EMPLOYEE TURNOVER

IN MALAYSIAN ORGANIZATIONS
Introduction
Organizations invest a lot on their employees in terms of induction and training, developing,
maintaining and retaining them in their organization. Therefore, managers at all costs must
minimize employees turnover. Although, there is no standard framework for understanding the
employees turnover process as whole, a wide range of factors have been found useful in
interpreting employee turnover Kevin et al. (2004). Therefore, there is need to develop a fuller
understanding of the employee turnover, more especially, the strategies that managers can put in
place to minimize turnover. With globalization which is heightening competition, organizations
must continue to develop tangible products and provide services which are based on strategies
created by employees. These employees are extremely crucial to the organization since their
value to the organization is essentially intangible and not easily replicated Meaghan et al. (2002).
Therefore, managers must recognize that employees as major contributors to the efficient
achievement of the organizations success Abbasi et al. (2000). Managers should control
employee turnover for the benefit of the organization success.
Employee Turnover
Employee turnover refers to the movement of employees in and out of a business. However, the
term is commonly used to refer only to wastage or the number of employees leaving. It refers
to the number of persons leaving and the ones retained within the organization. In most formal
organizations, employee turnover is inevitable. Analysis of associates leaving the organization
provides the data for staff supply forecasting, so as to calculate the number of workers lost who
need to be replaced. More significantly however, the analysis of the number of associates who
left the organization and the reasons why provides a guide to job retention policy/decision
(Armstrong, 2004). According to Kohn (1993) and Logan (2008) in (Agbi, 2010), most workers
leaves their workplace for another in search for more pay in form of salary or wages and other
fringe benefits. They also leave in search for better condition of service, and career prospects.
Others leave because of poor relationship with management and fellow colleagues and
harassment by managers.
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Turnover intention is defined as an employees personal estimated probability that he or

she has a deliberate intent to leaving the organization permanently in near future (Kerlinger,
1973). Employee turnover as per Igbaria (1992), is refers to an employee who are considering
and thinking to quit a job. The word intention, (Salahudin et al., 2009; Watrous et al., 2006)
is the main determinants of actual quitting from the job behavior. Turnover intention also cited as
ones propensity to leave (Zynalabedin et al., 2011; Dess et al., 2011). Turnover are
classified and categorized into voluntarily or involuntarily, as well as functional or dysfunctional,
each will have varying degree of impact on the organization (Lund, 2003).
As cited in Wells et al. (2010), voluntary turnover is defined as a process in which an
employee makes decision whether to stay on or leave the organization (Wells et al., 2010).
Mobley (1982) further commented that this type of turnover is usually dysfunctional and can be
most detrimental to the organization. It is also warned by Abbasi and Hollman (2010) that those
that most likely to leave the organization are those who are most talented and smartest employee
within the group. Their valuable experiences, talent, skills and knowledge will leave with them
and resulted in deteriorating efficiency (Abbasi and Hollman, 2010).
In contrast, involuntary turnover is referred to the situation in which the organization
undertaken the control over the employees decision to stay or leave the organization (Wells et
al., 2010). The reason why it is classified as functional turnover is due to the often removal of
under-performing employees (Abbasi and Hollman, 2010).
On the other hand, Ali (2009) defines employee turnover as the entrance of new
employees into the organization and the departure of existing employees from the organization.
The researcher will use the term departure of existing employees interchangeably with voluntary
separation or exit. Salahudin et al. (2009) defined turnover rate as how many new recruitments
were hired to replace resigned employees. By these definitions, turnover occurs only when a
replacement is successfully hired. A similar definition is provided by Gwavuya (2011) who state
that turnover means voluntary cessation of membership of an organization by an employee of
that organization. Another study suggests that employee turnover is the rotation of workers
around the labor market, between different companies, occupations and jobs and also between
states of employment and unemployment (Ramey, 2002). In an organizational context, turnover

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can be defined as the termination of an employees intraorganizational career trajectory, which is

