Impact of training on reducing staff turnover in retail sector

IMPACT OF TRAINING ON REDUCING STAFF TURNOVER IN RETAIL SECTOR – A CASE STUDY OF TESCO, UK

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DECLARATIONI declare that this research is completely my effort and piece of work based on study conducted

by myself. Any work or theory used in this dissertation have been duly referenced and given

proper sources. Moreover, the research has been conducted according to the guidelines provided

by the tutor.

ACKNOWLEDGEMENT I would like to thank my supervisor, ---------- for his/her help in the process of completing this

dissertation. This dissertation would not have been possible without my supervisor’s help and

patience.

ContentsDECLARATION...........................................................................................................................................2

ACKNOWLEDGEMENT.............................................................................................................................3

ABSTRACT...................................................................................................................................................9

CHAPTER 1 - INTRODUCTION...............................................................................................................10

1.1 DEFINITION OF TURNOVER..................................................................................................11

1.2 TRAINING AT TESCO..............................................................................................................12

1.3 AIM AND OBJECTIVES OF RESEARCH................................................................................13

1.3.1 Research Objectives..................................................................................................................13

1.3.2 Research Questions...................................................................................................................13

1.4 STRUCTURE OF STUDY..........................................................................................................13

1.4.1 Chapter I – Introduction............................................................................................................13

1.4.2 Chapter II – Literature Review.................................................................................................14

1.4.3 Chapter III – Research Methodology........................................................................................14

1.4.4 Chapter IV – Data collection & Analysis................................................................................14

1.4.5 Chapter V – Conclusion & Recommendations.........................................................................14

CHAPTER 2 – LITERATURE REVIEW...................................................................................................15

2.1 DEFINITION AND CLASSIFICATION OF STAFF TURNOVER..........................................15

2.2 REASONS BEHIND EMPLOYEE TURNOVER......................................................................17

2.2.1 Relationship between Job satisfaction and Turnover...............................................................17

2.2.2 Relationship between Commitment and Turnover..................................................................18

2.2.3 Causes of dissatisfaction at work.............................................................................................18

2.2.4 Relationship between Training, career development and turnover.........................................20

2.3 TURNOVER IN RETAIL SECTOR...........................................................................................20

2.4 ROLE OF TRAINING IN REDUCING EMPLOYEE TURNOVER.........................................24

2.5 EFFECT OF COMMITMENT STRATEGY ON EMPLOYEE TURNOVER..........................24

2.5.1 Effect of Training on Employee Investment............................................................................26

2.5.2 Effect of Training on Employee Reciprocity...........................................................................28

2.5.3 Effect of Training on Employees Identity...............................................................................29

2.5.4 Effect of Training on Employees Lack of Alternatives...........................................................30

2.6 CONCLUSION............................................................................................................................30

CHAPTER 3 – METHODOLOGY.............................................................................................................32

3.1 RESEARCH DESIGN.................................................................................................................32

3.1.1 Research Philosophy................................................................................................................32

3.1.1.1 Realism............................................................................................................................32

3.1.1.2 Positivism.........................................................................................................................33

3.1.1.3 Interpretivism...................................................................................................................33

3.2 RESEARCH METHODS............................................................................................................34

3.2.1 Questionnaires..........................................................................................................................34

3.2.1.1 Closed ended questions....................................................................................................36

3.2.2.2 Open ended questions......................................................................................................36

3.2.2.3 Interview questions..........................................................................................................37

3.2.3 Population of Research............................................................................................................38

3.2.4 Sample of Research..............................................................................................................39

3.3 DATA COLLECTION................................................................................................................39

3.3.1 Quantitative Data.....................................................................................................................40

3.3.2 Qualitative Data.......................................................................................................................40

3.4 DATA ANALYSIS......................................................................................................................41

CHAPTER 4 – RESULTS & ANALYSIS OF DATA................................................................................43

4.1 RESULT ACCORDING TO DEMOGRAPHICS.......................................................................43

Table 1.1 Gender and Marital status...........................................................................................44

Fig 1.1 Fig 1.2....................................................................................................................44

Table 1.2 Age group and duration at Tesco...............................................................................45

Figure 1.3 Figure 1.4............................................................................................................46

Table 1.3 Position at Tesco........................................................................................................46

Figure 1.5....................................................................................................................................47

Table 1.4 Change of jobs in last 5 years.....................................................................................47

Figure 1.6 Figure 1.7............................................................................................................48

..............................................................................................................................................................48

Table 1.5 Reasons for leaving the Job........................................................................................49

Fig 1.8.........................................................................................................................................49

4.2 GENERAL TRAINING.............................................................................................................49

4.2.1 General Training at Tesco.........................................................................................................49

4.2.2 Usefulness of General Training................................................................................................50

Table 1.6 Gap between training at Tesco...................................................................................50

Fig 1.9.........................................................................................................................................51

4.3 SPECIFIC TRAINING...............................................................................................................51

4.3.1 Training before change............................................................................................................51

Table 1.7 Effective ways of training..........................................................................................52

Fig 2.0.........................................................................................................................................53

4.3.2 Satisfied with training provided..............................................................................................53

4.4 AFFECT OF TRAINING ON EMPLOYEE TURNOVER.......................................................53

Table 1.8 Skills learnt / utilised in other companies..................................................................54

