An examination of employee turnover Essay

Concepts of Employee Turnover

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In the view of the employer, employee turnover is the rate of which workers enter and leave corporate positions (Droege & Hoobler, 2003).  One simple way of measuring employee turnover is through investigating the length of average tenure of employees usually classified under one specific industry.  For example, an industry that has low average worker tenure is generally classified as one having high turnover rate.  The most notable influence of high turnover is that the event historically resulted to increase in corporate costs.  It can even exceed the budget for the salaries of the employees which transformed it as critical issues that managers should consider.

Issues surrounding employee turnover also exists.  The usual thought of employee turnover is the rate of employee mobility from one company to the other. This expression, however, is limited to external turnover.  There is also an internal turnover where workers leave their present position to undertake new job functions within the same company (Devens, 1992).  In this category, there is a positive side that impacts the firm unlike the general conditions of employee turnover.  This is eminent as the employee would be freed from being burned-out from the rigors of the current work and personality clashes with the immediate manager.  In contrast, high internal turnover may lead in disrupting relationship among employees which can affect the present output.

Another issue is the profile of the group of employees with regards to employee turnover.  Such profile can dictate the level of organizational concern in cases of high turnover.  When employees that belong to this group are unskilled workers, the firm may find favorable outcomes such as high bargaining in employee contracts as worker may want a secure and long-term employment (Dalton & Mesch, 1990).  Employers have the choice in reducing wages, working conditions and other employee programs due to stronger stance.  On the other hand, high turnover rate engaged by skilled employees is generally negative to organizations.  The concern of the employer is that the human capital that provides value to the firm would be lost.  Skilled employees have experience, expertise and reputation which are a function of time, training and work ethics.  Aggravatingly, competitors would recruit skilled employees to the disadvantaged of the former employer.

In the realm of human resource management (HRM), employee turnover can be a critical issue for decision-making if the employees enter a turnover voluntarily.  The reasons of employee turnover in the point-of-view of employees are subject to scrutiny and there is a room for improvement (Devens, 1992).  However, when the turnover is non-voluntary, HRM has less control over them.  This is because involuntary turnover is triggered by singular factors such as terminal disease, migration, death and downsizing policies.  Even if HRM will apply resolution to them, the rate of turnover would not be effectively solved due to conflict in employee status and corporate stance.

Expanding the concept of voluntary turnover, high turnover indicates that the needs of employees are not addressed well (Droege & Hoobler, 2003).  These needs include reasonable salary and other benefits, sufficient policy to protect the health and safety of the working environment and supportive approach of the employer when it comes to employee competencies.  When employers are assumed to compete in a fair recruitment game, these variables to employee needs are mere benchmark or what we can call minimum requirements to achieve lower turnover.  Under fierce competition when supply of employees is low and demand of employers is high, additional effort must be applied.  Investment for a company to achieve lower employee turnover results which generally includes additional benefits which have to condition of continuance as long as the worker retain his/ her current employment.  Some of these are insurances, loans and other packages.

Employee Turnover in American Retail Industry

Government Intervention as Signs of Alarm

In 2004, the US retail industry confronted pressures from lack of labor supply (Department of Labor Website).  This led the Department of Labor to fund at least $5 Million worth of investments to implement a series of programs that targets the challenges in HRM.  One prominent strategy is to coordinate with several institutions primarily employee associations, education and business.  This effort is dedicated to restore the favorable characteristics of the industry when it comes to the nature of the jobs, level of wages and potential growth.  Further, the intervention of the government in these private transactions leads to a presumption that the worker shortage is a threat to the industry.

There are a number of issues that the US retail industry is ought to address.  The first issue is related to employee turnover.  The industry is known to the workforce sector as one that offers below-minimum salaries and also workers in the industry are not provided with potential to grow (Department of Labor Website).  The second issue refers to the inability of the US retailers to have a single decision regarding certification requirements for applicants.  The inconsistent practice of the industry separated the certified and non-certified employees which basically reduce the total retail labor force to half.  Lastly, as much as retailers wanted their employees to be customer-oriented through the use of the latter language, most workers that are capable of doing so are described as having inadequate proficiency in the English language.

