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Impact of performance appraisal on employee satisfaction and retention

Impact of performance appraisal on employee satisfaction and retention


In this chapter the researcher will discuss staff revenue, employee retention, satisfaction, relevant assumptions, and employee performance appraisal in fast food industries. This chapter will as well tackle problem related to staff contentment and performance because it is closely connected fast food industries plus the techniques and measures that need to be taken to support and improve maintenance of staff.

2.2 Employee Turnover

According to Ghoshal (2012), employee turnover returns has been an issue in several sectors, however, the fast foods sector is clearly famous for its pitiable and poor working states, stumpy incentives, and lofty turn-over rates. Getting superior aptitude and motivated staff is tricky owing to traumatic, tiresome, and swift paced nature of the profession employment given by fast food sector. Although overheads of revenue are exceedingly lofty, the sector is still facing employing and maintaining staff as among the challenging issues. Not only is this a widespread concern in the sector, but leaders believe this problem to be present. The management in fast food sector recognize that owing to the frustration of staff, employment nature in this sector, and the categories of workers employed that elevated turnover is expected and at times unavoidable (DiPietro and Pizam, 2008). Nevertheless, managers in this sector should find out the root causes of the high turnover, and develop policies or strategies on how solve high turnover problem.

Staff turnover is the percentage of workforce that are replaced in a given institution to the standard figure of personnel within the firm. According to Phillips and Connell (2013), management of staff maintenance and upholding turnover rate that is not to the required standard and sector customs is among the trickiest problems in the fast food industry today. If a member of staff  resigns, retires from a given organization or decides to join another company, the firm will lose proficiency, skills and expertise that employee has hence organization will have no choice but to substitute this staff, habitually from external source (Kransdorff, 2010). Employee turnover, particularly if it is unpaid, is likely to have detrimental consequences on a company, not only comprise skill loss from the staff retirement or resignation but also signifies that functional progression of the firm will be damaged even as new staff members are employed to take up vacancies that have been left.

As stated by Kransdorff (2010), whereas the benefits of recurrent employment turnovers appear bring new inventiveness and fresh thoughts to the firm, paying off those who are resigning or retiring, the truth still remains that the organization’s investment in employees who are leaving in form of proficiency and skill earned while working for the company is a waste and a big loss.  Consequently, the company does not have the gains of the retrospection that the employee has received as personified in the proficiency and skill of the persons that retired or resigned, except if the company looks for a means of retaining the intelligence, skill and proficiency of these staff members it has invested in through efficient evaluation successfully. The end result is a general loss in output and poor competitive advantage, because the company will lose the benefits of hard earned retrospection personified in the skills of its staff and in place it will force the company to put up the  skill of fresh workforce  that come from diverse settings overall.

Khatri (2009) differentiates amid turnover purpose, which is the objective of the staff to resign or retire profession hopping. He cites Ghiselli (2007: 87) who defined profession hopping as cyclic itchiness to shift from one employment to another in same position or to another employment in a different position  that come out of spontaneous dealings. An additional cause why staff decides to go to another employment is the turnover traditions, which makes it suitable for a staff member that has stayed in the company for a long period to adjust employment and go to a different firm.

In fast food sector particularly, staff turnover is high because of a number of issues.  Booth and Hamer (2007) in their research presented a case research that involved fast food retailers.  These two researchers used information from payments that staff received annually and the domestic labor turnover information for every United Kingdom fast food retailer. The research results recommended that factors that surround the like environment within domestic labor market affect workforce turnover. Second, higher personnel turnover might as well be the effects of company’s problems and traditions, particularly became organization behaviour that has in addition influenced staff to decide if they want to stay or resign for another job. This survey was particularly important as it outlined that in fast food industries to be specific, as the workforce get entrenched and well-known in the company; the further they are expected to go seeking greener pastures. This case study gives a good explanation why there is a high turnover of workforce in fast food sector, since a number of staff that joins the company untrained and once they get the required skill that improves their skills to get a good employment they resign and thus promote high workforce turnover. Likewise, those personnel with preceding skill would as well work out a way to develop their skill and knowledge and then shift on to secure positions.

