Employee Turnover In The Public Sector Of Namibia Management Essay

This research project examined the Impact of employee benefits on employee turnover in the Public Sector of Namibia. The problem is focused on the factors that contribute to the employee turnover and investigate if the public service is meeting the needs of the employees and to characterize the various types of employee benefits offered to the public servants. For the past decade, the Namibian Public Service has experiencing a high level of employee turnover. The purpose of this project was to analyse the reasons behind this employee turnover.

The problem statement for this study reads as follows: It appears that employee benefits in the Namibian public sector are not sufficiently competitive to retain well experienced staff members.

The study employed primary data as well as secondary data and a mixed method approach was used to collect data. A descriptive method was used to analyse the reasons behind the employee turnover and answered the following questions: How insufficient employee benefits impacts the employee turnover in the public sector; what are the types and forms of employee benefits offered to the employees?; what are the main concerns of grievances of employees regarding employee benefits in the public sector?; what is the relationship between staff turnover of male and female, different age groups and the relationship between young and old within the Namibian public sector? These questions were answered using literature review, personal interviews and questionnaires.

Result found that some of the reasons for employees leaving the public sector is the provision of insufficient employee benefits that are being offered to them.

Recommendations include………………..

The study concluded that…………………………………….

Chapter 1

Introduction and Problem Statement

Introduction and Background

Employee benefits typically refers to retirement plans, medical aid, vacation, sick leave, housing subsidy, maternity leave, study leave, etc. Benefits are forms of value, other than payment, that are provided to the employee in return for their contribution to the organisation, that is, for doing their job. According to Swanepool et al, benefits are indirect forms of compensation that, like direct compensation, are intended to aid the achievement of the human resource objective of attracting, retaining and motivating employees. The provision of these benefits may be required by law, but the possible range of employer provided benefits is bound only by the limits of creativity of compensation specialists (Swanepool et al, 2001:557). Employee turnover is a very important issue of human resource management. There may be several factors why employees leave the public sector. It could be a voluntary turnover where employees choose to leave for better career opportunities or increase in compensation or it could be involuntary turnover where employees are asked to leave for reasons such as poor job performance or inappropriate behaviour just to mention a few. Over the past years, the Namibian Government has made many positive efforts to improve employee benefits and services to attract and retain professionals in many sectors. This has been done to build the country’s competitiveness through improved performances of employees at all levels and sectors of the economy. In the public sector, the benefits and services to employees are not usually kept sufficiently competitive to retain the well experienced staff members, which results in the declining of output within the public sector. The problem which is focused in this study is to investigate the effects of employee benefits on employee turnover in the public sector. This problem will be focussing on the factors that contribute to the employee turnover and to investigate if the public service is meeting the needs of the employees and to characterize the various types of employee benefits offered to the public servants.

Problem Statement

It appears that employee benefits in Namibian public sector are not sufficiently competitive to retain well experienced staff members.

Research Questions

Main Question:

How do insufficient employee benefits impact the employee turnover in the public sector?

Sub-Questions:

What are the types and forms of employee benefits offered to the employees?

What are the main concerns of grievances of employees regarding employee benefits in the public sector?

What is the relationship between staff turnover of male and female, different age groups and the relationship between young and old within the Namibian public sector?

Research Objectives

Primary Objective

To investigate the impact of employee benefits on employee turnover in the public sector.

Secondary Objective

To investigate if the public service is meeting the needs of its employees

To characterize the various types of employee benefits offered to the public servants.

To investigate specific effects of employee benefits on public service turnover and why servants are not staying.

Hypothesis

The provision of improved employee benefits to the public servants will reduce the employee turnover rate and enhance quality for improved public service delivery.

Research Methodology

Empirical Study

Research design

The study will employ primary data as well as secondary data therefore I selected a mixed method approach. During the study, qualitative data will be collected through interviews and quantitative data through questionnaires. This will ensure that the data will be reliable and measures to what the researcher desire to measure.

Unit analysis

This study intends to investigate individual employees, different departments within ministries and ministries as a whole within the public sector in Namibia.

Sample and Sample type

The study will employ a fractional sample strategy aimed at three important aspects within the public sector, namely management, supervisors and ordinary employees.

The study will make use of convenience sampling techniques for data collection. Through this technique I will choose settings, individuals and groups that are conveniently available and willing to participate in the study.