Obviously, these problems are both issues of employers and employees.  With minimal skills and varying retailer standards, the previous job experience of the workers becomes less relevant to the new employers.  This would likely lead to employee turnover which can be triggered by the retailer lay-offing of employees or through worker’s voluntary turnover.  In the issue of worker perception of unattractive salaries and career growth, the competency of the employee is made non-available to pursuing retailers because the latter cannot provide the level of satisfaction of the former.  In these problems, both employers and employees are adversely impacted as high employee turnover would likely ensue in each case.  As illustrated, retailers would have to cyclically invest on recruitment and training as well as loss of human capital advantage while employees will have to start from the bottom rank-in-file as well as experience unemployment for sometime.

The government intervention resulted to intensive development of Retail Skills Centers.  These Centers benefited the employers, employees and prospective retail workers because it promotes retail employment training to increase the employment opportunity of soon-to-be workers as well as acting as intermediary for employers to have access to talent pool.  The state-led training programs will also aim to help the industry to hone the skills of experienced workers and upgrade their career levels to managerial positions.  Specifically, there will be a modular-based training curriculum by which a trainee can choose what level of training will he/ she pursues based on career paths.  Top retailers such as Toy “R” Us and Saks will submit their capability models to help the government create rational and appropriate training modules.

Labor Statistics in the US Retail Industry

The industry contributes at least 9% in gross domestic product with more or less $1 Trillion annual turnover (Career Voyages Website).  Its gigantic size is capable of creating a minimum of 2 million jobs in 2012.  Further, people alternatives of employee within the industry is substantial such as it offers part-time, casual and permanent positions depending on people needs.  People can also choose whether to be a part of undersized retailer or one that has international name.  If an aspiring employee has no collegiate diploma, his/ her experience is a sufficient basis to enter the industry and even have managerial positions.  For those that have a degree, they can be offered with several opportunities such as inclusion in the management apprentice pool.

There are three necessary conditions in the pre- and post-hiring stages (Career Voyages Website).  First, it is vital for applicants to obtain a high school diploma as minimum educational attainment.  This will assure that they posses that basic language, writing and analytic skills which will be used in the day-to-day operations of retail.  Second, for applicants for managerial positions, the minimum requirement is a degree in colleges such as junior, community, technical and also university.  This requirement will ensure that potential managers have advanced analytical and conceptual skills for departmental and corporate decision-making.  Finally, as an employee, training might not be formal especially in small retailers but informal training through mentorship is present.  In larger retailers, training is very formal in for entry-level positions but experienced workers tend to have sporadic opportunities.

The retail industry is America’s biggest employer harboring at least 15 million people which will continue for at least a decade (Career Voyages Website).  Being a worker in the industry develops the basic skills that can be used for future employment and career advancement.  In effect, the industry became the favorite destination of starting employees to learn primary office, communication, relational and decision-making skills.  There are four specializations that a worker can pursue for long-term tenure, namely; sales/ operations, management, merchandise flow and entrepreneurship.  Based on industry rankings, retail salespersons, cashiers and customer service representatives are among the top three job title in the retailer industry with at least 2 million, 1.7 million and 0.7 million demand until 2014 respectively.

The Best Cloak against Industry Shocks: Wal-Mart’s Culture

Generally, the culture of Wal-Mart is engraved in treating other people as one wants to treat itself and accepting this becomes positive to the company as its culture is a source of competitive advantage (Prism Business Media, 2001).  This reflects how they create relationships with customers, associates and suppliers with an initiative to provide excellence to show their competence and upper hand from industry players.  The company’s official website has a dedicated icon that explains their culture.  Opening remarks before detailing them comes from the CEO who presents financial and operational performance of the firm (Wal-Mart Website).  Such design is strategic in order for website visitors and people to know that they have an effective corporate culture which results in positive outcome for the company and its customers and business partners.

There are three basic corporate beliefs; namely, respect to individual, service to customers and strive for excellence covering employee motivation, customer satisfaction and competitiveness (Wal-Mart Website.  On the other hand, top-management including shareholders and owners of the company engaged in ten rules in building the Wal-Mart business.  Such rules reveal how the profit-oriented individuals should balance their short-term goals with long-term ones by loving the business, sharing success to others, motivating all partners, managing open communication systems, showing appreciation, celebrating success, exceeding customer expectation, being competitive and adherence to continuous improvement.