Fig 2.1 Fig 2.2....................................................................................................................54

Table 1.9 Factors determining effectiveness of training............................................................55

Figure 2.3....................................................................................................................................56

4.5 ANALYSIS OF QUALITATIVE DATA..................................................................................56

4.5.1 Response of Staff / Managers..................................................................................................57

4.5.2 Analysis....................................................................................................................................58

CHAPTER 5 – CONCLUSION AND RECOMMENDATIONS...............................................................60

5.1 CONCLUSION..........................................................................................................................60

5.2 RECOMMENDATIONS...........................................................................................................62

5.2.1 Future Recommendations........................................................................................................63

REFERENCES............................................................................................................................................65

WEBSITES..............................................................................................................................................67

APPENDIX - QUESTIONNAIRE..............................................................................................................68

ABSTRACTTraining and development of employees is an important part of human resource practices. With

growing competition in market and globalisation, large and medium organisations are investing

heavily in this area to gain future benefits.

This research will discuss different attitudes of employees which ensure reduced turnover rate

among them. These attitudes include employee loyalty and commitment with company,

employees’ willingness to invest time in company, lack of opportunities, career development

opportunity in company and others. Furthermore, this research will investigate the effect of

training on increasing these factors and as a result reducing turnover among employees.

The first chapter will introduce the topic and reasons behind conducting this research. In this

chapter, the company chosen for this research will also be introduced. A case study will be

performed on Tesco, Chessington, Surrey branch in United Kingdom. Aims and objectives of

this study will be outlined in this chapter, which will give a roadmap to the research.

Theoretical framework of the research will be discussed in the second chapter. This will include

the discussion of earlier researches carried out on the similar topic. The third chapter will bring

out the methodology used to carry out the research. In order to conduct the case study,

quantitative and qualitative research will be carried out by using structured and semi-structured

questionnaire. Primary data obtained from the questionnaire will be analysed against the

secondary research in chapter two.

This will be followed by the calculation and analysis of results in the fourth chapter. The data

obtained from the responses of questionnaire will be calculated using simple arithmetic

percentages and averages. The last chapter will sum up the entire research with conclusion.

Recommendations will also be made for the current training system of Tesco and further

research in this area.

CHAPTER 1 - INTRODUCTION

Training is increasingly becoming very important for the companies in their effort to gain

competitive advantage in the market. Professionals see this as an important tool towards gaining

organizational goals. They argue that training is best source of increase in employee turnover and

retention. They also believe that training is an extremely important part of human resources

practice (Colarell and Montei, 2006).

There has been a considerable increase in training industry. Joyce (2008) quotes statistics from

The American Society for Training and Development and says that from there was an increase of

$135 per employee on the training programs from 2003 to 2007, whereas, there has been a slight

decline in training expenditure from 2008 onwards (astd.com, 2010). Joyce argues that

employers are still spending on the training system during the financial crunch, which makes it

even more important for the company’s growth.

Kaufman and Hotchkiss (2007) argue that although training can be extremely beneficial for

company’s growth, it can also be high cost for them. These costs may vary from the salary of the

trainer to the technology or material required for it. There are other indirect costs, like

productivity of the employee during and after completing the training. Apart from all these costs,

it is generally expected that the productivity of the employees will increase at the end of the

training program. There is two-way benefit of training; the company will benefit from the

increased output of employees, whereas, the increase in productivity will ensure higher wages

and better pay and rewards. Generally the company will weigh its cost incur on training with the

expected benefit derived from the productivity of the employees.

Besides the costs incurred on training, employee turnover also plays an important part in the

investment made on training. The company will avoid investing more on training programs, if

there are high chances of employee turnover. Reason behind this is that the company will lose all

its investment if the employee leaves upon completion of the training. Keeping in view the

turnover issue, organizations decide very prudently about the investment they have to make in

training the employees. Companies should take into account all the factors, like the duration, cost

and location of training before starting the program (Frazis and Speltzer, 2005).

Organizations usually spent lot of money in hiring, training, developing and retaining their

employees. This is the reason that managers make all the effort to reduce the level of employee

turnover (Kevin et al., 2009). They said that there is no standardized procedure of reducing

turnover and managers should study different factors that may affect employees and make them

to leave the organization. The need is to develop strategies to counter and minimize the factors

that cause turnover. Globalization has made competition even tougher between the

organizations, so that they have to come up with products and services which would make them

unique. Employees are source of gaining competitive edge in the market, as they can help

provide high value services to the company. Also, if retained by the company, these employees

are not easily replicated by other companies. Hence, managers should make every effort to

understand the factors behind turnover and try to minimize them as much as possible.

1.1 DEFINITION OF TURNOVERThere are various reasons behind employee turnover. Abassi et al (2005) describe turnover as the

circulation of employees in the job market from one organization, job or profession to another or

from being unemployed to employed. Whereas, Price (1977) cited in Abassi et al (2005)

describes turnover as the ratio of the employees leaving in a particular period divided by the

people employed in an organization in the same period of time. He also said that the process of

turnover starts from the time an employee leaves voluntarily or involuntarily to the time another

employee is hired and trained to fill that space. This complete cycle is called turnover.

