BH7631 Financial Impact Of Turnover And Retention On Nostrum Oil And Gas Assessment Answer
FINANCIAL IMPACT OF TURNOVER AND RETENTION ON NOSTRUM OIL AND GAS
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Turnover of employees is one of the crucial challenges for every organization across the world. Every human resource manager is keen to restrict this sort of risky scenario within the organization. Most of the management staffs are not aware of the fact that why employees left the organization. In regards to this, the financial status of an organization crucially impacted by the same. Therefore, for analyzing the significance of employee turnover in an organization's financial health this research is conducted by the researcher. The same reason tends to choose Nostrum Oil and Gas Company in order to derive the impact of turnover as well as the impact of employee retention. Some Objectives which are relevant to the topic are developed by the researcher. One of the significant objectives regarding the same is to review the factors lead employees to quit their job.
Moreover, the researcher crucially evaluated the methodologies which brought the outcome precisely. The 30 respondents were taken into account by the researcher which critically helped to meet with the objectives of the topic. Besides, primary data was collected by the researcher and the information was interpreted through quantitative data analysis method. For bringing the outcome accurate primary data collection method was considered by the researcher.
The research or analysis represents that some of the major causes regarding employee’s turnover are dissatisfaction regarding the job, overworking feel and also hostile working environment. Apart from that, the failure of the management team regarding employee’s needs fulfilment also leads the organization towards massive employee turnover.
Some scholars told that the management of an organization critically asses the needs and requirements of every staff. By filling the needs an organization can retain its valuable employees. Employees are the preliminary asset of every organization. Therefore, an organization need to provide career growth opportunities and also required to implement rewards and recognition strategy to mitigate dissatisfaction level of employees.
Findings suggests that Nostrum authorities need to be more aware of employee feedback taking process. As a significant number of their employee base are young freshers, it is important for the organisation to work closely with the HR department to manage this workforce as they are the people who are more likely to leave Nostrum. Furthermore, it is recommended that management need to investigate if any discriminatory practice is in effect at Nostrum and also required to enhance existing rewards and recognition program for the performing employees to keep their employees engaged and satisfied.
Chapter 1: Introduction
1.1. Background of the study
The topic that has been considered for this report is the financial impact of turnover and retention on the organisation. The organisation which has been chosen for the study is Nostrum Oil and Gas which operates in the oil production industry in Kazakhstan. This organisation has been listed in the London Stock Exchange having it headquarter in the Netherlands. The total workforce of the company grew by 6% in the year 2014 but the staff turnover rate was 5.4% which is quite higher (Annualreports, 2020). This is quite higher because the company has a group employee base of 820 according to the company published sources (Nostrum, 2020). As a result while the workforce of the company grows by 6% annually, a turnover rate of 5.4% makes the overall growth less than 1% and this as a result demonstrates the criticality of this issue for Nostrum. Thus, the company has retention strategies like pension funds, insurance plans, medical care and assistance and many more other benefits. This employee turnover in the company thus, requires the management to invest on retaining them.
1.2. Aims and objectives of the study
The aim of this report is to consider the financial impact of turnover and retention on the organisation.
- To review the factors affecting employee turnover in the company on the basis of age, service, and gender
- To evaluate the relationship between employee turnover and employee retention of the organisation
- To investigate the impact of high employee turnover on the financial health of the company
- To recommend the strategies of employee retention and employee turnover to the organisation.
1.3. Rationale of the study
A greater degree of employee turnover and retention could provide a negative financial impact as the company have to incur cost on the regular training and development of the new employee.
The major issue lies in the organisation are not able to retain the employee for a longer period of time. This leads to employer turnover which affects the financial decisions of the organisation (Brook et al. 2019). Employer turnover and retention have become a major topic nowadays because of the greater pressure from the external market. Employees are the major resources who could benefit the company in the long run. It could be said that there is a necessity of reducing the employee turnover and bringing the employee retention strategies for the sake of sound internal environment of the company (Al Mamun and Hasan, 2017).
1.4. Significance of the study
This study has been chosen because there is a greater requirement of maintaining the employee turnover and retention for the growth and development of the organisation.
Chapter 2: Literature Review
2.1 High employee turnover is demonstration of low employee engagement
According to Devi (2017), the employee turnover rate is the depiction of employee engagement in any organization. Devi states that as organisational performance is dependent on employee engagement, the financial performance of the organisation also gets adversely impacted by the employee turnover. Supporting this argument Yap Peng Lok et al. (2019), argues that employee dedication leads to the organizational performance and which as a result helps the organisation to achieve their financial goals through employee productivity. However, employee turnover jeopardises the flow of projects and productivity goals of the organisations and which as a result adversely impacts the organization in the achievement of their goals. Therefore, based on the findings made by Devi (2017), it can be said that lack of engagement of employees results in high employee turnover and which as a result acts as a crucial barrier for organisations that harms them financially.
