Formative assignment Unit 2

Centre name: ICS Learn

Candidate name: Joanna Fortuna-Queiroz

CIPD Membership ICS student 21049132

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Qualification title: HR Management Level 5
Unit title(s): Using information in HR Unit code(s): 5UIN/01

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Effective Employee Retention Methods

By Joanna Fortuna-Queiroz
Content

1. Literature Review of the Employee Retention............................................................................1

2. Critique of potential solutions........................................................................................................3
3. Critique of data collection methods..............................................................................................3
4. Benefits to the organisation...........................................................................................................4
References..........................................................................................................................................5
Bibliography.........................................................................................................................................7
1. Literature Review of the Employee Retention

Employee retention is a critical issue that many companies struggle with.

The costs of employee turnover are increasingly high — as much as 2.5 times
an employee's salary depending on the role. According to a CIPD Recruitment,
Retention and Turnover survey, the average cost to employers of replacing a single
member of staff was £4,625 (CIPD, 2005).
High employee turnover costs money, wastes time spent on employees’
training and has huge impact on employee morale and organisation’s brand
(Armstrong, 2012)
The reasons behind turnover may highlight issues within the workforce such
as dissatisfaction with career progression opportunities, benefit packages or lack of
employee support schemes. Therefore, employers should strive to address any
issues and create a retention strategy within their organisations (CIPD, n.a).
The analysis of the numbers of leavers and the reasons why they leave
provides information that will indicate whether any action is required to improve
retention rates. It can prompt further investigations to establish underlying causes
and identify remedies (Armstrong, 2012, p375).
The retention of employees can be calculated by using the following formula
and establishing the stability index:

Number of workers with one year’s service

(or more) x 100 = Stability index
Number of workers one year ago

Once the employee retention rate is established, it should be then established

why people are leaving, who is leaving and the impact it has on the organisation.
An average UK employee turnover rate is around 13%. However, the
employee turnover in the charity sector is even higher – 16%. (Ricketts, A. 2008).
These numbers suggest that charity sector due to various cuts (funding
government grants etc) may especially struggle to offer equally competitive
packages like the private or public sectors.
Many factors can influence employee retention. Just some of them may
include lack of company loyalty, desire for more challenging work, lack of
progression and development within the organisation, desire for different kind of
benefits, desire for a better work-life balance.
In a study on employee retention, Ramlall (2003) suggested that when there
is lack of challenge and opportunity, career advancement opportunities, recognition,
inadequate emphasis on teamwork, no flexible work schedule, these become the
most common reasons for employees’ quitting an organization.

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 .
According to Gberevbie (2008), employee retention strategies refer to plans or
set of decision-making behaviour put in place by organizations to retain competent
staff for performance. However, it is important to differentiate between retention
methods companies can control like poor management, wages, benefits, lack of
development, flexible working etc. and those companies can’t control like family
members being transferred (Gamlem, C. & Mitchel, B. 2017).
In order for companies to improve employee retention, they should identify the
areas within their organisations where they can focus on improving employee
retention.
Employee retention is a process in which the employees are encouraged to
remain with the organization for the maximum period or until the completion
of the project. Retention is not only important just to reduce the turnover costs but
also to even more importantly to retain talented employees from getting poached
(Sandhya & Pradeep Kumar, 2011).
There are various methods of retention available to choose from. One of them

is flexible working.
Flexible working is a way of working that suits an employee’s needs, for
example having flexible start and finish times, or working from home (gov.uk, n.a)
A review of literate shows that flexible working increases the workers’
engagement and can lead to greater commitment and loyalty to the employer. A
report by CIPD (2010) based on a report by Truss et al 2006, showed, that workers
with flexible working were more satisfied with their working arrangements, more
emotionally engaged and therefore, they were less likely to leave the organization.
According to Emma Perry, “flexible-working becomes a ‘sweetener’ and
ensures experienced and skilled workers are retained but also act as a motivational
tool” (Perry, 2013, pp 110).
According to Armstrong (2016), flexible working takes steps to improve work-
life balance and takes into account employees’ needs outside work. In turn,
employees are less inclined to leave the organisation.
Another method that studies show could increase employee retention is
offering employee assistance program.
Employee assistance programs are employer-sponsored programs designed
to alleviate and assist in eliminating a variety of work and personal problems
(Attridge, 2009, pp383).
There is a huge demand for services offered by charities. This, in turn, adds
more pressure on their staff. Work-related stress leads to more sick leave and
people simply leaving the sector.  A study by Mosadeghrad (2013) has indeed
confirmed that occupational stress was associated with turnover intentions among
Iranian nurses.
Another study by Lewis (2012), found that the lack of support from the
organisation in employees’ difficult times both at work and in their personal lives can