According to Hom and Griffeth (2007), the term turnover can also be used to describe the

relationship between an employee and organization upon their leave. They believe that an

employee makes a conscious decision to leave an organization. This decision is made after a long

process of analyzing different factors, internal and external. Internal factors can be the behavior

of the manager, organization policies, lack of career growth; while, external factors can be the

better job offer, higher wages, more rewards etc. This is also termed as push and pull factor.

Push factors are the internal factors of the organization that push an employee towards another

organization, while pull factors are external factors which attract the employee towards it

(Beach, 2009). He argued that either single factor makes the employee leave the organization or

sometimes both pull and push factors play significant role in employee’s decision to leave.

This research will examine the relationship between training provided by organizations and

employee turnover in retail organization. Through this study, inquiry will be made into different

areas and factors that cause turnover and how these can be minimized through training programs.

The research will focus on a UK based retail company, Tesco.

1.2 TRAINING AT TESCOTesco is one of the three largest retail stores in the world with more than 472,000 employees in

its stores located in Europe, North America and Asia (Guardian, 2010). The company has

devised an effective plan to retain its employees through training and career development. The

company has a training institute called “Tesco Academy” that designs and carries out training

programs. These training programs are made to meet the changing trends and ambitions of the

employees. The team in charge of planning a training program reviews the existing trends of the

customers and competitors and the expectations of the employees. Then a training program is

devised according to the observations and recordings. After an extensive research in its stores in

the UK, Europe, USA and Asia, Tesco Academy came up with the Trainer Assessment Program

(TAP) (Case study: Tesco, 2011).

The purpose of TAP was to identify and understand the needs of trainers responsible for the

training of thousands of employees in the company. These trainers are provided with special

training under this program to cope with the challenges of training the employees. At the end of

their training, the trainers are awarded with professional certificate to ensure their future growth.

Tesco pays great importance to the career development of its employees. For this reason, the

company has developed a training program called “Every Little Helps” which aims to enhance

the abilities of its employees needed to carry out their job efficiently, while giving them an

opportunity to grow professionally (Tesco Plc, 2011).

Another significant training program run by Tesco is their Optional Development Program,

which is offered to the apprentices to encourage them to study while at work. In this program

approximately 7000 employees are given training at a time. Through this program, the company

prepares the existing employees for the next level in their careers. Tesco HR manager says this is

the reason that almost 80% of the managerial positions are filled from internal hiring (Tesco,

Careers, 2011).

1.3 AIM AND OBJECTIVES OF RESEARCHThe aim of the research is to identify and evaluate the impact of training on reducing staff

turnover at Tesco.

1.3.1 Research Objectives

Following are the objectives of the research:

1. To identify and evaluate the factors behind employee turnover in an organisation

2. To examine the effect of staff turnover on organizational performance

3. To analyse the role of training in reducing staff turnover

4. To critically analyse the training procedure at Tesco and its effect in staff turnover

1.3.2 Research Questions

Following are the questions which will be explored in the research:

1. How can training improve the turnover of staff in a company?

2. What factors determine the employees’ level of commitment towards the company?

3. What kind of training impacts employees’ performance?

4. How far has Tesco been successful in decreasing the turnover of its employees?

1.4 STRUCTURE OF STUDYThis research paper comprises of five chapters; introduction, literature review, research

methodology, data calculation and analysis and conclusion and recommendations. Each chapter

begins with an introduction, giving the summary of the chapter.

1.4.1 Chapter I – Introduction

The first chapter introduces the topic under discussion. It explains the role of training in human

resource planning, while focusing on its impact on the turnover of employees in a retail sector.

1.4.2 Chapter II – Literature Review

This chapter includes discussion on the theoretical framework of the research. Important terms

like turnover have been defined and explained, followed by analysis of the theory of

commitment.

1.4.3 Chapter III – Research Methodology

The third chapter outlines the methodology used to conduct the research. Research design and

structure has been discussed in this chapter, while the sample and questionnaire have also been

discussed.

1.4.4 Chapter IV – Data collection & Analysis

Data collected from questionnaires will be calculated, using simple mathematical tools and the

results will be shown in tabular form. The result will also be analysed according to the

theoretical framework of the research.

1.4.5 Chapter V – Conclusion & Recommendations

The last chapter sums up the entire research. It gives the conclusion based on the results and

analysis in chapter four. Also, recommendations are given for Tesco to improve its training

system and reduce turnover.




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CHAPTER 2 – LITERATURE REVIEW

In this chapter theoretical framework of the research will be developed. This chapter will discuss

the reasons behind employee turnover and how it can be reduced through training. In the first

phase different factors causing employee turnover will be discussed, with emphasis on the

internal factors. In the next phase factors that ensure employee retention will be discussed, such

as employee commitment and time investment. Also, their relationship with training will be

explored and investigated.

2.1 DEFINITION AND CLASSIFICATION OF STAFF TURNOVER Different researchers have defined turnover as movement of employees leaving or joining the

organization (Nel, Werner, Haasbroek, Poisat, Sono & Schultz, 2008). As per the definition, the

researchers do not consider transfers from one branch or office of the same organization to

another to be staff turnover, as it is a permanent activity.

The authors also explained the controllable and uncontrollable forms of turnover. Controllable

turnover is the one that is in control of the management. These include the voluntary turnover,

which means the resignation of employees and the termination from work. Such situations can be

avoided if the management plays proper role. To minimize the number of resignations, managers

should motivate employees, offer better salaries and bonuses, train them and provide

opportunities for career development. Similarly, terminations can be controlled if the

management recruits employees best suitable for the job, train them according to the

expectations and policies of the organization, provide support and guidance when necessary and

provide them with opportunity to utilize their strengths. Also, effort should be made to mould the

behavior of the employee according to the environment and policies of the company. They

should be provided with opportunities for proper socialisation.