2.2 Impact on financial perspective of business
On the other hand, Gervasi and King (2016) state that human resources and accounting are correlated as even though they function independently, activities in the human resources have direct effect in the financials of an organisation. Gervasi and King (2016) argue that in the older business models, organisations used to categorize their employees as an expense because of the financial requirements such as salaries, hiring costs, severance pays and so on. Thus, according to them, employee turnovers are actually costly for businesses as organizations have to go through recruitment costs once again to hire human resources once again. Furthermore, another paper by Ugoni (2016) supports this argument and states that newly hired employees are often not as skilled and require time to reach their potential, therefore organisations often incur losses due to low productivity and fail to achieve quality standards. Therefore, due to the globalisation and abundance of employment opportunity in the developed and developing markets it has created a new financial burden on the organisations due to high employee turnover rates. These arguments of Gervasi and King (2016) are supported by King (2016) as the author states that employee turnover related expenses have become a burden for the businesses. King develops the argument further and states that in order to control their employee turnover rates, businesses often undergo employee retention programs and through which they provide bonuses or financial benefits to their employees in order to retain them in their organization. Although, such organizational activities decrease the turnover rates for the organisation, retention related costs are also financial requirements which the organisations have to pay. However, King (2016) states that employee retention related costs are much lower than the turnover related costs and also helps with the enhancements of employee engagement and productivity.
Vejsiu (2019) also supports the fact that employee turnover rate has an impact on organisational profitability as it increases various costs and which as a result acts as a financial burden for the company. Investigation of Vejsiu(2019) suggested that voluntary employee turnovers are financial burdens for the organisation as they adversely impact the net profit of the organisation due to several costs such as employee severance packages or their full and final payments. Wilson (2018) supports the findings of Vejsiu and states that these costs are avoidable if employees are committed to the organization and continue working, furthermore, they also help with the increase of profitability through their productivity as well.
2.3 Employee satisfaction reduces employee turnover:
Woodend (2019) on the other hand focuses on the incorporation of the Theory of Work Adjustment in their paper and investigates the impact of this theory on the enhancement of employee satisfaction in order to decrease the employee turnover rate.
2.3.1 Theory of Work Adjustment: This theory depicts the adjustments an employee makes with the environment of their workplace. Woodend (2019) argues that employee engagement depends on their satisfaction and satisfaction is the evaluation of the situation. Fitria and Linda (2019) supports Woodend and suggests that organisation needs to facilitate a positive work environment and favourable work culture in order to enhance the employee engagement and as a result can capitalise on the employee engagement as it reduces employee turnover rates.
Figure 1: Theory of Work Adjustment
2.4 Spending in retention plans can reduce overall financial impact of employee turnover
A research article by Callaghan et al. (2016) investigates the issue of employee turnover rates and organizations forming retention plans to deplete the financial impact on the organisations. Bangemann (2017) supports this argument and states that the real cost of employees leaving an organisation is not only limited to their productivity but also associated with expenses of new employee hiring, screening, training, the productivity of new joiners and so on. Therefore, according to the employee turnover is another aspect which requires a serious evaluation from the organisations' end other than the profitability enhancements and gaining competitive advantage in the market. Evidence gathered by Callaghan et al. suggests that organisations undertake various employee retention initiatives such as financial bonuses and stock options. According to the stock option is one of the effective employee retention methodologies as it not only ensures employee retention but also enhances their engagement with the organisation as they become stockholder for the organisation.
In their research paper, Rana and Malik (2017) gives support to the findings of Callaghan et al. (2016)and states that employee retention can be ensured by providing stock options to senior and performing employees and also keeping them motivated through periodical financial bonuses or salary increments. According to Skelton et al. (2017) various human resource practices such as employee selection, training, performance appraisal of them are recurring organisational events that an organisation has to undergo. However, the impact and prevalence of these events can be mitigated by motivating them through both financial and non-financial motivators and which as a result will ensure that employees are engaged with the organisation, thus lower turnover rate.
2.5 Organisational focus on employee motivation and engagement:
In their journal, Aithal and Kumar (2016) suggest the incorporation of motivational theories in the organisation's management of human resources. Aithal and Kumar argue that motivational theories such as Theory X and Theory Y as well as Maslow's hierarchy theory can be beneficial to facilitate the employee motivational factors in order to maintain employee engagement. According to them, motivation instigates satisfaction and which as a result will help organisations to keep their workforces within their organisations and decrease the expense related to employee turnover. Furthermore, on the other hand, Tahir and Iraqi (2018) suggest the organisation need to focus on the enhancement of employee motivation and job satisfaction among their workforce, which in return mitigates the prevalence of high employee turnover rates.
Figure 2: Theory X and Theory Y
(Source: Tutorialspoint, 2020)
2.5.1 Theory X and Theory Y:
Theory X and Theory Y was formulated by McGregor in the 1960s and this theory states that there are two human behavioural aspects within an employee. McGregor termed the negative aspects as Theory X while the positives as Theory Y. The assumptions of Theory X are that employees do not want responsibilities and they also resist change, while on the other hand Theory Y states that employees are more loyal and engaged if they are satisfied with the job as well as if they get to utilise their skills and capabilities fully. Tahir and Iraqi (2018) therefore suggests that while Theory X's prevalence in the organisation can increase the costs relating to employee turnover, Theory Y reduces the turnover and retention costs as employees are more engaged.
