Effect of Employee Turnover on Performance of Zoomlion
Abstract: The purpose of this study was to identify the causes of employee turnover; examine the effect of labour turnover on performance of the organizational and identify strategies for reducing employee turnover in Zoomlion Ghana Limited. A descriptive cross sectional survey was conducted among 120 purposively selected employees of Zoomlion in Ho Township. Both descriptive and inferential statistics were computed. Results show that "lack of motivation influence their decision to leave" "lack of good working conditions", "lack of recognition of one's effort", "lack of staff training and development", "work loaded is too much", "unfair management treatment", "low career development opportunities", "pursue of higher education", "lack of promotional opportunities", "higher salary has influence my exit", "poor quality of job training", "lack of proper supervision", and "poor chances of improving skills" are the causes of labour turnover in Zoomlion Ghana Limited. The study also establishes that on "Loss of productivity", "Reduce profitability of business", "High cost of training and recruiting new employees", "Management frustration" and "Decline in service quality" are the effect of labour turnover on organization performance. Also "Rewarding employees for long service", "Management institute flexible time schedules for employees", and "Free health care for employees" are the strategies being adopted by management to reduce employee turnover. The study therefore recommends that recognition for significant accomplishment, chance of advancement and giving opportunity to grow and career development has to be taken in to consideration. Also, proper treatment of employees, enhanced pay, and fair promotion will increase employee responsibility. Therefore, management should properly treat the employees.
Keywords: Employee, Turnover, Performance, Zoomlion
1. Introduction
Productivity is a very important issue for every organization. Productivity of an organization is thus mostly affected by several factors including employee turnover. Employee turnover is considered to be one of the challenging issues in business nowadays. Employee turnover is becoming a major problem among most companies in the world, especially in low paying jobs. Employee turnover can be extremely upsetting and disturbing for any company. It makes employers find it very difficult to maintain a stable and successful operation.
In view of Abbasi, & Hollman (2000) [1] employee turnover is the rotation of workers around the labor market between firms, jobs and occupations, and between the states of employment and unemployment. Employee turnover is the rotation of workers around the labour market; between firms, jobs and occupations; and between the states of employment and unemployment [1]. The term turnover is defined by [2] as the rate of people leaving an organisation. He assert that turnover can be disruptive and costly to the organisation. That is to say when employees leave an organization, this may have both negative and positive effects on the organization, the employee themselves and the society at large. According to Morrell, Loan-Clarke, and Wilkinson, (2004) [3] although there is no standard framework for understanding employee's turnover process as a whole, a wide range of factors have been found useful in interpreting employee turnover.
According to Mitchell, Holtom, & Lee, (2001) [4] when employees leave the organization its costs the organization time and money to replace them, the total cost of which sometimes range from the 90%-200% of the annual salary for the position advertised. [5] as cited in [6] concur and enumerate the costs of turnover to include, recruiting costs, selection and or employment costs, orientation costs, training costs, lost wages/salaries, administrative costs, lost productivity, loss of human capital. In addition to the obvious direct costs, there are a wide range of other direct and indirect costs associated with turnover, and organizations must attempt to avoid these costs at all times [7]. [8] however, stated that wages, company benefits, employee attendance, and job performance are all factors that play a significant role in employee turnover. If it is not managed properly, employee turnover can harm the overall productivity of an organization and it would act as a symptom for some other major problems. As said by [9] employee turnover can cost companies a million per year.
Employee turnover is a very difficult manner that requires deep understanding of its causes. Many writers had stated that one of the major reasons behind employee turnover is looking for a better job from the financial point of view and the prospect of getting higher pay elsewhere is one of the most obvious contributors to turnover. This practice can be frequently observed at all levels of the economic ladder; lower, middle and higher level economic. However, there is considerable evidence that money is not the only root cause of turnover, even when it is a factor in an employee's decision to quit. Regardless of the causes, different organizations have different methods to manage and control employee turnover and add value to the company by benefiting their employees to reduce the rate of turnover in their organization. Employee turnover affects both workers and the organizations. Workers experience disruption, the need to learn new job-specific skills and find different career prospects. Organizations suffer the loss of jobs-specific skills, in performance of organization and incur the costs of hiring and training new workers.