With this general framework, Wal-Mart is doing business in ever-changing industry and economy.  Recently, it unveiled new ad agency portfolio wherein it aligned its marketing and merchandising businesses to selected advertising agencies (CNN Money, 2007).  The outsourcing of one of the most significant area of the business to outside parties can have changes or “shocks” in the present cultural structure of the company especially of its known low-pricing strategy.  Wal-Mart should be able to guard its business partner selection to maximize the strategy and prevent untoward occurrences.  This would not be done without strategic leaders who implement best practice in decision-making.

Wal-Mart is undoubtedly one of the most successful global companies not only in its industry but taken all industries at once.  However, its success is exposed to fast-phased environmental changes which can affect its corporate culture.  The case of Enron showed that unethical standards that can affect culture should be avoided by the owners and managers.  In this regard, the ten rules adhered by Wal-Mart owners should be kept in-tact.  The case of Standard/ Hofberg showed that its partnership with external entities should be planned and framed within Wal-Mart’s evaluation of its culture.  Otherwise, integration difficulties will emerge and beneficiaries of marketing strategies will not full-appreciate marketing endeavors due to this incompatibilities.  Corporate culture is the heart of success because it reflects how people think about their jobs and cooperate towards corporate goals.  This is why Wal-Mart should guard its ethical consideration about its culture as well as partnership implications on it.


Government intervention is typical when the issue at hand could affect a large number of people.  With state programs directed to the US retail industry, it is apparent that the impact of high rate of employee turnover is gradually taking away the opportunities for the nation to grow more economically.  This led to an impression that combining the role of retail industry to an economy and inherent problems of high employee turnover the whole economy could suffer.  The case of Wal-Mart indicated that the best tool for retailers to avoid industry problem in high employee turnover is to have a concrete and visionary culture.  With this in place, threats (e.g. high employee turnover) in the operating environment can easily be resolved while opportunities (e.g. low employee turnover and higher people with retail skills) can easily be embraced.  However, in cases where a US retailer have minimal use of its culture, there following section will serve as framework on what determines high employee turnover.

Issues to Consider in Wages and Benefits

Business Nature and Corporate Performance

            The rule in labor economics is that when supply of labor to the occupation decreases, the opportunity cost the company is willing to forgo is higher, which means higher wages (Marshall & Briggs, 1989).  A company involve in the manufacture of hi-tech machines are restricted to employ experienced and knowledgeable workforce.  On the other hand, when the nature of business is rather general services like security, janitorial and clerical, the market value of employing working is low.  With this, wages can vary across different industries according to the value of the labor it needs.  The more complicated the job and rarer the people exercising it, the higher the worth of the employee’s effort.  Companies cannot afford to loose available talents.  This is the reason why employees under strike belong mostly in the blue-collar jobs and general works.

            In addition, certain fringe benefits like insurance and health assistance may not be provided in relatively out-of-danger employment (Holtom & Inderrieden, 2006).  But everyone perceives the existence of extreme accidents from electrocution to a more predictable health side-effect in computer radiation.  The failure of the company to take extra-sensitive to these facts can lead to poor-performing employees because they are less considered with possible long-term harmful effects of the work.  Not to mention the inability of the organization to respond to certain demand of driving, construction works and mining employees to a more appropriate wage and benefits to waive the possibility of injury, even death, of performing the task.

            Not only such inherent characteristic affects the company in wage and benefit loopholes, low performance for a certain period also added adverse effects to employees.  Although, wage determination is not directly proportional to company productivity and performance, benefits are.  The failure of the organization to credit employees who excel in a certain production period but resulted to loss can discourage future performance.  It is possible that other factors induced the occurrence of loss.  The individual efforts should be closely monitored and awarded if necessary.

Presence of Unions

            A management confronted with union rules restricts some managerial authority like the maintenance of productivity, efficiency and price stability (Hillmer, Hillmer & Mcroberts, 2004).  Business can loose some of its competitive advantage from employees who demand individual needs regardless of adverse effects to the employer and company operations.  With union’s presence, employees are provided with collective voice in wage increase and other employment benefits that create greater pressure to the management.

