The Big Issue: Hiring, Training, and Retaining Employees in our Economy Today

The Big Issue: Hiring, Training, and Retaining Employees in our Economy Today

Submitted in Partial Fulfillment
Of the Requirements for
MBA 560 Human Resources Management for Leaders

Thesis The purpose of this paper is to expose a dilemma in America’s companies to date. This dilemma does not focus on age or sex discrimination in the workplace, but exposes a reoccurring theme in companies across our country. The issue at hand is once a qualified individual is hired, that employee needs to be trained and retained in the company. The economy remains fragile and jobs are at a premium, but retaining qualified employees continues to be a concern.

In today’s society, much can be learned from the economy and how companies are reacting to the continuing concerns of employee hiring and employee retention. For years, with a strong economy, finding jobs were not at such a high demand. In today’s current state, unemployment rates are still climbing even with attempts to rejuvenate the ailing economy. With the economy in its current state, many individuals are qualified and still cannot find appropriate work. With the current state of our nation’s economy, I believe that most companies are being unrealistic in regards to employee retention and employee overall happiness in the workplace. In the following paper, the topics of costs related to continually training new employees and the ways to improve the turnover of employees in the workplace will be discussed.
Year after year, the economy is scrutinized and there is always hope for vast improvements. Many efforts have been made to try to revitalize the United States economy, but overall these efforts have not done the complete job. Our economy remains fragile, which directly affects many other ways of life that individuals forget about. The housing market, stock market, and individuals financial futures remain up in the air and not secured. These are definitely troubling times and makes employment that much more vital. Companies to date have shown that downsizing and cutting costs are needed for survival. These techniques of saving money are well thought out, but hurt employment growths and continually rise the unemployment percentage. This makes finding a job very difficult. If a job is actually found, it is unfortunately rare for the employee to completely be satisfied by that given position. The ultimate goal is find a job that fits the individual has needs and is passionate about. Here is where this problem arises, there are many examples of companies showing poor strategies to satisfy and thus keep quality employment. The retention of quality employees is vital to any company’s success. With much research, this has become a countrywide dilemma and something that should change because it affects both the company and the individual.
In today’s society, companies are forced to use strategies to cut costs and remain profitable in our countries ailing economy. Cutting costs can come in a variety of different forms and is done mainly so that given company can remain in business. Although cutting costs help companies “turn the corner”, it does not help the employees who lost their job because of this strategy. Eliminating positions is not the only way to cut costs, but it is very popular even though it affects so many individuals’ livelihoods. Other ways of cutting costs can include lowering salaries instead of eliminating them, finding cheaper office supplies, making sure office supplies are used efficiently and last longer, and becoming aware of high expensed areas to control the costs in the future. The main reason our countries unemployment rates are so high and growing is that companies continue to eliminate positions, thus leaving thousands of talented individuals to find future work.
With thousands of talented unemployed individuals out of work, finding the ideal position becomes a daunting task. If you look at it from a mathematical standpoint, with only a few jobs available and thousands of potential applicants, the odds of getting a position becomes slim to none. This creates a nation-wide dilemma in our society and there needs to an immediate fix in this matter. United States President, Barack Obama, proposed many plans to increase jobs growth over the past few years. Some of this plans produced a glimmer of hope, others made no effect on the unemployment rates. This situation will continue to “snowball” unless a plan is put in place to increase job openings thus reduced unemployment.
With jobs being eliminated and unemployment rates increasing, our country is in disarray. However, there is another issue at hand in today’s companies that is becoming increasingly more prevalent and well known. This issue is known as employee retention. We are very familiar with the hiring process, as most have gone through this a time or two. This process usually consists of applying for a desired position and then interviewing for that position. Once the employee is hired, that employee goes through training and education programs to get that employee up to speed on the company’s processes. If all goes well, that employee will perform strongly in that companies system and benefit the company in many ways. The above scenario is a perfect situation and often does not occur exactly in that fashion. There is far too much evidence to support that in today’s workplace, the turnover of employees is growing rapidly. That desired and skilled employee is not staying with the company that he/she was hired for. There are always extenuating circumstances with every employee, but this has become far too common to overlook.
