IMPACT OF RETENTION OF EMPLOYEE ON ORGANISATIONAL SUCCESS
ABSTRACT
The study was inspired by the need to investigate the impact of employee retention on organizational success in the Lagos State Ministry of Education. For the study, forty employees were chosen at random. Data on the impact of employee retention on organizational success were gathered from the sampled staff using a questionnaire designed to elicit relevant responses.
The data was analyzed using a frequency count with simple percentages and the Chi-square (X2) statistical method. The study used a descriptive survey design. According to the study’s findings, employee retention has a significant impact on organizational success.
It was also discovered that a pleasant working environment has a significant impact on an organization’s performance. Organizations with highly motivated employees, better human relations, moderate hours of work, access to loanable funds, and cordial relationships between superior officers and subordinates tend to perform better in terms of productivity than organizations lacking these characteristics.
Based on the findings, policymakers were advised to implement a process of encouraging, planning, and investing in employees’ professional development. Employee affective commitment to the organization was found to be higher when organizations invest in their employees.
This procedure will demonstrate that management is committed to developing long-term relationships with employees. Employees may become more committed to their profession as a result of these educational investments, and they may work harder to achieve organizational growth and development.
CHAPTER ONE
INTRODUCTION
1.1 The Study’s Background
Retaining employees with high competitive value knowledge is becoming a critical and well-recognized challenge (Taylor, 2004 and Williamson, 2008). Knowledge workers are those who “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 shown to be important to the development and achievement of the organization’s goals and objectives. Employee retention can be a critical source of competitive advantage for any organization.
Changes in technology, global economics, trade agreements, and other factors are having a direct impact on employee/employer relationships today. “ Loyalty was the bedrock of that relationship until recently. The loss of talented employees could be disastrous for the company’s future success.
Outstanding employees may leave a company if they are dissatisfied, underpaid, or unmotivated (Adeniran 2005). While attempting to retain employees within the organization, the organization may face additional challenges such as skilled employees’ demand for higher wages, noncompliance with organizational practices, and insufficient good interaction with their coworkers.
Aside from these issues, a lack of information about an employee’s performance can make it difficult for an organization to retain productive employees. Without adequate information, an organization may be unable to distinguish between productive and non-productive employees.
Employees frequently take credit for successes while deflecting failures to other employees. Inadequate information about employees’ performance may lead to their adverse selection (Grossman and Hart 1999). Better employees may leave for better opportunities in other organizations. Coworkers who are unable to advance in their positions are more likely to remain.
This is especially possible when outstanding performance is not rewarded due to a lack of information, i.e. a lack of motivation for outstanding performance. Because of management’s inability to distinguish talented employees from the rest of the labor force in the organization, nonproductive and productive workers end up receiving the same or nearly the same compensation and package of perks.
The problem of attempting to retain talented members of the workforce may be exacerbated by these talented employees’ superiority complex in relation to organizational success (Simon, 1996). It is another example of asymmetric information, in which both the manager and the employee do not know what information to request from the employee.
As a result, productive workers are unable to distinguish themselves from non-productive coworkers. Even if a company is fortunate enough to retain talented employees, it may still have to deal with agency costs incurred by them and their colleagues.
When gathering information about an employee’s activities is difficult, the employee may be motivated to act in his or her own self-interest, which may or may not be in the best interests of the organization. This conflict of interests costs the organization money in the form of excessive prerequisite consumption, avoiding job responsibilities, and making poor investment decisions. (Jensen and Meckling, 1996) explained that if an employee is not the sole owner of the organization, it is in their best interest to overconsume perks and avoid job responsibilities.
Employees may also be persuaded to make suboptimal investment decisions on behalf of the company. Because most company employees have their wealth invested in the organization for which they work, employees may attempt to make less risky investment decisions than the firm’s stockholders would prefer.
This is done to reduce the company’s risk of failure, which protects the undiversified employee from financial loss. This investment strategy may also reduce the return on investment desired by the firm’s diverse owners. (Mark, 2000)
Employees or agents of the organization may also take a short-sighted approach to investment selection in order to advance their own careers (Narayanan 1985). The employee can signal his superiority to the labor market by choosing a quick-starting project that may fizzle out later for the firm.
