FACTORS the study……………………………………………………… 1.4 Conceptual Framework …………………………………………………… 1.5 Purpose

FACTORS
INFLUENCING EMPLOYEE TURNOVER IN LIVING GOODS LIMITED

 

 

ALUDAH
CYNTHIA ANZEMO

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A
research project submitted in partial fulfillment of the requirement for the
award of a Masters’ Degree in Project Planning and Management at The University
of Nairobi.

 

 

 

 

 

 

 

 

 

 

 

DECLARATION

 

This
project is my original work and has not been presented for a masters’ degree in
any other university.

                            

Signature……………………………………….Date…………………………

ALUDAH
CYNTHIA ANZEMO

ID:
28501970               

 

This
research proposal report has been submitted for examination by my approval as
the University supervisor.

 

 

Signature……………………………………….Date…………………………

Dr.

Lecturer

 

 

 

 

 

 

DEDICATION

I
wish to dedicate this research proposal to my colleagues, Grace Kikosi and
Lydia Owola for their immeasurable contribution during the study.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                                 
ACKNOWLEDGEMENT

I would like to
take this opportunity to express my sincere gratitude and appreciation to the
Human Resource Manager of Living Goods, Charity Wanjau, for being available to
answer my questions and providing me with the information needed for this
research.

Secondly, I want
to thank all the respondents who participated in the study and my classmates at
UON Bungoma for their encouragement and input.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE
OF CONTENTS

CONTENTS                                                                                     PAGE

Student’s
Declaration………………………………………………………..         i

Supervisor’s
Declaration…………………………………………………….ii

Dedication…………………………………………………………………….iii

Acknowledgement…………………………………………………………….iv

Table of
contents………………………………………………………………v

Abstract………………………………………………………………………..

CHAPTER ONE:
INTRODUCTION

1.1 Background of
the study……………………………………………………

1.2
Problem statement……………………………………………………………

1.3Objectives
of the study………………………………………………………

1.4
Conceptual Framework ……………………………………………………

1.5 Purpose of the
study…………………………………………………………..

1.6Limitations……………………………………………………………………

1.7Delimitations………………………………………………………………….

1.8
Organization of the study…………………………………………………….

 

 

 

CHAPTER TWO: LITERATURE REVIEW

2.1
Introduction………………………………………………………………….

2.2 Theoretical
perspectives……………………………………………………

2.2 Empirical
studies…………………………………………………………….

CHAPTER THREE:
RESEARCH METHODOLOGY

3.1
Introduction…………………………………………………………………

3.2 Research Design…………………………………………………………….

3.3 Study
Area……………………………………………………………………

3.4 Target
Population……………………………………………………………..

3.5.0 Data
Collection……………………………………………………………

3.5.1 Data
Sources……………………………………………………………….

3.5.2 Data
Collection procedures……………………………………………….

3.5.3 Data
Collection instruments………………………………………………

3.5.4
Validity test for the Data Collection instruments……………………………

3.6
Data analysis…………………………………………………………………

CHAPTER
FOUR: RESULTS AND DISCUSSIONS

4.1
Results………………………………………………………………………

4.2
Discussions……………………………………………………………………

 

CHAPTER
FIVE: SUMMARY, CONCLUSION& RECOMMENDATION

5.1
Introduction………………………………………………………………….

5.2
Summary of Findings……………………………………………………….

5.3
Conclusion…………………………………………………………………..

5.4
Recommendations…………………………………………………………….

 

REFERENCES

APPENDICES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INTRODUCTION

Employee turnover
is defined as the rate at which workers are leaving an organization. This is
when the relationship between the employer and the employee ends. It is always
in the best interest of on organization to have this percentage as low as
possible. Employee turnover also happens when employees are shuffled and moved
among departments. Demotions and promotions are also seen as turnovers. According
to Mathis and Jackson (2003), there exists two types of turnover: voluntary turnover
and involuntary turnover. Voluntary turnover occurs in an instance where the
employee quits due to different reasons such as finding a better paying job,
conflict with colleagues or the immediate supervisor, job dissatisfaction or
starting their own business. Involuntary turnover on the other hand is when an
employee is forced to leave the company. This can be due to firing, seasonal
layoffs, unsatisfactory performance or violation of company policy. Turnover
affects an organization both positively and negatively. On the positive side,
it brings in better performing staff which in turn improves the productivity of
an organization. It is also an avenue of acquiring new talent and skills which
gives the company an advantage over competitors. The negative side of this is
that it will cost the company more to hire and train new staff and also lower
the existing employees’ morale.