2.5.2 Maslow's Hierarchy Theory of Motivation:
Tahir and Iraqi (2018) also utilised the Maslow's motivation theory as this theory states that employees have different needs. In order to enhance the employee engagement and to reduce the turnover and retention costs, organisations need to focus on employee motivation enhancements and which as a result helps with increased employee engagement and fewer turnover rates.
Figure 3: Maslow's Hierarchy Theory of Motivation
(Source: McLeod, 2018)
2.6 Employee turnover as an organisational stability indicator
According to Mohammed et al. (2016), due to economic crisis working conditions deteriorates due to low salary, less career growth and this as a result adversely affects the employee commitment. However, according to Mohammed et al. (2016), these turnover rates of the employees also denote another fact as well. They argue that employees leaving the organisation also indicate the fact that the internal stability of the organisation is at turmoil.
2.7 Conceptual framework
Figure 4: Conceptual framework
(Source: Created by author)
Employee turnover rates can also be viewed as an organisational stability indicator as well Due to the dissatisfaction with the job and low employee commitment, employees often switch their job and which as a result costs the organisation. As a result, high employee turnover denotes the human resource practices are the reason why the organisation is struggling with employee turnover and which as a result demonstrates organisational instability to various external and internal stakeholders.
Chapter 3: Research methodology
The research methodology is confined with choosing the appropriate method to gather data for the research work. The direction and the intent of the research are also expressed through the choice of the research methodology. The method needs to include the following subsections:
3.1 Research aims
The aims of the research are to develop a deeper understanding of the cause and the financial impact of employee turnover as well as retention on the organizations of Kazakhstan. The research focused to gain perspective views into the reasons for the turnover and due to which the companies’ loose employee that has a direct impact on the financial turnover affecting the companies. The primary quantitative analysis essentially helps in this regard for the numerical data that can help in the reflection of the employee turnover.
3.2 Research Questions
- What are the main reasons regarding the employee's turnover within the selected organization?
- What is the relationship between employee turnover and employee retention?
- What is the impact of massive employees’ turnover on the financial health of the organization?
- How the organization can restrict employee turnover and retain its employees?
3.3 Research design
The research design chosen by the researcher for the research includes the use of survey as the primary sources of information. Since the aim of this research is to include the financial impacts due to the turnover of the employees as well as their retention. The understanding of the motivation would allow the scope to understand their influence on the productivity and output that affects the financial strength of the organizations. The research design of the research was drawn effectively by the researcher in order to develop the relationship among employee satisfaction, awards, a work environment with employee retention and recruitment in Nostrum oil and gas. The survey was conducted by the researcher in order to recognize the impact of employee turnover on the financial status of the selected organization.
Justification: The design was considered by the researcher as it created fluid points and factors that relate to the topic and helped to generate a value that focuses on the financial impacts of turnover and retention of the employees. Along with that, the survey also added employee’s opinion into the research which can help the organization to critically evaluate the reasons behind employee turnover. Besides, the survey helped the researcher immensely.
3.4 Data collection
The data for the purpose of the research was collected with the help of survey instruments taking employees from the Nostrum Oil and Gas Company. The survey consisted of 10 questions that were intended to reflect on the employee turnover reasons as well as their motivations. The survey questions were intimated through the electronic mail and their permissions for their consent also taken in a consent form and stored for future reference. This survey will help to understand the financial impact of the employee turnover and retention in the Nostrum oil and gas.
Justification: The survey instrument with the employees helped to reflect on the employee motivation and help unearth the reasons for the widespread overturning (Brennan, 2017). The survey also helped to generate numerical data in favour of simpler data analysis. The questions were prepared so that the primary aims of the research can be achieved very easily.
3.5 Data analysis
The analysis of the data was done with the help of analysing the survey opinions of the employees for information that sheds light on the factors that influence employee satisfaction. The sources like the company websites were used by the researcher to collect the data by searching for keywords to get the relevant information. Quantitative data analysis has been performed here which allowed the researcher to get the fresh information regarding the financial impact on the employee turnover and retention and also the possibilities of collecting the new information regarding the employee motivation is high in this process.
Justification: The information was collected and stored in word file format for processing and analysis. The percentage of the respondents was calculated to reflect on the responses and inclinations of the employees (Mertens, Pugliese and Recker, 2017). The information sources were chosen so as to provide reflections on the financial impacts. The financial analysis represented the impacts on employee retention and vice versa. The contrast of the financial deviations due to the employee overturning provided impactful meaning to add value to the research arguments.
3.6 Sample size:
In regarding the conduction of this research work the researcher took 30 employees of the Nostrum to evaluate the impact of the employee turnover and retention of the finance of the nostrum Oil and gas. The researcher followed the probability data sampling technique as it helped the researcher to randomly select employees of the company as it was very essential to diversify the consent of everyone. Such random selection helped the researcher to get the knowledge on the financial implication of the employee turnover and retention and more frequent answer can be obtained. Therefore, the sample size is selected which can fill up the gaps present in the literature and reflect upon the cause for the employee overturning in the company.
