IMPACT OF RETENTION OF EMPLOYEE ON ORGANISATIONAL SUCCESS
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IMPACT OF RETENTION OF EMPLOYEE ON ORGANISATIONAL SUCCESS
Chapter one
INTRODUCTION
1.1 Background of the Study
Retaining personnel with high competitive value is becoming a key and widely recognised concern (Taylor, 2004; Williamson, 2008). Such individuals are referred to as knowledge workers because they “have high degrees of expertise, education, or experience, and the primary purpose of their jobs involves the creation, distribution, or application of knowledge” (Davenport, 2005).
Employee retention has been proved to have a substantial impact on the development and achievement of the organization’s goals. Employee retention can provide a significant competitive edge to any organisation.
Today, technological advancements, global economy, trade agreements, and other factors have a direct impact on employee-employer interactions. “Until recently, loyalty was the foundation of the partnership.
The departure of brilliant individuals could be extremely detrimental to the company’s future growth. Outstanding employees may leave an organisation due to dissatisfaction, low pay, or lack of motivation (Adeniran 2005).
While attempting to retain people within the organisation, the company may encounter additional obstacles such as skilled employees’ need for greater compensation, noncompliance with organisational practices, and insufficient positive relationship with coworkers.
Aside from these issues, a lack of knowledge regarding the employees’ performance can impede an organization’s efforts to retain competent staff. Without proper information, an organisation may be unable to discern between productive and unproductive employees.
Employees sometimes claim credit for thir triumphs while blaming failures on others. Insufficient knowledge regarding employees’ performance may lead to their undesirable selection (Grossman and Hart, 1999).
Better personnel may leave their current organisations in search of better prospects. Coworkers who are unable to better their positions are more inclined to stay. This is especially true when great performance is not rewarded owing to a lack of knowledge, resulting in a lack of drive to perform well.
Because management is unable to discern talented people from the rest of the labour force in the organisation, both nonproductive and productive workers receive the same or almost the same remuneration and package of perks.
The challenge of retaining brilliant employees may be exacerbated by their superiority complex to organisational achievement (Simon, 1996). Another example of asymmetric information is when both the management and the employee are unsure of what information to request from the other.
As a result, productive workers are unable to distinguish themselves from their less productive coworkers. Even if an organisation is lucky enough to retain exceptional people, it may still have to deal with agency fees incurred by them and their colleagues.
When gathering information about an employee’s activities is difficult, the individual may be driven to behave in his own best interests, which may differ from those of the organisation.
This conflict of interests costs the organisation money in the form of excessive material consumption, avoiding job obligations, and making poor investment decisions. (Jensen and Meckling, 1996) explained that it is in an employee’s best interests to overconsume perks and avoid job responsibilities if they are not the sole owners of the company.
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