Uncontrollable staff is the kind of turnover which cannot be controlled or avoided by the

management. These include unexpected accidents like death, downsizing staff because of

financial loss etc. Similarly, Price (1997) has stated that difference should be made between

avoidable and unavoidable turnover. He explained that avoidable turnover is in control of the

management and the reduced or prevented.

It is pertinent to mention here that retrenchments because of financial loss and cost-cutting would

be counted as involuntary turnover (Schultz & Schultz, 2006). They pointed out that in some

situation this may be voluntary as well; such as employees resigning due to lack of bonus in

worse financial times.

Nel et al (2008) pointed out that both voluntary resignations and terminations are controllable by

the management. However, some authors stressed that resignations are voluntary turnover, while

terminations are involuntary; adding that both these can be measured and controlled by the

management (Swanepoel, Erasmus, Van Wyk and Schenk, 2003).

Some authors supported Nel et al (2008) definition and stated that turnover is the movement of

employees leaving the organization (Globler et al, 2006). Although they say that that voluntary

and involuntary turnover are different from each other, but they do not give any specific

differences between the two. But they clearly stated that there is a direct link between job

satisfaction and staff turnover. They explained that management should identify and work on

factors which reduce employees’ satisfaction at work.

Gordon (1991) defined staff turnover as the number of voluntary resignations, while others

define it as the number of employees leaving the organization in a certain period of time

(Newton & Davis, 1997). It has also been observed that the cause of involuntary turnover may

not be related to employees, as it can be restructuring of the organization or downsizing the

employees, where the management has to let go of the employees (Price, 1997).

North and Stone (2006) said that turnover is a voluntary process, chosen by employees to leave

the organization. They said this process brings a balance between the benefits of organization

and employee’s aspiration for better opportunity and career development. These factors can be

termed as push and pull factors. Pull factors are those that attract the employee to the job market

and push factors are those organizational factors that force the employee to look for new

opportunities. Moreover, employees’ attitude towards career development and better

opportunities in the job market are major factors in voluntary turnover. Similarly, organizations

which do not invest in employees create push factors for them to leave.

Negrin and Kirschenbaum (1999) explained different attitudes of employees which affect the

turnover rate of organization. They said that voluntary turnover reflects an attitude of employee

who is in transition of jobs and looks for better opportunity while staying at a job. Such

employees react violently to the negative environment in the organization and are the first ones

to leave. Overall, it is the attitude towards career development that drives the employees to quit

their jobs for better ones. This can also be explained through argument of market viability, which

says that an employee who has greater control on his/her professional abilities and is aware of

strengths is bound to move more from one organization to another.

Greenberg and Baron (2000) explained that while considering different aspects of turnover, this

should also be noticed that sometimes turnover can be in interest of the organisation and can

prove to be beneficial. Turnover allows organization to reduce its costs through fewer salaries

and other financial benefits. However, this can be money consuming with cost of recruiting and

training new employees necessary for specific fields. Also, professionals whose skills are less in

demand in the market are less likely to leave organizations frequently.

It was necessary to explain the difference between controllable and uncontrollable turnover, as

this research work will discuss controllable turnover and measures to reduce it. Focus will be on

the training of staff to help them in their career growth and reduce turnover rate.

2.2 REASONS BEHIND EMPLOYEE TURNOVER Boxall et al (2009) have carried out a study in which they concluded that there are several factors

that affect the motivation level for job in a work place. They argued that all these factors were

linked with turnover, which appeared several times during the study.

An earlier research done by Mobley et al (1979) as cited in Morrell et al (2007) proposed that

factors such as age, duration at work, job satisfaction, job design and job commitment were

indirectly related to turnover, i.e., higher the level of these factors, lower the rate of turnover.

2.2.1 Relationship between Job satisfaction and Turnover

There have been number of researches done on the relationship between the level of job

satisfaction of an employee and turnover rate. One of the researchers’ Lum et al (2008)

suggested that increase in the motivation and level of satisfaction of employees can lead to lower

turnover rate in an organization. It was also researched that job satisfaction is indirectly

proportional to turnover (Mobley at al., 1979; cited in Morrell et al., 2007). Similarly, Griffeth et

al (2007) found out that job satisfaction has a great impact on the turnover rate of employees in

an organization. They said that major reason behind turnover is employee’s dissatisfaction with

the management and a more interesting job offer from another company.

2.2.2 Relationship between Commitment and Turnover

While there seems to be a strong relationship between job satisfaction and turnover rate;

researchers have also proposed that employee commitment with the organization also plays an

important role in the decision behind turnover.

Lum et al (2008) carried out a study on pediatric nurses, in which they concluded that

commitment with the organization has a direct relationship and a great affect on employee’s

decision to leave the organization. Mueller and Price (1990), cited in Lum (2008) said that there

is a close relationship between job satisfaction and commitment, as motivated and satisfied

employees tend to stay committed with the organizations for long time. Hence, they said that

there job satisfaction, commitment and turnover are inter-related to each other, as both the

variables affect the rate of turnover.

