Employee Retention and Profitability

Subject: Employee Management
Pages: 10
Words: 2782
Reading time:
10 min
Study level: PhD


A significant number of organizations’ success is measured by financial and operational achievements. This procedure tends to take employees’ participation for granted, meaning that they are less appreciated. In addition, members of the labor force find themselves pressured in order to help respective companies surpass the financial and operational achievements of yesteryears. Companies are in most instances successful in having the labor force return improved performance, but not for long because of the accruing turnovers that arise from poor employee retention. Concurrent sections of this paper shall deal with procedures that companies employ in their attempts to have higher employee retention levels that lead to improved productivity and profitability.

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Employee retention is best achieved through recognition of their efforts in respective departments. This calls for the management to start looking at organizational progress through the eyes of how current productivity has been achieved and not the level itself (Zlotnik et al., 2005, p. 12). This means focusing on how individual members of the labor force contributed to company earnings. Having to know how employees contributed to overall productivity helps the management to develop mechanisms and consequently advise on the way forward. According to DeNers (2002, p. 41) taking this measure of recognizing employee inputs is tantamount to building a strong foundation for future productivity.

Employees themselves feel more appreciated when senior management involves them in developing the foundations for future productivity. In addition, the accruing constant engagement between members of the labor force and senior management allows the smooth flow of information within individual companies, especially when leadership at all levels is involved. On their part, employees feel freer to express themselves to the management regarding what they needed for their productivity to increase. On the other hand, the management gets to know about the goings in company departments. The understanding between the two would therefore lead to solving the problem before issues get out of hand. The most important ways that this relationship can be natured are discussed.

Undertake Job Analysis and Previews

This first step involves developing mechanisms that will prepare potential employees for positive relationships in respective companies. Indeed, measures developed at this stage should be strong enough to attract labor into companies. Management should therefore embark on the process of making a list of all job positions in respective companies, which should be undertaken in both occupied and vacant positions (Ellett et al., 2003, p). After getting such lists together, senior management should instruct department heads to compile the duties and responsibilities of each of the positions in respective departments. In order to make the job less laborious, department heads can have each individual in these positions provide their current job description, duties, and responsibilities. These employees should also be given the liberty to make comments on their submissions—these comments could detail extra responsibilities or corrections on errors made in current job descriptions. Departmental heads and the management should make final adjustments to the list for filling. The resulting documents should be provided to employees so they can understand their roles in company activities. This process should not end there; management should embark on helping employees become more aware of their roles and applications. Taking this move would lead to more interaction between the management and employees at all levels, which will make members of the labor force feel they are more appreciated and therefore put more effort into their activities.

The new job description should also be used in the recruitment of new members of staff. Reading the materials would provide employees with opportunities to compare job descriptions with their own qualifications, and thus gauge whether they are well cast for the advertised positions (Leslie et al., 1999, p. 13). Having potential candidates compare their abilities with company demands would therefore mean that only the most qualified ones would be applying. In this regard, the human resources department would have easy time vetting and candidates. Fewer resources would also be applied in the processes. In the end, successful candidates who get employed will have an easy time getting started in their respective positions, which will further reduce the cost of training and orientation. Productivity among these candidates would therefore be achieved faster in former processes. Undertaking this measure would also ensure that employees know what is expected of them once they become part of the labor force.

Employee Orientation

After successful hiring of highly qualified candidates, management should have a policy of mandatory orientation to company operations. This orientation should be departmental or the lowest level of the company, the reason being that new employees get opportunities to develop a working relationship between the current labor force and their new colleagues (Winthers, 2007, 30). Indeed, it is vital that groups of employees in the department with new members participate in the process. This is because they are better placed to help their new colleagues with any challenges. The new members of staff would also be more confident to ask for clarifications or questions regarding tasks. In addition, team leaders participate in orientations of their new partners, would be able to see strengths and weaknesses, and therefore know tasks that can easily be accomplished by new employees (Fields, 2002, p. 94). This will mean continued allocation of team duties in accordance with employee abilities.

