Executive Summary
The report presents the concept of managerial decision making and its process in an organizational setting. The problem of employee turnover in an organization is selected for the analysis. The report consists of decision making steps in the sequence of problem identification and definition, solution generation, and evaluation and implementation. An overview of the budget or calculations for employee turnover is explained. The study is concluded with the significance of decision making for managers and organizations.
Contents
Problem Identification - SWOT Analysis. 5
Solution Generation – Mind Mapping / Divergent Thinking. 6
Solution Evaluation – Affinity Diagram.. 7
Solution Implementation – Force Field Analysis. 8
Overview of the Decision-making process. 9
Employee turnover is a grave problem for organizations. Businesses have long recognized that keeping your present customers happy is more comfortable and cost-effective than bringing fresh customers. That's why there are so many loyalty programs for clients intended to maintain clients happy and come back over and over again. The same applies to staff. Recruiting the finest staff is not enough for a business a way to maintain these staff as long as possible to maximize the importance of their recruitment attempts. Employees are essential in any company; the company would be unsuccessful without them. Whether a worker resigns or is fired, on profit margins, their lack requires a toll. Paying for continued advantages or severance pay, combined with the expense of employing someone to take their position, leads to a loss of productivity and eventually a loss of income. Employee turnover is the estimation of the amount of staff, typically one year, leaving an organization during a defined period. While an organization usually measures the total amount of staff leaving, turnover can also be applied to subcategories within an organization such as individual departments or demographic groups. The reasons behind the problem of employee turnover can be lack of appreciation, absence of good working conditions, inadequate respect, compensation, motivation, no reward policy, mismatch of job and talent, poor feedback process, stress, an overload of work, less support, lack of confidence in management, etc.
Turnover takes place at the end of the employment relationship. Turnover and attrition–terms that, when describing an employee's departure, are sometimes used interchangeably. Attrition usually related to the termination of the employment relationship due to retirement, termination of employment or death of employees and can be distinguished from turnover because attrition happens when a fresh worker is not filled in the role. Employee turnover is of two types: 1. Involuntary Employee Turnover: Employee termination for bad work results, absenteeism or workplace policy breach is known as involuntary turnover – also known as a termination, firing, or discharge. It's involuntary because the choice to leave the business was not made by the employee. 2. Voluntary Employee Turnover: When a worker leaves the company voluntarily, it is called voluntary termination. Employees offer several reasons to leave their employment. They may accept a job with another business, relocate to a new region, or deal with a private issue that makes working difficult.
High turnover can be detrimental to the productivity of a company if qualified employees often leave, and there is a high proportion of novices in the employee population. It has been estimated that the price of employee turnover to profit organizations is between 30 percent. Direct and indirect expenses exist. Direct costs relate to expenses of withdrawal, costs of replacement and transition and indirect costs such as training, learning time, etc. Each business has its own distinctive turnover drivers, so businesses have to operate on an ongoing basis to identify problems that cause turnover in their business. High turnover often implies staff is unhappy with their employment, particularly when finding a fresh one is comparatively simple. As predictors of high turnover were quoted the absence of career options and difficulties, discontent with the job scope or conflict with leadership. Low turnover shows that none of the above is true: satisfied, healthy, and secure workers and, and their performance is above satisfactory level. By providing advantages such as paid leaves, holidays, and flexible work schedules, companies attempt to decrease employee turnover rates.
Problem Identification - SWOT Analysis
Employee turnover is a dynamic problem that is ill-structured and complex in nature. Calculations of basic turnover are comparatively easy. If your business employs 100 staff and fires or quits 15 staff, your turnover is 15%. To determine what underlies turnover, most organizations are looking for. A SWOT analysis can be applied to understand this problem effectively. SWOT analysis is utilized for defining the organization's strengths and weaknesses, along with the possibilities and threats within its environment (Phadermrodet al., 2019). SWOT analysis aids in transitioning the organization from a reactive state to a proactive state. The use of SWOT analysis is justified for understanding the problem of employee turnover as it is simple and practical in approach to be used for a dynamic and ill-structured problem. The other advantages of SWOT are: clear to comprehend; focuses on the company's main inner and external variables; helps identify future objectives; initiates a further evaluation.
For employee turnover, SWOT analysis can provide the below information:
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STRENGTHS Physical work facilities, Quality products and services, better technology, Brand, Business reputation, strong employee relationships, and Management support. |
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OPPORTUNITIES Business expansion, growth in product and service demand, increasing customer base, diversified business.
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SWOT ANALYSIS |
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THREATS Competition, changing preferences of customers, changes in customer or supplier negotiation power, change in foreign exchange.
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WEAKNESS Budgetary constraints, outdated equipment, poor technology, unsafe working conditions, high operating costs, weak brand value, poor relationship between management and employees.
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Dynamic problems are those that have a recurring occurrence. These must be solved as a sequence of static issues, or a method must be developed to solve them on a continuous basis. Employee turnover is a dynamic problem as a variety of factors are responsible for it. Personal factors like marital status or organizational factors like leadership style, co-worker behavior have a profound effect on employee turnover.
Solution Generation – Mind Mapping / Divergent Thinking
Divergent thinking in understanding the problem of employee turnover leads to the analysis of various factors. These factors are responsible for employee turnover in an organization, which includes various favorable, unfavorable, personal, and organizational. Mind mapping technique is used to facilitate divergent thinking and developing a solution for the problem. In mind maps, the concept is depicted in the graphic and non-linear ways to promote divergent thinking. It is a tool of visual thinking that helps to structure information and enables you to assess better, comprehend, synthesize, recall, and generate new ideas. Information is organized in a mind map in a manner that strongly resembles how your brain actually operates. It involves your brain in cognitive evaluations because it is an activity that is both analytical and artistic.