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serve as a reason for employee’s decision to leave the organisation and increase
staff turnover (Lewis, A. 2012)
An ACAS research by Hudson (2016), showed that mental health and well-
being are increasingly being seen, as core components linked to staff retention. Her
research showed a link between offering Employee Assistance Programme and
increase of employee retention.
Finally, offering progression and development schemes is another method of
retention that authors quote as highly successful.
Progression and development schemes are employer-sponsored programs
which aim to maintain talent within the organisation.
Messmer (2000) found that one of the important factors in employee retention
is an investment in employee training and career development.
Dockel (2003) strongly argues that employees should not only be rewarded
financially but they should also be provided with opportunities to grow within the
organization.
Finally, according to a CIPD survey, offering increased learning and
development opportunities are among the most effective retention strategies
undertaken by organisations (CIPD, 2017)

2. Critique of potential solutions

The employee retention solutions mentioned in the previous section have

showed to be successful.
Authors spoke highly of the use of flexible working method because it
increases workers’ engagement and can lead to greater commitment and loyalty to
the employer. This solution can be also applied in the charity sector. However, it
needs to be applied well in order not to be discriminative as in the charity sector
“workforce is predominantly female” (Wainwright et al., 2006; Baines and
Cunningham, 2011, p. 761; Baines et al., 2011).
As suggested, the employee assistance program is a good way of improving
employee retention levels. Both authors agreed that it will contribute to lowering
work-related stress, lowering absences and in turn increase employee retention
levels. This could prove especially useful in the charity sector where, as research
shows employees are under enormous stress due to the type of work they do.
However, individuals choose jobs that offer maximum benefits and might still move
from one organisation to another if improved benefits are available.
Equally, all authors agreed that offering development and progression
schemes are solutions that would allow an employer to lower costs of constant
recruitment and would aid retaining employees longer. Charity sector struggles with
offering development and so this would be particularly useful to introduce within the
sector. However, there is no proof employees won’t participate in the development
programs only to leave for other organisations and so further research is
recommended.

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3. Critique of data collection methods

A study concerning the flexible working conducted by Perry showed flexible

working to be highly successful. She used both quantitative (survey) and qualitative
(interviews) research methods in her studies. Using both is beneficial as qualitative
research validates quantitative results. However, she used postal surveys in the
study and those had a low response rate – common disadvantage. However, her
research, was carried within a charity sector and is therefore relative to the
organisation.

Research carried by Attridge regarding the employee assistance program was done
using a quantitative method of data collection. This again puts in doubt whether his
findings can be applied to the wider population. Although it showed the EAP’s impact
on increasing employee retention levels, it had been conducted in the United States
and so may not be apply to the UK charity sector. His method of collecting data -
surveys – also only showed statistics without sufficient context.

The research conducted by Dockel regarding progression, indeed suggested that

offering development and progression schemes is beneficial in retaining employees.
However, his study was conducted on highly trained technicians within a private
sector in South Africa and may not be relative to the UK Charity sector. Furthermore,
the qualitative method of data collection – interviews - used in the study, put in doubt
results as the results are difficult to analysed and can be biased.

4. Benefits to the organisation

Flexible working could be beneficial to charity employees, because it could lead to

better work/life balance. It would reduce travelling time for employees and improve
their productivity.

An employee assistance program could help charity employees with their mental
health and therefore would be effective in lowering sickness absences and improving
employees’ efficiency and productivity. It would also help with any work-related
stress, again contributing to lower absences and higher retention.

Staff development and progression is an effective solution as it offers an opportunity

to retain employees longer. Development and progression, in the long run, should
also contribute to lowering the costs of recruitment. Especially in the charity sector
where it is common for employees to complain there is no progression path
available.