3.7 Reflection on the validity and reliability of the method chosen
The validity and reliability of the methods were in the numerical reflection of the opinions of the employees. The reflective account was included as the survey is used for the purpose of the data collection. The survey helped to add contextual views and helped to reveal the factors that are affecting the satisfaction of the employees. The method of quantitative data collection method added significant value to the research through the numerical association to the analysis that is objective in nature. The validity of the methods that was chosen was done with careful considerations of the aims as well as the research questions for this research. The reliability was in the numerical association of the conclusions with the opinions of the respondents (Albers, 2017). Thus, quantitative research design helped to add information that was translated to number for easier analysis and achieve the aims more easily.
3.8 Ethical considerations
The main ethical considerations for the conduction of the research are regarding the protection of the information which was the opinions of the employees in the survey. The data protection acts were observed for the data to be kept safe and secure. The safety and security of the data that was collected were also ensured through the storing of the data in a secure server with restricted access being given to a limited number of people. The reason for the choice of ethics was added to positive reviews and adds credibility to the research conclusions (Pietilä et al., 2020). The limitations were ensured that the proliferation of the collected data is restricted with access to a few numbers of people. The anonymity of the responders would also be ensured by the researcher and the intended use of the responses has also been mentioned and their consent obtained in a consent forms and stored for future reference.
Chapter 4: Analysis and Results
1. What is your gender?
Table 1: Gender of the respondents
Graph 1: Gender of the respondents
Graph 1 shows that there was a total of 30 respondents who have taken part in the survey. Among all the respondents 15 were male and 15 females. There is an equal proportion of both the genders and have they have actively taken part in the survey.
2. What is your age?
|20 -30 years||33%||10||30|
|More than 45||14%||4|
Table 2: Age of the respondents
Graph 2: Age of the respondents
There was the involvement of the employees in the survey and responses have collected from different age group employees. Table 2 represented that there were 33% of respondents from the 20-30 age group, 53% of respondents from the 30-45 age group and 14% are from more than 45 age group.
3. How long have you been working in the company?
|More than 2 years||7%||2|
Table 3: Work experience of employees
Figure 3: Work experience of employees
Figure 3 shows that most of the employees (53%) of the company are new having an experience of 1-2 months only. Again, 33% of the employees have an experience of 3-6 months. In addition, 9% of the total employees have an experience of 1-2 years or more. 86% (1-2 months and 3-6 months) of the samples have 6 months service or less as the company faces sudden change due to turnover of skilled employees. These results in hiring employees and the workforce of the company grew by 6% apart from 5.4% staff turnover rate. Staff turnover drives increase in workforce requirement which results in conflicting ratio between the two.
While, the staff turnover rate at Nostrum is almost 6%, this findings demonstrates that Nostrum is more likely to hire freshers into their organisation once they are backfilling their human resources. This is why around 86% of the respondents are six months or less than six months tenured.
4. Do you agree that job satisfaction could lead to employee turnover in the company?
Table 4: Job satisfaction factor
Graph 4: Job satisfaction factor
Frederiksen (2017) asserted that employee turnover significantly depends upon the job satisfaction level of employees. Graph 3 displayed that there are 53% responses which in agreement with the expectation. This means that the majority of the employees from the organisation believe that job satisfaction is one of the key factors for not leaving the organisation. In aspects of this question, 33% of the respondents not agreed with this factor. It could be said that if this factor is strengthened for the company then the cost raised from the employee turnover could be mitigated. Thus, another question has been asked in this behalf whose results are as follows:
5. Do you agree that the lack of recognition and feedback could leave the employees with dissatisfaction?
Table 5: Lack of recognition and feedback
Graph 5: Lack of recognition and feedback
Another factor that has been considered for the survey to research the first objective was recognition and feedback for the work performed by the employees. In case if this not efficiently met the leaders, then employees are left de-motivated. A de-motivated employee is not productive and it could have an adverse impact on the organisation's profitability (Al Mamun and Hasan, 2017). Table 4 shows that they could be a significant part of meeting the company's objective. The total percentage of respondent who has agreed with this factor was 50%. There were 0 neutral responses and 20% of people strongly agreed with this factor in employee turnover.
6. Do you agree being overworked (over supervision and lack of recognition feature or need for training to supervisor) is one of the major reasons for employee turnover in the company?
Table 6: Being overworked
Graph 6: Being overworked
Sathyanarayan and Lavanya (2018) said that which employees of an organization felt to be overworked they are willing to quit the job. Thus, it can be told that an organization needs to cautiously identify the perception of employees regarding their tasks. Graph 5 represented that there are 47% of respondents agreed with this fact and 17% of employees disagreed. It could be a major reason for the insignificant cost management as the employee turnover could leave the company with less human resources. Strongly agree respondents were 30% and all the respondents have shown their interest in the survey question.
