Employee Retention and Employee Turnover in American Red Cross - Case Study Example

Employee Retention in an Organization Abu Kuyateh MGMT 610 9041 Organizational Theory of Maryland College Originality Check 8% Employee retention in an organization In an organizational setting, employee retention refers to the concept of an organization’s ability to retain employees. The representation of employee retention can be through a percentage covering a certain period of time. For many organizations, employers to retain their employees consider employee retention. In essence, employers only tend to focus on retaining employees that are valuable and help contribute to the well being of their organization. The opposite of employee retention is employee turnover where an organization seeks to replace old employees with new ones. An organization may part ways with an employee either through death, termination of contract, retirement, resignations, or through interagency transfers. When the employee turnover in an organization is high then serves as an indication that deeper issues within the company have to be resolved so as to facilitate employee retention. Some of the underlying issues that can lead to employee turn over being high include low employee morale, lack of vision, the lack of a clearly marked career path, and poor relationships between managers and employees. Essentially, American Red Cross should have had proper management channels and a human resource department established so as to manage human capital and increase employee retention. The Case Study Description The American Red Cross has been the longest serving humanitarian agency in the USA with its focus being on providing emergency response services, disaster relief assistance and education to those in need of these services. American Red Cross found itself terminating most of its most of its executives in a period of eight years, which is raises interest. Some of the CEOs had to leave because the board of directors of American Red Cross felt that they were delivering as required and because of tainted reputations. During 9/11, America Red Cross was idling around than assisting victims and families of those affected by the terror attack. One explanation for this would be that they were not motivated enough to execute their duties as required of them. Even when Healy spotted that the workers were not doing anything, she could not do anything in her capacity as CEO because the American Red Cross lacked mechanisms that could have influenced employee satisfaction. The lack of performance by employees resulted from underlying issues that the American Red Cross could have met before matters could get out of hand. As much as Bernadine Healy tried to manage the situation to the best of her ability, the board still terminated and blamed the poor performance of employees on her, which was actually the American Red Cross’ fault. Marsha Marty Evans termination resulted from the organization’s perceived poor management of the Hurricane Katrina disaster that hit the USA in 2005. Another CEO that the American Red Cross terminated was Mark Everson who despite being an IRS Commissioner served the organization for six months (Epstein, 2007). Bureaucracy also exists at the organization where those that mismanage funds are retained while those that serve diligently are terminated. When Healy sought to bring a culture change where she sought to influence accountability, huge resistance met her, as she could not agree with board members over the same. Additionally, American Red Cross could not coordinate their efforts with other organizations in times of calamities as it saw itself as the supreme humanitarian agency. The view was misguided as the focused was supposed to be on alleviating human suffering and not on proving who was supreme and who was not. From this, the organization failed to deliver on their mandate because they focused on issues that were of not concern. From the issues presented, it is evident that the problems at American Red Cross began during the 9/11 attack as nothing remained the same after that. Analysis The wrangles between the management and the board of directors of American Red Cross are part of the reason why the organization experienced high employee turn over. For one, the board of directors that oversaw the termination of Bernadine Healy consisted of a fifty-member team, which is too large. By having such large number of board members, the making of decisions that are not in favour of the organization’s wellbeing is very high. A small board of directors is essential as they help in making effective decisions rather than having to rely on the emotions of the majority members. In any organization, the human resource department is the sole organ that should be responsible for handling employees and their concerns. In the case of the American Red Cross, decision to retain or terminate any employee lies with the board of directors who might not consider the merits that an individual has. For instance, the board made the decision to terminate Mark Everson because of his poor judgment that led to a scandal instead of retaining him based on the contributions that he had made to the organization. On the contrary, the board of directors should have considered what Das & Baruah (2013) say about employee retention. According to these authors, retaining of old employees is much cheaper than recruiting new employees. The authors further suggest that the human resource related functions should fall under the area of jurisdiction of human resource and not the entire board of directors. In essence, CEO Mark Everson was a skilful employee who the American Red Cross should have retained, which should be part of an organization’s key responsibilities. Complaints had also been lodged over the failure of the management at American Red Cross to implement improvement suggestions suggested by employees. An organization such as American Red Cross should be able to listen to the issues raised by employees in order to help the organization to grow. In this case, the organization has no regard for employees that want to influence changes as they usually receive very poor treatment. The problem that seems to be dominant at the organization is the need for those in charge to continue doing things the old way, meaning that they have become used to a certain organizational culture that they do not want changed. Essentially, the process of bringing change the operations of an organization is not an easy task and not many people would be willing to implement such. For instance, American Red Cross can increase employee retention by motivating employees and rewarding. Part of the reason why employee retention rates in an organization might be high, as suggested by Aguenza & Som (2012), is by applying motivation strategies so as to influence job satisfaction. In the case of the American Red Cross, employees were not recognized for their efforts and only their negative attributes were considered when making the decision to retain or terminate them. According to Hassan (2011), recognizing the efforts of employees and providing career development opportunities can help in employee retention and influence job loyalty. Many of those terminated by the organization did not get the opportunity to develop their careers as they only served a few months’ terms. By providing