This strategy may cause the company to miss out on profitable long-term projects or critical research and development. Employees may also try to expand the firm’s size through acquisitions and project selection regardless of the impact on company profitability in order to increase their own power within the organization.
1.2 Problem Statement
Organizations face a variety of challenges that jeopardize their ability to achieve their goals and objectives. Employee retention has been a major issue in most government investments in recent years. In Lagos State, there is a general outcry that her employees are not being properly compensated and that incentives are not being paid on a regular basis.
Recently, foreign doctors in Lagos state went on strike, causing a mass exodus of patients from Lagos state hospitals. It has also been observed that the majority of erudite scholars are now leaving government educational institutions for private institutions due to better opportunities. This makes it difficult for the government to retain skilled employees in order to achieve its goals.
It was also discovered that the majority of individuals abandon government investments in favor of private investments after having benefited from government investments in staff investments such as in-service training, resulting in a failure in the output of government investments.
It has also been discovered that the privatization of government investments, which results in mass unemployment of government employees, has contributed to a mass outflow of government employees to other private sectors due to the fear of job insecurity. This raises the issue of employee retention as one of the factors impeding the success of government establishments.
1.3 The Study’s Purpose
The following is a summary of the study’s purpose:
1. Determine the significant benefits enjoyed by the public sector workforce in the Lagos State Ministry of Education in comparison to private businesses.
2. Evaluate the critical organizational strategies that contribute to the retention of skilled public-sector employees.
3. Examine the extent to which organizational culture influences public-sector workforce retention.
4. Determine the extent to which staff turnover will help the government achieve its goals.
5. Calculate the rate of demand for government jobs in private businesses.
6. Determine the advantages of keeping skilled employees in the public sector.
1.4 Importance of the Research
In order to achieve high organizational success, this study assists organizations in determining the extent to which skilled employee retention contributes to the achievement of organizational goals.
It also enables organizations to cultivate the habit of retaining skilled employees by establishing criteria for determining an employee’s productive capacity. This research will also assist the government in determining the extent to which skilled labor contributes to economic growth and development.
Furthermore, it will provide employees with the opportunity to negotiate terms of service that will ensure job security. It will also provide employees with knowledge of self-evaluation and upgrading on a regular basis, through in-service and on-the-job training, in order to increase productivity.
It also assists trade unions in determining appropriate strategies for ensuring job security for their members. It will reveal to what extent employees’ productive capacity has been improved or the organizational goal has been met as a result of employee retention.
It will inform society about the extent to which employee retention contributes to organizational success, and thus to societal growth and development.
1.5 Research Issues
In this study, answers were provided to the following research questions.
1. Is the public sector workforce aware of any efforts to retain them in their agency?
2. What causes employees in the public sector to consider leaving their jobs?
3. How does the public sector workforce feel about their agency’s retention situation?
4. Do public-sector organizations discuss specific reasons for leaving with their employees?
5. Is the public sector workforce aware of specific retention issues in their organization?
6. What kind of work environment or organizational culture, for example, supervisory style, work itself, is most appealing to the workforce?
1.6 Hypotheses for Research
The following are the research hypotheses for this study.
Ho1: There is no significant relationship between employee retention and organizational success.
Ho2: There is no significant relationship between an organization’s performance and its environment.
Ho3: employee retention has no significant impact on organizational achievement.
1.7 The Study’s Scope
This study focused on the impact of employee retention on organizational success in the public sector, with a particular emphasis on the Lagos State Ministry of Education.
1.8 The Study’s Limitations
The study’s scope was limited to the Lagos State Ministry of Education. The amount of time and resources available for study was quite limited.
1.9 Term Definitions
Organizational Success: A company’s ability to stay solvent and grow in its market.
Employee with talent: This is an employee who has the potential to contribute to the success of the organization through his natural abilities.
Privatization is the process of selling government investments to private individuals or organizations.
Career Planning: An organizational initiative that assists employees in assessing their skills, defining their career goals, and developing an action plan to achieve those goals. It is also the organization’s responsibility to hold employees accountable to those goals.
Employee Development: A system that assists employees in developing within their current jobs or advancing to meet their long-term goals.
Employee Retention refers to a company’s ability to retain quality employees who contribute to its success.
Employee Satisfaction: The degree to which employees enjoy their jobs and are willing to contribute to an organization’s success.
Goal setting is the process of making plans for one’s future jobs and careers.
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