The Participation of senior management at this orientation is also important because it creates a vital culture of leadership, as well as showing the high regard that the management holds for employees (Arthur, 2002, p. 84). First, attending these training sessions helps break the barrier between the management and employees. Second, new members of the labor force get to know senior management in their department and in the company at the initial stages of their careers. It will therefore be easier to understand approach the management after the end of the orientation for counsel as well as expressing ideas. Management and departmental officials participating in the orientation processes should further ensure engaging the new employees in various conversations. These officials should continue with their conversations even after the end of orientation processes. The new employees will surely be left much appreciated and therefore be motivated to perform their best in respective positions. Seeing all the support mechanisms provided by the company would help in cultivating a culture of asking for help when needed.

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Employee Training and Development

The management should further provide training and development programs to employees in the labor force. New employees should be informed of the presence of such a program upon their entry to the company; current employees should equally be reminded consistently of the availability of training and development programs. The main purpose of establishing such programs in companies is to keep the labor force up to date with trends in their respective departments. Though initiated by companies, employees and other stakeholders should see the programs as mutually beneficial: employees benefit by gaining more knowledge that would increase their confidence, efficiency, and productivity at work and the sponsoring companies benefit from the having productive labor force that guarantees long term profitability (Ellett, 2001, p. 77). In addition, companies benefit from fact that training and development programs help attract talented employees into the labor force (Ellett, 2001, p. 81), which further guaranteed better productivity in both the short and long term future. These training programs can be internal or external. The external programs involve situations where companies send their employees to attend independent institutions on the promise that they would return to the company. The internal ones involve inviting professionals to provide educational courses to the labor force.

As it happens with orientation, training, and development programs are more successful when applied at departmental, or the lowest level of sponsoring companies (Leslie et al., 1999, p. 19). This is because training needs are not similar in all departments, meaning that managers with direct contact with employees are best placed to help with the selection of the most appropriate programs. Senior management should therefore let respective departments deal with training issues. The only role of organizational leaders in the training program should be the allocation of budgets to these departments. They can also be involved when the training is not departmental.

Other than attending formal classes, employee training and development should also be undertaken through other cheaper means. For instance, individual departments could subscribe to industrial journals that are subsequently made available to members of the department. Employees should equally feel obliged to read the journals so they could grasp current trends in their industry. Another method is that of participating in industrial conferences arranged by other companies or academic institutions. Companies in the same industry could also embark on arranging regular conferences, where experts would be invited to present their research findings. In addition to attending all these conferences and reading industrial journals, departmental employees should encourage their employees to make contributions to industrial literature. As a result of training and development, practicing companies would end up having an extremely informed and efficient labor force whose contribution would boost productivity.

Improve Manager Employee Relationships

Among the most important ways of increasing employee retention and secure future productivity is through collaboration between the management and departmental managers. Department heads should begin by keeping senior management informed on the goings in their sections. Such flow of information has the potential of helping in decision-making processes. Considering that information from some department heads could be misleading, senior management should consider having mechanisms that employees would use to pass information (Zlotnik et al., 2005, p. 27). These shall help management gather a wide range of information vital to the smooth running of company activities. Company leadership should use the information provided by departmental heads to understand issues that need to be addressed. The information passed to the leadership regarding management styles practiced by the departmental heads would also be important in understanding management capabilities at the department level. Considering that department heads could feel intimidated by the passage of information between juniors and senior management, the process should be official through reviews. Employees should be mandated to fill the reviews and submit them to the relevant offices. Results of these reviews should then be used to see any coloration between turnover rates and management styles in each department. This should be followed by an advisory to junior managers on how to improve their leadership for the benefit of their juniors’ morale and company productivity. Making the process more transparent would aid in the worry that could be contained in departmental heads. In addition to this measure, employees should do their best to be candid when filling the forms lest the process become flawed with untrue allegations. Companies should also be wary about employees that might use the process to tarnish their managers’ reputations. When all these measures are taken, the company shall benefit from increased morale from the labor force as they become more engaged in making a contribution to better labor-management (Arthur, 2002, p. 63).

Fair Pay System

Companies should ensure that employees are well remunerated according to their skills and expertise. Failure to pay employees well could lead to less motivation and therefore lead to lower productivity. The reviewing of job descriptions that were mentioned in the beginning sections would help the management to provide decent salaries to employees. In the process of developing pay mechanisms, companies should ensure to know who their competitors are paying, as well as how much current individuals in the labor force would fetch in the labor market (Leslie et al., 1999, p. 8). This shall help in coming up with pay systems competitive enough to retain current employees. In addition, the competitive pay rates would also help in attracting more talented individuals to the company labor force.