composed of a sequence of job changes from job entry to exit (NSDC, 2010).
Employee turnover also could refer to a situation whereby employees exit the
organization voluntarily for various reasons and thereby affecting the organization negatively in
terms of costs and the capacity to deliver the minimum required services (Yankeelov et al.,
2008). When an employee leaves the organization, thus may have a variety of effects that not
only impact on organization but also on employee itself and the society as well. Although enough
literature on employee turnover is available but still there is not universally agreed framework
for why employees leave (Curran, 2012). Employee turnover has a significant subject for many
researchers and academics because of its negative results as turnover (Mrara, 2010). The
relationship between training and development has been developed in the literature but
contradictory outcomes described in literature defining the part of training and its impacts on
employee turnover creates the complicated relationship (Pearce and Mawson, 2009). For
example the low rate of training programs in organizations may lead to poor job performance and
higher employee turnover rate. On the other side, the organizations which have proper training
program for the development of their employees, enjoying high success ration and lower level of
employee turnover.
Employees might feel grateful to show greater commitment and less encouragement to
leave the organization (Amos et al., 2008). Zhao and Zhou (2008) had asserted that both low
levels of job satisfaction and organizational commitment are related to higher rates of turnover.
Moreover, Firth et al., (2007) have summarized thirty nine studies related to the relationship
between job satisfaction and turnover conducted in the past 50 years and found that all but four
cases have shown a negative relationship. Research by Morris et al. (2007); Simon and Kristian
(2007); Tambunan (2007) have shown that job satisfaction was a strong predictor of turnover
intentions.

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Types of Employee Turnover

Voluntary Turnover
When employees leave an organization at their own discretion, it is referred to as voluntary
turnover (Noe et al., 2006). It is initiated by the choice of the employee. A similar definition is
given by Egan et al. (2004), stating that an instance of voluntary turnover, or a quit, reflects an
employees decision to leave an organization, whereas an instance of involuntary turnover, or a
discharge, reflects an employers decision to terminate the employment relationship. According
to Manu et al. (2004) who study voluntary turnover, it can be affected by a lack of job
satisfaction, job stress as well as alternative opportunities. It is thus important to consider
attractions such as alternatives when looking at voluntary turnover. However, voluntary turnover
can be predicted and, in turn, be controlled.
Involuntary Turnover
Mathis et al. (2004) define involuntary turnover as an instance of involuntary turnover, or a
discharge that reflects an employers decision to terminate the employment relationship.
According to Allen et al. (2003), involuntary turnover includes retirement, death and dismissal.
Boxall and Purcell (2003) further state that turnover initiated by the employee such as resigning
to take care of a terminally ill family member or accompanying a spouse to another area should
also be considered as involuntary as it includes reasons over which the employee has no control.
Another definition states that involuntary turnover includes the need to cut costs, restructure or
downsize due to reasons which are independent of the affected employees, as explained by
Bratton and Gold (2003). This represents a decision or choice made by the employer. It appears
that the distinction between voluntary and involuntary turnover is important but not
straightforward. Reasons for turnover may be misinterpreted. Employees leaving an organization
may wish not to disclose the real reasons for leaving as they are dependent on the organization
for future reference and this would of course only come to light during the exit interviews.
According to Martin et al. (2003), interviewers may not want to put the organization or the
employee in a bad light.

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Avoidable and Unavoidable Turnover

It is also important to distinguish between avoidable and unavoidable turnover as this too will
determine the intervention needed to address the issue of employee turnover (Buhler, 2002).
Unavoidable turnover results from life decisions that extend beyond an employers control, such
as a decision to move to a new area or a job transfer for a spouse. Avoidable turnover is
something organizations can prevent by hiring, evaluating and motivating their employees more
effectively. It is important to determine whether the organization is dealing with voluntary
turnover that could have been prevented. Such information is important as it will direct the
organization to the type of intervention needed to enhance the retention of employees (Chiu et
al., 2002). According to Leucke (2002), the phenomenon of turnover is psychological,
organizational and costly, as cited in Weisberg and Kirschenbaum (2002). There is
presently no accepted model for understanding the process of turnover as a whole. A variety of
factors are used to evaluate the causes of employee turnover. This includes personal factors and
external factors.
Reducing Employee Turnover
In the world of business, a high rate of employee turnover can be a significant problem.
Economic research suggests that for some industries it can cost up to one-fifth of an employee's
annual salary to find, train, and hire a suitable replacement. If turnover rates are too high, this
represents a significant sunk cost for the company that cannot be recouped. Luckily, by
improving the environment at work, practicing smart hiring strategies, and ensuring that the
company is optimally-organized, it is possible to keep turnover at a healthy minimum.
First of all, the manager could improve the work environment in the organization.
This can be done by paying more or offer a path to a raise. In the free marketplace, cash is king.
If the organization is willing to pay the employees more than a competitor would, they will be
less likely to leave for other work. An added benefit of increasing the employees' pay is that it
allows the organization to ask more of them, whereby, well-paid employees have an incentive
to work harder and commit themselves to their job, while employees who are making relatively
little will not usually have the same level of dedication or loyalty.