7. Do you believe providing basic needs in the company could help in employee retention?
Table 7: Providing basic needs to the employees
Graph 7: Providing basic needs to the employees
Table 6 shows that 60% of the respondent replied yes to the involvement of basic needs for the employees in the company, this could be from their fitness aspect and safety methods which could be employed by the company. The ratio of 2018 was 1.05 which is less than the previous year in performances. Earlier it was 2.48 in 2017, 1.99 in 2016 which are not significant for the company as compared to 2018. This is because Lost Time Injury Frequency in hours are more than 2018 data. 40% of the employees again were not in favour of this factor to increase employee retention. There are other requirements like a promotional and career development opportunities which could fill the gap of agreeing and disunited of the employees. The results prove that there is a significant relationship between employee turnover and employee retention. According to the respondent's increase in the work, the pressure is not a relatable element for staying in the company (Shah and Asad, 2018). Similarly, when their basic needs are met in the company, they will not look for further options which are a significant thing to maintain the financial position of Nostrum oil and gas.
8. Do you believe employee turnover could lead to an increase in the cost of the company?
Table 8: Employee turnover and company’s cost
Graph 8: Employee turnover and company’s cost
This is because the majority of the respondents have agreed that there is an adverse or negative impact on the cost of an employee leaves the company on a frequent basis. 60% of the respondents have agreed with this fact. There are possibilities of cost or financial impact according to the respondent (Wickramasinghe and Sajeevani, 2018). This might happen because recruitment and other resource assembling cost would increase. Thus, if the company has decided to invest that cost on growth and development or either research and development activities could not be fulfilled. This activity is required to raise the skill of existing employee so that they could take the place of a left employee. It is a way to escape from hiring a new employee for that particular position. However, it is not going to provide effective results for the company (Grotto et al., 2017). The reason is it also involves an ample amount of cost to train the employees. Graph 7 shows that 40% are still not united with this question and believe that the organisation is always ready to make the decision least impactful for them. Their approach varied from the agreed ones but did not have a valid reason for their responses.
9. Do you agree over-supervision in the organisation affects employee retention?
Table 9: over-supervision in Organisation
Graph 9: over-supervision in Organisation
Graph 8 represented that 66.6% have made a clear response for over-supervision in organisation effect on their retention plan. Hostile or biased environments make the employee look for another better organisation.
10. Does a hostile environment (bullying, racial or religious bigotry, lack of support) have a great effect on turnover for both the genders?
Table 10: Hostile environment
Graph 10: Hostile environment
In the view of Bader et al (2019), the HR department of an organization need to keep the capacity to manage a hostile environment. If HRM department failed to manage that then it can lead employees regarding employee turnover. There were other supporting questions like where the respondents think organisation politics (bullying, lack of support, over-supervision) affect their retention plan and hostile environment effect on employee turnover. For this context it is recommended to ensure the right organisation culture that motivates the employees for maintaining better environment. This was supported by Graph 9 showing a 60% ratio which could leave the organisation with less human resources or experienced one who is productive.
11. What will you recommend to the company on employee retention and turnover in the context of financial impact?
Table 11: Strategies of employee retention and employee turnover
Graph 11: Strategies of employee retention and employee turnover
Based on the research topic, it was necessary to ask the respondent for some recommendations on behalf of employee turnover and employee retention. There were two choices kept for the respondents where they could choose any of the options to recommend on the basis of their experience. For the nostrum oil and gas, respondents have shown equal choices for the options. This is being in the expectation because both the choices are equivalently important for the foster of the employees. It is the responsibility of the company to meet the expectation of the employees (Grotto et al., 2017). It is a significant way to deal with the problems of employee turnover and its impact on the cost and financial position of the company.
Again, there was a second option for career growth to retain the employees who have got equal responses with a 50% ratio as evident in Graph 10. Employees often leave the company if they do not find any proper place for their career development. Therefore, if these needs are met by the organisation there will be fewer chances of employee's turnover and retention of employees could be successful.
12. Do you think Nostrum has employee discriminatory practice at their workplace? (Please identify the discriminatory practices in your own words)
Table 12: Employee discriminatory practices
Graph 12: Employee discriminatory practices
While asked if Nostrum has discriminatory practices at their workplace, three discriminatory practices were highlighted by the employees. Among which Favouritism and Gender Biasness are the most emphasised by the respondents as 40% and 50% response respectively identified these two bias areas. This questionnaire as a result demonstrates that discriminatory practices at Nostrums workplace is a key reason behind employee turnover at Nostrum and requires immediate remediation from the HR managers and upper management.
13. Hypothetically, if you are to leave Nostrum tomorrow, what will be the reason behind such a decision?
|Discriminatory practices at Nostrum's workplace||34%||10||30|
|Excessive Work Pressure||23%||7|
|Lack of recognition and satisfaction||13%||4|
Table 13: Ultimate reason for leaving Nostrum
Graph 13: Ultimate reason for leaving Nostrum
Finally, when the respondents were asked if they leave Nostrum what will be the main reason, based on the response, most emphasised response from the employees were discriminatory practices as 34% of them stated this will be the reason behind their resignation. While, management hostility and work pressure or work-life balance also received a significant amount of response as 30% and 27% revealed these as their reason behind leaving Nostrum.
