Career Management Proposal to Reduce Employee Turnover

Executive Summary

Although the precise causes differ from organization to organization, the high costs associated with unplanned employee turnover are well documented. In some professions, replacement costs for employees can easily equal their annual salary or more, so identifying strategies to reduce turnover rates represents a valuable and timely enterprise. To this end, the purpose of this proposal is to describe the problems of interest and what can be done to mitigate them. A description of the implications of implementing the career management program is followed by the key recommendations that emerged from the research. These recommendations include providing employees with a career management plan that motivates them to acquire additional education and training, as well as instilling an enhanced sense of organizational loyalty to reduce turnover levels. A secondary recommendation concerns encouraging employees to develop their knowledge and expertise in successfully navigating their career ladder in order to achieve their full professional potential. Finally, a summary of the proposal and key findings from the research are presented in the conclusion.

Recommendations and Justification

This proposal sets forth relevant recommendations for ABC HR Consulting together with the corresponding rationale in support of their approval. It addresses the background, history, symptoms, and causes of the problems discussed herein, as well as the implications of adopting these recommendations with respect to cost, legal considerations, and effects on organizational relationships. A discussion of implementation timing and evaluation of these recommendations is followed by a description of comparable practices at other companies.

Recommendations

Based on an analysis of the problem situation at ABC HR Consulting (hereinafter alternatively "ABC" or "the company"), the following recommendations are provided:

• Recommendation #1: Immediately eliminate the practice of using sign-on bonuses as an incentive for recruitment.
• Recommendation #2: Immediately begin conducting exit interviews with employees who announce their intention to quit, in order to identify underlying causes.
• Recommendation #3: Provide all lower-level employees and staff members of ABC with on-the-job training concerning their respective career management planning and optimal strategies for advancing on the company's career ladder.

Justification for Recommendation #1: Eliminate Sign-On Bonuses

Although the antecedents of unplanned turnover differ depending on a number of factors — including the type of industry and the availability of alternative employment opportunities — one recruitment and retention strategy that has demonstrated ineffectiveness is the use of sign-on bonuses (Hansen, 2009). In this regard, Hansen (2009) emphasizes that "signing bonuses generate job hopping, damage morale among existing employees and exacerbate financial pressures. Although sign-on bonuses are common, we find that the practice can almost encourage job hopping from bonus to bonus" (p. 2). Moreover, sign-on bonuses are only a stop-gap measure to truly effective recruiting and retention practices, and they add significantly to the overall costs associated with turnover (Dobbs, 2009).

Justification for Recommendation #2: Conduct Exit Interviews

As noted above, the precise reasons employees leave their jobs differ from person to person, but there may be commonalities that can be identified through exit interviews (Christie, 2014). In this regard, Johns and Gorrick (2016) report that "exit interviews are a practice used to monitor and analyze employee turnover with a view to improving overall organizational effectiveness" (p. 26). In sum, exit interviews represent a highly cost-effective strategy for identifying the underlying causes of turnover, especially since these interviews can be conducted in person, by telephone, or by email (Christie, 2014).

Justification for Recommendation #3: Career Ladder Training

A career ladder can appear extremely steep when viewed from the bottom rung, and it is likely that at least some percentage of ABC's employees have left the company due to their inability to understand how they can advance in their career paths. While the company can provide employees with the tools and information they need for this purpose, it will also be important to emphasize that it is incumbent upon employees to learn how to navigate a career ladder. According to Tatham (2008), "a key driver for strengthening career development learning is the importance of well prepared and flexible [employees] with [the] capacity to manage their employability by learning effective career management skills" (p. 7). In other words, the rationale supporting this recommendation is a two-way street that involves effort on the part of both the company and its targeted employees.

Background and History

The research showed that ABC has experienced a sustained average unplanned turnover rate across all divisions of more than 32% over the past six years. The high costs incurred as a result have adversely affected the company's ability to invest in the types of innovative technologies that would help it achieve its organizational objectives. Some divisions have suffered from especially high levels of turnover, as shown in the relevant divisional breakdown data and career ladder figures referenced in the full report.

As can be readily discerned from the breakdown of turnover rates at ABC, the internship division has experienced the highest average level of turnover at 72.5% over the past six years, versus 57.5% for staff members, 29.5% for advanced staff, 21.5% for management, and 14% for senior management. Although turnover rates vary significantly by industry — for example, the hospitality industry experiences an average annual turnover rate of approximately 300% — the average turnover rate for all types of American small businesses is about 17.8% per year, and just 11.4% for companies competing in the services industries, such as ABC (Turnover rates by industry, 2019).

These averages mean that ABC's turnover rates for all categories of employees except senior management and partners exceed national averages, and in some instances — such as interns and staff — the rates are far higher. Although senior staff members and partners are heavily invested in the company in terms of tenure and are therefore far less likely to quit, it is apparent that lower-level employees do not possess this sense of organizational investment and are consequently more likely to pursue better employment opportunities elsewhere.

The use of sign-on bonuses began in 2012, when the company was experiencing a severe shortage of qualified candidates for its several HR divisions. It was during this period that turnover rates began to accelerate, but the process was allowed to continue unabated with no meaningful effort to identify its causes.

Conclusion

Today, ABC HR Consulting is at a critical juncture in its organizational history. The research was consistent in showing that the company has sustained an inordinately high level of employee turnover for the past six years, and little or nothing has been done to address this costly issue. The research also showed that the precise antecedents of turnover vary dramatically from industry to industry and from individual to individual, but some of the most common issues compelling employees to seek better opportunities elsewhere include diminished levels of job satisfaction and morale — both of which are adversely affected by the use of sign-on bonuses for new hires. Additional causes of turnover at ABC include the inability of current employees to successfully navigate the company's career ladder. Fortunately, highly cost-effective solutions exist for each of these problems, and it is recommended that the guidance in this proposal be approved and implemented at the earliest opportunity.

References

Christie, J. (2014, September). Cochrane review brief: Exit interviews to reduce turnover amongst healthcare professionals. Online Journal of Issues in Nursing, 19(3), 7–11.

Dobbs, K. (2009, April). Knowing how to keep your best and brightest. Workforce, 80(4), 56–60.

Hansen, F. (2009, March 27). Refining signing bonuses. Workforce Management, 85(6), 1–3.

Johns, R. & Gorrick, J. (2016, April). Exploring the behavioral options of exit and voice in the exit interview process. International Journal of Employment Studies, 24(1), 25–29.

Ohunakin, F. & Adeniji, A. (2018, March). Perception of frontline employees towards career growth opportunities: Implications on turnover intention. Business: Theory and Practice, 19(1), 278–283.

Tatham, P. (2008, Spring). At my desk. Australian Journal of Career Development, 17(3), 6–9.

Turnover rates by industry. (2019). Compensation Force. Retrieved from