 2009).
Candidates should not be selected by the firm only on the basis of their educational qualifications and communication skills, participation of workers in decision-making. It becomes incredibly important for the management to include employees in decision making process. This will help in generation of new ideas and perspectives that top management has never thought before. In order to retain information it is important to allow each member to share their knowledge with others. This will ensure the team member that he is also one of crucial part of the organization (Mathis and Jackson, 2011).
There is no doubt that family is equally significant to all employees. When employees suffer from high work pressure and timings, no pay packages keep an employee into the organization. Therefore, there should be balance between work and personal life of employees (Bohlander and Snell, 2009). Culture of organization also helps in retaining an employee for a longer period time. HR department should make their efforts in selecting those candidates who possess faith in organization culture and can easily adapt as well.
Supreme staff is UK’s leading specialist agency, providing talented and qualified staff for food industry. It has more than 12 years of experience in this industry. This company acts as a recruitment agent for food industry (Supreme staff limited, 2010). The organization is being managed and owned by professionals having practical experience in recruiting agency staff. Supreme staff engages themselves in providing qualified and trained employees to different organizations like hospitality; catering, cleaning, security and IT sector (Crook, et.al. 2011). They know requirements of different companies and avail them quality employees as per their specifications. Company also offers immediate and critical solutions to those who require workforce for a specified period of time. The competitive strength of the firm lies in their responsiveness and flexibility. They provide supporting hands to firms in dealing with the emergency situations through availing them required workforce (Bohlander and Snell, 2009).
Challenges faced by Supreme staff in managing talent
Talent management is defined as that process which develops and integrates new workers, develops and retains current workers and at the same time attracts highly skilled workers to perform for the company (Supreme-Recruitment, 2007). This process enables the organization to maintain, align and motivate highly qualified as well as high-performance labor force. Talent management also ensures automation of tasks and quality review on time (Price, 2011).
There are basically six dimensions of talent management i.e. developing strategy, attracting and retaining, motivating and developing, deployment and managing the resources, connecting and enabling and finally, transforming and sustaining. The success of business lies on its talent management strategies. However, supreme staff faces many challenges in regards with the managing talent. Some of the challenges are problem in attracting high quality applicants, identifications and development of high performers for placing them in key positions, retention of employees who are performing well (Bohlander and Snell, 2009), engaging and keeping employees focused on high quality goals, in order to support company’s growth, it becomes difficult for the firm to fill high impact positions and optimizing compensation with a view to serve the objectives of the company.
Managing human resource in an organization is very tedious and alarming, as it helps the firm to function effectively and efficiently. Without manpower no company can conduct and sustain its business in this competitive market. Thus, need of human resource is worthwhile. It is very easy for the HR department to hire employee’s but difficult to retain them (Kaistha, 2012). In order to retain workers for longer duration, managers need to employ many strategies like high compensation attached to performance, good appraisal system, conductive and amicable environment etc. However, this is also not enough (3 Reasons Why Call Centers Have High Attrition Rate, 2012).
If company wants to keep their employee for extended period of time, they must recruit only those candidates who meet specifications of the job. When right candidates are staffed at right time and place, they are more likely to stay with the company for longer period.
In today’s scenario, high attrition rate has become more distressing and prevailing factor in almost all organization. Human resource managers are facing many challenges that relates with people. Some of the problems are retaining talent in the organization, High rate of employee turnover, Developing work ethics, Managing workplace diversity, Employee empowerment, Retrenchment and downsizing and Limited resources of training (Ingram, 2012).
Among all the above, attrition is most crucial, which needs more concern from the managers. Supreme staff is UK’s leading specialist agency, which provides talented and qualified staff for food industry from past 12 years. This company is well known for its quality people and staff. They organize numerous training and development program for their employees so as to make them aware of new technologies and trends in the market (Supreme-Recruitment, 2007). Although they are acquainted with skillful workers, many challenges are faced by the company in this regards. Organization is in need to adopt talent management strategies so that they can be in a position to retain potential staff for long term in their firm.
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