IMPACT OF LABOUR TURNOVER ON ORGANIZATIONAL PERFORMANCE: A STUDY OF DEMICOCK PAINTS NIGERIA LIMITED, PORT-HARCOURT, RIVERS STATE
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The main purpose of this study is to investigate the impact of labour turnover on organizational performance, using Demicock Paints Nigeria Limited, Port-Harcourt, Rivers State as a case study. The study adopted a survey research design. The population of the study was all the workers of Demicock Paints Nigeria Limited, Port-Harcourt, Rivers State. Stratified random sampling technique was used to select the sixty (60) samples that participated in the study. Five research questions were posed for the study while a twenty (20) item structured questionnaire designed by the researcher were used to obtain data for the study. Descriptive statistical tools used for analysis of data obtained on the study were total score, frequency distribution and simple percentage. The findings of the study revealed that labour turnover has impact on organizational performance. It was concluded from the findings of the study that labour turnover has direct and indirect impacts on organizational performance. It was therefore recommended among others that management of business organizations should use monetary and job related non-monetary incentives to motivate their employees to improve their performance. This will turn around to improve organizational performance in the long run.
TABLE OF CONTENTS
Title Page – – – – – – – – – i
Declaration – – – – – – – – – ii
Certification – – – – – – – – iii
Dedication – – – – – – – – – iv
Acknowledgements – – – – – – – – v
Abstract – – – – – – – – – vi
Table of Contents – – – – – – – – vii
List of Tables – – – – – – – – x
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study – – – – – – 1
1.2 Statement of the Problem – – – – – – 3
1.3 Objectives of the Study – – – – – – 5
1.4 Research Questions – – – – – – – 6
1.5 Hypothesis – – – – – – – – 6
1.6 Scope of the Study – – – – – – – 7
1.7 Significance of the Study – – – – – – 7
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Concept of Labour Turnover – – – – – 9
2.1.1 Concept of Organizational Performance – – – – 10
2.1.2 Causes of Labour Turnover – – – – – 12
2.1.3 Costs Associated with Labour Turnover – – – – 14
2.1.4 Effects of Employee Labour Turnover on Organizations – 16
2.1.5 Methods of Controlling Labour Turnover – – – 18
2.1.6 Impact of Labour Turnover on Organizational Performance – 23
2.1.7 Strategies for Reducing and Managing Labour
Turnover in Organizations – – – – – – 24
2.2 Theoretical Framework – – – – – – 26
2.2.1 Equity Theory – – – – – – – 26
2.2.2 Expectancy Theory – – – – – – – 27
2.3 Empirical Review – – – – – – – 27
2.4 Summary of Empirical Review – – – – – 30
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction – – – – – – – – 31
3.2 Research Design – – – – – – – 31
3.3 Area of the Study – – – – – – – 31
3.4 Population of the Study – – – – – – 31
3.5 Sample Size – – – – – – – – 32
3.6 Sampling Technique – – – – – – 32
3.7 Stratified of the Sample – – – – – – 32
3.8 Instrument for Data Collection – – – – – 32
3.9 Validation of the Instrument – – – – – 33
3.10 Method of Data Collection – – – – – – 33
3.11 Method of Data Analysis – – – – – – 33
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA
4.1 Presentation and Interpretation of Data – – – – 35
4.2 Analysis of Data – – – – – – – 38
4.3 Discussion of the Results – – – – – – 46
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary of Findings – – – – – – 49
5.2 Conclusion – – – – – – – – 49
5.3 Recommendations – – – – – – – 50
5.4 Suggestions for Further Studies – – – – – 51
1.1 Background to the Study
Employee labour turnover is the rate of change in the working staff of an organization during a definite period (Odueyungbo, 2009). In other words, it is the measurement of the number of employees leaving an organization. It signifies the shifting of work force from one organization to another. It is the percentage of the total labour force of an organization leaving its employment and being replaced over a given period of time, usually a year (Bhattacharyya, 2012). It is the exit of employees (manpower) from an organization in the form of discharge, retirement, death, termination among others (Hartzell, 2006).
Labour turnover, whether low or high is a dangerous signal for an organization. Low employee turnover is harmful to an organization as its affect organizational performance, service delivery, productivity, customer satisfaction among others. Also, low labour turnover can be dysfunctional since it may lead to a statistic or depressed internal labour market and inhibit the entry of new blood in an organization. On the other hand, high employee labour turnover, is harmful to an organization. It may signifies poor and unhealthy personnel practices, leadership style, compensation policies, supervisory practices, performance appraisal practices or poor company policies (Appleby, 1981). Equally, high rate of employee labour turnover may means that many employees are leaving an organization as a result of many interrelated personnel problems which are often difficult to identify, diagnose, control or prevent within a short time (Ojo, 1998). This may drastically reduce organizational performance, imposed some unprecedented costs on the organization, destabilized and demotivate employees remaining in an organization. In addition, high employee labour turnover can be costly and result in a poorly skilled workforce because employee may leave on their own accord once they are trained and consequently become more valuable to other organizations (Pilbeam & Corbridge, 2002).
