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Human Resource Management in Staff Retention

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What the role does human resource management play to keep employees? Is it really vital to a company? Nowadays with the development of the worldwide economy, there are numerous companies in many fields. And as a result of intense labor market competition, human resource management seems more and more important because it is related to staff retention. It is the key for the success of a company. This essay will first demonstrate the background about retention, and then extend to the role of human resource management in staff retention in four aspects by give some examples. In the final part, the importance of human resource management and staff retention will be explored.

A human resource information system (HRIS) “is a systematic procedure for collecting, storing, maintaining, retrieving, and validating data needed by an organization about its human resources” (Cathcart, 1999: p275-282). “Human resource systems are the organizational support struts that keep internal operations running smoothly” (Homey & Ruddle, 1998: p54). To put it simply, human resource management is about manage staff, motivate them and put them in a proper position. Employee retention means the ability of an organization or a company to keep its employees. And turnover means the rate at which employees leave a workforce and are replaced. There are two kind of turnover, one is unavoidable staff turnover while another is avoidable staff turnover. Some unavoidable factors are influencing staff turnover such as retirement, people got sick, got married, death, and pregnancy. And influencing factors of avoidable staff turnover contains relationship with manager, dissatisfaction with the salary, lack of training, work pace and stress, relationships with other colleges and hours of work. Human resource management aims to deal with these avoidable influencing factors. For example, human resource department in a company will train employees and increase the salary to motivate staff, so that the staff turnover will decrease. It will make staff retention rate increase.

A new employees is the fresh blood of the enterprise, it guarantees the company always creates new idea and keep the company lively. But if the rate of turnover is too high, it will lead the company into a circle of “hire–lose–hire”, which will affect the company seriously. There are some methods that HRM usually follows to help in staff retention.

Employee Selection
Recruiting a eligible employee is the duty of human resource department. The employee should be suitable for the job occupation rather than best in every aspect. In some cases of recruitment, companies blindly pursue excellent staff, but ignore the circumstance of the company itself. Whether the company can create a good work platform for these staff. If not, those talented people will not match the company and will leave the company at last, resulting a new employee turnover. Therefore, to guarantee staff retention, HRM will do things in a recruitment stage as follows. First, analyze the occupation and make a human resource plan, define the job qualifications. Before the recruitment, HR should communicate with every department in the enterprises to avoid blind recruitment. Then the new employee will match the position and keep staff.

Second, HR should know applicants personnel quality, work ability, experience by CV and do some tests. And HR hire those whom always job-hopping should be with caution. Because they might change the job quickly. For example, “APPLE” select staff very strictly. The staff in “APPLE” should be skillful, and HR gives a prior consideration to those who love “APPLE” products by some tests. Third, in the progress of recruitment, HR should show applicants the true things about the company otherwise when they entered the company and find things are not as their expectation, they will disappoint, even leaving the company. To conclude, recruitment is most important because successful businessman Jack Welch has said the all thing we could do is bet on the people we pick out.

Training the employee is the another role in human resource management which can enhance understanding between people and stabilize the team. In human resource management, staff should be trained to improve the confidence and reduce staff turnover. Usually HR will give the new staff company culture and management system training. This is to ensure the new staff follow the rules of the enterprise in the work so that it can avoid staff makes errors by mistake and increase their pressure. What is more, HR always give the new employee knowledge and skill training. This is to ensure the new employees can work efficiently. If they cannot get used to the work, they may have psychological pressure and produce “job-hopping” idea in their mind. The last training is the understanding of the company which is used for build the loyalty. New employees usually like to compare the current company and their previous company. Giving them a course about the background of the company will help their understanding about it. Thus reduce the turnover rate to keep staff. The Chinese phone company “HUAWEI” is an example for this. When entered in this company, all the employees should receive training which contains the background of the company, skilled training and so on. This measure is very helpful for them. (Yingguang, S. Human Resource Management at Huawei)