Chapter 5: Discussion and limitations
Multiple factors are present which need to be taken into account by the authorities of an organisation to mitigate the issue regarding employee’s turnover. Sutanto and Kurniawan (2016) told that an organisation needs to try to retain its existing employees more than recruiting a new one. Apart from that, it can be told that a higher turnover rate directly impacts on the organizational growth of an organisation. Therefore, it is crucial to recognise the aspects for which employees quit their job. Multiple organizations are evident that high employees turnover lead them towards destruction. Hence, the authorities of a company have to recognise the aspects of employee satisfaction. Multiple factors are present which can cause employees turnover. It is found so far that the employees of Nostrum quit their job regarding disappointment as well as dissatisfaction. Apart from that, overworking, hostile environment also some reasons behind high employees’ turnover within the organisation. Therefore, the authorities of Nostrum need to significantly recognise the outcome of the survey and implement some strategies for reducing employee’s turnover and retain a maximum number of staffs. Also, the authorities need to ensure the satisfaction level of its employees.
5.2 Linking with objectives
Objective 1: To review the factors affecting employee turnover in the company
The first objective deals with the factors that could be responsible for employee turnover. There are job satisfaction and working time along with other factors responsible for the same. Respondents have shown major concern for job satisfaction and being overworked. The factors that have been determined for the study are significant and could make an impact on the financial position of the company. Nostrum also faces the impact of employee turnover where the remuneration of the employees has been decreased. Overall there is not a single factor that could be wholly responsible for employee turnover (Hom et al. 2017). It is the responsibility of the company to engage with the employee’s problems to reduce the impact of employee turnover on the financial position of the company.
Objective 2: To evaluate the relationship between employee turnover and employee retention of the organisation
Another objective was to deal with the evaluation of the relationship between employee turnover and employee retention, taking the insight from the literature discussion, it could be said that they both have significant relationships. Employee turnover is affected by an insufficient amount of job satisfaction. Employees always look for motivation which could help them to remain in the organisation. Thus, these two activities occur simultaneously in the organisation. Employee turnover could lead to ineffective employee retention (Shah and Asad, 2018). Similarly, if there is not employee retention measures there are chances that employee turnover could be highest. The research also shows that most of the respondents have agreed with job satisfaction problems for leaving up the company. Again, half of the respondents have shown their majority with a lack of recognition for their retention problems in the company. Comparatively, it could be concluded that there are major problems with employee turnover which could cause problems in finance management. Therefore, there stands a strong relationship between employee retention and employee turnover for the company.
Objective 3: To investigate the impact of high employee turnover on the financial health of the company
The third objective was to investigate the impact of high turnover on the financial health of the company. There was a significant impact on the way the company deals with employee turnover. This is because if there is a large amount of employee turnover the company has to lose cost in many ways. Experienced employees are the key resources to get the work done with fewer amount issues. In case of if they leave the company, there has to replacement of that which could be recruitment or promotion. They both could challenge the financial strategy of the company as they involve a cost in it. The results from the survey also depict the same. 60% of the respondents have shown their consent because they think the company need to take responsibility for maintaining cost. Any kind of recruitment could affect the decision of the company in the long-term aspects (Grotto et al., 2017). However, there are already determined by the company that some employees could leave the company and they are prepared for it. Therefore, sometimes it is not always possible that leaving up by the employees could have a larger impact on the financial health of the company.
Objective 4: To recommend the strategies of employee retention and employee turnover to the organisation.
Recommending the strategies that could have a solution for employee turnover and retention is the part of the last objectives. Literature has shown a large number of aspects that could be helpful in this situation. However, in the contemporary business where companies like nostrum interact with diversified culture need to look for in-depth strategies. It needs to match the requirements of new generation employees. They need a better option at the same place so that they could foster themselves with time (Al Mamun and Hasan, 2017). On the contrary, if this need is not met, they would start searching for better options. Searching for better options means leaving the company which could have an adverse impact on the financial performance of the company. The survey showed that equivalent potion is held by the promotional strategies and career development opportunities for the company. It would be beneficial for nostrum oils and gas to deal with the problems of employee turnover and retention.
5.3 Limitations of the study
The study has been concerned with primary data collection which needs more time and attention. There are many difficulties faced by the researcher in gathering the data. One of these is staff turnover which is chosen to be kept confidential by the company and limited information was found in the annual report (listed in chapter 1). The primary activity is to take the consent of participants and taking them in confidence so that they could take active participation in the survey. There could be a significant impact of this on the researcher as all the respondents are not equally participative. However, there is always scope for betterment which could be assisted by the help of legal and authenticated sources on which the respondents could rely on. Another aspect was the time which could be extended so that a coherent report could be submitted. The research process was time-consuming that could lead to missing the deadline of the submission. There could be biased answers to the questions asked in the research and have the improper results for the survey. This might affect the quality of the report. This is the reason favourable questions have been asked and participants could provide accurate answers.
