FACTORSINFLUENCING EMPLOYEE TURNOVER IN LIVING GOODS LIMITED ALUDAHCYNTHIA ANZEMO Aresearch project submitted in partial fulfillment of the requirement for theaward of a Masters’ Degree in Project Planning and Management at The Universityof Nairobi.
DECLARATION Thisproject is my original work and has not been presented for a masters’ degree inany other university. Signature……………………………………….Date…………………………ALUDAHCYNTHIA ANZEMOID:28501970 Thisresearch proposal report has been submitted for examination by my approval asthe University supervisor.
Signature……………………………………….Date…………………………Dr.Lecturer DEDICATIONIwish to dedicate this research proposal to my colleagues, Grace Kikosi andLydia Owola for their immeasurable contribution during the study. ACKNOWLEDGEMENTI would like totake this opportunity to express my sincere gratitude and appreciation to theHuman Resource Manager of Living Goods, Charity Wanjau, for being available toanswer my questions and providing me with the information needed for thisresearch.
Secondly, I wantto thank all the respondents who participated in the study and my classmates atUON Bungoma for their encouragement and input. TABLEOF CONTENTSCONTENTS PAGEStudent’sDeclaration………………………………………………………..
iSupervisor’sDeclaration…………………………………………………….iiDedication…………………………………………………………………….iiiAcknowledgement…………………………………………………………….ivTable ofcontents………………………………………………………………vAbstract………………………………………………………………………..
CHAPTER ONE:INTRODUCTION1.1 Background ofthe study……………………………………………………1.2Problem statement……………………………………………………………1.3Objectivesof the study………………………………………………………1.
4Conceptual Framework ……………………………………………………1.5 Purpose of thestudy…………………………………………………………..1.6Limitations……………………………………………………………………1.7Delimitations………………………………………………………………….1.
8Organization of the study……………………………………………………. CHAPTER TWO: LITERATURE REVIEW2.1Introduction………………………………………………………………….
2.2 Theoreticalperspectives……………………………………………………2.2 Empiricalstudies…………………………………………………………….
CHAPTER THREE:RESEARCH METHODOLOGY3.1Introduction…………………………………………………………………3.2 Research Design…………………………………………………………….3.3 StudyArea……………………………………………………………………3.4 TargetPopulation……………………………………………………………..
3.5.0 DataCollection……………………………………………………………3.
5.1 DataSources……………………………………………………………….3.5.2 DataCollection procedures……………………………………………….
3.5.3 DataCollection instruments………………………………………………3.5.4Validity test for the Data Collection instruments……………………………3.
6Data analysis…………………………………………………………………CHAPTERFOUR: RESULTS AND DISCUSSIONS4.1Results………………………………………………………………………4.2Discussions…………………………………………………………………… CHAPTERFIVE: SUMMARY, CONCLUSION& RECOMMENDATION 5.1Introduction………………………………………………………………….5.2Summary of Findings……………………………………………………….
5.3Conclusion…………………………………………………………………..
5.4Recommendations……………………………………………………………. REFERENCESAPPENDICES INTRODUCTIONEmployee turnoveris defined as the rate at which workers are leaving an organization. This iswhen the relationship between the employer and the employee ends. It is alwaysin the best interest of on organization to have this percentage as low aspossible. Employee turnover also happens when employees are shuffled and movedamong departments.
Demotions and promotions are also seen as turnovers. Accordingto Mathis and Jackson (2003), there exists two types of turnover: voluntary turnoverand involuntary turnover. Voluntary turnover occurs in an instance where theemployee quits due to different reasons such as finding a better paying job,conflict with colleagues or the immediate supervisor, job dissatisfaction orstarting their own business. Involuntary turnover on the other hand is when anemployee is forced to leave the company. This can be due to firing, seasonallayoffs, unsatisfactory performance or violation of company policy.
Turnoveraffects an organization both positively and negatively. On the positive side,it brings in better performing staff which in turn improves the productivity ofan organization. It is also an avenue of acquiring new talent and skills whichgives the company an advantage over competitors. The negative side of this isthat it will cost the company more to hire and train new staff and also lowerthe existing employees’ morale. This study aims atinvestigating the various factors that lead to employee turn-over in small organizationswith a single focus on Living Goods Limited, Kenya.
The first chapter isorganized as follows: first comes the background of the study followed bystatement of the problem. After which the purpose of the study and itsobjectives will be highlighted. This will be followed by research questions andsignificance of the study, then limitations of the study, delimitations of thestudy, research assumptions, definition of significant terms and the overallorganization of the study will be discussed.1.1. Backgroundof the StudyEmployeeturnover affects many organizations the world over.