2.3 Staff Retention

Fuller (2004) describes staff retention as the manner in which a company operates that is likely to persuade staff members stay of decide to go.  If workforce are not taken seriously or they are looked down upon and feel worthless, subsequently it is expected that staff will be affected negatively in terms of emotions and this will reduce their performance levels and the next move is to leave the company. Murphy and  Burgio (2005) suggests some five significant characteristics which each company must identify as far as staff retention is concerned. First, a few workers in the organization are extremely important than other employees, as a result the bigger the extent to which an organization plans to retain the performers in the company  and eradicate those employees who don’t perform, the high the performance level. Second, various workers can be goaded by dissimilar issues, thus it is simply by telling your staff that the organization will establish those things that motivate them and take steps to retain performing workforce in the organization. Third, the first three months during which employees are on probation is the time  that they are expected to quit, thus if the management will take time and  build some attachment with newly employed workforce within the ninety days period,  then to a large extent the chances of retaining these employees are high (Murphy and Burgio, 2010).

Fourth, an organization must never be fast permit performing staff retire or leave. A number staff members that decide to leave want to move out as quickly as possible and painlessly, but the management are supposed to request them to think about within a period of one or two days and consult his or her inner thoughts before making the decision. The company management should make some attempt to convince them if possible, change the work conditions increase their package that will lessen the basis for resigning. Finally, if a staff member is not able to be retained and is objective of leaving is understood then some attempt must be made to make sure those employees quit in a positive faith and maintains positive image of the organization. Conveying cyclic advertisements on any vacancies open is as well advisable if these employees want to return or refer other employees to the organization (Murphy and Burgio, 2011).

2.4 Staff replacement

After the retirement or resignation of a member of staff  the option to if the he or she is to replaced by another employee from within or hire another staff  from outside might as well be linked to fast food firms size and operations they are involved in. According to Dalton and Kesner (2012), big corporations, particularly the ones that appear in the stock market might be unwilling to pick a replacement externally to the firm. This is because the density of understanding the operations in the firm will be huge and complicating to understand, though in few cases this will be necessary but it is always tricky to understand and implement successfully transformations devoid of consulting an exterior successor. At times the organization arrangement can as well hinder recruitment of the heir externally to the firm, owing to the inclusion of engrossed stakeholders who might require the firm to replace the vacant position using the personnel within the firm. Amid the regular and dynamic transformations in administrative management, company employment is currently being motivated from a perspective that does not replicate the characteristic account and requirements of some firms.

Based on the above argument, Kransdorff (2009) proposes that the skill and recollections staff that has left must be vocally put into record and kept by the firms. This should be the succession planning strategy, in order that the depository of skills within the staff who has left does not go to waste for the firm. Somewhat, if this details are kept it may be applied to company’s account, strategies and challenges and permit the staff members to work hard and efficiently towards attaining the set goals of the firm. It will further assist the company to maintain skills that will assist it work on the past weaknesses to succeed.

Maxwell (2004) points out that most firms do not plan for the human resource side of the planning process to also take into consideration the growth, progression and succession of the staff.  If this policy is use in the fast foods it can real add to the productivity by to make sure that there is even changeover of staff. He suggests that sequence of phase so as to plan for efficient progression. First, it is essential to expect and approximate who is expected to go over a period of one year either by sequestration, relocation or on grounds resignation. The next step is to create a four quadrant array that has one axis each side that may be applied to evaluate every staff member as far as performance is concerned.  The staff grading besides such a method must give ten percent in the four sections of employees who perform poorly and twenty percent in the next section for the moderate achievers. The other members of staff are who are high performers will take over seventy percent within the quadrant (Maxwell, 2004).

This manage management technique is applied in the fast food industry on the ground of determining human resource requirements that includes ins-service seminars, workshops, conferences, withholding and progression. Members of staff that fall in the lower part of the axis quadrant are supposed to be asked to pull up their performance index of prepare to leave the company.  Members of staff evaluation of performance index are another significant characteristic that fast foods firms can use to determine the withholding of workforce.  For instance, the McDonalds foods, the form almost lost over ten million dollars annually because of pitiable recital and faulty practices amongst the staff members and after rectifying the mess, the company went back to its feet with no more loss and efficiency enhanced (Schuler and Macmillan, 2010).