Data collection methods

Data will be collected through both the qualitative and quantitative methods. The qualitative data is collected through interviews by means of open end questions to get deep insight from the respondents.

The quantitative data will be collected through questionnaires. These questionnaires will include close ended questions.

Identification of variables

For the purpose of this study, I will look at the relationship between the turnover of male and female, the different age groups within the sample, and the relationship between young and old within the sample.

Data analysis

Validity refers to the extent at which an empirical measure accurately reflects the concept it is intended to measure.

The reliability of a measure procedure is the stability or consistency of the measurement. For the purpose of this study the presentation of data that will be collected will be descriptive. Tables and graphs will be used to describe the relationship between employee benefits and the labour turnover.

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Chapter division

Ethical constraints

During the development of this proposal as well as during the completion of the research process, ethical issues should be kept into consideration. The purpose of the study is made clear to the respondents. Mutual consent forms, permission letters and any other written approval need to be acquired. Information should be kept confidential and protected. The privacy of the participants would be protected.

Organisational Plan

I will be responsible for the drafting of the proposal as well as the collection of data and the writing of the research project in its entirety.

Work Plan and Time schedule

ACTIVITY

ESTIMATED TIME

Preparation of written requests/consents

2 – 4 weeks

Preparation of Interview questions and Questionnaire

2 months

Conducting of the actual interviews

2 months

Completion of questionnaires

2 – 4 weeks

Collection of data

1 months

Data entry and analysis

1 – 2 months

Financial Planning

The project will be funded out of my own pocket and travel and subsistence expenditure will be covered by me.

Chapter 2

Literature review and Definitions and terms

2.1. Introduction

Benefits are forms of value, other than payment, that are provided to the employee in return for their contribution to the organisation, that is, for doing their job. One might think of benefits to be tangible and intangible. Tangible benefits are benefits such as insurance, vacation pay, maternity leave, profit sharing, stock options and bonuses as forms of compensation. Intangible benefits are less direct, for example, appreciation from the manager, likelihood for promotion, nice office, etc. People sometimes talk of fringe benefits, usually referring to tangible benefits, but sometimes meaning both kinds of benefits. This chapter will deal with the theoretical basis of Employee Benefits and it will encompass factors that will support the empirical study for addressing the research problem and questions.

2.2. Literature review

Employee benefits, which include mandatory benefits and fringe benefits, are becoming essential portions of the compensation packages that are offered by organisations to their employees. The extent and nature of the benefits commonly offered by organisations within a particular country are largely determined by the countries specific circumstances and the laws. (Swanepoel, et al. 2003:572).

In addition, benefits plans that are designed to increase in value over time encourage employees to remain with their employer consequently; they have a moderating effect on the organisations productivity irrespective of industry or size. Benefit plans can enhance satisfaction, sustain loyalty, retain frontline workers, improve service quality and discourage employees form leaving an organisation. Base on the above, it probes me to look into the following aspects in relation to employee benefits within organisations.

2.2.1. Current trends in employee benefits and services

According to the 10th Annual Study of Employee Benefits Trends done by Metlife.com, despite a difficult and shifting business climate, employers are not retreating from their workplace benefits commitments – employers remain committed to their benefits offerings, and for many employers benefits are increasingly about business opportunity. Employers that see opportunity in the current economy for benefits to drive business goals are identified in the Study as Progressives for their optimistic perspective on benefits and ability to see opportunity in difficult economic conditions. Employers’ who does not see the opportunity are referred to as Standards. According to the study 60% of surveyed employers recognized the precarious economic climate, rather than reducing business focus on employee benefits, actually creates opportunity for benefits to drive human capital. In addition, the study found employees less committed to their employers, but as the same time highly dependent on their workplace benefits.

According to Daft, the best human resource manager knows that a compensation package requires more than money. Although wages and salaries is an important component, it is only a part. Equally important are the benefits offered by organisations. Some benefits are required by law, others types of benefits are not required by law but are provided by organisations to maintain an effective workforce.