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If the organization does not have the cash to pay their employees more than the
competition, they should get more creative. For instance, offering company stock options or
equity plans is a relatively low-cost way to increase the long-term earning potential of the
employees. As an added benefit, these sorts of options give the employees a real financial stake
in the company, whereby, if they work hard and help the company do well, their stock value
will go up and they will make more money.
Besides that, the organization could offer potential for advancement towards their
employees. Employees like to feel like their hard work is being rewarded. As a manager or
business owner, part of making sure their employees feel this way is compensating them fairly
for their work, but another part is giving them the opportunity to achieve the non-tangible
benefits of recognition and advancement. Reward exceptionally smart, resourceful, and hardworking employees by gradually increasing their responsibility and giving them more important
titles. An employee who was advanced from an entry-level position to a manager role is much
more likely to be loyal to your company than one who was done the same job for years in spite
of their hard work.
It is not enough to simply offer the potential for advancement because it is also
important to make sure that employees understand how they can advance in the business.
If the manager is having a hard time communicating this matter towards the employees, they
can try inviting a career counselor into the workplace once or twice a year to discuss this with
them.
Manager also can try to promote from within their workforce, rather than recruiting
outsiders into management roles. While this may sometimes be unavoidable, hiring an
outsider to fill a management vacancy when there are qualified employees with years of
experience who could conceivably do the jobs can give the impression that the manager do not
care about their employees' accomplishments.
Apart from that, the manager should consider to rebalance the work load. If an
employee's work is stressful, monotonous, or extremely difficult, different jobs with
comparatively easy workloads will start to look very attractive. Manager should never work the
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employees to the point of exhaustion because this is one of the easiest ways to cause the
employees to start looking for other work. In addition, it is also often financially inefficient
since employees with very long or stressful jobs will require significantly higher pay levels to
retain than employees with ordinary duties and hours.
There is a wealth of evidence to suggest that working the employees extra-hard can
actually cause their net productivity to plummet, even to below the level of productivity from a
normal 40-hour week in some cases. Some research has found, for instance, that excessively
long hours can cause employees to take longer to perform the same tasks as they normally
would, deal poorly with problems requiring critical thinking or creativity, make more mistakes,
and waste time engaging in recreational or personal activities at work.
Organization on the other hand could offer competitive benefits towards the
employees. Increasingly, people looking for work do not just consider the salary being offered
by a potential employer, but also the benefits provided. By offering affordable benefits like
health insurance, dental insurance, retirement plans, and, as mentioned above, stock options,
manager can make a job at their company more appealing than one at a competitor's, decreasing
employee turnover. Reviewing the benefits package is something the company should do
regularly for at least once a year.
The manager also should be aware of the benefits their biggest competitors are
offering their employees. If they start offering more generous benefits than the organization,
they may be able to steal some of the best employees.
Encouragement of friendly employee relationships could help a lot too. To long-time
employees, coworkers and bosses can function like something of a family, providing friendly
relationships, conversation, and sometimes even emotional intimacy. The manager should not
let their employees' jobs become a source of boredom or dread for them. Instead, manager
should try to foster a warm and open environment at work. Employees should be comfortable
talking, joking, and making outside-of-work plans with each other as long as it does not
interfere with their work.

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If the employees seem cold, detached, or emotionally distant, manager can try
sponsoring a fun workplace outing to lighten the mood. Going out for drinks, catching a
movie, or playing sports after work can be a great way to bond with employees and allow them
to bond with each other, even if manager can only do so once or twice a month.
Manager should put trust on their employees with responsibility. People tend to work
hardest and smartest when they think their jobs matter. Though this is often forgotten by even
the best managers, it is surprisingly intuitive. Manager should consider this one who is likely to
work harder, such as a mail room clerk with little responsibility or a heart surgeon with
responsibility over other peoples' lives. Manager should try to make an effort to give the
employees with even the most minor jobs some sense of importance or responsibility. If they
understand exactly how their work is essential to the business's success, they will have added
motivation to succeed in their jobs.
Ironically, giving people added duties that increase their responsibility can actually
make their jobs more attractive to them. However, if manager do this, they should be open to
the possibility of promotion or a raise in the future, as employees do not want to deal with
increased responsibilities without ever being rewarded for their work.
From the view of improving the human resource practices, the organization should
hire more selectively. Most business experts agree that one of the very best ways to keep the
employee turnover rate low is to ensure that the people organization hire are right for the job in
the first place. Picking employees that have exactly the right qualifications and personality for
the job organization is hiring for ensures that they will learn quicker, perform better, and, most
importantly, feel happier in their new role.
Manager should conduct regular employee reviews. If the business is suffering from
high employee turnover, one of the best reasons to find out the reasons is simply to ask the
employees. Having regular review sessions in which the manager meet with each employee and
talk about what they like and dislike about their job is a great way to make sure the employees
feel valued and see their concerns being acknowledged. If manager do not feel that they are up

