Labour turnover and absenteeism is a vital issue in an organization especially in the clothing industry. It is mainly causes of employee dissatisfaction in workplace. Every organization needs to give focus on how to change employee mind from job dissatisfaction to job satisfaction. Other wise organizations are badly effected by this. High labour turnover and high absenteeism causes low productivity and efficiency. My aim is to find out the reason behind employee turnover and absenteeism and focuses on factors increases the turnover and absenteeism ratios which are the main barrier of organization development. So organization needs to find out the best way to motivate employees to reduce labour turnover and low absenteeism and get best performance where company can increase productivity and efficiency.

INTRODUCTION:

The main purpose of this project is to find out the reason behind employee turnover and absenteeism. And also discuss the impact of staff turnover and the employee absenteeism ratio which effecting the organisational productivity.

Bangladesh is a developing country. According to UNDP’s Human Development Report 2007/2008 Bangladesh’s rank is 140th out of 177 countries. In Bangladesh, 40% of total population lives below the poverty line. In other report of Bangladesh Garments Manufacturer and Exporters Association (BGMEA), 2007 it shows that garments sector provides maximum export (76%) of total export in Bangladesh and 1.7% of total population of Bangladesh is working in Garments industries.

Ready made garments exports mainly are doing in the European market & US market. The ratios of exports are 49% to European Market, 33% to the US market & rest (18%) to other countries. In a report of UNDP’s (2007) shows that due to a strong demand for skilled labour combined with insufficient wage and discontinuity of payment, management system, inappropriate appraisal system causes dissatisfaction of job, discriminate in workplace etc. there is high level of migration of workers between one factory to other factory, and the average turnover is around 20% and absenteeism ratio is surprisingly increases.

METHODOLOGY:

Secondary data is the main source of data of this project. I collected information from internet, journal about Bangladesh labour issue, some local magazine and newspaper, and books of human resource management. This project is based on exploratory research. I share my personal experience in based on my previous work.

LITERATURE REVIEW:

Bird and Beechler (1995) cited in Briscoe & Schuller (2008) established that employee performance (e.g. morale and turnover rate) in firms that successfully adopted the strategic fit concept was significantly better than in firms that did not do so. Although managerial performance (e.g. profit margin and sales) was also better, the difference was not significant. The concept of “fit” refers mainly to the close linkage of HRM strategies and business strategies in ways that will help retain and motivate employees. Yes it is very good point retain and motivation of employee, as because every organisation aim is finding way to keep there employees. Motivation is one of them; it can be two type’s money and appraising employee. In most of the case money is main motivational factor for the employee especially in Bangladesh.

The key reason is why money is the most important factor then we can see that the minimum salary of worker is 1650 BDT (£15) a month (www.news.sky.com/skynews/home/world-news/bangladesh-garment-workers-in-wage-protest). So the monthly income of average employee is low and there life status is not much standard based on there income and expenses. So they always looking for better opportunity when ever they got good offer from other company they migrate or switch the company.

LABOUR TURNOVER:

Some consultants, academics and management gurus states that ‘There are no longer any jobs for life.’ Torrington et al. (2002) argued about the impact of staff turnover rates is depends on the organization to organisaiton. In some organization is successful in business with high turnover rates which are impractical to function in other sector due to the different in operation and difficult to replace skill workers. For example in some chains of fast food restaurants are generally managing business and become successful with turnover rates in excess of 300 percent that means standard occupancy for each employee is only four months (Ritzer 1996; Cappelli 2000). On the other hand, in a professional service organization where personal relation is more important between employees and clients to organizational success, it is badly hampered to the organization if the turnover rates are excess of 10 percent.

Bevan (1991) cited on Bratton & Gold (2007) indicates several causes for high staff turnover. He identified that pay in not only the reason for staff turnover and there are some other factors works on that issue. They are follows:

Employee expectation: The employee’s expectations are not matching with the job such as bonus, benefits, holidays and etc (Torrington et al 2002). That factors causes dissatisfaction of job. It is more likely happened with the new employee’s of the organization.

A lack of attention: Employee’s are found that managers are not giving attention to them and they are not providing supporting training to develop themselves. For that reason they are not well perform in the job. (Torrington et al., 2002)

Work environment: Work environment is not friendly with the employee such as lack of freedom in work, limited responsibility, no challenging environment and there are no innovative works within the organization. (Torrington et al., 2002)

Appraisal system: Some organization doesn’t have the proffer evaluation systems. So employees are disappointing with the unfair promotion and worried about the development opportunities system. (Torrington et al., 2002)

Management system: Due to unskilled management and their unfair treatment with the employees and lack of knowledge of how to motivate employee. Gregg and Wadsworth (1999) cited in Torrington et al. (2002) demonstrate in their study of 870,000 workers starting new jobs in 1992 out of that 17 per cent had left within three months and 42 per cent within 12 months.

According to Armstrong, M (2003) analyses the reason for employee turnover and he identified several reasons to quitting from job such as more pay from other company, better career prospects, more job security, more opportunity to develop skills, better working conditions, poor relationships with manager or supervisor, poor relationship with colleagues, bullying or harassment in workplace, and personal reason like pregnancy, illness, moving away form area etc. From the above reason to resolve personal reason is beyond management control but other all reason management can do further analysis to do better for employee satisfaction.

