AN INDEPTH ANALYSIS ON IMPACT OF EMPLOYEE TURNOVER ON ORGANIZATIONAL PERFORMANCE OF BESIX CONSTRUCTION COMPANY

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The business landscape worldwide continues to expand as companies seek various avenues to gain and sustain competitiveness. Increasingly, organizations recognize that employees constitute a vital part of their structure, and for success, they must integrate employee considerations into their strategic planning. This underscores the significance of employees rather than labor in gaining a competitive edge. In an organization, various elements contribute to its operations, with employees being a crucial aspect. When employees are nurtured and supported, they offer valuable contributions to the company (Aiza & Abdus, 2019). Many companies invest resources in enhancing employee efficiency and effectiveness to improve overall performance. However, retaining employees has become increasingly challenging, leading to turnover and the need for repeated recruitment processes (Ghulam, Syed, & Zainab, 2022). Employee turnover refers to the rate at which an organization acquires and loses employees, as well as the average duration of employment before employees leave or join the organization (Lalah, 2019). It imposes undue strain on employees who are present at work, resulting in an augmented task for the remaining staff. Similarly, Hur (2018) states that employee turnover results in a depletion of institutional knowledge, necessitating dependence on newly hired staff members who may not be fully familiar with the organization's policies and processes. This, in turn, leads to diminished morale, heightened stress levels, and thus, higher absenteeism. Moreover, Kimazi & Schope (2022) assert that employee turnover can manifest in either voluntary or involuntary forms. Voluntary turnover arises when an employee perceives another opportunity, such as higher pay, greater recognition, or a more convenient location, as preferable to their current position. It can also occur due to health or family reasons, or when an employee plans to retire.  Beyond that, voluntary turnover can be classified as either functional or dysfunctional for the organization (Kimazi & Schope, 2022). Functional turnover occurs when an employee's departure benefits the organization and can be easily replaced, resulting in a net positive impact on workforce value that outweighs turnover costs. Conversely, dysfunctional turnover occurs when the departure of a highly skilled or high-performing employee negatively affects the organization, resulting in a net negative impact on workforce value or insufficient positive change to offset costs. Although dysfunctional turnover may lead to the loss of firm-specific human capital, it can also benefit the organization by eliminating employees with burnt-out performance or negative attitudes, which could otherwise influence the motivation and productivity of others. Overall, turnover is deemed functional when replacements are expected to contribute more value to the job or organization than the employees they replace. In contrast, involuntary turnover occurs when an employee leaves the organization due to factors such as disengagement, retirement, layoff, or death (Kimazi & Schope, 2022). Furthermore, employees are required to work additional hours in order to make up for the workload left by those who have quit. Nevertheless, voluntary and involuntary employee turnover can lead to interruptions in operations, work team relationships, and unit performance. Both types of turnover result in expenses for the organization (Robbins and Decenzo, 2019). Researchers have sought to comprehend the psychological and economic impacts of employee turnover on organizations and their performance. While turnover can benefit organizations by replacing underperforming or older employees with skilled or younger ones, it also incurs costs such as recruitment, administrative expenses, and training (Ibrahim, Usman, & Bagudu, 2019). Although organizations can partially control turnover through policies and regulations, certain factors, such as instability, low pay, and poor working conditions, contribute to high turnover rates, leading to unexpected costs and reduced human capital, ultimately affecting the organization performance (Ghulam, Syed, & Zainab, 2022). Organizational performance results from the company's inputs in its activities. Saving costs on recruitment and retaining employees serves as a milestone toward achieving the desired performance levels. However, if an organization has made substantial investments in training and developing its staff. The investment becomes forfeited when an employee departs. Moreover, high employee turnover can detrimentally impact the overall performance of a company and is frequently indicative of additional challenges. Every organization aims to achieve high productivity, minimise turnover, and maximise profitability (Mello 2018). Therefore, effectively managing employee turnover is essential in order to accomplish the aforementioned objectives. The management must acknowledge that employees play a crucial role in achieving organizational performance efficiently. Hence, it is imperative to acquire a comprehensive understanding of employee turnover in terms of its causes, effects, and ways to mitigate turnover (Hollman 2019). Therefore, a survey will be conducted in order to analyze on impact of employee turnover on organizational performance of Besix construction company.

1.2 Statement of the Problem

When employees resign from a company, it incurs significant direct and indirect costs for the organization. The costs associated with staff turnover can be substantial, encompassing advertising fees, resource management expenses, loss of time and efficiency, work imbalance, and training and development expenses for new employees (Harrie, 2019). However, the frequent departure of experienced employees who possess valuable knowledge and have assimilated the organizational culture can significantly disrupt organizational performance. Consequently, the organization is at risk of losing its market share to competitors. Likewise, Phillip (2020) states that employee turnover disrupts the distribution of roles and duties in different departments, leading to new employees who lack the ability to effectively carry out organizational services. This significantly diminishes the quality of the organization's services, resulting in low levels of client or customer satisfaction. Similarly, the organization's sales revenue decline leads to a decrease in the level of organizational competency. Also, inexperienced new employees who lack the necessary skills to perform their assigned roles and duties require significant time and financial resources to be trained and replaced. This exposes the organization to substantial expenses for recruitment, hiring, and training in order to fill the workforce gap left by departing employees. Consequently, the company will incur significant costs in terms of time and finances to train the newly hired employees, ensuring their efficiency, familiarity with the organization's working culture, and acquisition of relevant skills and expertise. However, organisations have used numerous employee retention tactics, such as enhanced incentives management, career advancement opportunities, and improved health and safety measures, in response to high staff turnover rates. However, this has led to higher operational costs and a decline in profit margin (Duncan, 2019).  It is in the light of these that the study seeks to analyze on impact of employee turnover on organizational performance of Besix construction company.

1.3 Objectives of the Study

The main purpose of this study is to analyze on impact of employee turnover on organizational performance of Besix construction company. Specifically, the study will;

Determine the effect of employee turnover on the organizational performance of Besix construction company.

Determine the impact of employee turnover on organizational performance of Besix construction company. 

Determine whether there is a relationship between organizational performance and employee turnover in  Besix construction company.

1.4 Research Questions

The following questions have been prepared for the study:

What is the prevalence of authoritarian leadership styles in private organizations?

What are the levels of employee turnover intentions in private organizations?

How does authoritarian leadership style impact employee turnover intention in private organizations?

1.5 Research Hypotheses

Ho: There is no significant impact of employee turnover on organizational performance of Besix construction company.

Ha: There is a significant impact of employee turnover on organizational performance of Besix construction company.

1.6 Significance of the Study

The results of the study will help the management of the organization implement strategies to mitigate employee turnover, such as fostering a supportive work environment, providing opportunities for professional development, and promoting a sense of belonging and connection to the company. Additionally, the study findings will empower employees to take proactive steps to strengthen their ties to their jobs , thereby increasing their job satisfaction and likelihood of remaining in their current positions. Furthermore, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to impact of employee turnover on organizational performance of Besix construction company.

1.6 Scope of the study

The scope of this study is boarded on impact of employee turnover on organizational performance of Besix construction company. Empirically, this study will determine the effect of employee turnover on the organizational performance, the impact of employee turnover on organizational performance and determine whether there is a relationship between organizational performance and employee turnover in organizations.

Geographically, the study will be delimited to managers of Besix construction company, Cameroon.

1.7 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. 

More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

1.9 Definition of Terms

Employee turnover: the rate at which employees leave an organization and need to be replaced. 

Organizational performance: the extent to which a company achieves its strategic objectives, fulfills its mission, and meets stakeholder expectations.