According to (“JobOpenings and Labor Turnover – January 2016,”Bureau of Labor Statistics press release, March 17, 2016) nearly 59 millionemployees left their jobs in 2015 in the US with a quarter of them voluntarilyquitting and two fifths of workers thinking of leaving their jobs. More women(32%) in scientific fields such as technology and engineering were thinking ofquitting their jobs, making them 46% more likey than their male counterparts to quit.( NadyaA. Fouad and Romila Singh, Stemming the Tide: Why Women LeaveEngineering(University of Wisconsin Milwaukee, 2011): p. 15.). A survey done by (ManpowerGroup,2015 Talent Shortage Survey (2015): p.
3.)indicates that working conditions and company culture were the key drivingfactors for employee turnover.(Josh Bersin, “Employee Retention Now a Big Issue:Why the Tide has Turned,” Bersin by Deloitte/ LinkedIn, August 13,2013; David G. Allen, Retaining Talent: A Guide toAnalyzing and Managing Employee Turnover (Society for Human ResourceManagement, 2008): p.
3-4.) states that turnover costs companies money andvaluable time. The amount an organization spends to replace an employee isabout one fifth of that employee’s annual salary (HeatherBoushey and Sarah Jane Glynn, There Are SignificantBusiness Costs to Replacing Employees (Center for AmericanProgress, November 16, 2012).According to (Iqtidar Ali Shah, Zainab Fakhr, M. ShakilAhmad, and Khalid Zaman, “Measuring Push, Pull, andPersonal Factors Affecting Turnover Intention: A Case of University Teachers inPakistan,” Review of Economic & Business Studies, vol.
3, no. 1(June 2010): p. 167-192),people leave organizations due to push and pull factors. The pull factors arethose that attract an employee away from their current company.
These are externalfactors and are beyond the control of an organization. They include jobopportunities that offer better remuneration, more freedom, skills being put touse and better working location. Push factors are from within the organization,that lead to employee dissatisfaction therefore causing them to quit. These areinternal and are within the control of the company. Some of these factors are:employee harassment, excess workload, lack of career progression, no workrecognition or feedback and the job eating away into personal time.
The older employees (ages 56 to 65)are more prone to stay longer in a company as compared to the younger ones(ages 25 to 35) (Employee Tenure in 2014,” Bureau ofLabor Statistics press release, September 18, 2014.). In 2016, half (43%) ofMillennials interviewed expect to leave their current jobs in the next twoyears (Deloitte, Millennials Have One Footout the Door: Executive Summary (The Deloitte MillennialSurvey, 2016).This study further states that most Millennials believe they will leave theircurrent jobs by 2020 across all of the various countries and regions surveyed,including: the United Kingdom (71%), Latin America (71%), the United States(64%), Canada (61%), Western Europe (60%), and Japan (52%).
Job security is a major cause ofemployee turnover and any organization without it will experience high rates ofturnover (Kuzmarski and Thomas, 1995; Roy, 2002)-Kuzmarski,S.S. and D.
K. Thomas, 1995. Value Based Leadership: Rebuilding EmployeeCommitment, Performance and Productivity.
Prentice Hall, USA, pp: 34). (Coulson-Thomas, 1997)- Coulson-Thomas, C., 1997. The Future of the Organisation, AchievingExcellence through Business Transformation.
Kongon Press, London, 14: 258 asserts that employeesare forced to remain in their current positions as they are unable to find moresecure alternatives. In South Africa, the employeeturnover rate for organizations was calculated to be between 15 and 19%.The highdemand for specialized skills along policies put in place to address the issueof imbalances has resulted in an increase in staff turnover (Kotze & Roodt,2005; Vass, 2010)- Kotze, K.
, & Roodt,G. (2005). Factors that affect the retention of managerial and specialiststaff: An exploratory study of an employee commitment model. South AfricanJournal of Human Resource Management, 3(2), 48–55.
Moreover, the issue of inequalityin the quality of education offered as a result of apartheid has caused ashortage of skilled black professionals, resulting in an increased demand forthem (Robinson, 2004)- Robinson, S. (2004, 11April). The second revolution. Retrieved May 01, 2011, from http://www.time.
com/time/magazine/article/0,9171,610026,00.htmlIn Kenya, the highest percentage ofthe working class is comprised of Millennials aged between 23 to 35.They aredriven by the need to acquire wealth as quickly as possible and most of themhave no loyalty to the organization. In most small startups in the country withless than 20 employees, the funding is limited as most of it goes into runningthe business so employees are forced to contend with little pay with only thepromise of future increases. In companies such as Living Goods Limited, thechallenge is how to retain top talent as most of them are given better offersand eventually leave.