Retraining of new staff itself brings its problems, for this involves the expense and time of training, be it formal or on-the-job instruction. In addition, there are indirect costs associated with high labour turnover; these include the reduction of interaction possible between co-workers resulting in the inhibition of friendship bonds. Inter-personal links require time and continuity, neither of which are possible in a situation of high labour turnover. This natural reduction in staff morale can also lead to a decrease in the sense of loyalty or belonging to the company, and hence to a general loss of commitment ·to the workplace. Thus the workers feel a sense of alienation. Therefore, as stated by [10] there is significant consequences of labour turnover on organization, individuals and management. Clearly the fact that workers tend to terminate employment with companies is not in itself a problem but rather the problem derives from the consequences of such termination. Therefore, this study seeks to find out the impact of employee turnover on performance of Zoomlion Ghana Limited. Specifically, to identify the causes and effects of employee turnover and finally strategies if adopted will reduce employee turnover
Literature Review
The Concept of Employee Turnover
Employee turnover refers to people coming into and people moving out of an organization. It is also defined by [11] as the regular change of employees around the employment market among organizations, professions and career; and between the conditions of full employment and that of being without a job. Loquercio et al., (2006) [12] observed that staff turnover is the proportion of staff leaving in a given time period but prior to the anticipated end of their contract. According to Singh, & Loncar, (2010) [13] staff turnover is the rate of change in the working staffs of a concern during a defined period. Loquercio et al. (2006) [14] opine that staff turnover is the proportion of staff leaving in a given time period but prior to the anticipated end of their contract.
Employee turnover is the rotation of workers around the labor market, between firms, jobs and occupations, and between the states of employment and unemployment [1]. Staff turnover that can occur in any organization might be either voluntary or involuntary. Voluntary turnover refers an employee's choice to terminate association with an organization while involuntary turnover is the type of organizational exit that occurs when a firm terminates an individual's employment contract [15]. Turnover is referred to as the rate at which people might leave an organization [2]. A number of terms have been used for employee turnover, such as quits, attrition, exits, mobility, migration or succession [3].
Causes of Employee Turnover
According to Carrel et al., (2000) [16] staff turnover may be caused by low remuneration, job dissatisfaction and unfair treatment. As indicated by Grobler et al., (2002) [17] staff turnover costs may be estimated to include separation, replacement, recruitment and training costs. The following are some of the causes of staff turnover:
2.2.1 Employee Expectations
Generally, newly employed staffs have expectations but when these expectations are not met, they may then start withdrawing from work using sick leave, family responsibility leave and all kinds of excuses [18]. Employees expect that their performance will proportionally equal with the rewards received from the organization. In most situations, if certain levels of performance are achieved, employees set expectations about rewards and compensation to be received. These expectations determine goals or levels of performance for the future. Employees achieving the desired levels of performance expect a certain level of compensation. If employees see that hard work and superior performance are recognized and rewarded by the organization, they will expect such relationship to continue in the future. Therefore, they will set higher levels of performance expecting higher levels of compensation. If employees see little relationship between performance and rewards, then they may set minimum goals in order to retain their jobs but will not see the need to excel [19].
According to Nel, et al., (2004) [20] when an employee joins an organization, besides the employment contract, usually a psychological contract is established between employer and employee with respect to what each should expect of the other. Habeck, Kroger, & Trâm, (2000) [21] emphasized that psychological contracts consist of the individuals' beliefs regarding the terms and conditions of the exchange agreement between themselves and their organizations. They emerge when individuals believe that their organization has promised them certain inducements in return for their contributions [22]. These inducements might include promotion and other benefits. This type of contract is usually informal and unstated and often spells shared commitment to a goal or objectives. It is also dynamic and changes with time. If at any time during the course of employment, the employee perceives a breach of the psychological contract, the commitment by the employee to the organization becomes diminished and triggers feelings of discontent which can lead to the employee leaving the organization [23].