With employee retention at a focus, more research needs to be done in the effects it causes to the employee and the company involved. With the company in mind, employee retention causes many concerns that most do not realize. The first major issue that employee retention causes is the overall cost to the company. A recent survey taken by Salary.com indicates that 50-150% of that employee’s salary will be needed to then cover the turn over costs of that employee leaving the company (Putzier & Baker , 2011). These turn over costs include the training needed for the new employee that will be hired and the possible loss of production that will be expected until the new employee is fully trained. Employee retention is often overlooked and most do not realize the grave effects it could place on a company if it continues. With a slow economy, companies are having a mindset of employees cannot leave because they have nowhere else to go. In a recent survey released in February 2009 by Salary.com, 65% of employees admitted to passively or actively looking for a new job already (Putzier & Baker , 2011). Employers are blind to what is happening and believe that they are in power. In this survey, Salary.com found that 80% of the employers believe their employees would not begin a job search in the next 3 months; at the same time, 60% of the employees said they plan to intensify their job search in the next 3 months (Putzier & Baker , 2011). What generally happens in these circumstances is the top employees that you cannot afford to lose can find jobs now and even the good / average performers will find jobs at least when the economy picks up. If this happens, you will be left with those that cannot find employment elsewhere. If they have not left yet, you may still have time to show them that you care about them and have a great place to work if you begin investing in retention now.
With a slow economy, most companies have the opinion that finding a replacement employee is an easy task, but this is not that case. Recruiters are finding out that replacing employees is not as easy as you might think it would be when unemployment levels are at 7 – 9%. Companies that are actually recruiting now are reporting receiving as many as 1500 or more resumes in response to an ad on the national job boards. After spending countless hours screening these resumes, we continue to hear the same message “where are all the good candidates?” We have high unemployment but we are still in a labor / skills shortage; and employers’ expectations are very high given the crunch on keeping expenses down. Filling a position is not an easy task now; nor will it be when the economy picks up. Your best recruitment tool is going to be retention. Spend your money keeping your employees and training them to do the jobs you need them to do. You are likely to spend more money recruiting from the outside and not find the right skills, knowledge, and commitment than what you could spend on retaining and training the employees you already have. Finally, studies also show that not only is you are bottom-line impacted by the turnover costs but also a decrease in productivity and customer satisfaction. The more dissatisfied employees become and the less focused they are on doing a good job for you, the less productive they are on the job and more likely they are to impact customer satisfaction. According to Karen Campbell the vice president of human resources and director of the People Management Resources Division at SMC Business Council “Good retention practices go hand-in-hand with customer satisfaction and employee productivity.'' The issues of employee retention are nationwide and affect every company, big or small (Putzier & Baker , 2011).
With the importance of retaining employees in mind, researchers have narrowed down the main challenges companies face regarding hiring and keeping skilled employees. In some countries, most notably the United States, demographic changes have made retention especially challenging. Overall, the work force is maturing. Currently, the average age of employees is 35. Some 3.75 million workers have already turned 55 (Goldsmith, 2008). By 2015, the population of Americans in the prime management age range of 35–45 will be 15 percent less than it was in 2000 (Goldsmith, 2008). The next issue is economic growth is outpacing the growth of the work force. The U.S. economy has been growing at 2.4 percent while growth in the labor force lags behind at only 1.2 percent (Goldsmith, 2008). The last main issue researched is that the supply of highly skilled technicians and professionals is being overwhelmed by demand particularly in computer related fields. (Google.com images). The above graph shows the increasing amount of employees who plan to leave their current position over the past two years.
In any given company there are different circumstances that arise when employee’s choice to leave, however there has been much research performed to narrow down the main reasons why employees leave and on the other side, choose to stay. One currently reoccurring theme of employees leaving is due to company’s leadership shifts. This could be due to top management decisions declining or new ideas being put into place. Another issue is when there is a problem with immediate supervisors. When the supervisor to employee relationship becomes problematic or stressful, employees may choose to look elsewhere. Lastly, an employee may choose to leave if another close friend or colleague leaves. If someone who is respected and trusted leaves the company, it is not all uncommon to have others follow. Much research has been done to understand why employees stay in their current company even if the circumstances are not the greatest. The main reason why employees stay is that they take pride in their organization.

