Alternative solutions and analysis
Employee turnover is a major problem for any business, particularly a business in the service sector where the relationships created by the employee are as important as the job itself. In this case, the NGO is facing a very high employee turnover and alternative solutions to the problem are being investigated. High employee turnover is a major problem because of the costs associated with recruitment and training of a new employee. It has been established that most of the employees who leave usually do so within the first 12 months on the job which means that the company is not able to recover the costs associated with recruitment and training.
Alternative 1: Outsourcing
Discussion:
This could be one of the possible alternative solutions. The NGO can decide to outsource the human resource department to a third party company. Outsourcing has become preferred lately due to its convenience. The employees are basically employees of the third party company who are forwarded to the NGO to work on its projects.
Associated benefit and costs:
As a result, the NGO is freed from the responsibilities of recruiting and training the employees, which becomes the responsibility of the company with the employees. The NGO can therefore concentrate on its core work while leaving employee management to the contracted company. Because the human resource company is specialized, they are able to look for suitable employees more easily than the NGO.
This alternative is beneficial to the company as it removes the responsibility of hiring and training employees.
The main cost associated with this alternative is the cost of engaging the third party human resource company. This cost may initially be higher; the high cost will be mitigated by the lower cost of hiring and training new employees. This cost is passed on to the human resource contractor (Bragg, 2006).
Methodology tool:
The analysis tool to be used for this alternative is the return on investment. The company will require investing heavily initially with the third party human resource provider. Once the company outsources the human resource department, it is a major cost because it will still have to pay for the employees’ salaries as well as additional costs charged by the contractor. This is mainly because it is estimated that the initial cost for hiring a third party organization is $ 100,000. The company stands to increase its profits by $ 20,000 a year. Hence, it is expected that the company will be able to recoup its initial investment in a period of $10,000/$20000 = 5 years. However, the company will transfer the risks associated with employee turnover to the contractor. Over time, the company will benefit from reduced recruitment and training costs of new employees (Barrar & Gervais, 2006).
Does your benefits/cost analysis align with your stated research objectives?
Yes, this method is beneficial since risks associated with employee turnover to the contractor and turnover issues will be decreased and addressed.
Advantages and disadvantages:
Advantages
Removes staffing cost from the organization
Organization can benefit from wide pool of possible employees
Disadvantages
Very expensive to implement initially
Employees loyalty is with their employer who is the contractor
Alternative 2: Reviewing pay
Another issue raised during the research that can be attributed to high employee turnover was the issue of pay. Many of the employees believed that the pay structure in the organization was not standard. As observed during the research, majority of the turnover is with low cadre employees whose salaries are about $10 per hour. This is the minimum pay in the United States and this job offers no retirement benefits. This is a reason why the organization is facing a high employee turnover. Majority of the employees leaving the company leave within the first twelve months on the job.
Associated benefits and costs:
The cost of recruiting and training such an employee is very high and if they leave within the first year, then they would not have repaid the cost to the organization. It is therefore important to improve the pay package for each employee (Armstrong, 2007).
On the short term, it might seem like it is expensive but if it significantly reduces employee turnover, then the cost of recruitment and training will fall.
Methodology:
The technique that will be used to analyze this alternative is cost benefit analysis. The main cost for this alternative is the additional revenue the organization has to incur while increasing employee salaries. However, it has major benefits since the organization will be able to maintain its current workforce. It will also be able to motivate the employees for higher returns. For example, if the company increases all salaries collectively by $50,000 a year and the profits increase by $150,000 due to the increase in productivity, it is clear that this alternative is highly beneficial. Examining the costs and benefits outlined above it is evident that the overall return gained from using this alternative will be high for the company. The money spent on constantly recruiting and training employees will be used to improve the pay package of employees who are retained. This will continue to encourage productivity as well as enhancing motivation.
Does your benefits/cost analysis align with your stated research objectives?
The research objectives for this paper were to identify the problems within the organization that are leading to a high employee turnover and come up with measures to mitigate them. This alternative is therefore aligned with the research objective of this paper.
Advantage and disadvantage:
Advantage
Improves the motivation for employees
Disadvantage
Expensive to implement initially
Alternative 3: Changing recruitment process
The current recruitment problem could also be a major problem for the organization. The positions that are experiencing the highest turnover are the lower categories of jobs, which mainly involve community work. Currently, the organization recruits people from virtually anywhere and posts them to the communities where they will work.