However, Elangovan (2011) observed that there are various turnover models which do not take

into consideration the relationship between job satisfaction and organizational commitment with

turnover rate. He proposed that there is a strong relationship between stress and job satisfaction

and between job satisfaction and organization commitment. He said that if the employees are

under stress at work, they are more likely quit the job as they are not satisfied. Similarly, a

committed employee is likely to hold on to the job for a long time.

2.2.3 Causes of dissatisfaction at work

There are various reasons that may cause dissatisfaction at work place. Researchers have argued

that among various factors, pay can be the most important factor in voluntary turnover. Lum et al

(2009) studied the effect of pay on the decision of employees to quit work. They found out that

the study gave mixed results, but higher number of employees suggested that they would

consider leaving the organization if they are not paid according to their job. Similarly, there have

been other studies that revealed that there is not a strong relationship between pay, job

satisfaction and turnover rate.

However, Martin (2008) carried out a survey to find out the importance of higher wages and

career growth among hospitality employees. He found out that these two variables can work as

push and pull factors in turnover rate. He explained that if an employee is dissatisfied with the

wage rate, he or she is likely to leave the job for another company which offers higher wage rate.

In another study carried out by Griffeth et al (2007), it was concluded that pay and rewards have

considerable effect on the satisfaction and turnover rate in an organization. They analysed

different variables including pay, employee performance and turnover rate. Their study

concluded that employees who give high performance expect to be paid and rewarded

accordingly. When the wage rate fails to meet their expectations, they leave the job for better

options.

Griffeth et al (2007) also cite findings from research carried out by Milkovich and Newman

(1999). The later proposed that the high performers look for collective rewards from the

organization rather than individual incentives. But when the organizations fail to fulfill their

expectations, they tend to leave the organization for better offers.

Sometimes, pay or monetary rewards are not the only reason behind dissatisfaction that may

result in turnover. Tang et al (2009) carried out a study including mental health professionals.

They observed that different variables such as attitude of employees towards money, job

satisfaction and voluntary turnover. They found out that attitude of employees towards money is

also an important factor in decision to leave the organization. They said that employees who

value money more than job satisfaction tend to leave the job voluntarily, as compared to those

who regard job satisfaction more important than money. Two things were noted in this study;

pay or monetary reward does not affect job satisfaction and dissatisfied employees result in

increase turnover.

2.2.4 Relationship between Training, career development and turnover

During the course of his study, Martin (2008) found a complicated relationship between training,

career development and turnover. He argued that training can affect turnover in two ways; it can

help decrease turnover rate and sometimes may result in increased turnover rate. Martin further

explained that with enhanced and improved career development skills, employees will be

satisfied enough to stay with the organization for long. But they can also leave for another

employer who will offer better options. This is mostly the case when organizations are not able

to provide challenging work according to the employees’ skills.

However, some researchers have concluded training has no impact on the movement of

employees from one organization to another (Shah & Burke, 2005; Green et al., 2008). They

concluded that training which is given by the organizations result in reduce turnover rate, as the

organizations are likely to build training programs which will prepare their employees to meet

future challenges or change in organizations. Whereas, training obtained outside the organization

leads to higher turnover rate.

Another study done by Chang (2009) focused on relationship between career development and

commitment towards the organization. He found out that when employees are committed they

are less likely to leave the organization. This is also because they see career growth in their

organizations. It was also seen that employees who have low career ambitions are not committed

with the company and hence tend to move frequently from one organization to another.

Chang (2009) also concluded that employees tend to stay long in the organization when they see

that the management is working for their benefit and career growth. They would prefer an

organization which has opportunities for internal growth and promotions and provide training

and professional advice.

2.3 TURNOVER IN RETAIL SECTOR

This dissertation is targeted towards investigating and critically analyzing the unique characteristics

of retail organizations and how these characteristics define their overall strategies in retaining staff

and reducing turnover and affect their respective performances’ impact. Retail have been playing a

very critical role in the world economies. Retail organisations employ around about 9% of workers in

the USA and 5% in UK, France and Germany. In the UK retail are basically among the most earning

businesses and are biggest employers (Bennett, Iossa & Legrenzi, 2010).

Before investigating the impact the unique characteristics of retails make on their overall strategy

and performance, it is of utmost importance to establish a clear set of guidelines to classify any

organization as a retail Organizations. As per Salamnon and Anheier (1992b), the lack of attention

given to retail sector around the world has been more due to the factors that are more conceptual than

empirical. In order to define the boundaries around retail sector, this dissertation will start with the

following five big fundamental classifying elements as suggested by Salamnon and Anheier (1992b):

A) Formally Constituted

B) Private in basic structure

C) Self Governing

D) Serving every community and class

E) Commodity eccentric

These five elements will work as a guiding mechanism for picking up right retail examples,

understand the overall RETAIL sector in any exemplary world economy UK, establishing an

appropriate definition in the realms of UK, and most importantly, in critically analyzing the unique

characteristics that shape the strategies and performance of any RETAIL.