This study aims at
investigating the various factors that lead to employee turn-over in small organizations
with a single focus on Living Goods Limited, Kenya. The first chapter is
organized as follows: first comes the background of the study followed by
statement of the problem. After which the purpose of the study and its
objectives will be highlighted. This will be followed by research questions and
significance of the study, then limitations of the study, delimitations of the
study, research assumptions, definition of significant terms and the overall
organization of the study will be discussed.

1.1.        
Background
of the Study

Employee
turnover affects many organizations the world over. According to (“Job
Openings and Labor Turnover – January 2016,”
Bureau of Labor Statistics press release, March 17, 2016) nearly 59 million
employees left their jobs in 2015 in the US with a quarter of them voluntarily
quitting and two fifths of workers thinking of leaving their jobs. More women
(32%) in scientific fields such as technology and engineering were thinking of
quitting their jobs, making them 46% more likey than their male counterparts to quit.( Nadya
A. Fouad and Romila Singh, Stemming the Tide: Why Women Leave
Engineering
(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 driving
factors 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 to
Analyzing and Managing Employee Turnover (Society for Human Resource
Management, 2008): p. 3-4.) states that turnover costs companies money and
valuable time. The amount an organization spends to replace an employee is
about one fifth of that employee’s annual salary (Heather
Boushey and Sarah Jane Glynn, There Are Significant
Business Costs to Replacing Employees (Center for American
Progress, November 16, 2012).
According to (Iqtidar Ali Shah, Zainab Fakhr, M. Shakil
Ahmad, and Khalid Zaman, “Measuring Push, Pull, and
Personal Factors Affecting Turnover Intention: A Case of University Teachers in
Pakistan,” 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 are
those that attract an employee away from their current company. These are external
factors and are beyond the control of an organization. They include job
opportunities that offer better remuneration, more freedom, skills being put to
use and better working location. Push factors are from within the organization,
that lead to employee dissatisfaction therefore causing them to quit. These are
internal and are within the control of the company. Some of these factors are:
employee harassment, excess workload, lack of career progression, no work
recognition 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 of
Labor Statistics press release, September 18, 2014.). In 2016, half (43%) of
Millennials interviewed expect to leave their current jobs in the next two
years (Deloitte, Millennials Have One Foot
out the Door: Executive Summary (The Deloitte Millennial
Survey, 2016).
This study further states that most Millennials believe they will leave their
current 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 of
employee turnover and any organization without it will experience high rates of
turnover (Kuzmarski and Thomas, 1995; Roy, 2002)-Kuzmarski,
S.S. and D.K. Thomas, 1995. Value Based Leadership: Rebuilding Employee
Commitment, Performance and Productivity. Prentice Hall, USA, pp: 34). (Coulson-Thomas, 1997)- Coulson-Thomas, C., 1997. The Future of the Organisation, Achieving
Excellence through Business Transformation. Kongon Press, London, 14: 258 asserts that employees
are forced to remain in their current positions as they are unable to find more
secure alternatives.

In South Africa, the employee
turnover rate for organizations was calculated to be between 15 and 19%.The high
demand for specialized skills along policies put in place to address the issue
of 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 specialist
staff: An exploratory study of an employee commitment model. South African
Journal of Human Resource Management, 3(2), 48–55. Moreover, the issue of inequality
in the quality of education offered as a result of apartheid has caused a
shortage of skilled black professionals, resulting in an increased demand for
them (Robinson, 2004)- Robinson, S. (2004, 11
April). The second revolution. Retrieved May 01, 2011, from http://www.time.com/time/magazine/article/0,9171,610026,00.html

In Kenya, the highest percentage of
the working class is comprised of Millennials aged between 23 to 35.They are
driven by the need to acquire wealth as quickly as possible and most of them
have no loyalty to the organization. In most small startups in the country with
less than 20 employees, the funding is limited as most of it goes into running
the business so employees are forced to contend with little pay with only the
promise of future increases. In companies such as Living Goods Limited, the
challenge is how to retain top talent as most of them are given better offers
and eventually leave. The aim of this research will be to determine the factors
leading to employee turnovers in organizations such as Living Goods Limited.

