THE IMPACT OF RETENTION OF EMPLOYEE ON ORGANISATIONAL SUCCESS

ABSTRACT

The study was motivated by the need to investigate the impact of retention of employee on organisational success in Lagos state Ministry of education. Forty staff were randomly selected for the study. Data on the impact of retention of employee on organisational success were collected from the sampled staff with questionnaire instrument designed to elicit relevant responses. The analysis of data was based on frequency count with simple percentages and Chi-square (X2) statistical method. Descriptive survey design was employed for the study.   The findings of the study revealed retention of employee has a great influence on the organizational success. It was also found that condusive working environment has a strong on the performance of an organization. Organisations with highly motivated employee, better human related, moderate hours of work, access to loanable funds, cordial relationship between the superior officers and subordinates tends to perform better in productivity than in organizations where these are lacking. On the basis of the findings, it was recommended that policy makers provide a process of encouraging, planning, and investing in employees’ professional development. Organisational investment in employees was associated with higher level of employee affective commitment to the organisation. This process will indicate that management is committed to establishing a long term relationship with employees. These educational investments could make employees more committed to their profession and put in their best in achieving organisational growth and development.

CHAPTER ONE

INTRODUCTION

1.1   Background of the Study

Retaining employees whose knowledge has high competitive value is becoming a critical and well-recognized challenge (Taylor, 2004 and Williamson, 2008). Such employees are known as knowledged workers in that they “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).

The retention of employees has been shown to be significant to the development and the accomplishment of the organization’s goals and objectives. Retention of employees can be a vital source of competitive advantage for any organization.

Today, changes in technology, global economics, trade agreements, and the likes are directly affecting employee/employer relationships. “Until recently, loyalty was the cornerstone of that relationship. The loss of talented employees may be very detrimental to the company’s future success. Outstanding employees may leave an organization because they become dissatisfied, under paid or unmotivated (Adeniran 2005). While trying to retain employees within the organization, the organisation may face other challenges such as demand for higher wages by skilled employees, not complying with organization practices, and inadequate good interaction with their co-workers.

Besides these problems, lack of information about the employees’ performance may complicate an organization’s endeavour to retain productive employees. Without adequate information an organization may not be able to distinguish productive workers from non-productive ones. Employees often may take credit for the successes and deflect failures to other employees. Insufficient information about employees’ performance may result in adverse selection by them (Grossman and Hart 1999). The better employees may move to other organizations for better opportunities. The co-workers who cannot improve their positions are more likely to stay. This is especially possible when due to inadequate information outstanding performance is not rewarded i.e, lack of motivation for outstanding performance. Non productive and productive workers end up receiving the same or nearly the same compensation and package of perks because of management’s in ability to distinguish talented employees from the rest of the labour force in the organization.

The problem of attempting to keep talented members of the work force may be further complicated because of superiority complex of these talented employees to organisational success (Simon, 1996). It is another result of asymmetric information where both the manager does not know the information for which to ask from the employee and the employee does not know what to provide. Therefore, productive workers cannot distinguish themselves from non-productive co-workers. Even if an organization is fortunate enough to retain talented employees, the company may still have to cope with agency costs resulting from them and their colleagues.