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to this task as a manager, they can hire a third-party human resource agency can handle the
process for the organization.
As an added benefit, these review sessions can also give manager great ideas. For
instance, if one employee who is sick of sitting at the desk all day has a great idea for putting a
standing desk in the break room, doing this might make the employee significantly happier in the
job for a relatively small one-time cost.
The reviews should involve a healthy back-and-forth of information sharing.
However, manager should not use reviews merely as an opportunity to critique the employees
because they should also be an opportunity for the employees to critique the manager instead.
Manager also should be willing to meet the employees in the middle as long as their demands are
reasonable and their intentions are good.
Manager in addition can conduct the exit interviews. Even friendly, open companies
with great work environments occasionally have to let people go. When the business has to do
this, they should take the opportunity to conduct a thorough exit interview with the employee
being dismissed before he was gone for good. Some business experts have found that employees
are more willing to be candid at exit interviews, though others have found that many employees
will be less critical in hopes of getting a good recommendation. In any case, an exit interview is
the last chance to learn what went wrong with an unhappy or unproductive employee, so the
manager should take advantage of it.
The organization also should regularly review and assess employee concerns. Merely
asking the employees what makes them unhappy is not enough, instead, to keep them feeling
valued, manager will need to make a reasonable effort to address their concerns and, most
important of all, show them that the manager is making this effort. If the employees can see that
their comments and suggestions are being taken to heart, they will feel like they are being
listened to and that their opinions matter in the grand scheme of the business, which can make
even a low-level employee feel happier in his job.
In terms of organizing the employee retention, the organization can retrain managers
with high turnover. Sometimes, high turnover may not be a problem for the entire company, but
instead only for certain divisions or departments. In this case, the root cause may be something
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the heads of this department have no control over, for instance, pay levels or deadline schedules
set by upper management, but it may also be the management style of individual supervisors that
is causing the problem. If this is the case, strongly consider re-training the problematic managers
before firing them and searching for replacements. The one-time cost of a short management
course is usually much less than the time and money wasted replacing an employee in a highpaying, highly-skilled management position.
Some business experts argue that an employee's manager can have a greater effect on the
overall job satisfaction than even the wages, hours, or benefits. In any case, effective managers
are vital to a company's success, so making an investment in the ones organization have can
substantially reduce employee turnover.
Manager also should consider alternate roles for unhappy employees. Sometimes,
otherwise productive employees just are not a great fit for the job they have been given. While
they may work hard, their personality or skill set may keep them reaching the full potential of
their role. In these cases, manager should try to avoid dismissing the employee until manager has
considered other roles or duties for them. Manager should not fire an employee who is wellsuited for some other important role in the company, however if they do, they will be forcing the
company to undergo the costs of finding and training a replacement without getting the money's
worth out of a perfectly competent employee.
Manager should be aware of how they present a role change to an employee. To
avoid hurt feelings, for instance, manager should not tell the employee that they are performing
poorly and that the company thinks they would do better in a different role. Instead, manager
should focus on the positive side by telling the employee that the organization has found
something more important for the employee to do. Manager should remember of being aware of
the language they use in this situation can make the difference between the employee thinking of
the new role as a promotion or a demotion.
Besides that, the organization should avoid constant reorganization. In many cases,
finding new roles for old employees can be something that leads to increased productivity and
satisfaction. However, large-scale corporate reorganizations are usually something that
employees fear, and with good reason. Most company-wide reorganization efforts result in some
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layoffs and sometimes many. Frequent reorganizations can lead to a culture of fear and
uncertainty in the workforce and encourage them to seek other, more stable jobs. To avoid this
unfortunate situation, manager should try to avoid frequently re-structuring the workforce. On
the other hand, slow and gradual changes are almost always better-received than sudden, widescale ones.
Lastly, manager should not be afraid to fire any bad employees. In the words of the
old clich, "Sometimes, to save the hand, you have to lose the finger." Getting rid of
exceptionally problematic employees is a must for any business looking to keep turnover at a
minimum. Employees that perform poorly, have a negative attitude, or are grossly incompetent
can hold the company back. Worse still, they can contribute to other employees developing
negative attitudes towards work by sharing their negative views or demonstrating through
example, that bad work can go unpunished. Manager should not be afraid to get rid of employees
with bad attitudes because if they do this, they will usually have to fire less people in the long
run.

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