Once establishing the clear-cut boundaries around the different sets of RETAIL, this thesis will

attempt to establish the function of RETAIL and an attempt will be made to understand the

methodology used by retail organisations to retain staff. But this is interesting to note that the retail

system in different countries of the world differ from eachother. For example: In the US states have

laws relating to the structure of RETAILs and in the past few decades there has been a general

tendency of liberalizing the laws governing the structure of RETAILs in different states. This, in

return, has flourished the retail enterprises (Ware, 1996). In contrast, the there are no retail laws in

Britain. As per the British Laws, the RETAILs come under the folds of corporate law and the

organizations can only seek corporate status, but they must conform to the rules and guidelines laid

out by English Corporate Law (Ware, 1996). Till the 19th century, the American and English Laws

classifying the retail were quite similar (Ware, 1996).

Once establishing the clear cut definition of RETAILs in the UK, the unique characteristics of the

RETAILs will be listed out and then the impact different techniques and strategies of retail to avoid

and reduce turnover will be discussed. For the purposes of this dissertation, it will be quite crucial to

establish the right model for strategy and parameters for performances.

In order to establish firm understanding for the research question, the study will aim to fulfil six key

objectives. The research will start by establishing clear cut boundaries around RETAILs in the UK

by utilizing the five classifying elements listed (above) by Salamnon and Anheier.

1) The first objective of retail is to provide necessary commodities and every day use products

to the customer from all walks of society.

2) It is their responsibility to understand the needs of the customers and arrange necessary

products that fulfil their demands requirements.

3) The most important role is played by the employees or the staff in the retail sector. Since

retail is customer oriented, it is necessary that the staff are well trained and friendly and deal

with the pressures of customer service.

4) Using the RETAILs’ unique characteristics the impact on RETAILs strategies will be

studied. It should be noted that the RETAILs examples used for listing the unique

characteristics will be used to study the impact as well.

5) Right parameters will be established to measure the performance of a RETAIL based in UK.

The examples used in listing out the unique characteristics will be used to list out

performance parameters.

6) Finally, using the listed out unique characteristics for the exemplary RETAILs cases, the

impact on RETAIL training on employees will be studied.

The free market system in the world economies basically consists of entities in three different kinds

of categories:

a) Public Sector

b) Private Sector

c) Non-Profit Sector

The entities in public sector are generally publicly traded, state-owned agencies, government entities

which come under the purview parliamentary office, statuary audit control and established company

laws. Whereas, the entities in the private sector operate under free market competition, have their

annual accounts subjected to independent public audit system and they are controlled by ownership

interests. The retail sector falls in the private sector or the corporate sector. The organizations in this

sector include a variety of different entities such as family owned retail, public owned retail. Some

retail organisations are also going into different other sectors like charity, research and scientific,

educational, cultural or professional, private foundations etc., together with some of the other

entities, the RETAIL sector collaborates with the public sector in the delivery of goods and services

(Torres, Pina 2003).

In the past three decades, the importance of RETAIL has grown to a very large extent in the different

world economies. There also has been an increase in the size and the amount of resources managed

by the RETAIL. These reflective trends have made it quite important for us to study the impact of

unique dynamic characteristics of RETAIL on their respective Strategies and Performances. For the

study of a topic of this vastness, it becomes quite relevant to choose a mature world economy: UK in

our case - and develop the research study by also considering multiple exemplary RETAIL based in

UK, Tesco.

Turnover rate in retail sector has increased immensely over the years. The sector is faced with major

challenges due to growing inflation and financial crises in past few years. Although large number of

people are turning to retail after losing their jobs due to downsizing and financial cuts in their

organisation of employment. The only sector that welcomes people from different other professional

sectors, qualifications and skills is retail.

This can be an advantage or a disadvantage to the retail organisation. Advantages can be in form of

cheap labour, which is readily available any time. Also the organisation does not have to spend much

on the recruitment and training of the employees, as both these are standardised in retail sector. Large

numbers of employees required in the retail are for customer services. This may create problems for a

store, if the employees are not recruited after careful process. For example, a person with IT

background may not be good with customer service, so it will be a great challenge for the person to

deal with people face to face. Such an employee will get de-motivated very easily and would look for

other options in the market.

Similarly, if the employees are not given proper training they will not be able to cope with the

growing demands of the job. Training is necessary in the retail sector, as most of the employees are

from various backgrounds and have no formal training of being a retail store employee.

If the employees are not trained according to the demands of the job, then the store would have to

bear the loss of losing employees often. In the long run, the retail organisation will end up losing

more money in recruiting and training new batch of employees.

2.4 ROLE OF TRAINING IN REDUCING EMPLOYEE TURNOVERKrueger and Rouse (2008) studied the effect of training and development programs can have on

the growth of various organizations. They studied various variables that were the result of

training, educational and vocational programs carried out in various organizations. Variables

included the productivity, improved performance, job satisfaction, motivation and regularity at

work. It was observed that these variables result in reduced turnover rate in organizations. The

researchers explained in presence of these factors, commitment of employees towards their

organization increases, which result in reduced turnover rate. Thus, the strategy of reducing

turnover by increasing employee commitment level through training can lead to company growth

and success.

Although there are various human resources strategies to increase commitment level of

employees, but this paper will focus mainly on training programs of companies and its role and

importance. Scholl (2003) said that companies should develop strategies to motivate and retain

employees for long period of time. These strategies should be able to develop a psychological

and emotional relationship between an employee and the company. This should be done in an

attempt to tie up the employee for a longer period of time with the company, which will help the

company to reduce cost of hiring and training another employee. This is the commitment

strategy that can help human resource managers to gain loyalty and commitment from the

employees. This strategy can be used for almost every human resource practice, for example,

recruitment, selection, performance management etc; but in this research focus is on the training

of employees and its affect on turnover of employees.

