Employees: Satisfaction And Turnover Rate

In the era of the competitive global economy, the Human Resource is playing a vital part in the growth of an organization. Employee turnover can be defined as voluntary terminations of employees. Khan and Aleem (2014) state that it is becoming a challenge to reduce the employee turnover and keep their loyalty toward the organization for the better performance and also for the survival of the organization. Past researchers seem to argue that employee turnover significantly affects the productivity of the organization since when an experienced employee leaves, the organizations need to do a new recruitment which would increase the cost on training and development. Further, it can be argued that employee turnover affects the productivity too. In additionally, Des and Shaw (2001) state that the employee turnover would create indirect costs like increment of workload on the existing workforce which leads to demotivation and also low morale.

Definition of Employee Satisfaction

Employee satisfaction can be defined as a measure of how happy employees are with their working environment and the job. Sageer, Rafat and Agarwal (2012) state that employee satisfaction as a terminology which is used to assess whether the employee is happy, engaged and fulfilling their needs, wants and desires at work environment. Moreover, the job satisfaction of an employee can be defined as the physical and emotional reaction towards the job based on the comparison between desired and actual outcomes.

Importance of Employee Satisfaction

The success of a company seems to be linked with employee satisfaction which leads to the retainment of the talented and experienced workforce who can contribute to the company growth. Lai Wan (2007) argues that employee satisfaction is an essential goal to have in an organization since higher the job satisfaction in employees is, more they give in return to the organization as the form of efficiency and the productivity. Moreover, Medina (2012) elaborates that when the employee is satisfied with the job, they are less likely to seek for a new opportunity with a new employer. Further, it is mentioned that job satisfaction has a connection with life satisfaction. In addition, they also report that job satisfaction is linked with the experience in the previous jobs as well. If someone struggled and took a long time to find a job, that person seems to be satisfied with what he has. Accordingly, they suggest that job satisfaction positively impact on motivation level, performance, mental health and organizational commitment while it negatively impacts on turnover, absenteeism and stress. In the same way, it can be argued that employee satisfaction has an impact on organizational profit, employee accidents and customer satisfaction.

Employee Satisfaction Variables

Sageer, Rafat and Agarwal (2012) report that employee satisfaction variables can be divided into two main categories.

• Organizational variables

Organization development, compensation and benefit, career development, job satisfaction, job security, working environment and conditions, relationship with supervisor, workgroup, leadership style and also other factors like group outgoing, effective feedback, encouragement and opportunity to use internet and technological devices for doing the job can be named as organizational variables which would affect employee satisfaction. When a company has a potential growth in future, promote democratic leadership style, provide a safe work environment which has the mutual respect for each other, provide effective feedback and the encouragement, provide attractive remuneration package, the employees seem to be comparatively satisfied. Despite this, it is also mentioned that above-mentioned factors can be named as the organizational culture which is based on different perceptions and emotions rather than the facts and figures which makes it complex and intangible.

• Personal Variables

The personality of the employee, education level, gender difference, age and the expectations can be named as the personal variables which have an impact on employee satisfaction. Nevertheless, Medina (2012) states that the above-mentioned variables can be categorized under demographic variables. Further, it can be argued that according to the Maslow’s hierarchy of needs theory, the employee satisfaction can be achieved through the fulfillment of the individual needs which starts from basic needs such as food, clothes and shelter which will end with employee self-actualization.

Definition of Employee Turnover

Employee turnover can be defined as the cycle movement of the workers between the status of employment and unemployment, as well as between jobs and companies. Similarly, employee turnover can be defined as a process which is linked to the resignations and recruitment of employees in an organization. Further, they argue that employee turnover can be in two forms, which are voluntarily leaving and involuntarily leaving. Nevertheless, Janssen et al (1998) state that employee turnover is only the voluntarily leaving the company. Moreover, the employee turnover was defined as the number of employees who left the organization in a specific time period. This can be in both voluntarily and involuntarily manners.

Impact of Employee Turnover

Employee turnover can create an impact on existing workers and firms. An employee is spending the time to find a new job after leaving the previous job, might cause a loss of money and time. Similarly, the organization itself has to spend money and time to find a replacement for the vacant position. Ongori (2007) states that the employee turnover can be impacted on production output to some extent since replaced workers might not be experienced as the workers who left. This will negatively impact on the profitability of the organization since it seems to have other costs like the waste of the time of the management, training and development costs, burden on existing employees, loss of efficiency, loss of teamwork and loss of customer satisfaction. However, the employee turnover can also create a positive impact on the organization since it gives an opportunity to replace the low-quality workers with the high quality experienced workers. Further, it can be argued that the employee turnover increases the flexibility and adaptableness among the teams within the firm while it creates opportunities for the existing employees to go up in the ladder. In employee perspective, the employee retention provides the opportunity to reach for higher income, new challenging jobs as well as to escape from stressful work environments.

According to the past researches, it can be argued that there is a significant relationship between employee satisfaction and employee turnover. Tnay et al. (2013) state that employee satisfaction towards the pay, supervisory support and organizational commitment has a significant impact on employee turnover. Moreover, it is mentioned that when the employees are satisfied with their job, work environment, management and remuneration packages and promotions, they tend to remain in the company for a comparatively long time period. Similarly, Medina (2012) reports that employee satisfaction and employee turnover rate has an inverse connection. Higher the satisfaction in employees, lower the employee turnover rate is.