            The union’s force increases where the organization belongs in highly technical industry like computers, automobiles and other jobs that require experience and expertise to work effectively (Reilly, 1995).  The management is not provided with ample labor force to replace every group terminated because of a strike.  Its solution is to maintain relations with union leaders for mutual benefit.  On the contrary, the number of employee and their crucial role in the everyday operations of the company can also strengthen a union.  The experience of Safeway can illustrate such situation.  Sixteen thousand clerks, baggers, and meat-cutters went on strike when their health benefits are diminished.  After a week, the Californian Company proposed a three-year extension of the health benefits even if there is a need to cut cost.

            Without the union employees, individual and isolated complaints are likely to be underestimated by the managers (Wright, 2001).  The employees of Safeway resorted to solicit help from an outside union to obtain shelter for their grievance.  Even though unions are known to cause distortion from corporate objectives of efficiency, their disruptions can also serve as signals for possible and existing problems in the workplace.  When they are paid and treated at the right and just circumstances, they can work harder.

Offsets to Wage Increase

­            Rarely, the company will voluntarily increase the wage of workers without receiving any demand for its occurrence even if company performance improved.  Because of this, legislation and collective bargaining agreements became two of the most common drivers of minimum wage increases.  With this support, employees are protected to the distorted insensitivity of management (Bright, 2003).  In the initial phase, they thought they got the best of the wage increase.  But then, there are corporate mechanisms, especially implemented by companies resisting to added expenditure in the cost of production, which can manipulate and even transform the perceived loss to a breakeven point.

            The first offsetting mechanism to counter effects of wage increase that can also affect the price of a certain good or service is to reduce other money wages like bonus pay and commissions that are not tied in the work hours.  Second, the management can choose to reduce non-wage expenditures like fringe benefits and other amenities like training.  Third, in response to a wage increase, the management can demand raise in productivity from workers.  This may result to law of diminishing returns and lay-off of some inefficient workers because others will perform better and overtake another due to the monetary motivation making them perform doubly.  The third kind of offsetting can also mean that a worker must be laid off when demand for the output falls which results to job instability (Brubeck et. al., 1980, 6).

            These offsetting mechanisms that companies can use serve as a deception of the granted wage increase.  The impact of the increase would be hardly felt because of the disappearance of the past benefits and security employees are entitled before the wage adjustment happened (Wagar, 1998).  The situation of the employees is aggravated instead of the intended improvement.  This is possible because companies dedicate its effort in achieving its objectives for efficiency and expansion even at the expense of allowing few dollars to enter in the pockets of few and isolated in-need employees, probably saying,  “Let them strike first, afterwards, let us start to give their increase, and of course,  some offsetting…”

Issues to Consider in Career Development

Corporate Culture

            Perhaps the most influential issue to consider, corporate culture establishes the framework in which human resource management implements its career development programs.  It is reinforced as years passed by and naturally adjusting to the present goals and future undertakings of the company.  Its significance is confined with the strength and reputation of the top-level management who set policies for effective and efficient business.  In relation to this, Jim Bright (2003) affirms old and new ideas that an organization lives with that directly affect its submission to support career development for its employees.

            The old idea of a company in perceiving employee turnover as costly, disruptive and avoidable is replaced with the new idea that turnover is to be welcomed, necessary, inevitable and encouraged.  If the company culture will embrace the new idea, career development can be easily established and accepted across the organization.  The company is not afraid to pass necessary knowledge to employees under possible transfer to other companies leading to open communication both in behavioral and technical aspects.  Employees only have to open the door of the opportunity to exploit the situation.

However, the current situation has a different voice to speak.  Only few employees trust the corporate executives of their respective companies.  Partly, the company are not treating them according to what the former perceive is just and equitable.  In face of this, they are force to develop loyalty to the latter through promotional opportunities and rewards.  Top-level managers overlook that the new idea that individuals are increasingly loyal to themselves and the company only serve as partners in the career journeys of employees.  Consequently, the priority of the new idea is on the employees and how they will nurture their skills to make them employable in other industries.  Not the opposite in which the company extorts the value of employee’s labor to achieve its ends.