Pay rates in all job categories should be reviewed regularly and adjusted as situations demand (Leslie et al., 1999, p. 11). Any failure to undertake this measure could lead to companies paying employees salaries that are way below industrial average, and therefore result in employees being poached by competitors. This poaching could have disastrous consequences to company operations when more experienced employees go to work for the competition. When this happens, the affected companies find themselves losing market share, decreasing profitability, and the eventual collapse of their operations. Another consequence is the possibility of increased pay stagnation in the affected companies, where individuals at higher management levels receive no pay increase whereas the juniors keep getting a constant pay rise (Winthers, 2007, p. 50). These pay rates reviews can be done at both internal and external levels. The internal level means the use of organizational human resource departments, whereas the external one means using consultants that are experts in the field. Consultants’ contributions help in comparing pay rates between companies operating in the same industry. Individual companies have the liberty of choosing the most preferred route or can combine both means and compare results. Whichever the case, it is upon the senior management to ensure that employees rates are competitive compared to the competition.

Companies should equally be concerned with the pay provided to employees after attending training and development programs developed described earlier. According to Zlotnik et al. (2005, p. 12), employees tend to have expectations of receiving better pay packages. As a result, employers’ failure to adjust salaries after employees attend higher education or specialized courses leaves the affected employees less motivated, which could cause a decline in productivity. The worst-case scenario could develop from the affected employees moving to work in competitors’ premises despite the resources invested in them. Senior management should therefore provide employees with higher salaries or other forms of remuneration after attending specialized programs. When this happens, the rest of the labor force would be encouraged to participate in training and development courses, staying in the company and doing all their best to apply what had been learned—all of which would lead to improvement in long-term productivity.

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Succession Planning

Management in individuals companies should embark on developing procedures preparing employees for their future roles. Apart from improving employees’ understanding of the way things work in respective companies, preparing them for succession provides the motivation that upward movement in the organizational hierarchy is possible (Fields, 2002, p. 108). As a result, the entire labor force ends up working hard in order to increase their chances of becoming leaders in their respective fields. It also has the benefit of creating competition among employees and therefore boss practicing company’s productivity. Companies failing to provide succession planning may find themselves with a labor force that has some members looking for opportunities in competing companies.

The first step into developing a successful employee succession plan is identifying roles that employees would best perform in the future and consequently design their succession plan in those lines (DeNers, 2002, p. 20). Communicating the same with employees affords them time to develop skills that would be needed in that process. In addition, the management and employees can collaborate in choosing the most suitable training and development program. The affected employee thus embarks on attending the agreed programs. There are higher chances that as training takes place, employees would be putting more effort into their daily activities, thus increase productivity.

The method of succession planning is mentoring program. Indeed, employees earmarked for succession planning should be enrolled in mentoring, This can be done by aligning each employee to a certain mentor who would help in the development of managerial skills. These mentors should be the ones performing tasks that would be performed by the said employee. In order to make the mentoring process more worthwhile for employees, it is vital that management considers short-term engagements with several senior employees. This will involve employees being aligned with specific leaders for some time before moving to the next mentor. Employees involved in this process should be made to develop goals they want to achieve in the process, which is in addition to the organizational goals of the mentoring program (Winthers, 2007, 44).

The measures mentioned in this paper are meant to help companies recognize their labor force as important components in their respective production processes. This is considering that recognizing employees and providing them with what is needed to perform their roles helps companies to unleash productivity potentials. Despite the success that can be achieved through the application of the measures, management should understand that it is keeping employees engaged in day to day running of organizations that can help increase productivity. Making decisions at the highest level of management and expecting employees to comply would not achieve much. In addition, the application of the above measures should be accompanied by constantly mentioned to employees that they are vital in respective companies.


Arthur, B. (2002). A Handbook on Employee Retention. New York: AMACOM.

DeNers, C. (2002). A Manager’s Guide to Employee Recruitment & Retention. Personnel Management, 33 (1), 19-51.

Ellett, J. (2001). Facts Affecting Retention in Professional Organizational. Louisiana State University.

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Ellett, J., Rugutt, J. and Ellett, D. (2003). Factors contributing to Profitability in Employee Retention. Athens: University of Georgia.

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