Besides, employee labour turnover disrupts production, increased individual work load and leads to instability in the labour force. It also causes knowledge loss, additional training costs, difficulties in attracting new staff, low productivity, delayed service delivery and low handling of customer complaints among others (Appleby, 1981). But despite the negative impacts of employee labour turnover on organizational performance, it is also beneficial to organizations because it enable people to utilize their abilities more effectively on-the-job. Employee labour turnover provides opportunity for an organization to recruit fresh staff to bring new blood into an organization. Thus, making an organization a going concern in terms of personnel as long as employees who leave for reason of death, retirement, ill health or disability are replaced with younger or stronger employees (Mamoria & Gankar, 2008). In like manner, efficiency and morale are raised when necessary replacements can be supplied by promotion from within rather than from outside the organization. In addition, it provides opportunity for introduction of new knowledge, fresh ideas and skills.
This study is conducted to assess the impact of employee labour turnover on organizational performance, using Demicock Paints Nigeria Limited, Port-Harcourt, Rivers State. It is hoped that the findings of the study will reveal the consequences of employee labour turnover on organizational performance and also provide means of identifying, diagnosing, controlling or reducing it in both small and large as well as public and private organizations.
1.2 Statement of the Problem
Employees are the most valuable assets of every organization. As such, no employer will be willing to loose its cherished, valued, talented, experienced, skilled and trained employee to another organization. However, some degree of staff turnover is inevitable due to contingencies such as death, compulsory retirement, expiry of contract, termination, dismissal or discharge due to unsatisfactory performance, misconduct, ill health or disability among others. All these, as well as voluntary and involuntary staff turnover give a warning signal to the management that something is definitely wrong with an organization.
Whenever, employee labour turnover occurs in an organization, it indicates an unhealthy condition of the organization and also have direct negative consequences on its performance. It also indicates that the organization may be having problems with its leadership style, compensation policies, human resource policies, human relations, conditions of service, work environment, supervisory practices, staff appraisal practices, company policies or other welfare facilities provided by the employer for the staff. Apart from that, it is an indication that there are grievances, low job satisfaction, and other personnel related problems which need thorough investigation to ascertain its causes because of the danger and harm it poses to the organization. The most disturbing aspects of employee labour turnover is that it comes in different forms and dimensions with different interrelated human resource problems which affect different spheres of an organization. Besides, it is not easy to notice its commencement and it is not easy to identify, control or manage once it occurs.
Worse still, employee labour turnover, whether low or high reduces organizational performance, abilities and demotivate employees remaining in the organization. Other negative consequences of labour turnover include low productivity, lost of customers, delay production, interruption in work flow, increased production and increased hiring costs, high scrap and rework rates, high rate of accidents due to inexperienced employees, difficulties in attracting new staff and delayed service delivery. Others are increased work load of individual employees, loss of knowledge, increased training costs, delayed in handling customer complaints, increased costs of overtime work to meet production and demand targets, low morale, damage to firm’s reputation, image and goodwill, customer dissatisfaction and poor patronage among others.
However, there are schools of thought which hold that employee labour turnover is beneficial to an organization. They asserted that it enables organizations to hire new blood for its operations and it enables employees to utilize their skills, knowledge, experience and abilities effectively for their organizations. Also, it makes an organization a going concern as employees discharged from an organization are replaced with younger, vibrant, experienced, skilled and talented employees among others.
It may be true that employee labour turnover benefits an organization to some extent but its negative consequences on organizational performance outweigh its benefits to organizations. Hence, there is fear that if these problems are allowed to continue, they might force some organizations to fold up. Therefore, this study was conducted to investigate the impact of employee labour turnover on organizational performance so as to proffer some solutions to the identified problems.
1.3 Objectives of the Study
The main objective of the study is to investigate the impact of labour turnover on organizational performance.
Other objectives of the study include:
- To identify the causes of labour turnover in business organizations.
- To examine the costs of labour turnover in business organizations.
- To find out the possible methods of controlling labour turnover in business organizations.
- To identify the strategies for reducing labour turnover in business organizations.
1.4 Research Questions
The research questions stated below were posed to guide the study.
- Does labour turnover impose costs on business organizations?
- Are there methods of controlling labour turnover in business organizations?
- Does labour turnover has any impact on organizational performance?
The following hypotheses were established in this study to be tested using the collected data:
H1: There is significant relationship between labour turnover and organizational performance.
H0: There is no significant relationship between labour turnover and organizational performance.
1.6 Scope of the Study
This study focuses on impact of labour turnover on organizational performance. The study was conducted at Demicock Paints Nigeria Limited, Port-Harcourt, Rivers State. The study examines the concepts of labour turnover and organizational performance, causes, costs and methods of controlling labour turnover. Additionally, the study examines the impact of labour turnover on organizational performance and possible strategies of reducing labour turnover in business organizations.
1.7 Significance of the Study
The significance of this study cannot be over-emphasized as it will be useful to human resource managers in their recruitment, selection and placement functions in business organizations. They will benefit from the study through presentation of its findings in the study in seminars, workshop, internets, conferences among others. The findings of this study will be of great help to management, human resource manager and staff of Demicock Paints Nigeria Limited, Port-Harcourt, as it will educate them on the causes, costs and positive and negative impacts of labour turnover on the company’s performance through the company’s newsletters, inhouse journal and seminars. This study is also important to researchers and students studying human resource management, Business Administration/Management and other related courses as it will educate them on the scope of the study. The reading public will also find this study very useful as they will read the findings of this study on the internet, journal publication and business magazines among others.
This study is also significance because it will serve as reference materials for students studying Business Administration and other business related courses in Tansian University as copies of this study will be available at the University library for students use.
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