2.2.2 Monetary Rewards
Monetary reward has been defined in such a way like cash or equivalent that an employee receives against his services from the employer. Here equivalent reward includes fringe benefits, medical facilities and provident fund. Monetary rewards have negative effect on employee turnover. This reward helps to raise job satisfaction and likewise suite for minimizing the intent to leave the job [24].
Compensation plays an important role to retaining employees [25]. Researchers believed that frustration with salary and pay strongly motivate employee turnover. The lack of different compensation packages like fringe benefits and incentive pay certainly generate a force on holding experienced and qualified employees. Employees demand an appropriate level of compensation for their effort. Such compensation may be offered in monetary (direct) reward, such as salary and bonus, or bundled with other non-monetary (indirect) reward such as medical insurance and transportation services [26]. Poor compensation is widely known as one of the problems in the organization that leads to employee turnover. According to Shamsuzzoha, and Shumon, (2007) [27] one of the most common reasons given for leaving the job is the availability of higher paying jobs. This implies that employee leaves the current organization to gain better payment from other organization. When looking at specific vacancy characteristics, pay levelis one that stands out that as being important to most applicants. Pay is considered one of the most effective and important job attributes in determining applicant attraction to the organization. Employees preferred organizations with high rather than low pay, flexible rather than fixed benefits, individual rather than team-based pay, and fixed rather than variable pay [28]. This indicates that compensation is the most important element in attracting, retaining and utilizing qualified workers.
The perception of getting fairness about the level of compensation, the equality in the sharing of pay and rewards, strongly create turnover. The conventional elimination of compensation packages doubtlessly misjudges the outcome of discernment of fairness on decisions to exit [25]. According to this explanation, making discrimination during offering compensation may cause employee turnover. Thus, the management of the organization should treat in equitable and justice during supervision, distribution of compensation and other important remunerations to retain well experienced and well qualified employees within the organization. Fair compensation policy is very important for both employer and employees. Employer should compensate its employees in equitable with the work done, and employees should ask the amount of reward according to their work performance result. If so, it leads to reduction in employee turnover.
2.2.3 Employee Recognition
Robbins, (2003) [29] stated that individuals at all levels of an organization wants to be recognized for their achievements on the job. Their successes do not have to be monumental before they deserve recognition, but the praise should be sincere. Steers, (2002) [30] states that one premises inherent in Herzberg's theory (1959) is that most individuals sincerely want to do a good job. To help them, they should be placed in positions that use their talents to an optimal level and where they are not set up for failure [31]. Clear, achievable goals and standards for each position should be set and should be known to employees. Individuals should also receive regular, timely feedback on how they are doing and should feel they are being adequately challenged in their jobs. Individuals should not be overloaded with challenges that are too difficult or impossible [32].
3 Methodology
This study used descriptive, cross-sectional study design. The setting was the Ho Township in the Volta Region of Ghana. The population for this study was 195 employees, which was obtained from a list of employees provided by the Zoomlion Ghana Limited, Ho branch Human Resource Department. A total of 120 employees were selected for the research. The study employed a purposive sampling technique in selecting the employees. Purposive method was used because all the employees were not available during the time of the data collection.
Data for the study was obtained using questionnaire. The questionnaire had two sections. The first section consisted of demographic information such as gender, age, marital status and length of service. The second section consisted of information on the causes and effect of employee turnover.
Both descriptive and inferential statistics were computed during the analysis of the data using both SPSS and Microsoft Excel. The descriptive aspect employed frequency tables; pie and bar charts whilst the inferential aspect of the analysis employed binomial test to categorize the proportion of success and the proportion of failure and Mann-Whitney Test which is used to compare differences between two independent groups when the dependent variable is either ordinal or continuous, but not normally distributed. Here it tests whether significant difference exist between the responses of the male and the female category of respondents.
4. Results and Discussion
This subsection looks at the summary statistics of the respondents. A total of 120 employees of Zoomlion Ghana Limited in the Ho Township completed the questionnaire. Table 1 below summarizes the socio-demographic information of the respondents.
Table 1. Demographic information of the participants (n=120).