Chapter 6: Conclusion
Employees turnover have become major issue among the companies as the employee expectations from the company are increasing. This leads to critical issue that most of the companies focusing on how to retain their employees. A single employee can impact vulnerable on the financial status of an organization. Also, according to the findings of the primary data, it can be concluded that the company Nostrum Oil and Gas suffering from this critical issue also. The researcher efficiently accumulated the demographic background of the employees working within the organization. 50-50 division was generated by the researcher during the data procurement process. Apart from that, it is found the most of the employees working within Nostrum oil and gas belong to 30 to 45 years of age group. , if an employee leaves his or her reputed post then the authorities have to suffer a critical financial loss. Multiple scholars asserted that job satisfaction plays a crucial role in employees’ job satisfaction. This statement is also justified by the consent of the employees. Most of the employees told that dissatisfaction regarding a job leads them to quit the job.
Therefore, the authorities of Nostrum need to efficiently recognize the basic reason for employee's turnover. Recognition could acts as an effective tool to retain the employees in the company. Office perks like best parking spot, assistant for the Week, hand written note, and healthy snacks are acts as rewards which are provided after recognition of best performing employees. Recognition could acts an effective tool to retain the employees and make them feel motivated. An oil and gas company spend a lot of money regarding procuring raw materials, equipment and so on. Also, a lot of money spends on the recruitment process. Therefore, the management of Nostrum oil and gas need to not tolerate this vulnerable issue which can lead them towards destruction. Significant operational disruption can also occur within the organization due to a higher turnover rate. After the extensive research, it is also found that the recognition problem is another issue which leads the employees towards leaving their job. Apart from that, it is also found a lack of feedback is another cause of employee's turnover.
In respect to the findings, it could be said that Nostrum authorities need to aware of their feedback taking process. Everyone has their own choices and also has their capabilities. The management team of the organization need to be assigned to the job which they can do. In case, if an employee does not like his or her task then the authorities need to recognize that who is the better person to do the task. By doing the same the authorities of Nostrum can also satisfy the basic needs of an individual. Also, the employees do not feel be overworked regarding their jobs. The company need to strategically assign every task in order to mitigate the perception of employees regarding overworking. Another crucial point of view of employees arose during the research work is that the impact of a hostile environment. Decorative and prosperous environment prefer by everyone in this world. Thus, a hostile environment needs to not be maintained within an organization. According to multiple theories every person has their own needs. An organization need to crucially recognize the requirements and take measures to fulfil them. If the authorities of Nostrum can successfully do the same then they can easily retain their employees. Every organization across the globe tries to increase their profitability as well as to gain competitive advantages by delivering efficient services to its customers. However, employee’s turnover restricts the company to generate more revenue through business. Moreover, it can be concluded that the company need to not tolerate organizational politics and also, they need to provide opportunities regarding career growth. After these inclusions, the higher authorities of Nostrum and the management team also can retain its employees very easily.
Furthermore, concerning the analysis result of this research work, it can be suggested that the management team of Nostrum oil and gas need to be highly efficient in order to manage the employees. Along with that, the managerial team need to recognize the key aspects of employee’s turnover. Rewards and recognition are the most widely used techniques by several organizations in order to satisfy the employee’s needs. By implementing the same authorities of Nostrum can also able to retain its employees. Apart from that, the working environment needs to be enriched by the authorities of Nostrum in order to provide the essence of belongingness to the employees. Moreover, the team leaders also need to implement effective interaction with their colleagues as it can help the organization to increase the productivity of the company. If the authorities of Nostrum implement these implications efficiently then they can achieve their target easily.
Chapter 7: Recommendations
Employee turnover is a big issue for the company as it impacts the performance of the company in many ways, from increasing the spending of the company to the low turnover of the company. So, in this section, some recommendations are given by the researcher which needs to be implemented by the authorities of Nostrum Oil and Gas Company in their organization for decreasing the rate of employee turnover. These recommendations are provided after analysing the research findings and the related literature review of the research properly.
7.1.1 Prevention of employee discriminatory practices:
The authorities of Nostrum Oil and Gas need to restrict the politics taking place within the organization. By implementing the same the company can retain its employees. Along with that, the authorities can also Influence the work-related attitudes of individuals. As a vital predictor regarding employees’ turnover, the authorities need to be aware of the negative impact of organizational politics. As the primary research suggests that favouritism and gender biasness are two major issues at Nostrum as the majority of the respondents identified these two issues. This as a result identifies discriminatory practices as a major unsatisfactory factor for the employees of the organisation rather than evaluating their employees based on their competencies giving preferences based on gender or relationship with management, thus the issue of favouritism. Therefore, any discriminatory practices associated with workplaces issues such as favouritism, gender biases or other racial biases needs to be strictly handled by the upper management and the human resources managers in order to mitigate the employee dissatisfactions issues related to the discriminatory practices.
7.1.2 Performance appraisal:
The HRM department of Nostrum need to conduct some appraisal per month to seek the potential of employees regarding their assigned tasks. Also, the management team need to deliver the results of appraisals to its employees. As a result of which employees can recognize their effectiveness as well as can recognize their flaws regarding work (Mulievi and Wanyama, 2019).
The authorities need to acquire feedback from their employees per week to identify what are the reasons for which the employees like to leave their posts (Johennesseand Chou, 2017). By identifying the key point’s authorities of Nostrum can prevent or restrict those factors effectively.
The team leaders, management team and the higher authorities need to interact with their employees frequently in order to recognize their needs. Apart from that, the authorities of Nostrum need to provide freedom to its employees regarding the providence of any concern.