2.5 EFFECT OF COMMITMENT STRATEGY ON EMPLOYEE TURNOVER An employee who is committed with the organization will tend to remain with it for a longer

period of time. Researchers have conducted various studies to argue and find out the accuracy of

this phenomenon. The conclusion was that there are greater chances of a committed employee to

stay longer with the company than a non-committed one. Steers (1977), cited in Green et al

(2006) proposed that highly committed employees stay hooked to the company for a long period

of time than a non-committed one. He said that highly committed employees have the urge to

produce more at work, come to work regularly and have a positive attitude towards the co-

workers and the job. Thus, he concluded that commitment is a significant factor in curtailing

employee turnover.

Similarly, Arthur (2004) carried out a study on employees of two steel mills. On one mill he

studied the effect of commitment strategy, while on the other control strategy. Arthur observed

that the company that followed commitment strategy yielded business growth and productivity.

He also found out that the turnover rate in this mill was considerably lower than the one which

followed controlled strategy. Through this human resources can make a great impact on the

organization. By adopting a strategy human resources can influence the employees’ decisions to

change the organization and their attitude towards the current organization. Also, when human

resource managers adopt a commitment strategy, then the percentage of employees leaving the

organization reduces.

Green et al (2006) said that according to their study commitment strategy plays an important role

in retaining the employees. Their study revealed that the organization that practiced committed

strategy managed to reduce the rate of turnover from 19% to 10%, whereas, the likelihood of job

search was reduced from 26% to 15%. Owens (2008) came up with results with his study of

effect of training on organizational growth. Although his study discussed different outcomes of

training, he managed to find the relationship between training and turnover rate. He found out

that employees who had high commitment level towards their organization, have high level of

“turnover cognition”. High level of “turnover cognition” means that the employee tends to stay

for long period of time with the company. When he applied T-test, it was calculated that turnover

cognition had mean of 33.44 with commitment to organization of 84.45; as compared to

untrained employees with mean of 29.32 and commitment level of 73.86. By calculating the

level of commitment in trained and untrained employees separately, it was helpful in proving

that more committed employees are, more chances of staying long with the company and vice

versa.

Commitment also plays an important role in job performance of an employee. This is ascertained

that a committed employee will perform well on the job, which ultimately leads to employee

retention (Walton, 2005). It is believed that when employees perform well improves the working

environment of the company, which increases the company growth.

There is a two way relationship between the growth of company and the performance of

employees. If the performance of employees is low or not up to the expected out turn then it will

affect the growth of the company.

Of the several outcomes of commitment strategy Walton discusses four most important

variables, which impact the turnover of the employees in a company. By discussing these four

variables, we can gain deeper insight into the relationship between training and turnover.

2.5.1 Effect of Training on Employee Investment

Investment is the time and effort an employee makes in return for higher rewards and pay in

future. Becker (2003) argued that the benefits reaped from the investment made in the company

can be in form of monetary or non-monetary rewards. He said that training is also a benefit

gained over a period of time, which may result in higher employee commitment and increased

investment in the company. Becker said this can be achieved in two ways; by providing general

training and specific training. General training enhances employees’ general skills and provides

them with basic skills to survive in the job. These skills help the employee to perform in any

company in the market. Kaufman and Hotchkiss (2006) said that it is very unlikely that an

employer will invest in basic training skills, as the employers are able to use them anywhere in

the job market. Another reason that employers would avoid general training is that it is the kind

of training that almost every employee can benefit from and thus, it enhances the skill of the

employees all over the market. Keeping in view the market trends, organizations would have to

compete with each other in paying more to its employees to retain them. And even by doing that,

there are still high chances that the employees would leave the company as soon as a better offer

comes in the market. This way the company will have to bear double cost of training the

employee and hiring a new one when they leave.

Contrary to this, on-the-job or specific training is the one that is provided to employees which is

specific to the demands of the company only (Frazis and Spletzer, 2005). Through this training

only the employer can benefit out of it. This may include technical training which is specific to

the products or services of the company. This type of training differs from general training in a

way that it can only be given by the company and all costs are born by them. The downside of

this training is that employees may not be able to utilize the skills learnt in the company with any

other employer. The idea behind this training is that the skills attained through this training are

nontransferable to any other company, but at the same time it enhances the skills of the

employees which will be beneficial for the company. This increases chances of career growth of

the employees within the company and reduces the chances of turnover to maximum level.

Becker argues that due to its nontransferable nature, this training is given by the companies and

all costs are incurred by the company. During the course of training the employees are not paid

high and the anticipation of getting a higher wage after training also keep them stick to the

company. If we compare Becker’s model with that of commitment strategy, we can see that

employees’ investment in terms of time, effort and wait for wage increase will lead to the

commitment with the organization. Thus, training becomes a side benefit which fosters employee

investment that leads to commitment and reduced turnover rate.

There are other researches that have expanded the works of Becker by blending the general and

specific forms of training. Pischke (2009) said that without even knowing some companies give

a blend of general and specific training to their employees. He argued that general and specific

training are dependable to each other. He said that companies invest unknowingly in general

training while providing with specific training to their employees. Speltzer (2005) said that

according to the research done by Employer Opportunity Pilot Project, 63% of employees

reported that the training that they received can be transferable to other companies. Moreover,

90% of the employees believed that their skills can be utilized in other companies as well.