For those cultures stocked to the yesterday’s mediocrity, change is considered a threat or challenge that must be managed if not controlled.  The problem with this idea is that it discourages the company to think outside-the-box and apply the proven restructuring several companies conducted.  The old belief that general motivators such as prestige and money drive most of employees to become managers has been replaced by Generation X managers who value different drivers.  Because of this, corporate culture in the new idea proposes to top-level management that change should be considered constant and the only source of growth and opportunity.

Without the corporate will to update their old ideas with the more dynamic and new ones, career development is far fetched.  A company existing for twenty years or more is hardly to compare the economic and social situation of the past from the present.  Values and cultures also changed.  The resistance to give the chance for new ideas to fix and adjust corporate disparities can be the biggest hindrance an employee may confront in his demand for growth, independence and self-esteem.  When an individual does not see that he can go further in a certain situation, movement seems irrational while to maintain temporary status quo then suddenly withdrawing can be the best retaliation to undertake.  The company can only wish to trick another applicant to replace the former.

Size and Maturity of the Firm

            Small, medium and large firms differ in the number of employees they employ.  In addition, they also differ in stability and financial capital that could affect their approach in career development of their employees.  Small and medium firms are likely to employee few employees and show some flaws in financial liquidity and stability in case of economic recession or hard times.  Consequently, they need employees that can provide day-to-day services to keep the company going concern.  Managers tend to focus in the major and present issues with less regard to futuristic circumstances.  The importance to have status quo for the moment is an achievement for many of them as they climb to business progress little-by-little.

            On the other hand, large companies have years of business experience and financial stability to back-up them in emergency situations.  Even caught unprepared, it has the ability to get out of trouble because of the learning curve it has formed as time goes by.  As the result of its maturity in the business, employees are also in nurtured and established their own self-stability, expertise, flexibility and passion for work.  The everyday departmental problem seems a sleepy setting because they are confident and used to solve certain occurrences.  They tend to search for more challenging responsibilities where their years of experience can be applied and rewarded.

            In comparison, large firms put far more emphasis to career development than small and medium-sized ones.  This can happen because large firm likely to have the financial capability than small ones that can counter impacts of opportunity cost.  Opportunity cost that a firm may have when implementing career development is lectures and seminars that will replace production time of the employees, budget intended for such undertakings instead of investing it to another venture and the possibility of turnover of an employee under the program.  Large firms are less vulnerable to these costs than small to medium sized firms that rationalizes the level of importance firms are giving to career development.

            The simplicity of small to medium sized firms prevents the acquisition of large pool of employees.  There is less pressure for the business to provide additional supervisors and managers to handle a small group.  Hence, career development is not necessary unless expansion will be undertaken.  If so, the organization may demonstrate minimal concern because of the less complexity of employee task not like the large corporations.  They can simply promote an employee that excel and shows hard-work in the job.

Managerial Mind-Set

            It is normal for experienced managers to have varying perspective in treating their positions either as treasure or responsibility.  There are managers who want to retain status quo in his department that he sees an aspiring employee a threat against the thrown.  On the contrary, there are some who opted to pursue mentorship for every able and willing employee.  He is known to be devoted for the good of the company by improving every candidate who epitomized love of work and perceives the undertaking useful for the future of the organization.  The presence of these two extreme managers, not to mention those in the middle, is known to many employees and the company itself.  The hardship emerges when human resources implements career development plans under the numerous and subjective approaches of managers.

            Most managers use informal approach when it comes in rearing an employee.  Not like human resources personnel that acts in holistic manner, that is, according to company objectives, departmental managers proceeds according to the day-to-day technical problems and circumstances within his jurisdiction.  As a result, they extract large part administrative discretions that human resource manager’s role is necessary, if not intended.  Since departmental managers are the front-line of the company in handling staff-employees, their role extends within the technical aspect of their sections to some HR functions such as employee motivation, training, counseling and building the image for the company.