(Google.com images)
As a recent survey from 200 large corporations show, employees are more inclined to stay with an organization if they feeling commitment and involvement from upper management. It is shocking to see that increasing pay and benefits is at the bottom of the list and are not main reasons why employees choose to leave their companies. Employees want to work for well-managed companies that are headed by skilled, resourceful leaders. When managers are focused on success and can get the entire workforce on that same vision, the company becomes much stronger and united. The next reason to why employees stay is that they highly respect their current supervisor. If a supervisor is supportive and can motivate his/her employees, the entire group will flourish. The next reason is for companies to offer fair compensation to their employees. This does not always come in the form of financial compensation, but also ways to the employee to learn and grow within that given system. Lastly, employees stay in their current companies if they can take pride in their work and feel appreciated. When an employee feels satisfied in their work and stimulated, the productive levels increases. With employee retention thoroughly discussed, I have been in a similar situation that proves many of the reasons to leave or stay are completed valid. I have been employed for an engineering company for over a year now and have seen many situations where loosing skilled employees could have been avoided. My first job at this engineering company is thought of more of a stepping-stone from college and a group for young graduates to learn and grow. Coming from college, the compensation was generous and this company presented a great opportunity to learn and grow. This company has great potential for advancement and continues to grow in the particalular-invested market. However, this group did not treat the employees with enough respect and continues to lose skilled talent for years to date. The mindset of the managers is that they could get any skilled college graduate in at any point of time. This mindset is demeaning and it shows by how many employees choose to either leave the company or apply elsewhere. The group could be a phenomenal training ground to learn and work your way up the company pipeline, but instead it has considered entry level and treated as such. Over the past few years, this department has seen incredible amounts of employees leaving or applying out of the department as soon as they possibly can. This creates poor moral for the employees that remain in the department and high costs for the company for new hires. As it states above, the cost to re-train, educate, and cover the loss of production when an employee leaves is insurmountable. It would be more cost efficient to keep employees in this department and have them move up when the time is right rather than leaving as quickly as possible. This would increase moral and the overall atmosphere in the department. As of late, the managers in this department have taken notice and are getting restless with the high amount of turnover. They are trying to take measures to increase retention and the overall employee satisfaction. Overall, the topic of employee retention has been a growing theme across the United States. This issue has been increases in recent years and continues to be a major concern. The issue of employee retention is present in all companies no matter the size or employee population. Companies need to focus on retaining their employees because of the overall cost it takes to re-train and educate new hires. Other deterring factors are that poor retention causes low employee morale and slows production. Companies that continue with loosing employees and do not fix the problems will suffer severely in the end. The economy does not ultimately decide if employees stay or leave their job, the company itself can help shape that reality. In any given company, there needs to be supportive and respectful managers in place to encourage the workforce. This will raise production and most importantly the spirits of the workers to take pride in their job. Any worker who feels appreciated by their company is more inclined to stay and be loyal to that given company. A company’s goal should not only be to make a profit, but to support the workforce, after all, they are what make the companies drive.

Putzier , J., & Baker , D. (2011). the everything hr kit : A complete guide to attracting, retaining & motivating high-performance employees. Part 2: Postemployment , 269p. doi: American Management Association

Goldsmith, M. (2008, July 08). Human resources: The big issues. BloombergBusinessweek. Retrieved from http://www.businessweek.com/stories/2008-07-08/human-resources-the-big-issuesbusinessweek-business-news-stock-market-and-financial-

Spiro, J. (2010, April 07). How to improve employee retention. How to Improve Employee Retention: Motivation is Not Enough, 1-2. Retrieved from http://www.inc.com/guides/2010/04/employee-retention.html

Von Bergen, J. M. (2008, June 26). Top challenge: Hiring and keeping the very best. Finding talented, reliable workers in a competitive market is a pressing concern, human resources people say., 1-3. Retrieved from http://articles.philly.com/2008-06-26/news/24990794_1_talent-aramark-catholic-health-east

Google.com Images