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Favorable factors Job satisfaction Adequate compensation Rewards and prizes |
Mind Map for Employee Turnover
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Unfavorable factors Poor technology, unsafe working conditions, high operating costs, weak brand, poor relationship between management and employees.
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Pull factors Income – personal and Household, Job Status |
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Individual characteristics Age, Marital status, education level, tenure |
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Other characteristics Feedback, Performance review, reasons for joining a company
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Employee Turnover |
Solution Evaluation – Affinity Diagram
By grouping the data appropriately, the Affinity Diagram aids in understanding the data. It enables the managers to organize un pattern thoughts in an efficient way of identifying and analyzing problems produced during divergent thinking. It also includes items put in distinct categories that link distinct ideas together (Mitchell,2016). The Affinity method is a nice way to get individuals to work creatively to tackle tough problems. It can be used in situations unknown or unexplored by a team or in circumstances that seem confusing or disorganized, such as when individuals with different experiences form a fresh team or when participants have an incomplete understanding of the analysis region. Divergent thinking produces a great deal of information; the affinity diagram organizes thoughts into groups for assessment.
Affinity diagram, in the case of employee turnover, is presented below:
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HRM Flexible work practices Inclusive cultural diversity Adequate Performance Management Benchmarking Training Motivation |
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Communication Bottom-up approach Conducting surveys Feedback loop Transparent and clear communication |
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Affinity Diagram |
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Organizational Structure Leadership Management style Policies Flexibility Defined roles Specific job process |
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Incentives Appreciation Rewarding good work Recognition Learning opportunity |
Solution Implementation – Force Field Analysis
Kurt Lewin developed Force Field Analysis in the 1940s. Lewin used it as a social psychologist in his job. It is also used in the company today, for making and communicating decisions. It's an effective decision-making tool. Changes can be made in distinct ways within an organization. For instance, a reorganization, the introduction of fresh technology, the introduction of fresh machines, manufacturing adjustment, or job process modifications. Using Force Field Analysis, it becomes apparent what might affect the shift (Toves, 2016). A technique for listing, debating, and assessing forces for and against a suggested change provides possibilities for individuals to think about and visually portray forces that affect the issue in question. Forces that assist you in accomplishing change are ' driving forces; ' forces working against change are called ' restraining forces ' (Harrington, 2016). Analysis of the field force helps you make informed decisions about the best way to solve an issue by using these forces (Täuscher,2017). A Force Field Analysis group must be made up of individuals in the organization engaged in distinct respects in changing. A Force Field Analysis group can also involve important stakeholders, such as shareholders or customers.
The force field analysis, in this case, would like:
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Driving Forces Compensation Flexible work practices Inclusive cultural diversity Adequate Performance Management Benchmarking Training Motivation |
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Desired State Reduced Employee Turnover |
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Restraining Forces Poor Leadership Management style Unclear Policies Inflexibility Undefined roles Unspecific job process |
Overview of the Decision-making process
Decision-making is a cognitive process that results in several alternative situations selecting a course of action. Effective and thoughtful choices lead to profit, while failure leads to losses. Managerial decision-making is called the process of defining or identifying any particular problem/opportunity to solve them logically. Decision making usually depends on two models: Rational and Normative. The rational models are based on cognitive judgments and assist in selecting the most reasonable and logical option. For instance, Brainstorming etc. Decision-making normative model considers limitations that may occur in decision-making, such as time, complexity, uncertainty, and resource inadequacy. The managerial decision making occurs in the given sequence: Identification of the purpose of the decision, collection of information, principles for judging alternatives, brainstorming, and analysis of alternatives, selection of the best alternative, execution of the decision, evaluation of the results.
The steps involved in solving the problem of employee turnover are presented below:
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Problem Identification Employee Turnover (SWOT Analysis) |
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Solution Generation Mind Mapping |
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Solution Implementation Force Field Analysis |
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Solution Evaluation Affinity Diagram |
For employers, the expense of losing and recruiting fresh staff can be important. Regardless of the position level, recruiting a fresh employee — even entry-level positions — can cause businesses a significant economic blow. Considering the entire staff, the turnover budget is generated. It will give an approximation of the prospective turnover a business will have during the budget period, then reduce payroll resources by a suitable quantity. Time and money associated with a departing worker are the primary variables in the turnover budget or calculation (apart from particular expenses), such as Time spent on filling the empty position; Hours/weeks in lost efficiency before the worker leaves; Time that associates and the administrator/chief joined should compensate for the empty worker (extra time, included movements, and so forth.); Number of hours in lost efficiency coming about because of direction and preparing of another representative; and Time spent on administrator and enlisting assignments (publicizing, continue screening, meeting, onboarding).
Management skills, particularly organizational decision-making, are essential in an organization. It helps attains the organization's objectives and harnesses everyone's potential within the organization. Management decision-making is one significant skill. Leaders should be decision-makers, and based on the choices they make, they become effective. Therefore, a leader needs to understand how and when to make a proper decision. The turnover of employees has significant implications for groups, units, and organizations. By adopting effective employee retaining methods such as training, motivation will surely lead to reduced employee turnover.