Consequently, the misleading application of these managers of career developments laid down by the company can hurt the growth of employees.  The focus might exclusively be for short-term production efficiency that undermines the importance of growth.  Another, opportunistic managers may seek to resort in discouraging training systems that can promote self-vested interest in holding back the position.  Lastly, discriminatory tactics can be inserted managerial decision-making.  A manager might not choose to train a woman executive to avoid perception of cross-gender relationship and male dominance or encourage career development for the child of a family friend.  Such managerial tendencies run counter to the goals of strategic human resource management that can pull the company downwards.

The Aftermath when Human Resources Strategies are Considered


Wal-Mart has three basic corporate beliefs; namely, respect to individual, service to customers and strive for excellence covering employee motivation, customer satisfaction and competitiveness (Wal-Mart Website).  Using this criterion, importing China products which are argued to be economically destructive to US populace is within Wal-Mart’s corporate values.  The company wanted to satisfy customers through offering low-priced products.  This makes them competitive, therefore, able to obtain its employees with their current jobs.  In effect, basic beliefs are not bypassed.

 In the contrary, one of its top supplier, Rubbermaid, had ran out of certain manufacturing sites followed by other manufacturing suppliers (Gainor, 2006).  As a result, Wal-Mart is blamed about the loss of most jobs in the manufacturing industry.  However, these cases are out of the core beliefs of the Wal-Mart.  Suppliers are merely partners and therefore the company’s core beliefs had less priority over them perhaps under striving for excellence or being competitive.  Also, competitiveness is also derived from the satisfaction of customers that made supplier-focus less lucrative to be prioritized.  Due to this, Wal-Mart has to be in the driver seat in negotiating with suppliers and supplier’s pricing strategies.  The strategic position of Wal-Mart makes it a strong retailer purchasing power which led to several suppliers to keep their prices down even if product development and other inputs require some mark-up.  On the part of Walt-Mart, it is adhering to its core beliefs and there is no change in corporate values.

Exclusivity of Cost Reduction and Innovation Strategies

In strategic management sense, cost reduction is a type of strategy where a company offers products that at low price with acceptable quality (Hitt, Hoskisson & Ireland, 2003, pp. 71-75).  On the other hand, innovation is a type of strategy where a company offers products that have superior quality (e.g. high in differentiation) with value-based prices.  It is to be noted that cost reduction strategies would likely result to minimal gains and growth, unshielded to leakage/ imitation and machine-oriented.  On the contrary, innovation strategies are based on compounded techniques such as continuous improvement, employee empowerment and acquisition of new technologies.  To the extent that it is hard for these two strategies to be simultaneously implemented, it can be argued that they are exclusive strategies.

            It is also hard to have market position and identity if a company will have to use these two strategies at the same time.  The endeavor can be very costly and problematic for managers.  Since every company has its corporate culture, it is also hard to fit two strategies at one moment because the strategy that is more embedded in the values of the company will be the one that will be adopted.  Otherwise, the combination of the strategies can form resistance from the employees which would lead to eventual failure of the company change.  In the contrary, on the aspect that innovation relates to new products that are dear to the customers, cost reduction strategies can be viewed as corporate innovation because a company tries to be known in the aspect of being a price-leader.

Optimal Production

MRP = MLC rule can be explained using labor as example (Sloman & Sutcliffe, 2001).  Using labor as capital variable in the production, profits can be maximized at an employment level where the Marginal Revenue Product of Labor (MRPL) is equal to Marginal Cost of Labor (MCL).  In definition, MRPL is the marginal revenue that the firm gains from employing one more unit of worker while MCL is the extra cost of employing one more worker.  It can be argued that MRPL can be exploited almost indefinitely, therefore, reaching maximum profit potential through introduction of increasing labor.