Associated benefits and costs:
An alternative would be to seek for employees from the same communities they will work in. this is important as these people will already have a relationship with members of the community (Arthur, 2012). They are also familiar with the community and will therefore find it more comfortable to work in the communities. This is very important as it reduces the chances of .the employees leaving quickly. If the employee is comfortable in the position, they are likely to stay on longer.
It might be difficult to get all the qualifications needed by an employee from the community. Therefore, more resources will be used in training the employee in the first place. However, if the turnover is lower, the overall cost over time will be reduced for the organization.
Methodology:
The technique that will be used to analyze this alternative is cost benefit analysis. The main cost in this case is restructuring the recruitment process. This cost will be very high since it involves changing the internal mechanics of the human resource department. In order to have an effective restructuring the organization may have to spend $ 200,000. The benefit gained from this is new employees who are loyal to the company. From examining the costs and benefits above it is evident that the costs the company will incur from changing its recruitment process are greater than the benefits. Furthermore, this may increase the costs associated with hiring new employees.
Does your benefits/cost analysis align with your stated research objectives?
The research objectives for this paper were to identify the problems within the organization that are leading to a high employee turnover and come up with measures to mitigate them. This alternative is therefore aligned with the research objective of this paper.
Advantages and disadvantages
Advantages
Employees who are loyal to the cause can be employed
Low cost of recruiting employees from the target communities
Disadvantages
Expensive to train new recruits
Alternative 4: Restructure the operations of the organization
The organization can also opt to restructure the way it operates. Currently, there are two offices catering for all the people in both regions. The company can opt to increase the number of offices from where it operates.
Associated benefits and costs
Opening up of new offices sounds like it is going to be expensive for the organization. However, the organization will absorb existing employees into the new branches. This will improve service delivery at the ground. The employees will also have new responsibilities which will make them more motivated in their work and reduce the employee turnover.
Methodology
The cost benefit analysis is going to be used in this scenario. The costs for the organization are going to be setting up the new offices. However, no new employees will be hired as they will be absorbed from the existing workshop. Having a nearby office to work from will be a benefit to the employees by improving their working conditions. For examples, employees working in a certain neighborhood will report to the local office rather than reporting to the existing offices where distance was seen as an issue. The main benefit drawn from this is that the company can be able to save on additional costs.
Does your benefits/cost analysis align with your stated research objectives?
The benefit/cost analysis aligns with the stated research objectives as it identifies a case for employee turnover and gives a solution.
Advantages and disadvantages
Advantage
There will be easier supervision of employees at the local level
Disadvantage
The initial cost of setting up an office is high for the organization.
Alternative 5: Downsizing
The organization can decide to downsize its operations. This will mean fewer employees are needed to perform all the functions.
Associated benefits and costs
Downsizing will lead to a smaller scale of operations for the company therefore less employees will be needed. This will reduce the cost of employees and manage to keep only dedicated employees within the organization.
Methodology
Cost benefit analysis is the method used to analyze this alternative. The organization is facing a high employee turnover, which is expensive in terms of recruitment and training. If the organization downsizes, it will be able to keep loyal and dedicated employees within the organization. For example, a company can be able to save $ 100,000 per month from the downsized workforce. These funds can be used in increasing the pay of the other remaining employees. The cost for the organization is that it will have a smaller reach in the community when compared to what was the case previously.
Does your benefits/cost analysis align with your stated research objectives?
The analysis aligns to the stated research objectives as it identifies why the organization is facing too many turnovers. It is probably bigger than it is ideally meant to be. The alternative is a solution to the high percentage of employee turnover.
Advantages
The organization will reduce its operation costs
Disadvantages
The organization will have a smaller reach within the community than it previously had.
Summary table for all alternatives
References
Armstrong, M. (2007). A handbook of employee reward management and practice. Philadelphia: Kogan Page.
Arthur, D. (2012). Recruiting, interviewing, selecting & orienting new employees. New York: American Management Association.
Barrar, W., & Gervais, R. (2006). Global outsourcing strategies: An international reference on effective outsourcing relationships. Aldershot, England: Gower.
Bragg, S. M. (2006). Outsourcing: A Guide to Selecting the Correct Business Unit Negotiating the Contract Maintaining Control of the Process. Hoboken: John Wiley & Sons.