The seventy percent in the quadrant of the staff members should be taken for training attend management workshops, conferences and seminars on leadership in fast food firms to enhance their skills.  When you train your members of staff you create a helpful tool or asset in that can offer the firm greater competitive advantage. For instance, Tesco plc in the United Kingdom, McDonalds in the Unites States  and other firms that sell fast foods have policies on staff training that allow them to prepare their workforce for higher management positions and capacity to retain them (Schuler and Macmillan, 2011). When employees are trained using the firms money, they know this is a company investment hence will be prepared to remain in the firm for a considerable amount of time. The management also understands that if they train staff members the level of production will shoot which in turn allow them to gain competitive advantage.  It is the good achievers as Maxwell (2004) array of quadrants says that will make the company achieve competitive advantage, have a smooth succession process, retain more employees and perform well.  Nonetheless, the high achievers must be compensated well, munificently and be given a chance to advance. These are the staff members who the management must promote to succeed the ones who have resigned, retired or otherwise fired (Maxwell, 2004).

With this therefore the human resource section must look into individual members of staff, what they are able to do, performance index within the period they have been in the firm, rank they can fit in the firm and their suitability in the position they will be given. Following these consultations in the human resource department administrators, the members of staff can be reached as individuals and asked what their plans are as far as the company is concerned. This must involve lengthy deliberations that open up how the personal ambitions can be integrated into the mission, objectives and vision of the firm. They can as well discuss if personal goals of the staff member can be lodged in the structure of the company’s objectives (Maxwell, 2004). Based on the human resource section in the company, operations in the firm may operate extremely effective if the members of staff personal desires are integrated into firm goals. They will know they are part of the big picture of the organization. Conduct a yearly appraisal on the low achievers and assist them to improve their performance, establish timetable for training and enrollment for some future years and decide on who will be promoted and succeed who.

2.5 Motivation of staff members

According to Macmillan (2008), to attain the competitive advantage the management of the fast food firms should comprehend and analyze the obstacles to rejoinder, aptitude, communications structure and necessities, universal organization issues in addition to widespread forecasting practice. A number of firms have productively realized positive competitive advantage by redesigning their staff management structure, as suggested openly out by Schuler and Macmillan (2010). The Tesco plc in the United Kingdom, bonus is connected to good performance for executive management, middle level managers and the lower staff. Within a one financial year the firm realized a triple increase in sales starting at 500 million sterling pounds to around one point six million sterling pounds.  At McDonalds fast foods the members of staff get allocation revenue generated within a year, which make the staff members to work hard because they are motivated towards productivity (Schuler and Macmillan, 2005).

2.6 Turn over wastage or opportunity? Advantages disadvantages to a firm

Currently a number of older employees are going home due to retirement and health related problems. The labor market is faced with an acute employee turnover that is costing most firms a great deal. Retention of staff members is becoming tricky also due to globalization of the labor market and the corporate world. The systems of employing workers are getting dynamic every day. Today many potential employees are able to change from one job to another after a given number of years other than staying in one firm for a long time. Furthermore workers are asking for equilibrium amid personal issues and employment. To the corporate world, turnover of employees is both a waste and an opportunity in the fast food industry. How is this possible? In terms of wastage, employee turnover increases operational expenses for the company (Fair, 2008). Staff turnover expenses for most companies are extremely elevated and can considerably influence the monetary recital of the firm in question. Straight expenses comprise staffing, assortment, and training of newly employed staff members. A lot of money spent to conduct this exercises which can be used to fund other profit making project in the firm. Circuitous expenses consist of operations like augmented work-load and over-time operating cost for co-employees, and also low output connected to stumpy members of staff drive. Projected expenses differ from company to company, others as stumpy as little as some thousand sterling pounds, euro or dollars and other companies can go ten times the yearly wage of a single member of staff (Lashley, 2010). In relation to opportunity, employee turnover in the fast food industry it is an opportunity to let non-performers go out of the organization. Those members of staff who area burden to the company and are not productive, the employee turnover provides management with an opportunity to kick them out.  With the reduction of staff in the for the wage expense on the employees who have left, the funds can be be used to create other projects in the company that generates revenues.