7.2 Recommendations regarding retention:
7.2.1 Rewards and recognition:
By critically evaluating the needs and requirements, the management team of Nostrum needs to take steps for fulfilling those needs. Several organizations are evident that by implementing excellent rewards strategies like paying cash, free lunch, sporting or festival tickets and many more other perks (Mamo, 2017).
7.2.2 Supportive working environment:
In this regard, team leaders need to develop a supportive working environment for fellow members (Kunduand Lata, 2017). Also, leaders need to take measures in order to mitigate issues within the workplace. Alongside, for increasing the productivity level and retain employees team leaders need to assist their teammates regarding a job.
7.2.3 Employee engagement:
It is another significant strategy which can efficiently increase the chances of employee retention (Pareek et al. 2019). The authorities of Nostrum need to engage a massive number of employees within a workplace to increase the employee retention rate.
7.3 Implementation plan:
|Factors required to be implemented||Starting date||Closing date||Duration|
|Prevention of organizational discriminatory practices||18.02.2020||25.02.2020||One week|
|Performance appraisal||26.02.2020||10.03.2020||Two weeks|
|Rewards and recognition||08.04.2020||21.04.2020||Two weeks|
|Supportive working environment||22.04.2020||05.05.2020||Two weeks|
|Employee engagement||06.05.2020||19.05.2020||Two weeks|
Table 1: Implementation plan
Source: Developed by the author
7.4 Tracking the benefits:
|Employees retention rate increase||A worksheet will be developed by authorities in order to check how much employees leave their posts.|
|Productivity increase||How much amount of task is accomplished by employees within a certain time?|
|Flaws can be recognized||By enlisting the feedbacks.|
|Belongingness increase||By recognizing interaction attitude|
|Employee retention||How many employees are retained within a certain time?|
|Flawless work||How much work produced without any issue?|
|Employee retention||What number of employees is retained within a specific time?|
Table 2: Benefits monitoring plan
(Source: Developed by the author)
7.5 Costing (£):
|Factors required to be implemented||Duration||Activities||Budget(£)|
|Prevention of organizational discriminatory practices||One week||Implementing rules and regulations|
|Performance appraisal||Two weeks||Paperwork|
Printing of papers
|Feedback||Two weeks||Feedback forms printing||100|
|Communication||Two weeks||Implementing strategies|
|Rewards and recognition||Two weeks||Bonus|
|Supportive working environment||Two weeks||Free database access||500|
|Employee engagement||Two weeks||Recruitment||800|
Table 3: budget
(Source: Developed by the author)
b. Cash flow forecast:
|Recommendations||Wk 1||Wk 2||Wk 3||Wk 4||Wk 5||Wk 5||Wk 6||Wk 7||Wk 8||Wk 9||Wk 10||Wk 11||Wk 12||Wk 13||Total|
|Prevention of organizational discriminatory practices||£200||£200|
|Rewards and recognition||£400||£400||£800|
|Supportive working environment||£200||£300||£500|
Table 4: Cash flow forecast
(Source: Developed by the author)
c. List of costing assumptions:
- Implementing rules and regulation and documentation: approx. £200
- Paperwork, the printing of papers and documentation: around £300
- The reward of the employee's performance: approx £200
- Feedback forms printing: approx. £100
- Implementing strategies and documentation around £200
- Bonus and incentives: about £800
- Free database access: around £500
- Recruitment: Near about £800
On the other hand, due to reduced staff turnover rate, Nostrum will also enjoy financial benefit as these following costs are expected to reduce over time:
- Costs related to employee recruitment and their training
- Increase in organisation’s reputational value in the Industry
- Increased productivity and thus increased profitability due to more work opportunity
d. Contingency expenses:
The companies need to have a contingency fund in case there is an emergency. Providing fewer work hours to the employees or giving the employees extra day off for better performance can give the company a negative effect, so, there need to be a contingency fund for the company to combat these types of problems of the company in the time of their implementation of the recommendation plan.
e. Other costs:
Lastly, the companies need to maintain some extra expenses regarding this implementation to their company. The companies need to have a specific budget to monitor these whole processes as these monitoring will help the companies in their future implementation of recommendation plan.
Chapter 8: Personal learning
Through this study, I have learnt a lot. First of all, I have improved my time management skills. In any research, time management is very important and researchers have to know how to manage the shortage of time in research of vast topics. That is why I and my team members divided the time of our work. It helped a lot to us to complete the research in the given time. Then, the shortage of budget is a big issue for us. To solve this matter, first, we divided our research into some sections and then distributed the budget according to the sections. This proper planning helps us a lot to complete the research in low budget as for this planning we did not need to investigate money on the research. Though, there are some difficulties that we faced during the time of research. So, the outcome of the result has a high chance, not to be accurate. So, I have learnt that before starting the respondents it is needed to be clear, that there is full participation of the respondents. Researchers have to make sure of it to the respondents. I have learnt that for an accurate outcome of any research participation of every respondent is a necessary thing. Also, I have gained a lot of knowledge in order to conduct research. This experience and learning from the research will surely help in my future research.