The aim of this research will be to determine the factorsleading to employee turnovers in organizations such as Living Goods Limited.1.2Statement of the problemAccording to research, employeeturnover rates are higher in developing countries such as Kenya, as compared todeveloped countries (Schaffner, 2001). The most valuable asset an organizationhas is its talent and holding on to it is very crucial to an organizationssuccess.
Employee turnover costs companies huge amounts of money in hiring andtraining replacements. There’s also decrease in performance of workers as theyare disrupted when other employees leave and become less motivated.Organizations with high turnovers means that newer employees are being hiredregularly and they are less familiar with the work thereby affecting theirefficiency since the organization has fewer older and experienced workers.Previous studies have failed to look at the relationship between Human ResourceManagement (HRM) practices, company culture, and the character of managers onemployees’ decision to quit, especially in context of developing countries suchas Kenya. There isn’t enough literature on the current state of employeeturnover and retention in Kenya. Therefore, deficiencies in the literature makeit necessary to research and understand why and how to prevent employeeturnover in Living Goods Limited. Table1.
1 Employee Turnover YEAR INITIAL STAFF STAFF WHO LEFT 2015 32 7 2016 70 16 2017 126 25 Datafrom Living Goods Limited, Kenya1.3Purpose of the studyThis study will aim atinvestigating factors influencing employee turnover in organizations with focuson Living Goods Limited, Kenya.1.4.ResearchObjectiveThe general objective of the studyis to determine the factors influencing employee turnover in Living GoodsLimited in Kenya. The specific objectives of the study are:1.
Toassess the effect of compensation on employee turnover in Living Goods Limited.2. Todetermine how the relationship with the immediate supervisor affects employeeturnover in Living Goods Limited.3. Toevaluate how job satisfaction affects employee turnover in Living GoodsLimited.4. Todetermine how career development opportunities affects employee turnover inLiving Goods Limited.
1.5 ResearchquestionsThestudy will utilize the following research questions: 1. Howdoes the relationship with the immediate supervisor affect employee turnover inLiving Goods Limited?2. Isthere a relationship between compensation and employee turnover in Living GoodsLimited?3. Doesjob satisfaction influence employee turnover in Living Goods Limited?4. Islack of career development opportunities a factor in employee turnover inLiving Goods Limited?1.6 Significanceof the studyThis study will bring to light the factors thatinfluence employee turn-over in Living Goods Limited, Kenya which in turn willsave the organization on costs of hiring and training replacements.
The resultsof this research can also be adopted by many organizations where measures willbe put in place to ensure employee satisfaction and retention.1.7 Limitationsof the studyThe following limitations will likely be identifiedduring the study:· Thefindings will be limited to a single organization- Living Goods Limited due totime constraints and lack of adequate resources.
· Someformer employees may not be willing participate in the study. The researcherwill try to convince them to do otherwise.· Someformer employees may have changed their contact information therefore affectingdata collection and results. The researcher will get alternative contactinformation from social media and their close friends.
1.8 Delimitationsof the studyThe scope of the study will cover only thoseparticipants who left the organization on voluntary terms. Due to time andresource restrictions, the research will exclude involuntary turnover cases andemployees hired on contractual terms.1.9Research assumptionsThe research assumes that not all respondents will beavailable to answer questions and that some of the ones interviewed will givebiased information. Furthermore, it isassumed that the instrument to be used to collect data will give reliableresults.
1.10.Definitionof significant terms 1.11.Organizationof the studyThis study in organized into five chapters. Chapter Onecovers the background of the study, statement of the problem and purpose of thestudy. Next is research objectives, research questions, significance of thestudy, limitations of the study, delimitations of the study, researchassumptions, definition of significant terms and closing the chapter isorganization of the study.
Chapter Twocovers concept of independent and dependent variables, literature review of thefour objectives, the theoretical framework and conceptual framework, summary ofreviewed literature and knowledge gap.Chapter Three contains the research methodology,research design and target population. This is followed by the sample procedureand sample size, research instrument used, instrument validity and instrumentreliability. The chapter closes withdata collection procedure, data analysis techniques, ethical considerations andoperationalization of variables table.Chapter Four will contain the findings from dataanalysis, presentation of findings and interpretation of findings. It is willbe concluded with an overall summary of the chapter.
Chapter Five will have a summary of the findings,discussion, conclusions and recommendations of the study. It is will close withsuggestions of areas for further research and contribution to the body ofknowledge. CHAPTERTWOLITERATUREREVIEW2.1.Introduction