Figure 1: The Profit-Maximizing Level of Employment

However, MRPL is governed by law of diminishing returns which is shown in Figure 1 at “point b”.  On the other hand, MCL simply refers to the existing wage rate resulting to a horizontal supply curve where it implies that a firm can employ as many workers as it chooses under such wage rate.  The point of intersection where MRPL = MCL is situated to quantity of labor at QE.  At this level, optimal number of labor units is obtained by imploring profit-oriented decision.  Where levels of employment are less than QE, MRPL is greater than MCL (e.g. MRPL > MCL) that means that the firm has undermined the profits to be derived by adding workers.  In this case, labor level should be increased (e.g. right movement towards QE).  On the other hand, when the levels of employment is greater than QE, MRPL is less than MCL (e.g. MRPL < MCL) which means that the profits earned by employing additional units of labor “entirely felt” the adverse effects of MRPL against the law of diminishing returns.  The firm is at loss as cost exceeds profits; therefore, there is a need to reduce employment (e.g. left movement towards QE).

            Further, Figure 2 summarizes the rationale behind the optimal number of workers to be employed.  It is observed that at QE, all surpluses that a firm can receive are obtained while bringing wages at a minimum.  Although Figure 1 and Figure 2 clearly show the optimal number of labor variable for the production process, it is useful to mention that such assumption is of good use in the short-term.  MRPL is undoubtedly the demand curve of labor.  In the long-run, changes in the wage rate (e.g. through legislation), productivity of labor (e.g. through experience and new technologies) and demand for concerned goods under production (e.g. positive reactions in marketing campaigns) can change the optimal level of labor (e.g. at QE).

Figre 2: Summary of MRPL = MCL Criteria



Wal-Mart confirmed the advantage of a large retailing company.  It has the market base that enjoys volume-based benefits.  In this way, the best strategy is to be a cost leader.  This is why it is the most successful discount retailer in the US.  It is competitive even if it is not focus on offering high-quality products.  Further, although adverse social impacts occurred from its Chinese suppliers due to a series of job loss, the optimum level of production explained that the strategy of Wal-Mart is in line with the cost reduction of its suppliers.  If suppliers will continue to produce inefficiently, they would not be able to exploit doing business with Wal-Mart.  Due to this, Wal-Mart is successful to protect its leadership by focusing on a single and effective strategy that emphasizes prices of the products.


Update Job Descriptions

The three sources of information include the employees/ managers, the human resources (HR)/ operations manual and peer reviews from other companies.  Job description means identifying duties and qualifications of the position as well as the conditions of work environment.  There are no other reliable sources to explain each of this but through the people who supervise and most especially do the job.  Inter-departmental links that influence or is influence by the position can also be indentified.  This can be achieved through personal interviews and observation.  When the data about “what really happens” is available, it will be cross-referenced against “what should happen” which is pronounced by the HR/ operations manual.

Such action is vital in updating the job description as any difference between the reality and the rules can entail critical issues of performance, policies and possible change.  Desk research is the obvious tool to collect secondary data.  Finally, to prevent myopic view of the situation, it is a useful effort to ask human resources personnel of other companies that the researcher has personal or professional connection.  This will concretize any conclusions from the findings that the reality differs from the manual or vice versa.  This can also prevent the researcher from deviating on industry practices which is not good in obtaining competitive advantage.  The use of spontaneous and informal questioning is practical to get this kind of messages.

Communication in Organizations

Month Meeting/ Awards
Luncheon Meeting

Aids to perfect attendance; performance awardees are rewarded while others are inspired
Urgent Messages

Staff feels complacent; often lead to conflict; digital message is subject to system error
Break-Time Informal Conversation
Cubicle Murmuring

Shift employees are disturbed; pantry is  appropriate especially for long talks
Formal Letter

Shows respect and gratitude
Conflict Resolution
Undergo Systems of Employee Association

Bureaucratic; delay; managerial arbitration will expedite

Characteristics of People

There are four types of employee personalities; namely, driver, motivator, thinker and supporter.  Although each has strengths and weaknesses, taken together, they can form effective workplace relationships.  The driver is goal-oriented and can bring the group to new heights.  His confidence and isolated effort to achieve his ideals can inspire the group.  The motivator is optimistic and can get very well with the objective of the team.  His passion to be praised and build relationship with others adds to group cohesion.  The thinker, although less passionate than the motivator, can contribute to the needs of the group to identify potential opportunities and problems.  His love for details can aid the group to prioritize a goal when a set of goals conflict.  Also, during personality clashes, his focus on facts can maintain the function of the group despite the conflict.  The supporter is bound with patience and is very good in doing routine tasks.  As he is surrounded by innovative and passionate minds, his best contribution is his ability to maintain the core needs of the group.