According to Neo, the objectives of the employee benefits of an organisation is to provide a competitive total remuneration package that both attracts and retains high quality employees; provide for the personal needs for employees; increase the commitment of employees to the organisation and provide for some people a tax-efficient method of remuneration. In today’s business environment, benefits are divided into categories such as pension schemes – they are generally regarded as the most important employee benefit; personal security – these are benefits that enhance the individual’s personal and family security with regard to illness, health, accident or life insurance; financial assistance – such as loans, house purchase schemes, relocation assistance and discounts on company goods or services; personal needs – entitlements that recognize the interface between work and domestic needs or responsibilities, such as holidays and other forms of leave, child care, career breaks, retirement counselling, financial counselling and personal counselling, fitness and recreational facilities; company cars and petrol; other benefits that improve the standard of living of employees such as subsidized meals, clothing allowance, refund of telephone costs, mobile phones and credit card facilities. (Armstrong 2009:850).

2.2.2. Employee turn-over

Employee turn over, sometimes known as labour turn over, wastage or attrition, is the rate at which people leave an organisation. It can be disruptive and costly. (Amstrong, 2009:497). Labour turn over may be a functions of negative job attitudes, low job satisfaction, combined with an ability to secure employment elsewhere. (Amstrong, 2003:374). According to Armstrong, employee turnover rates provide a valuable means of benchmarking the effectiveness of HR policies and practices in organisations. They do not tell the whole story, but if turnover is significantly higher than in comparable organisations, this should stimulate action to investigate why this is the case and to do something about is. It is a fact that an employee will leave an organisation if they are not satisfied with the compensation. Empirical studies reveals that labour turn over has a negative effects on both the morale and satisfaction of employees with their employment conditions. It is argued that organisations with high labour turnovers will find it difficult to replace the departed employees and the direct and indirect costs to the organisation will be higher to replace employees. (Pilbeam & Corbridge, 2002:234-6). According to Armstrong, the cost of employee turn over can be considerably high.

2.2.3. Impact of employee benefits and services on employee turn-over

A firm with a high employee turn over rate can destabilise and de-motivates those who attempt to maintain levels of service outputs against a background of vacant post, inexperienced staff and general discontent. It is obvious that recruitment, induction and training costs all rise with and increase in employee turn over. According to Noe et al, firms who were in the top quartile in terms of employee job satisfaction had profit rates that were 4 percent higher than firms in the bottom quartile. Noe also stated that the whole employee satisfaction-firm performance relationship can become part of a virtuous cycle, where firms with more highly satisfied employees perform better and increase their profits, which in turn they use to shore up employee pay and benefits which further add to their competitive advantage. Some of the impacts that employee benefits and services has on employee turn over can be summarized as follows:

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Direct cost of recruiting replacements – advertising, interviewing, testing, etc; direct cost of introducing replacements – induction cost; direct cost of training replacements in necessary skills; leaving costs – payroll and HR administration; opportunity cost of time spent by HR and line managers in recruitment, induction and training; loss of output from those leaving before they are replaced; loss of output because of delays in obtaining replacements and loss of output while new starters are on their learning curves acquiring the necessary knowledge and skills. (Armstrong, 2009:502)

2.2.4. Employee retention

According to Starling, all levels of government strive to hire the new generation of the best and the brightest. Unfortunately, many of these efforts are similar to turning on the faucet in your bathtub while the drain remains open. It has been proven that too often the best and the brightest, once attracted to a public-sector job, don’t stay. The key to retaining good workers is to provide an environment that is rewarding and flexible – both financially and personally.

It is found that once reasonable pay compatibility is achieved, non-monetary issues become more important. Most of the factors that cause people to stay or leave an organisation are under the control of their immediate supervisor. People want training, career development opportunities, open communication, and flexible work arrangements as well as competitive benefits. According to Starling, top performing companies had adopted unusually progressive policies towards their employees. These organisations exhibits distinct traits – firstly, they pay exceptional attention to the traditional HR issues such as recruitment, compensation, training, performance appraisals, etc; and secondly they set up HR systems specifically for job satisfaction. Starling argued that the rationale for these systems is straight forward, “Satisfied employees not only perform better, but they also make better team members, co-workers, mentors, and colleagues. For all these reasons it is in the best interest of the organisation to pay attention to all the factors that determine job satisfaction and to devote resources to them”. In addition to compensation, these factors include the following: flexibility of work structure, staffing and hours, personal benefits such as healthy living, child care, and elder care, and rewards and recognition for individual and team contributions. (Starling, G 2010:466-7).

2.3. Definition of terms

Employee benefits

Employee benefits are various non-wage compensations provided to employees in addition to their normal wages and salaries. It is also referred to as fringe benefits, perquisites or perks. The purpose of the benefits is to increase the economic security of employees.