2.6.1 Advantages and disadvantages of employee turnover to a firm

Increased levels of staff turnover have some advantages and limitations as well to the concerned company.  In a few organizations, an elevated intensity of member of staff turnover is anticipated and this is normally taken care of, nevertheless in other organizations, a quick extent of employee turnover is extremely expensive. The question whether staff turnover is advantageous or not will depend on firm and the management strategies. A few companies anticipate and control elevated return, whereas other companies will depend on the permanence of members of staff so as to thrive, reduce or maintain expenditure do well (Bartel, 2004). It’s likely for the majority of the firms the level of staff turnover is problematic than an advantage. With that there the following are the constraints associate with employee turnover. First, time wastage is an issue when a firm encounters employee turnover because the moment a new staff is employed, he or she requires some orientation on how to work and this requires training. Whenever a workmate is taken away out of their duties to orient newly hired staff, real affects work progress and efficiency is impacted negatively. The number of hours spent to train new recruits is a significant disadvantage of elevated member of staff turnover. Second, there is loss of implicit understanding because the skills that member of staff that has left posses is important to the company. Everybody has impressive ideas to offer a firm and a company that receives high level of employee turnover is expected to lose valuable assets.  In spite of the limitations, we as well have a number of benefits attached to employee turnover. A few are company particular; however others are of benefits to the common idea too. Whereas newly employed staff members come into an organization with fresh ideas, on the other hand we are different and habitually we are buried in a particular way and at times we judge differently and in a completely narrow angle. Employee turnover where new and fresh notions are coming in addition has excellent prospective, a lot of which firm benefits. Another issue that the firm will gain from the employee turnover is possible modernization where fresh thoughts frequently lead to modernization and companies that experience high employee turnover habitually get themselves growing o this ides.

2.7 How turnover effect profitability of a business or organization?

 It is factual that staff turnover has detrimental impacts on the output and universal performance of most firms. High employee turnover makes an organization blank of skills or expertise because the best may leave the company. It takes a considerable amount of time to bring in another employee to fill the mark left. Organizations have to widen their interior system essential to carry out the given tasks well (Johnson, 2010).  However, in some cases theories have been developed which suggests that organization don’t suffer from high staff turnover because they are not given the opportunity to gain the required skills within the firm. Because each firm comprises various groups of persons, getting them provide some service, growing the skills they have, encouraging them to advanced performance intensity and making sure that these people continue to sustain the initial dedication to an organization are necessary to accomplishing company’s goals. Acquiring and maintaining a performer in an organization is vital if a firm is to succeed a public or private organization. Catherine (2002) argues that sustaining staff members involve giving some work states the workforce consider are essential so as to sustain their dedication to the company. The main goal of the human resource department is to maintain a workforce that will assist a company achieve its set goals and to let go any staff member whose performance is substandard. When there is high level of staff turnover the likelihood of reduced service delivery to the customers is very high.

2.7 Managing employee retention

Almost all good working and performing organization have one thing in common that they share; dedication to their work. Such organizations are aggressive, demanding environment where unevenness is disregarded and malfunction unbearable. Furthermore, persons who succeed in such environments are always “A” plus workers with passionate aspirations. These guys are out looking for a better place to work (Rion, 2011). How we retain high achievers in these companies? The problem is regularly how firms look at withholding of employees who are good performers. Most firms ignore the idea and it costs them dearly till the business suppose that a staff may bailout, where at this point management will handle this by giving the staff member some sort of incentives so that he can wait. This technique will only sustain the firm for a short period, but there is nothing it will do to nurture long term fidelity. The best method to use to handle this problem on the basis strategic view. Lagunas (2011) suggests a number of strategies that management can use to handle or manage retention. First, he proposes that organization must hire employees who are retainable. Management must state to newly employed staff from the first day of recruitment that all the company need is performance. Whereas a few employees will flourish when demands are put before them, some may hesitate. 

Demark (2009) comments that the initial thing good firms must do is to stop this turnover problem by employing staff that can be retained even after taking them up. Whilst there may be some positive characteristics that management can use to know the new employ who is able to perform constantly like two four to ten years of experience in the same position is a positive indicator that the employee can be retained even after taking him or her up. Second, the management of the organization must forecast careers and stop filling roles. It is possible to plan on the close term when running an organization and managing human resource within a high performing environment (Black & Holden, 2008). The firm can employ a high achiever expecting that they will do well within the position they recruited into and quixotically imagine that the staff will remain stay in the position all the years. The high achievers are planning on their profession and career and the firm as well must plan. Well managed firms always assist newly employed staff plan to remain in the organization, forecast their profession within the company (Tucker, 2009). The main thing here is to assist newly employed and existing staff to map out how they may achieve professional objectives in the firm. Third, the management of the any organization must take retention a personal issue. Each member of staff is goaded by dissimilar things, and withholding policies therefore require to be customized downward to the personal rank.