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References

ACAS(2014): Managing employee absence and retention. How do I find out why
employees are leaving? Online. Accessed 16.04.2020. Available at:
https://archive.acas.org.uk/media/241/Advisory-booklet---Managing-attendance-and-
employee-turnover/pdf/Managing-attendance-and-employee-turnover-advisory-
booklet.pdf

Alfes, Kerstin & Bailey, Catherine & Soane, Emma & Rees, Chris & Gatenby, Mark.
(2010). Creating an Engaged Workforce (CIPD Research Report). Online. Accessed
16.04.2020. Available at:
https://www.researchgate.net/publication/253279910_Creating_an_Engaged_Workfo
rce_CIPD_Research_Report

Armstrong, L., BLuitt-Fisher, J, Lopez-Newman, L, Paul, D. and Paul, K. (2009):

Nonprofits in Crisis: How to Retain Employees in the Nonprofit Sector.
Online. Accessed 16.04.2020. Available at:
https://digitalscholarship.unlv.edu/cgi/viewcontent.cgi?
referer=&httpsredir=1&article=1811&context=thesesdissertations

Attridge, Mark. (2009). Employee Assistance Programs: A Research ‐Based Primer.

In The Handbook of Work and Health Psychology (3 rd Edition). Minneapolis, Wiley-
Blackwell pp 381-405

CIPD (2017) Resourcing and Talent Planning Survey Report. London: CIPD. Online.
Available at: https://www.cipd.co.uk/Images/resourcing-talent-planning_2017_tcm18-
23747.pdf

Dockel, A. (2003). The effect of retention factors on organisational commitment: An

investigation of high technology employees. Master of Human Resource Thesis.
University of Pretoria

Gberevbie, D. (2008): Strategies for employee recruitment, retention and

performance: Dimension of the Federal civil service of Nigeria. African Journal of
Business Management Vol. 4(8), pp. 1447-1456, 18 July, 2010. Online. [Accessed
19 April 2020]. Available at:
https://core.ac.uk/download/pdf/32224474.pdf

Houston, D.M. and Waumsley, J.A. (2003) Attitudes to flexible working and family
life, JRF, The Policy Press. (online) Accessed 15.04.2020. Available at:

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https://www.researchgate.net/publication/
260389091_Houston_DM_Waumsley_JA_2003_Attitudes_to_Work_and_Family_Lif
e_JRF_Policy_Press_Bristol_80_pages/link/55376e190cf2058efdeabbfe/download

Lewis, A. and Sequeira, A. H.(2012), Effectiveness of Employee Retention

Strategies in Industry. Online. Accessed 18.04.2020: Available at:
https://ssrn.com/abstract=2167719 

Merhar, C. (2019) Employee Retention - The Real Cost of Losing an Employee

(online) Accessed 15.04.2020. Available at:
https://www.peoplekeep.com/blog/bid/312123/employee-retention-the-real-cost-of-
losing-an-employee

Messmer, M. (2000) Orientations Programs Can Be Key to Employee Retention.

Strategic Finance, 81, pp 12-15.

Mosadeghrad A. M. (2013). Occupational stress and turnover intention: implications

for nursing management. International journal of health policy and management, 
Vol 1 (2), pp 169–176.

Kelliher, C. & Parry, E. (2011). Voluntary sector HRM: Examining the influence of
government. International Journal of Public Sector Management. 24. 650-661.

Ramlall, S. (2003): Managing Employee Retention as a Strategy for Increasing

Organizational Competitiveness, in Applied H.R.M. Research, 2003, Volume 8,
Number 2, pp 63-72

Rampur, S. (2009). Causes of employee turnover. Online Available at:

http://www.buzzle.com/articles/causes-ofemployeeturnover.html on 13/11/2009.

Sandhya & Pradeep Kumar (2011): Employee retention by motivation. In Indian

Journal of Science and Technology Vol. 4 No. 12 (Dec 2011) (online). Accessed
16.04.2020. Available at:
https://pdfs.semanticscholar.org/314b/
bb852bc7754df0ecb07f7d3ef2ba36ad0727.pdf

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Bibliography

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https://www.researchgate.net/publication/
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Marriot, J. and Perkins, S. (2018) A report: Reward management: Focus on

employee benefits.. London: CIPD (online). Accessed 16.04.2020. Available at:
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