EFFECT OF LABOUR TURNOVER ON ORGANIZATIONAL PERFORMANCE

Abstract

This work examined the relationship between labour turnover and organizational performance in Kaduna State water board. It adopted survey research design. Related literature review was based on conceptual, theoretical and empirical frameworks. The study was anchored on equity theory. Data were collected from primary sources. Primary data were collected with item structured questionnaire based on five point Likert scale. The population of the study was one thousand two hundred and eighty five (1285) employees of the company under study. A sample size of three hundred and five (305) was determined with Taro Yamane (1964) formula The instrument was subjected to face and content validity and its reliability was determined through test-retest Method. Data generated were presented with tables, percentages and frequencies. Data were analyzed with chi-square statistical tool. Major findings indicated that there were significant positive relationships between dependent and independent variables. The study revealed that pay (salary) dissatisfaction, employee training and development, employee absenteeism and employee motivation significantly affect organizational performance. The study concluded that there is significant positive relationship between labour turnover and Organizational performance. Based on the findings, the study recommended an upward salary review, improved training and development programmes, constant check on employees and appropriate disciplinary measures and employee motivation to reduce the incidence of employee turnover.

CHAPTER ONE

INTRODUCTION

1.1    Background of the Study

In all economic activities human effort is the key. It is the human knowledge transferred into activity that give utilizes or value to all commodities. And that means who cultivates and whether he uses a hoe or tractor. It is the same who saws, weeds, processes, store and sells. It is also man who extracts iron ore, processes it into steel.

It postulates that who invents, designs, makes and operates machines is man who creates, transmits and seeks knowledge etc. thus, every human endeavour here one earth has man’s finger print. Thus without human effort which is considered vital for production so many managerial effort would been proved abortive. This effort also is usually called labour.

Labour is the most important resources in organization. This is why labour is define as human effort both mental and physical assertion legitimately applied in production of goods and services so as to satisfy human needs for a reward known as wages and salaries.

In this sense, labour include all labour, semi skilled labour and unskilled which all gear towards the production of goods and services to earn a living through their wages and salaries.

In the present work, organizational performance is the dependent variable (y) while labour turnover is the independent variable (x). Organizations have an important role in our daily lives and therefore, successful organizations represent a key ingredient for developing nations. Consequently, economists and business managers consider organizations and institutions similar to an engine in determining the economic, social and political progress (Gavrea, lilies and Stegereari, 2011). The performance of an organization determines its sustainability in the competitive business world. Continuous performance is the focus of any organization because it is only through performance that organizations are able to grow and progress. Therefore organizational performance is one of the most important variables in the management indicator or organizational effectiveness and productivity. Although the concept of organizational performance is very common in the academic literature, its definition is difficult because of its many meanings. According to Hendry (2012), organizational performance is a multi-dimensional concept whose complexity makes it difficult to be defined from simple perspective. However, Upadhaya, Munir and Blount (2014) asserted that organizational performance encompasses three specific areas of firm outcomes: financial performance (profits), return on assets, return on investment; product market performance (scales, market shares); and shareholder return (total shareholder return, economic value added). Organizational performance has developed to be the most important issue that every organizational management is concerned about, as it determines the ability of an organization to continue with its operation.

Labour turnover is a common phenomenon in business organizations, particularly now that Nigerian economy is in recession. In view of the economic realities in the country, there is the tendency for business organizations to lose their employees often. According to Benedict, Josiah, Ogungbenle and Akpeti (2012), labour turnover is the rate at which an employer gains and loses employee and that turnover is measured for individual companies and for their industries as a whole. Moreover, Mabindisa (2013) noted that staff turnover includes employees who retire and employee who are discharged. Employee leaves the department over a set period and usually expressed as a percentage of total workforce numbers (Molefakgotla, Ntebogang and Kattego, 2014). Employees tend to leave an organization as a result of certain factors including salary (pay) dissatisfaction, absenteeism, lack of training and development, lack of motivation, work environment and so on. Labour turnover has many implications for the organization, employee and the society at large. Organizations with high labour turnover are bound to incur high cost of recruitment and training of new staff and reduced productivity. Employees who leave their present job without hope of a new one are bound to remain unemployed and without pay until new jobs arc found. This leads to untold hardship and frustration on the individuals who may result to social vices such as armed robbery, kidnapping, substance abuse, prostitution and child trafficking.

1.2. Statement of the Problem

The problem of labour turnover attract a reasonable percentage of attention in an organization because labour represent the life wire of any organization. The rate at which employee have organization is alarming, the types and number of works who are terminated or resigning their various jobs show how effective and efficient is the management in its operation which also determined the level of stability, growth and development of the organization. Although, in some organizations, there, is extent to which mobility of workers is considered acceptable. Molefakgotla et al (2014) used 3 variables, Akinruwa, Ajayi, and Akeke, (2014) used 8 variables, Mabindisa, (2013) used 5 variables. These studies reported conflicting findings on the causes of labour turnover.  Mabindisa concluded that salary was the major cause of turnover while Benedict, Josiah, Ogungbenle and Akpeti, 2012 concluded that reduced production had the foremost effect on labour turnover as it significantly affects output and profit. These controversies from the findings of most studies on employee turnover and organizational performance make it imperative for further studies. These studies were carried out in different sectors banking, electricity, telecommunication, and education or research institute.

1.3. Objectives of the Study

Purposively, this project is to be educate whoever is concerned in its significance of the study on the following objectives:

1. To examine the effects of labour turnover on the performance of Kaduna State Water Board.
2. To enumerate the problems of labour turnover and how it can be minimized in Kaduna State Water Board.
3. To examine the major causes of labour turnover in an organization using Kaduna State Water Board as a case study.

1.4. Significance of the Study

The study would be of significance to the Kaduna State Water Board in identifying the problems and causes of labour turnover. This study is expected to provide solution the research work is of benefit to the body of knowledge students and other researchers. Other organizations that have similar problems can also benefit from the research work.

1.5. Research Questions

1. What are the effects of labour turnover on the performance of Kaduna State Water Board?
2. What are the problems of labour turnover and how can it be minimized in Kaduna State Water Board?
3. What are the major causes of labour turnover in Kaduna State Water Board?
   

1.6. Scope/ Limitation of the Study

The extent of this research covers all concept, the causes, problems, effects and the measures to be taken to tackle the problem of labour turnover that deserves to be minimized. This study will be restricted to the effects of labour turnover on organizational performance in Nigeria.

Limitation of the Study

This research is not lastly due to some proposition for any organization. He classified cost of turnover into direct and indirect cost.

Direct Cost

This is the cost that associated with the costs of replacing the employees and training the newly hired such as costs of communicating the vacant position cost of administering the recruitment function, cost of screening the applicant interviewing the candidates, administering selection tools tests, meeting hr candidate, concluding background investigation, cost of preparing new employee training materials, conducting training session, giving on the job training and the costs of separating former employee from the firm such as administering paper work/meeting, conducting exit interview paying several pay/packaged, vacation time etc.

Indirect Cost

Turnover also brings with indirect cost especially when the employees who are leaving were liked by the organizations client, customer loyally may be affected. Again, as the new employees learn their jobs, the quality of the product and service may suffer.

Michael Armstrong, human resources practice page 381 enumerated the following as cost of labour turnover, leaving cost, direct cost of replacement opportunity cost of time spent, direct cost of introducing replacement, loss of input.

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