"We have to get used to the thought that companies are much more dependent on their best employees than the good people from the company.” With reference to this statement made by Peter Drucker in 2002, the contribution of employees to a company’s success and their growing independence from current employer takes on greater significance in the management of human resources. Already in the 1990s, the war for talents has been declared on the basis of decreasing resources of employees who own valuable qualifications on behalf of organisational success. Employers nowadays are growingly confronted with economic circumstances influencing the quantity and quality of their workforce. Thus, demographic changes will modify the composition of employee workforces, while globalisation will enable employees to rapidly change their place of employment. In addition, organisations are likely to counteract skill shortages and increasing readiness of employees to leave an employer for a more profitable offer. With regard to these global developments, the work of HR management is to implement a specified form of management strategy in order to maintain experienced and valuable employees within the organisation, as well as to ensure continuing productivity. Similar to the common practiced customer relationship management aiming at establishing a stable customer base and associated higher profitability, employee retention management transfers experiences in retaining promising customers to human resource processes and therefore focuses on employees as an additional crucial element in corporate success. Basically, there is a growing consensus that the retention of employees is a key determinant of further strategic competitiveness and longterm success of a company. In fact, various surveys among human resource departments agree in their findings that the retention of employees will be prioritised in further human resource strategies. In order to counteract employees’ willingness to leave their employer, retention management intends to respond appropriately to employees’ needs by means of individualised incentives which are considered to improve the employees’ conformity and loyalty with the employer. Thus, the elaboration of the variety of possible instruments presented in this thesis may lead organisations in their development towards a strategic concept enhancing the organisations’ attractiveness as an employer which will enable organisations to current economic influences.
Table of Contents
1 Introduction
1.1 Purpose of the Study
1.2 Structure
2 Definition
3 Relevance of Employee Retention Management
3.1 Economic Perspective
3.1.1 Globalisation
3.1.2 Demographic Change
3.1.3 Employee Turnover
3.1.4 Shortage of Skilled Labour
3.2 Financial Perspective
3.2.1 Value of Human Capital
3.2.2 Costs of Turnover
4 Implementation of Employee Retention Management
4.1 Identification of Key Employees
4.1.1 Classification of Workforce
4.1.2 Process of Classification by the Example of Forced Rankings
4.2 Identification of Motivation
4.2.1 Motivation as Initial Point
4.2.2 Maslow’s Hierarchy of Needs
4.2.3 Measurement of Motivation
4.3 Instruments
4.3.1 Selection of Instruments
4.3.2 Financial Compensation
4.3.3 Leadership
4.3.4 Communication
4.3.5 Job Design
4.3.6 Job Environment
4.3.7 Summary of Employee Retention Instruments
5 Critical Reflection of the Applicability in Organisations
6 Conclusion
Objectives and Thematic Focus
This thesis aims to analyze the strategic importance of Employee Retention Management (ERM) in light of current economic challenges such as globalization, demographic change, and the shortage of skilled labor. It investigates how organizations can implement effective retention instruments to secure their competitive advantage by fostering employee loyalty and motivation.
- The economic and financial relevance of employee retention in modern organizations.
- Methods for identifying key employees and understanding their individual motivation.
- Practical human resource instruments including compensation, leadership, communication, job design, and work environment.
- A critical comparison of retention strategies between Small and Medium-sized Enterprises (SMEs) and major corporations.
Excerpt from the Book
3.1.3 Employee Turnover
During the last decade, turnover of employees has become a serious issue for organisations. In literature, employee turnover is regarded in different variations:40
All kinds of personnel departures
Personnel departures because of bilateral agreements
Personnel departures as autonomic decision by employees
With the third factor complying with voluntary turnover of employees which is defined as a change of workplaces between businesses intended by the employee itself41, this enumeration can be added the dimension of involuntary turnover on the part of the employer, such as permanent layoff.42
The consideration of turnover without taking into account such a differentiation has been critically discussed in literature, stating that the inclusion of turnover caused by transfers of personnel within the company or by the termination of employment due to e.g. retirement, death or illness, would undermine the effectiveness of turnover studies.43 However, the further consideration of employee turnover within the framework of this study focuses on the effects of voluntary turnover by employees.
Summary of Chapters
1 Introduction: This chapter outlines the growing importance of retaining qualified employees and sets the purpose and structure of the study.
2 Definition: This chapter defines the term "Employee Retention" and "Employee Retention Management" as a core process for organizational success.
3 Relevance of Employee Retention Management: This chapter examines the economic and financial reasons necessitating retention management, including global labor market trends and the costs associated with turnover.
4 Implementation of Employee Retention Management: This chapter explores the practical execution of retention systems, focusing on employee classification, understanding motivation, and detailing various HR instruments.
5 Critical Reflection of the Applicability in Organisations: This chapter compares the application of retention instruments in SMEs versus major corporations, highlighting differences in resources and organizational structure.
6 Conclusion: This chapter summarizes the key findings, reiterating that employee retention is a strategic necessity for long-term organizational stability.
Keywords
Employee Retention Management, Human Resources, Labour Market, Globalisation, Demographic Change, Employee Turnover, Skilled Labour Shortage, Human Capital, Motivation, Maslow’s Hierarchy of Needs, Employer Branding, Job Design, Work-Life Balance, Financial Compensation, Leadership.
Frequently Asked Questions
What is the core focus of this thesis?
The thesis focuses on "Employee Retention Management" (ERM) and examines how organizations can utilize various human resource instruments to retain key personnel amidst current economic developments.
What are the central thematic fields addressed?
The core themes include the economic and financial drivers of retention, the identification of key talent, motivation theories, and the practical implementation of retention measures in diverse organizational settings.
What is the primary objective of this research?
The goal is to provide guidance to organizations on implementing specific, need-oriented retention systems that enhance attractiveness as an employer and ensure long-term productivity and competitiveness.
Which scientific methods are employed?
The work utilizes a combination of literature analysis, current empirical study reviews, and comparative approaches to evaluate the practical applicability of HR instruments in different company sizes.
What is covered in the main section of the paper?
The main section details the "Relevance" and "Implementation" of ERM, covering topics such as globalization, demographic change, financial turnover costs, Maslow's theory, and specific instruments like leadership styles, job design, and work-life balance initiatives.
Which keywords best characterize this work?
The work is best defined by terms such as Employee Retention, Human Capital, Turnover, Motivation, Employer Branding, and Demographic Change.
How does company size affect the implementation of retention measures?
The study notes that while major corporations often have more financial resources for diverse benefits, SMEs can leverage their smaller size for closer leadership relationships and a better sense of community, although they may face more limitations in career advancement opportunities.
What role does "Forced Ranking" play in the discussion of performance appraisal?
The paper discusses forced ranking as a controversial tool for identifying top and low performers, noting both its potential for increasing competitiveness and its ethical risks regarding employee morale and team-based evaluation.
- Quote paper
- Isabelle Klippert (Author), 2014, Employee Retention Management. Instruments of Human Resources in the view of current developments, Munich, GRIN Verlag, https://www.grin.com/document/274122
