Extent of employee turnover in Nigerian SMEs. Employees’-owner/managers’ standpoint
| DOI | https://doi.org/10.1108/ER-02-2016-0046 |
| Date | 06 November 2017 |
| Pages | 967-985 |
| Published date | 06 November 2017 |
| Author | Tejumade Omowumi Siyanbola,Mark W. Gilman |
| Subject Matter | HR & organizational behaviour,Industrial/labour relations,Employment law |
Extent of employee turnover
in Nigerian SMEs
Employees’-owner/managers’standpoint
Tejumade Omowumi Siyanbola
Department of Management and Accounting, Faculty of Administration,
Obafemi Awolowo University, Ile-Ife, Nigeria, and
Mark W. Gilman
Birmingham City Business School, Birmingham City University, Birmingham, UK
Abstract
Purpose –The purpose of this paper is to assess the magnitude of employee turnover (E-turnover)
in Nigerian small- and medium-sized enterprises (SMEs) with particular focus on the manufacturing and
service firms adjudged as central to the growth and development of Nigerian economy.
Design/methodology/approach –Data from 602 employees and 94 owner/managers of SMEs located in
three Southwestern Nigerian states were collected through survey questionnaire and analysed quantitatively.
Findings –Employees’and management’s responses indicated that E-turnover still pervades the Nigerian
SMEs surveyed with most employees leaving their jobs in less than a year of employment. Multiple exits also
occurred; additionally, employees were more prone to exiting if they were male, older, had a smaller family
size and/or worked in the manufacturing rather than service SMEs.
Research limitations/implications –More needs to be done to comprehend owner-managers’apparent
deliberate disguise of employee over-casualisation in the SMEs studied, an act that appeared to limit the
interpretation of status-related turnover extent among employees.
Practical implications –Twenty-first century businesses need to stimulate sustainable cost-effective
employment relationship capable of thwarting the threat accompanying high E-turnover in businesses.
Originality/value –Through this research, extant global E-turnover literature (largely on western
businesses) is enriched by dedicated empirical data on Nigerian SMEs that this study offers.
Keywords Nigeria, SMEs, Employment relationship, Employees, Employee turnover, Owner/managers
Paper type Research paper
Introduction
Commentators of all persuasions (e.g. Hyson, 2016) have identified the occurrence of
employee turnover (E-turnover) and its concomitant problems in organisations/businesses
and the overall economies with great concerns. The significance of the turnover
phenomenon is also highlighted by the historic attention it has received from experts such
as Price (2001). More recently, Hyson (2016) and George (2015) argued that an
organisation’s ability to reduc e incessant E-turnover and retain more valuable employees
could help preserve the knowledge within the organisation and manage resources more
cost-effectively. Consequently, E-turnover issues in businesses and other organisations
appear commonplace and ongoing; hence, the accompanying instability and associated
costs cannot be ignored.
However, consensus on the degree, types and nature of E-turnover occurrence appears
not to be that clear-cut. For instance, while researchers like Budhwar et al. (2009) generally
acknowledged that high turnover characterises the service sector like hospital ity
(Nadiri and Tanova, 2010), others like Keltner and Finegold (1996) have reported
35-50 per cent E-turnover rates even in banking. By implication, organisational turnover
acceptability level is endlessly de bated (Glebbeek an d Bax, 2004) and its estimated costs
continually contentious (Chartered Institute of Personnel and Development, 2004).
Another fundamental issue is that although studies have revealed significant correlation
Employee Relations
Vol. 39 No. 7, 2017
pp. 967-985
© Emerald PublishingLimited
0142-5455
DOI 10.1108/ER-02-2016-0046
Received 24 February 2016
Revised 4 December 2016
9 April 2017
Accepted 18 April 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0142-5455.htm
967
Extent of
employee
turnover in
Nigerian SMEs
between E-turnover level in small- and medium-sized enterprises (SMEs) and their overall
performance (Ugbam et al., 2012), the rate of employees’exit from such businesses,
particularly in developing nations like Nigeria, is not clearly identifiable from extant
literature. Arguably, this gap in literature may be linked to the general lack of empirical
studies on businesses (Khatri et al., 2006).
SMEs are defined as businesses employing 10-199 people (Small and Medium
Enterprises Development Agency of Nigeria (SMEDAN) and UNDP, 2007); SMEDAN is the
agency mandated by the Nigerian Government to develop and sustain the nation’s SME
sector. The SMEs sector is fundamental to the development of many economies
(Tennant et al., 2013; Ariyo, 2000) and accounts for over 90 per cent of businesses in the
developed, emerging and developing economies (Seyal et al., 2004). Research indicates that
high E-turnover significantly impact SMEs and the broader economies (Gberevbie, 2010);
indeed, evidence of high turnover rates have recently been reported in Nigeria’s
organisations/businesses (Siyanbola, 2013; Ihua, 2010).
In view of these turnover-related issues and their significance to SMEs’and wider
economies’success, this study evaluated employees’and owner/managers’accounts of
E-turnover extent in Nigeria’s manufacturing and service SMEs. Studying E-turnover in the
Nigerian and its Southwestern zone contexts is critical because it is not only that
Southwestern Nigeria is non-oil producing like other Nigerian zones, it is also home to over
70 per cent of Nigerian SMEs (Oyelaran-Oyeyinka, 2001). Additionally, it is imperative to
explain that although many studies on turnover exist in extant literature, most including
theories, frameworks and the contexts they occur are western in nature and are meant for
western organisations (West, 2004). It has actually been argued that existing E-turnover
theories and frameworks may be contextually unsuitable for environments like Nigeria with
such cultural distinctiveness (e.g. Hofstede, 2010). By implication, each context requires
unique approachesto studying, understanding and managing E-turnover in its organisations
so that context-specific andlasting policies suitablefor such environment can bedeveloped for
medium- to long-term implementation. The paper further probes into the level of E-turnover
deemed acceptable for the SMES in the Nigerian context. The following section presents an
international outlook on turnover magnitude in the UK, the USA and other countries.
Extent of E-turnover in an international context
E-turnover in organisations in the western nations like the UK and the USA has been
extensively researched over the years; but, despite this research richness, it is surprising to
observe that turnover still pervades organisations with little consensus on its general
manifestations, frameworks, theories, definitions, measurement, etc. (e.g. Schlesinger and
James, 1991). The extent of the problem in the UK is highlighted by sources like the
Chartered Institute of Personnel and Development (CIPD), the Workplace Employment
Relations Survey and the Confederation of British Industry. The Chartered Institute of
Personnel and Development (CIPD) (2013), for instance, recognises that certain businesses
operate within what the organisation calls “[…] high-turnover industries [with] […]
people resigning or being dismissed in the first few months of employment”(p. 4). Although
the CIPD also reports a progressively decreasing overall turnover rate in UK firms from
17.3 per cent in 2008 to 12.5 per cent in 2011 (Chartered Institute of Personnel and
Development (CIPD), 2011), it is still arguable that a much lower rate is desirable,
particularly because the same source indicates that the rate for the private sector actually
increased for the same period. Additionally, more than half of organisations sampled
reported difficulties in recruiting (CIPD, 2011), indicating that high exits of critical
employees could be unwelcomed by such businesses, due to potential replacement difficulty.
Typically, turnover is often more pronounced in private sector services consortium like
retailing, hotels, catering, leisure, etc., than any other sector (CIPD, 2013). For instance, the
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