The results found by Speltzer can be compared with the commitment strategy. This ensures that

the time invested during training and in anticipation of better wages and rewards can be taken as

the commitment towards the company, even in the situation when the employees know that their

skills can be used in other companies. This can actually make the employees more committed

towards their work and organization. Researchers have also said that employees sometimes are

unaware that the training they are getting can be used in other companies. Regardless of this,

employees spent more time on work, produce better work, their performance improves; which

translates into more rewards and high wages that lead to commitment with organization and

reduced turnover rate.

2.5.2 Effect of Training on Employee Reciprocity

Reciprocity means that two-way, that is an employee will be loyal and committed to the

company because the company has trained and enhanced the skills of the employees. This is

similar to the notion of being under debt, in which employee feels that he/she is under the debt of

the company. Researchers have argued that this notion can be useful for the companies, as their

training can play a major role in developing this feeling in the employees. The kind of training

that fosters the feelings of reciprocity in the employee will ensure their commitment towards the

organization.

Glance et al (2007) argue that organizations that provide training to their employees on regular

basis have greater chances of retaining them than the ones who do not follow this practice. They

further explained that the companies which have trained staff are able to adjust in the times of

change inside and outside the company. They carried out a research on organizations with

changing environments and recorded the effect on turnover. Their research concluded that

companies which had trained employees faced less resistance from employees and low level of

turnover, as compared to the companies with untrained employees who were not ready to face

the challenge of changing environment.

If we see this from the reciprocity view, it can be ascertained that the trained employees feel in

debt of the company and tend to stick with the company in times of change. This commitment

can also be due to the fact that the employees were already trained to cope with the needs of the

change, which may result in better work conditions and pay raise. Also, this training may offer

the employees an opportunity to increase their skills and knowledge of their job, which they may

not be able to get anywhere else. This also leads to the sense of debt that fosters commitment and

loyalty in the employees.

Burke (2005) observed that the trained employees who found their training relevant and

beneficial for their future goals have rated their companies very favourably and plan to stick to

the companies for long period of time.

2.5.3 Effect of Training on Employees Identity

Various researches have shown that there is a close relationship between the identity of the

employee and its job. So it can be said that training that increases the productivity of an

employee at work helps it to identify itself with the organization and enhances commitment

towards the company. When hired, the employee has to pass through a formal training and plays

a role of socialization for the new employees (Tannenbaum et al., 2010). New employees have

high hopes and expectation from the company when they join. These desires and expectations

when fulfilled by the company help the employee to identify more closely with the company.

Similarly, when a training program fails to satisfy the demands and expectations of the

employees then it turns into a negative attitude towards the company. These failed or unmet

expectations and demands can lead to lack of commitment in an employee, which may result in

higher turnover. Similarly when the demands of an employee are met, then they feel greater

affinity and identification with the company, which leads to loyalty and commitment towards the

company. Green et al (2006) said that companies tend to give specific job training so that they

can identify with the culture of the organization, while also gain skills for career growth. They

said that Japanese companies like Toyota follow this path rigorously to build level of association

and attachment in employees with the companies, while also giving them social identity.

Bartlett (2009) said that training can increase the identification of an employee with organization

when used with a strategy. Social support for training is one way of integrating employees in the

culture of the organization. This support comes from higher and middle management and also

the co-workers which helps the new employee to go through the training successfully and blend

in with the environment of the company. Due to this the commitment of employees towards the

organization increases and so reduces the risk of turnover.

2.5.4 Effect of Training on Employees Lack of Alternatives

Becker (2003) has described this in his model of general and specific kinds of training. The kind

of training that limits the job alternatives of curtails the opportunities for employees outside the

company leads to reduced turnover. There are several researchers who have defended Becker’s

work and expanded on the model. Lynch (2001) cited in Green et al (2006) observed that young

employees with specific training skills tend to stay committed with the organization for longer

period of time than the ones with general training skills. She also found out that employees with

specific training skills tend to get more benefits than the ones with general training.

Glance et al (2007) elaborated on the “cherry-picking” phenomenon, which refers to the practice

when companies wait till the employees get trained and then attracts them with better offers and

job opportunities. They said that companies tend to steal the trained employees as they help in

reducing the cost of training while increasing their production. Due to this practice, organizations

also lose all their investment in terms of cost and time on their employees. This is the main

reason that companies stick to specific job training.

2.6 CONCLUSIONIn this chapter different models and approaches of training have been discussed to build a

theoretical framework for the study. In the first part of the research various reasons behind

turnover have been discussed, such as, dissatisfaction at work, organizational environment,

career development, pay and wage rate and attitude of employees towards work and money.

Through the understanding of these factors the relationship between commitment and turnover

has been established. It was seen through various researches that committed employees tend to

stick to the organization for a longer period of time than the non-committed ones. In the next

phase, the research focused on the literature that explained ways through which commitment can

be fostered in employees. These include through employee investment of time and efforts,

reciprocity between employees and organizations, social identity of the employees and lack of

job alternatives. Although there are various other factors which enhances commitment among

employees which leads to lower turnover, but this paper will focus on these four elements.

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