Armstrong, M. (2003) derive some action plan for low employee turnover for example better employee remuneration packages for employees’, give more opportunity for professional development, training and careers, enhanced future employability because of the position of the organization as one that occupies and build ups high quality people, as well as the learning chances it provides, employment conditions which deal with work-life balance issues by, such as flexible working hours and planning to give more over time and leave policies, and as long as child care facilities or vouchers to meet the personal needs with family responsibilities, organization need to arrange better amenities and opportunity for skill workers, for example transportation, provident fund, production bonus etc. facilities.

Ogbonna and Wilkinson, 1988, 1990 cited on Legge, K.(1995) argued that resigned behavioural compliance is contrasted favourably with commitment (psychological contract) which is seen as characteristic of employment relationships under conventional personnel management. On that argument it is clear to present in work is fully depend on employee commitment in workplace. And lack of commitment means not satisfied with job which leads to absenteeism and turnover. Moreover, Guest (1992a) cited on Legge, K.(1995) argues that McGee and Ford’s (1987) result get the reasons to emotional commitment being connected to effort at the same time as continuation commitment to low labour turnover.

In a study of Taplin et al. (2003) cited on Marchington, M. & Wilkinson, A. (2007) found that turnover rates of 26.5 per cent in clothing industry, out of that 45 per cent leaving during the first three months of their employment and one-third employees long-lasting further than a year. The outcome of their study was most marked at smaller workplaces. In general, they finalized that if the industry in this sector is unable to retain the employee by providing good remuneration packages and additional bonuses otherwise they will continue to be plagued by issues like turnover as workers seek alternative job.

However Marchington, M. & Wilkinson, A (2007) in a study of CIPD (2004) finds that labour turnover rates vary considerably between industry sector and occupational group, at the same time as do the costs of recruitment. Most employers are more concern about collect statistics on labour turnover, but they also facing problem with lack of data or software issues (IRS Employment review 2004). Many employers also performs exit interviews, and both of these tasks are usually carried out by HR department where no involvement of line manager. The information is used to improve HR practices and policies such as communication, induction, learning and development and selection in an effort to reduce turnover (CIPD 2004b, p31).

Perhaps the issue is the most difficult due to all cases of labour turnover are treated in the similar way, without giving any allowances for the performance levels and latent of the employees who quit from organization doing comparison with available employee. It is pointed that, manager is comparatively happy if an unskilled or poor performer were to leave, and there are suggestions from the researchers that if the future of the company is uncertain then employers in reality encourage turnover for not to ‘carrying staff’ (Smith et al 2004 cited on Marchington, M. & Wilkinson, A., 2007). On the other hand, if turnover was determined along with high-flyers or high skilled or highly experience and those who remained were unskilled or poor performers or lacked of ambitions, in that case this could have serious penalty for the organization.

However, a high rate of labour turnover could be benefited for the company if the organizations aim is to trim back the workplace or reduce costs of production (Sadhev et al 1999 cited on Marchington, M. & Wilkinson, A., 2007). Alternatively, Rubery et al 2004; Smith et al 2004 cited on Marchington, M. & Wilkinson, A., 2007 argued that employers may come to a decision to use temporary employment agencies for recruiting staff so that they pass the problem to somewhere else. Glebbeek and Bax 2004 cited on Marchington, M. & Wilkinson, A., 2007 point out that company should decide whether an optimum level of labour turnover with the mix of internal labour market and keep new recruits coming in, or whether the cost of turnover make most cases costly and unnecessary.

According to Linda Maund (2001) some internal causes of an increasing labour turnover:

The recruitment and selection procedure is not enough and imperfectly matches individuals to jobs. Employees willing to leave the organization and they are always seeking jobs which better matches with their skills and interests.

Employees are not well motivated and don’t feel the organization from the core. So, employees’ feeling is that s/he does not ‘own’ the organization and they don’t have liability or responsibility of it. S/he will consider better opportunities outside the organization and employee does not feel any interest to do better for the organization.

Not equality in wages and salaries with competitors. If wages and salaries do not fulfill the expected levels of companies in a similar business, then the individuals will search employment where s/he will get competitive rates or better reward packages.

Some external causes of an increasing labour turnover:

Head hunting: There is good demand of high skilled or skilled worker in the competitive market place. So, there is competition for a limited labour supply.

Improved transportation system: With good transportation infrastructure and the nice increment facilities encourage individuals to move away from local community to look for suitable work.

Negative result of a high labour turnover:

In order to be successful, recruitment and selection procedures can be more costly for organization.

It is costly for organization to train and retrain employee.

The induction of new employees into the organization and to familiar with its environment and culture is time consuming.

The productivity of the new workers is less as the experienced skilled workers productivity and efficiency.

Saiyadain (2006) point out that ‘I changed my previous job to this because it pays well.’ So pay is the crucial issues for quitting job. According to Torrington et al. (2002) there is some argument in the retentions literature about raising pay levels reduces staff turnover. In one side some researcher found that usually, employers who offer the most attractive reward packages to the employees have lower turnover rates than those who pay poorly (Gomez-Mejia and Balkin 1992), for that reason many organization uses pay rates as their major weapon in retaining employee (Cappelli 2000; IRS 2000a; IRS 2000b cited on Torrington et al. 2002).

On other research based on questionnaire suggests that pay is a good deal and less important than other factors in a decision to quit one’s job (Bevan et al. 1997; Hiltrop 1999 cited on Torrington et al. 2002). In a study Sturges and Guest (1999) cited on Torrington et al. (2002) point out that in the field of graduate employment pay rising is not vital factors for quitting job that only resulting greater job satisfactions but they wants more challenges and innovation within the job roles.

In addition, a result of research cited on Torringto