1.2
Statement of the problem

According to research, employee
turnover rates are higher in developing countries such as Kenya, as compared to
developed countries (Schaffner, 2001). The most valuable asset an organization
has is its talent and holding on to it is very crucial to an organizations
success. Employee turnover costs companies huge amounts of money in hiring and
training replacements. There’s also decrease in performance of workers as they
are disrupted when other employees leave and become less motivated.
Organizations with high turnovers means that newer employees are being hired
regularly and they are less familiar with the work thereby affecting their
efficiency since the organization has fewer older and experienced workers.
Previous studies have failed to look at the relationship between Human Resource
Management (HRM) practices, company culture, and the character of managers on
employees’ decision to quit, especially in context of developing countries such
as Kenya. There isn’t enough literature on the current state of employee
turnover and retention in Kenya. Therefore, deficiencies in the literature make
it necessary to research and understand why and how to prevent employee
turnover in Living Goods Limited.

 

 

 

Table
1.1 Employee Turnover

YEAR

INITIAL
STAFF

STAFF  WHO LEFT

2015

32

7

2016

70

16

2017

126

25

Data
from Living Goods Limited, Kenya

1.3
Purpose of the study

This study will aim at
investigating factors influencing employee turnover in organizations with focus
on Living Goods Limited, Kenya.

1.4.Research
Objective

The general objective of the study
is to determine the factors influencing employee turnover in Living Goods
Limited in Kenya. The specific objectives of the study are:

1.     
To
assess the effect of compensation on employee turnover in Living Goods Limited.

2.     
To
determine how the relationship with the immediate supervisor affects employee
turnover in Living Goods Limited.

3.     
To
evaluate how job satisfaction affects employee turnover in Living Goods
Limited.

4.     
To
determine how career development opportunities affects employee turnover in
Living Goods Limited.

1.5   Research
questions

The
study will utilize the following research questions:

1.     
How
does the relationship with the immediate supervisor affect employee turnover in
Living Goods Limited?

2.     
Is
there a relationship between compensation and employee turnover in Living Goods
Limited?

3.     
Does
job satisfaction influence employee turnover in Living Goods Limited?

4.     
Is
lack of career development opportunities a factor in employee turnover in
Living Goods Limited?

1.6   Significance
of the study

This study will bring to light the factors that
influence employee turn-over in Living Goods Limited, Kenya which in turn will
save the organization on costs of hiring and training replacements. The results
of this research can also be adopted by many organizations where measures will
be put in place to ensure employee satisfaction and retention.

1.7   Limitations
of the study

The following limitations will likely be identified
during the study:

·        
The
findings will be limited to a single organization- Living Goods Limited due to
time constraints and lack of adequate resources.

·        
Some
former employees may not be willing participate in the study. The researcher
will try to convince them to do otherwise.

·        
Some
former employees may have changed their contact information therefore affecting
data collection and results. The researcher will get alternative contact
information from social media and their close friends.

1.8   Delimitations
of the study

The scope of the study will cover only those
participants who left the organization on voluntary terms. Due to time and
resource restrictions, the research will exclude involuntary turnover cases and
employees hired on contractual terms.

1.9
Research assumptions

The research assumes that not all respondents will be
available to answer questions and that some of the ones interviewed will give
biased information.  Furthermore, it is
assumed that the instrument to be used to collect data will give reliable
results.

1.10.Definition
of significant terms

 

1.11.Organization
of the study

This study in organized into five chapters. Chapter One
covers the background of the study, statement of the problem and purpose of the
study. Next is research objectives, research questions, significance of the
study, limitations of the study, delimitations of the study, research
assumptions, definition of significant terms and closing the chapter is
organization of the study. 

 Chapter Two
covers concept of independent and dependent variables, literature review of the
four objectives, the theoretical framework and conceptual framework, summary of
reviewed literature and knowledge gap.

Chapter Three contains the research methodology,
research design and target population. This is followed by the sample procedure
and sample size, research instrument used, instrument validity and instrument
reliability.  The chapter closes with
data collection procedure, data analysis techniques, ethical considerations and
operationalization of variables table.

Chapter Four will contain the findings from data
analysis, presentation of findings and interpretation of findings. It is will
be 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 with
suggestions of areas for further research and contribution to the body of
knowledge.

 

CHAPTER
TWO

LITERATURE
REVIEW

2.1.Introduction