Employee turn-over

In a human resources context, turnover or staff turnover or labour turnover is the rate at which an employer gains and loses employees. Simple ways to describe it are how long employees tend to stay or the rate of traffic through the revolving door. Turnover is measures for individual companies and for their industry as a whole.

Employment

According to the Concise Oxford English Dictionary, employment is the action of giving work to someone. It is a person’s work or profession. Employment can also be seen as a contract between two parties, one being the employer and the other being the employee.

Compensation

According to the Concise Oxford English Dictionary, compensation is something awarded to compensate for loss, suffering or injury. It is referred to as a thing that counteracts an undesirable situation. It is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee’s right to sue his or her employer for negligence.

Wages

A wage is a compensation that is usually financial and is received by workers in exchange for their labour. Compensation in terms of wages is given to workers and compensation in terms of salary is given to employees. Compensation is a monetary benefit given to employees in return for the services provided by them.

Salaries

According to the Concise Oxford English Dictionary, salary is a fixed regular payment made usually on a monthly basis by an employer to an employee, especially a professional or white-collar worker. A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis. From a point of a business, salary can also be viewed as the cost of acquiring, human resources for running operations, and is then termed personnel expense or salary expense.

Retention

According to the Concise Oxford English Dictionary, retention is the act of retaining or state of being retained.

Conclusion

It is concluded that the adequate provision of benefits and services will boost morale and commitment that will result in the provision of quality service delivery in the Public Sector of Namibia. By reviewing the literature, it was discovered that the provision of adequate employee benefits both attracts and retains high quality employees, provide for the personal needs for employees; increase the commitment of employees to the organisation and provide for some people a tax-efficient method of remuneration. It also revealed that labour turn over has negative effects on both the morale and satisfaction of employees with their employment conditions. All organisations need to focus on attracting potential employees who will become productive members of the organisation. To remain competitive, organisations need to value their employees so that they do not leave the organisation. Employees want financial security for themselves and their families.

One way for organisations to accomplish this is to provide their employees with adequate employee benefits in order to retain them.

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Chapter 3

Empirical research (Results)

Presentation, Analysis and Discussion of the findings of the study

Introduction

The objective of this study was to investigate the impact of employee benefits on employee turnover in the public sector of Namibia. This problem focussed on the factors that contribute to the employee turnover and to investigate if the public service is meeting the needs of the employees and to characterize the various types of employee benefits offered to the public servants.

In order to understand the needs of the employees and to determine whether the current employee benefits satisfy the current needs of the employees, it is necessary to balance the foregoing literature review against an empirical investigation carried out in the specific context of employee benefits in Namibia. What has been of concern throughout this study is the fact that there is hardly any empirical research on the impact of employee benefits as it pertains to Namibia.

The results of this research are seen as only the initial steps towards explaining the need and importance of employee benefits within the public sector of Namibia.

The interpretation of the results will be done in the order in which they were presented on the research instrument.

Results obtained

Due to the fact that the researcher administered the research instrument and waited on respondents to complete the various sections of the questionnaire, the response rate was 50% (35 respondents).

In order to present the results of this study in as logical a fashion possible, it was necessary firstly, to refer to the general information; secondly, to report on the effects of employee benefits on employee turnover; thirdly, to share the findings on the management problems by the public sector in the provision of adequate employee benefits; and finally, share the strategies for the retention and reduction of employee turnover in the public service. Tables have been used in most instances for clarity, ease of understanding and interpretation. The variables will be discussed in the order of appearance in the questionnaire (Annexure 3).

PART 1

3.2.1. General Information of respondents

3.2.1.1. Gender

Respondents included in the study had to be of both gender groups. It was, however, not possible to obtain an equal number of males and females. Table 3.1 shows that ……. of the respondents were male employees, while …. were female respondents.

TABLE 3.1

GENDER

NUMBER

PERCENTAGE

TOTAL

NUM

MALE

FEMALE

TOTAL

35

100%

35

3.2.1.2. Age

The most effective way to measure respondents’ opinions according to age was to put them in age categories. Responses to this question follow in table 3.2.

TABLE 3.2

AGE BY GENDER

AGE CATEGORY

MALE

FEMALE

TOTAL

N

%

N

%

N

%

18-24

25-30

31-39

40-49

50 and above

TOTAL

35

3.2.1.3. Marital Status

Marital status has a great influence on the benefits that employees get from their employers. Table 3.3 shows that more than half 60% of respondents reported that they were married.