career development opportunities, the American Red Cross would have been able to solve the employee turnover problem that it was facing at the time. Being a non-profit organization, scaling down on expenditure is a needful practice because funding tends to be from donor organizations. In this regard, the American Red Cross had to lay off at least 1,000 employees and just had to find reasons that they could use to support this decision. During the time of the September 11th terror attack, the American Red Cross were seen idling around rather than providing support to the families whose relatives had been victims of the attack. In many instances, employees may fail to respond to their duties if they themselves are not satisfied with their work environment. Within a workplace setting, this brings forth the element of internal quality service, which is the response that customers should get that is quality and is able to create competitive advantage. The response tends to be from the staff within an organization where they respond as required and execute their duties in a diligent manner. Looking at American Red Cross during the 9/11 terror attack, the employees lacked internal quality service that was required of them, which is necessary during such calamities. The organization through its staff failed to provide quality service to the families of the victims in a timely manner simply because they were not satisfied with the way American Red Cross was handling them. In business, satisfied employees translate to happy employees who are able to serve customers in the best way possible. The failure by American Red Cross to satisfy its employees is part of the reason why they failed to respond as required because they were not motivated enough to perform well. According to Khan (2011, employee retention can only be achieved if customers are satisfied with their work because it directly influences the quality of service delivered. The human resource department within the organization should have taken the initiative of addressing the concerns of their employees to ensure that they worked as required rather than the employees having to lose their jobs due to poor performance. In order to avert the employee turnover rate that American Red Cross was experiencing at that time, the human resource function should have intervened to ensure that the management and board of directors were working together. The human resource department as intimated by Sinha C. and Sinha R. (2012) was supposed to play a major role in achieving employee retention for the organization. The focus of the department would have been on influencing job satisfaction among employees, providing career development opportunities, and motivating them towards achieving the organizational goals. Sinha C. and Sinha R. (2012) also suggest that the human resource function should also be responsible for developing relationships among employees that can help in furthering the interests of the organization, which was not the case American Red Cross. Poor relationships between employees and the board of directors contributed heavily to the failure in achieving organizational goals and execution of tasks as required. The human resource function should have also developed relevant strategies that would have facilitated employee retention rather than leaving the board of directors to be in charge of managing the human capital in the organization. Recommendations Essentially, the struggle between the management and the board of directors of the American Red Cross contributed heavily towards employee turn over. For one, the board membership should been reduced from fifty to a sizeable number that would have made decision making to be easy. Controlling a board constituting of many members is challenging to any organization and the case of American Red Cross is relevant example. Secondly, the handling of employees should have been by the human resource department, meaning that the board had to delegate this function in order for the organization to run smoothly. Therefore, the organization should have established a human resource department if it did not have any so as to look into employee grievances and increase employee retention. The organization should also have introduced motivation strategies that would have been essential in influencing job satisfaction among employees. The organization and the clients targeted by the employees are the one to benefit greatly because the employees would have been able to give it their all in times of calamities because they satisfied with the treatment they received at their place of work. Rather than fire the CEOs in such a manner, the organization should have given them warnings and allow them to improve because the process of hiring new employees is usually very costly. The organization should have also established a channel where employees would have used when they needed to give suggestions on ways of improving the organization. In so doing, employees would have felt valued by the organization, would have been more loyal to their work, and would be able to offer internal service quality. As it emerges, motivating and rewarding employees in various ways can be the surest way of ensuring that employee retention rates remain high in an organization such as the American Red Cross. Conclusion In summary, the case of American Red Cross is vital when it comes to the study of employee retention and the cause of high employee turns over within organizations. Most of the challenges faced by the organization could have been avoided if only the proper channels existed and a human resource department put in place to manage human capital. Employees should be motivated at all times because if they are not, then the clients they serve are the ones that would suffer most. A board of directors should also not consist of very many members as this makes it hard to run an organization, as was the case at the American Red Cross. Job satisfaction influences organizational loyalty by employees who in deliver quality services to the people they serve. Employee turn over is always an indication that some things are not working as required within an organization hence making employee retention to be impossible. Therefore, it is important for organizations to ascertain the underlying issues that make the employee turn over to be high if their intention is to achieve high employee retention rates for their own benefit, as is the case of American Red Cross. References Aguenza, B.B., & Som, A.P.M. (2012). Motivational factors of employee retention and engagement in organizations. International Journal of Advancement in Management and Economics, 1(6), 88-95. Das, B. L., & Baruah, M. (2013). Employee retention: A review of literature. IOSR Journal of Business and Management, 14(2), 8-16. Epstein, K.C. (2007). Case Study: American Red Cross. Retrieved on from http://www.contributemedia.com/trends_details.php?id=107 Khan, M. A. (2011). Modeling link between internal service quality in human resources management and employee retention: A case of Pakistan privatized and public sector banks. Africa Journal of Business Management, 5(3), 949- 959. Sihna, R., & Sihna, C. (2012). Factors affecting employee retention: A comparative analysis of two organizations from heavy engineering industry. European Journal of Business and Management, 4 (3), 145- 163. Read More