Increase the Staff Satisfaction
In human resource management, an important skill is to increase staff satisfaction. The satisfaction of employees is directly related to the employee turnover rate. The higher the staff satisfaction, the more staff retention. There are many influencing factors of staff satisfaction. So there is a need of human resource manage to communicate with staff and know what they need and what they dissatisfied with and solve the problem. In human resource management, the first thing people should do is care about, respect and trust the employees. Employees determine the future of the enterprise and respect them is one of the most basic conditions for keeping staff. When a new staff come into the company, he always has good wishes and dreams of this new job. He probably needs the attention and trust from the leader. If the company neglect the expectations of the new employee, their satisfaction will decreased. And then lose an excellent new employees. The best example is Google company. Google has a high salary for the employees and it provides them a perfect environment, such as free refreshments and swimming pool. (Huselid, M. 1995)

Performance Appraisal
In addition, companies establish a fail and reasonable performance appraisal system can help staff retention. In many enterprises, HR separate the new employee performance appraisal and the old staff performance appraisal. If the new employee evaluation standards are too high, the implementation process will not be fair. They may appear resent and dissatisfied. If enterprises have no signs of improvement and adjustment in the long run, finding a new job is the only way for staff. McDonald’s use “contribution paid” principle by give the excellent performance of the staff the best salary. The better the performance, the more the wage growth. And McDonald’s performance appraisal system is the basis for the adjustment of wages. (http://www.mcdonalds.co.uk)

Compensation and Benefits
The last role that human resource management play in staff retention is compensation and benefits. Compensation and benefits is a discipline of human resources management which focused on salary and benefits policy-making. A business compensation system has three main purposes: Attracting qualified employees, retaining those employees and motivating higher levels of performance from them. The company should praise staff who are excellent in the job by promotion. What is more, HR should have a plan about average benefits, to attract employees and retain them. Human resource management plays an vital role in increasing employee satisfaction, improving productivity, which benefits for the staff retention. “The lack of qualified staff threatens a company’s bottom line, motivating employers to be aggressive in developing programs to keep their valued employees.” (Cathcart, C and Kovach, K. 1999) Staff retention is the key of a company success. Every lose 10 technical and management staff will lose about 1000000 dollars in general. Lose of key employees of organizational causes significant economic impact, especially considering with staff from the resulting intellectual losses. This knowledge is about how to meet customer requirements and expectations. Knowledge management is to create, save and use that knowledge to enhance organizational performance process. (Bassi, 1997: p5)

This essay has examined retention, and the role of human resource management in staff retention in four aspects. And the importance of human resource management and staff retention were explored. In summary, there is a variety of factors which can influence staff retention. Some factor are controllable while some factors are not. Enterprises cannot eliminate the employee turnover but can reduce it by selecting employees, training them and satisfying them. Keep staff in a company not only can reduce employee turnover costs and losses, but also can create more economic value for a company. In addition, it is benefits to the reasonable distribution of staff in a company. It can help the long term planning and development of company. Therefore the company should attach importance on human resource management and staff retention.

Bassi, L. (1997). ‘Harnessing the Power of Intellectual Capital’. Training & Development. 51/25.

Cathcart, C. & Kovach, K. (1999). ‘Human Resource Information Systems (HRIS): Providing Business with Rapid Data Access, Information Exchange & Strategic Advantage’. Public Personnel Management. 28/2.

Farndale E & Scullion H. (2010). ‘The Role of the Corporate HR Function in Global Talent Management’. Journal of World Business. 14/2.

Homey, N. & Ruddle, I. (1998). ‘All Systems Go?’ Bank Marketing, 30/1.

Huselid, M. (1995). ‘The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance’. Academy of
Management Journal, 38/3.

Jack, W. (2005). Winning: The Ultimate Business How-To Book. London: HarperCollins.

Koch, M. (1996). ‘Improving Labor Productivity: Human Resource Management Policies Do Matter’. Strategic Management Journal, 17/5. Weeks, K. (2013). ‘An analysis of human resource information system impact on employees’. Journal of Management, 14/3.

Yingguang, S. (2004). Human Resource Management at Huawei. Online. Internet. 26 Nov. 2004. Available http://english.ckgsb.edu.cn/case_content/human-resource-management-huawei (Accessed 20/08/07)

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