TABLE 3.3

MARITUAL STATUS

CATEGORY

FREQUENCY

PERCENTAGE

Single

Married

Divorced/Widowed

Other specify

Total

35

100%

3.2.1.4. Qualification

Formal tertiary qualification also plays a major role in whether an employee will remain in one position for a long time or move on to greener pastures. It is for this reason that the researcher deemed it necessary to get information regarding the highest qualifications of respondents and the results are reflected in Table 3.4.

TABLE 3.4

HIGHEST QUALIFICATION

QUALIFICATION

FREQUENCY

PERCENTAGE

CERTIFICATE

DIPLOMA

DEGREE

HONOURS DEGREE

MASTERS DEGREE

DOCTORATE/Ph.D

TOTAL

35

100%

PART 2

3.2.2. Effects of employee benefits on employee turnover

Responses to these questions were obtained from an analysis of the employees responses to questions in part 2 of the questionnaire. The statements covered several aspects relevant to the quality of benefits available to employees.

Table 3.5 and 3.6 present the frequency distribution by the respondents on how satisfied they are with the current benefits and services provided by the public service and how the current benefits contribute to the current employee turnover.

TABLE 3.5

SATISFACTION WITH CURRENT BENEFITS

SATISFACTION RATE

FREQUENCY

PERCENTAGE

Satisfied

Dissatisfied

Very dissatisfied

Extremely dissatisfied

TOTAL

35

100%

TABLE 3.6

CURRENT BENEFITS CONTRIBUTION TO EMPLOYEE TURNOVER

LIKELYHOOD

FREQUENCY

PERCENTAGE

Less likely

More likely

Moderate

Neutral

TOTAL

35

100%

PART 3

3.2.3. Management problems by public sector in the provision of adequate employee benefits.

Table 3.7 and 3.8 presents the frequency distribution by the respondents on

management and other issues by the public sector in the provision of adequate

employee benefits as well as what the public service should do to reduce staff

turnover.

TABLE 3.7

MANAGEMENT AND OTHER ISSUES

MANAGEMENT ISSUES

TO A HIGH EXTEND

TO SOME EXTEND

ONLY SLIGHTLY

NOT AT ALL

TOTAL

N

%

N

%

N

%

N

%

N

Frequent change in management

Lack of available resources

Lack of recognition and appreciation of staff

Low compensation and inadequate benefits

Lack of fair remuneration packages

Lack of career development and opportunities

TABLE 3.8

WHAT PUBLIC SERVICE SHOULD DO TO REDUCE TURNOVER

SUGGESTED SOLLUTIONS TO REDUCE TURNOVER

FREQUENCY

PERCENTAGE

Recruit employees with right skills in jobs

Higher salaries and better benefits

Effective use of employee skills

Job satisfaction and good working conditions

Career development opportunities

Training programmes

Rewards and award systems

TOTAL

35

100%

PART 4

3.2.4. STRATEGIES FOR THE RETENTION AND REDUCTION OF EMPLOYEE TURNOVER IN THE PUBLIC SERVICE

Table 3.9 presents the frequency distribution by the respondents on strategies for

the retention and the reduction of employee turnover in the public service.

TABLE 3.9

HR PRACTICES AND OTHER ISSUES

HR PRACTICES

EXTREMELY SATISFIED

VERY SATISFIED

SOMEWHAT SATISFIED

NOT VERY SATISFIED

NOT AT ALL SATISFIED

TOTAL

N

%

N

%

N

%

N

%

N

%

N

Recruitment and selection procedures

Staff grading for job categories

Reward and award systems

Career development and opportunities

Remuneration packages

Compensation and benefits

Appraisal systems

3.3. Analysis and Discussion of Findings of Study

The objective of this section is to interpret the results of the study and examine the possible implications of how insufficient employee benefits impact the employee turnover in the public sector. The interpretation of the results will be done in the order in which they were presented in the preceding section.

3.3.1. General information of respondents.

Participants in the study were of both gender groups of which the majority were male participants. The proportion of men responding to the evaluation instrument was……. , in comparison to the proportion of female respondents which was……..

(See table 3.1).

3.4. Conclusion

This chapter provided a descriptive

Chapter 4

Conclusion and Recommendations

4.1. Introduction

4.2. Conclusions pertaining to the objectives

4.3. Recommendations based on findings of research

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