Variables
|
Frequency
|
Percentages
|
Gender
Male
|
45
|
37.5
|
Female
|
75
|
62.5
|
Age
18 – 25
|
8
|
6.7
|
26 – 35
|
52
|
43.3
|
36 – 45
|
43
|
35.8
|
46 - 55
|
17
|
14.3
|
Marital status
Single
|
35
|
29.1
|
Married
|
81
|
67.5
|
Divorced/separated
|
4
|
3.4
|
Source: Field data (2016)
Table 1 above revealed that out of the 120 respondents 37.5% of them were male, 62.5% were females. Also the distribution of respondents by age appears to be quite evenly distributed among three categories with the 26-35; 36-45; and 46-55 years' age group recording 43.3%; 35.8%; and 14.2% of the respondents respectively. The analysis further indicated that out of the total 120 respondents, majority of them which represent 67.5% were married; 29.2% were single whiles the rest 3.4% were divorced/separated.
Figure 1. Distribution of Respondents by Level of Education
Figure 1 above shows the proportion of respondents by level of education. It could be seen that out of the total 120 respondents, about 43 of them had bachelor's degree; 32 of them had diploma education; about 27 of them had Senior High education and finally, 18 of them had basic/JHS education.
Figure 2. Proportion of Respondents by Length of Service
Figure
2 above revealed that out of the 120 employees who responded to the
questionnaire, about 49% of them stayed at current work between 4 to 7
years; 28% of them have stayed between 8 years and above whilst the
rest 23% of them have stayed between 1 to 3years.
With the use of a five-point Likert scale, with one as "strongly disagree" and five as "strongly agree", respondents rated 20 possible factors which causes employee decision to leave current work. A higher mean score for a statement indicates greater importance. Results presented in table 2 indicate that majority respondents agree that "lack of motivation influence their decision to leave" with a mean score of 4.43 and a standard deviation of 0.89. This was followed by "lack of good working conditions" with a mean of 4.06 and standard deviation of 1.03. Also there was a unanimous agreement on "lack of recognition of one's effort", "lack of staff training and development", "work loaded is too much", "unfair management treatment", "low career development opportunities", "pursue of higher education", "lack of promotional opportunities", "higher salary has influence my exit", "poor quality of job training", "lack of proper supervision", and "poor chances of improving skills". However, it was evident from the mean score of 2.13, 2.61 and 2.81 with a standard deviation of 1.18, 1.23 and 1.57 respectively that respondents expressed disagreement opinion about these three factors, "peer influence", "lack of good accommodation" and "poor environmental conditions" as causes of employee turnover.
From table 3 above, at a significant value of = 0.05, it appears that none of the asymptotic is less than 0.05. It therefore suggests that there is no significant difference between the male and female respondents rating of the twenty variables describing the factors respondents consider to be responsible for employee turnover; and that there is no significant difference between the responses of males and that of females.
Table 4. Response to the Effects of Employee Turnover.
Category
|
N
|
Observed Prop.
|
Test Prop.