Keys for Team Cooperation

Listening is the process of getting the ideas of a person.  When a member knows the ideas of the team, he can adjust personal differences with them.  Alternatively, he leaves the group if his ideas and the idea of the group is extremely different which prevents regular conflicts.  Questioning is an active part of listening.  This enables a member to clarify the ideas of the group in cases where the group ideas are too broad and seemingly conflict into his.  This will prevent unnecessary disagreement due to ambiguity.  Persuasion is the ability of a member to convince the group that a minority idea exists.  It happens when the idea is where the member feels very deeply but separately to the group.  If successful, persuasion will not only ensure membership but can make the concerned member their leader.  Respecting perhaps happens when the core idea of the entire membership is already identified.  With respect, the group reserves its right from unaccepted persuasion from one member or to disregard the rules of the group.  Finally, helping the group to reach its ideals is the general theme of cooperation.  This is perhaps the end of the earlier keys to cooperation.

Effective Relationships

Due to the benefits of network relationships, people oftentimes undervalue their knowledge in favor of other’s knowledge.  As a leader, this should be prevented.  The first strategy in network relationships is to emphasize the value of one’s knowledge.  Confidence is a key to this strategy.  The role of networks is to provide inputs to decision-making, support those decisions, and provide criticisms for further improvement.  As observed, the backbone of the network success is in the leader’s hands.  The second strategy is to build networks that have similar standards to the intending person and those that value the person’s skills and leadership.  This is vital to leaders since their reputation is their most important tool in management.  With frequent acknowledgement of their skills by their networks, the reputation of the leader will be improved that can aid in managing the group.

Third, patience from the benefits of a healthy network should be characterized by the leader.  Network advantages are based on relationships that developed from time-tested and situation-based occurrences.  It does not come out of nowhere neither imposed sanctions to those networks that fail to delay their contribution to the concerned person.  An attempt to expedite networks to do their contribution may only destroy the network.  Once the network is formed, the concerned person must have the initiative to offer a helping hand to those networks that need one.  This gesture, however, must be limited to objective of the group, the work of the leader and his/ her resources.  The mere expression of support to the network during crisis can spell how the leader values their relationship.  Fifth, the leader must seek advice from a network that is a mentor.  This is a selective strategy for the leader to maximize the contribution of the network and its relation to the leader’s job.  As experience is the best teacher, the mentor is the second best alternative where information is readily accessible.

Performance Management

Through performance management, a leader initiates the favorable award and support system to members.  Its concept is based on rational and psychological benchmarks.  During a project, the concept can be applied in all phases.  In the planning and design stage, where objectives for the project is set, the leader reduces the effort that members would spend as the former has the ability to set clear goals.  Specifically, the leader can summarize all the responses and beliefs of the members to weave it as concise and realistic goal.  As the leader is usually the administrator of these goals, goals are assured to have commitment from him/ her.  In the execution stage, where the pressure of the goals and harsh work conditions are depleting the energy of each member, the leader would come to the rescue and pick each of them.  He uses positive feedback to elevate energies and continue the project with high spirits and productivity.  This kind of motivation is very useful especially when monetary rewards and other fringe benefits are measured to the amount of effort to be spent.  Good feedbacks rewards the members with intangible resources thus cannot be consumed hastily like money.  This enables long-term use of feedbacks as motivation.

Going on with the execution stage, there would be members that feel that a positive feedback from an unproductive act is a fraud.  Due to this, wrong acts of employees must be corrected by the leader offering problem-solving advice.  This is crucial for the team to obtain their goals in speedier manner without bypass of the feelings of employees.  When the leader personally teaches the members, the latter would also feel treasured and will pay high respect to the leader.  Lastly, during commissioning phase, the evaluation of the project can be easily dispersed to members.  This is because the leader has done his/ her best to bring-out the better part of the members.  The leader’s initiative to set clear goals, provide good feedbacks and solve member problems serve as a ticket for him/ her to aim for better future projects.  In effect, the leader is truly helping and continuously challenging the firm to do a good job.


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