Steve (2010) states that the main expression is focused attempts. He continues to say that thriving firms never look at employee withholding idea as a single entity that goes for everybody. Rather, they make employee withholding policies a company or personal matter. How? By basically posing a question, “What makes you get motivated?” It is so surprising that the answers given from the question one will find that motivation by money is the lowest in the list of what motivates   employees. Today most high performers are more worried when given a task that challenges their intellectual ability, individual and skill growth prospects, employment and family equilibrium, and place of work litheness. Fourth, the management must go down to the heart of underperformers.  What happens when a high performer starts to underperform?  When the management realizes a slow down n performance, Miranda (2010) proposes against sending them away from the firm instead suggests that management should go down to the root of the problem and understand the issue.

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Miranda (2010) looks at the issue of poor we broke performance and finds some causes. He says that proficiency and ability problems frequently arise when a member of staff is given a position and role he or she is not comfortable and not ready for.  He as well says that poor per performance is also brought by behavioral challenges in an employee which are generally tricky.  Classify the sources of the problems to understand the initiative of if it is an issue that can be of value. Finally, he says that individual problems are the major source of exhaustion amongst high achievers in organization. Issues crop up such as family disconnect, physical condition problems, loan issues among others, and may divert workforce from doing the job properly and effectively. In such circumstances some assistance and litheness will greatly help to bring back the performer the firm has known for all this time. While doing all this management discover some issues that you didn’t know in the underperformer that the firm may even use their advantage.  Can members of staff get uninterested with what they are doing daily? Can members of staff get uninterested with the job? Are employees able to be experience burnout in six or less months after recruitment? The answers you from these questions are important to purify the practice that support accomplishment and limits employee turnover.

 Finally, invest in departmental managers within the organization. Miranda says that members of staff never leave a job instead they relinquish. He approximates that over eighty percent of employee turnover in major firms is motivated by the environment management sets for members of staff. The remaining twenty percent comes from resulting problems to do with organizations culture. The triumph of a company retention policies are eventually subjected to departmental leaders capability to perform on plans that are laid down. According to Tucker (2009), whatever an organization embraces, you must be sure the departmental administrators are implementing it without delay. Assist the managers to help the company decrease employee turnover. Train managers how to empower members of staff to thrive and develop, instead of just driving achievements.  It’s as well significant to carry on the communication systems in the company as far as profession is concerned broad unlocked amid members of staff and management, particularly since professional objective are dynamic as time goes by. Develop more prospects for members of staff check systems both official and unofficial with administrators.

2.8 How to prevent labor turn over? Retention plan / strategy

Organizations that understand the important role both low and high performing must lay down strategies to prevent turnover.  Organizations must evaluate loses it will incur and design policies to retain them in case of high turnover. It must in addition forecast the anticipated employee turnover and a varying employee’s tradition. Companies should know that value of employment verve is more and more essential to staff members. Miranda (2010) proposes some approaches that organization can use to retain employees. First, recruit the correct staff and keep on developing their profession.Do most organization have continues profession enhancement policy or skills development policy? Spending to improve employees’ skills in an organization is the only way that a firm can use to retain employees and grow to competitive advantage. Second, a number of firms with stumpy employee turnover figures members of staff minded.They value their workforce and seek ideas and participation from every member of staff and uphold an honesty open forum strategy that shuns secret type of management. Workers are given opportunities for progression with zero micro-management. Workers should know they can be listed to when putting their view forward and are accepted for their input. Do most organization’s traditions promote sharing and open-minded communication approach to management? Third, management must develop a strategy on compensation packages that involves not merely bottom and capricious payment schemes, but also on long term motivation payment, additional benefits and profit allocation strategies, gain strategies to tackle healthcare and wellbeing problems of the staff members and noncash loot tool. To overcome competition that is in the labor market currently, a number of firms have found it essential to recommend set gain compensation, like healthcare, dentistry, and insurance covers, retreats and leave strategies and sequestration policies. However, what can the companies do extra in a cost-effective manner to create environment that is staff compatible?  Being creative in payment, rewards and paybacks makes clear changes of attitude t employees’ well-being. An organization must evaluate the general members of staff desires when tackling withholding challenges.


Employee turnover is capable of damaging impacts on the organization if members of staff and the management permit that.  The management must try the much they can to reduce the level of employee turnover. It is possible to completely eradicate staff turnover altogether and thus the firm executives should devise mechanisms to reduce if not eliminate it. A number of strategies are in existence to assist management in the organization deal with turnover problem. All attempts must be directed to sustaining high achievers in the firm not forgetting the low performers who may also be talked to find out why there performance is going down. In addition, the organization management must be ready to take the necessary actions whenever turnover knocks the door. Finally, the evaluation of company’s working conditions must be regular checked and harmonized with current trends in human resource management.