|
Exact Sig. (2-tailed)
| ||
Reduction in work productivity
|
Group 1
Group 2
|
<= 2
> 2
|
13
107
|
0.11
0.89
|
0.50
|
0.001
|
Total
|
120
|
1.00
| ||||
Management frustration
|
Group 1
Group 2
|
<= 2
> 2
|
37
83
|
0.31
0.69
|
0.50
|
0.000
|
Total
|
120
|
1.00
| ||||
High cost of training and recruiting new employees
|
Group 1
Group 2
Total
|
<= 2
> 2
|
36
83
119
|
0.30 0.70
1.00
|
0.50
|
0.000
|
Decline in service quality
|
Group 1
Group 2
|
<= 2
> 2
|
41
79
|
0.34
0.66
|
0.50
|
0.001
|
Total
|
120
|
1.00
| ||||
Lack of cooperation and coordination among employees
|
Group 1
Group 2 Total
|
<= 2
> 2
|
52
68
120
|
0.43 0.57
1.00
|
0.50
|
0.171
|
Reduce profitability of Organization
|
Group 1
Group 2
|
<= 2
> 2
|
21
91
|
0.18
0.82
|
0.50
|
0.000
|
Total
|
118
|
1.00
| ||||
Inability to meet deadline
|
Group 1
Group 2
|
<= 2
> 2
|
57
63
|
0.48
0.52
|
0.50
|
0.125
|
Total
|
110
|
1.00
|
Source: Field Data, 2016
The variables in the table 4 above are indicators of the effects of employee turnover on organization performance. From the table above, group 1 (<= 2) are those who strongly disagree or disagreed to the variables indicating the factors respondents consider the most as the effect of employee turnover; group 2 (> 2) are those who strongly agreed and agreed. At a significant value of 0.05; it appears that five exact significant values except one is less than 0.05, suggesting that the respondents are unanimous on them as a factors they consider the most as the effect of employee turnover. The significant variables are "Loss of productivity", "Reduce profitability of business", "High cost of training and recruiting new employees", "Management frustration" and "Decline in service quality" with 89%, 82%, 70%, 69% and 66% agreement respectively.
However, two factor has a significant value greater than 0.05 which is "Lack of cooperation and coordination among employees" and "Inability to meet deadline". The implication of this is that the respondents are divided on the effectiveness of that statement as a factors they consider the most as the effect of employee turnover.
Table 5. Response to Strategies for Reducing Employee Turnover.
Responses
|
Percent of Cases
| ||
N
|
Percent
| ||
Management institute flexible time schedules for employees
|
109
|
27.0%
|
90.8%
|
Arranging transport for employees to convene employees
|
46
|
11.3%
|
38.3%
|
Management institute physical fitness for employees
|
39
|
9.7%
|
32.5%
|
Rewarding employees for long service
|
112
|
27.7%
|
93.3%
|
Free health care for employees
|
98
|
24.3%
|
81.7%
|
Total
|
404
|
100.0%
|
372.9%
|
Source: Field Data, 2016
Table 5 above indicates that there were 404 responses to the series of questions on strategies being adopted by management to reduce employee turnover. The highest responses came from three factors "Rewarding employees for long service", "Management institute flexible time schedules for employees", and "Free health care for employees" with the above factors having about 27.7%, 27.0%, and 24.3% of the total responses respectively.
However, factors like "arranging transport for employees to convene employees" and "management institute physical fitness for employees" is not highly rated by the respondents with about 11.3% and 9.7% of the total responses respectively.
5. Conclusion and Recommendation
Conclusively, it was apparent from the findings that, "lack of motivation influence their decision to leave" "lack of good working conditions", "lack of recognition of one's effort", "lack of staff training and development", "work loaded is too much", "unfair management treatment", "low career development opportunities", "pursue of higher education", "lack of promotional opportunities", "higher salary has influence my exit", "poor quality of job training", "lack of proper supervision", and "poor chances of improving skills" are the causes of labour turnover in Zoomlion Ghana Limited. Furthermore, the study has been able to identify and establish that "on "Loss of productivity", "Reduce profitability of business", "High cost of training and recruiting new employees", "Management frustration" and "Decline in service quality" are the effect of labour turnover on organization performance. Finally, the study revealed that "Rewarding employees for long service", "Management institute flexible time schedules for employees", and "Free health care for employees" are the strategies being adopted by management to reduce employee turnover.
It is therefore recommended that employees should be given compensation which commensurate with job, and be provided with good working environment since most of the employees are influence by these factors. Also, recognition for significant accomplishment, chance of advancement and giving opportunity to grow and career development has to be taken in to consideration. Finally, proper treatment of employees, enhanced pay, and fair promotion will increase employee responsibility. Therefore, management should properly treat the employees.
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Disclaimer: This article was published under the Creative Commons License.
How to Cite:
Asamoah, E. S., Doe, F., & Amegbe, H. (2017). The Effect of Employee Turnover on the Performance of Zoomlion Ghana Limited. Journal of Business and Economic Development, 13(4), 8–26. http://doi.org/10.11648/j.jbed.20170202.17
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