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Khan, Z. U., Alam, N., Badar, A., and Ahmad, M. B. (2023). Impact of Employee Turnover on Organizational Profit with Moderating Role of Recruitment. Bulletin of Business
and Economics,12(3), 169-176. https://doi.org/10.61506/01.00015
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169
IMPACT OF EMPLOYEE TURNOVER ON ORGANIZATIONAL PROFIT WITH MODERATING ROLE OF
RECRUITMENT
DR. ZARGHAM ULLAH KHAN
1
, NAVEED ALAM
2
,
AYESHA BADAR
3
, DR. MUHAMMAD BILAL AHMAD
4
ABSTRACT
Turnover rate is an important factor to consider as it relates to the performance of employees intending to leave, thus
significantly impacting the company’s profitability. This study aims to examine the impact of employee turnover on
organizational profit. Employee turnover is examined on organizational profitability with the moderating role of
recruitment. This study used quantitative research with a descriptive approach. The finding indicates a significant negative
association between employee turnover and organizational profit. Furthermore, the analysis also confirmed the moderation
role of recruitment influences organizational profit. This research delivers essential perceptions for organizations about
what may influence employee turnover. The research signifies possible pathways to decrease employee turnover and
increase productivity in the organization.
KEYWORDS: Employee turnover, recruitment, organizational profit, employee satisfaction
1. INTRODUCTION
Turnover is the function of changing a worker with a new worker either voluntarily or involuntarily. As employee turnover
impacts the organization when they leave, the organization needs to hire another employee for which organizations need to
spend lots of money which means employee turnover hurts organizational profits. In certain developing nations, companies
in both the public and private sectors are realizing that they need to strike an appropriate balance between the contributions
of their employees to the organization and the contributions of the organization to the expectations of their employees. One
of the main reasons is to create this balance for rewarding workers to increase their profitability. Growing the speed of
turnover ratio within the organization can result in an increase in the value of enlisting consequently productivity of the
organization can decrease (Sorguli et al. 2021). Nowadays one of the biggest challenges for Human Resource (HR)
managers is to hold the workers in the organization for a lengthy time and diminish employee turnover (Top & Ali, 2021).
Training programs and monetary benefits may increase employee durability and retaining employees benefits the overall
organization’s profitability (Shahzad et al. 2020). Growth of the organization, the recruitment and selection process is
critical because these processes ensure that the right people enter the organization (Zhao et al. 2020). The infiniteness of
the method is needed for the time of accomplishment and choice for the appointment of new staff for the organization
(Wattoo et al. 2020). In Pakistan Hussain and Aleem conducted a study on workers of the Autonomous Medical
establishments of the Health Department within the Province of Punjab to search for the feature touching the duty
satisfaction level and therefore the result of job satisfaction on turnover. The findings showed that variables like Pay,
Promotion, operating Conditions, and Nature of labour area unit were outstanding within the job satisfaction level of the
workers. The management of Autonomous Medical funding may take suitable steps to reinforce the duty satisfaction level
of workers. In recent times, create that the phenomenon of turnover (TR) has been an everlasting issue for the company (J.
D. Smith, 2018). That would negatively mark the performance and profitability of the organization. Consequently, holding
valuable trained employees is essential to employers, as they are considered essential to the performance and achievement
of an organization (C. A. Al Mamun and M. N. Hasan, 2017). Employee turnover is costly, including direct hiring costs to
find replacements, loss of workforce during adjustment periods and replacements, loss of productivity when employees
leave, and job loss. This leads to minimizing new hire productivity in finding (A. F. Schlechter et al. 2016). Therefore, the
administration and establishment's main concern is employee turnover (TR). The current study’s findings will be useful in
establishing and implementing strategies for enhancing the recruitment process among organizations. The general objective
of the study is to examine the impact of employee turnover on organizational profit. However, the study also examines
1
Assistant Professor, Hailey College of Banking & Finance, University of the Punjab, Lahore, Pakistan
2
Hailey College of Banking & Finance, University of the Punjab, Lahore, Pakistan
3
Hailey College of Banking & Finance, University of the Punjab, Lahore, Pakistan
4
Assistant Professor, Hailey College of Banking & Finance, University of the Punjab, Lahore, Pakistan
Khan, Z. U., Alam, N., Badar, A., and Ahmad, M. B. (2023). Impact of Employee Turnover on Organizational Profit with Moderating Role of Recruitment. Bulletin of Business
and Economics,12(3), 169-176. https://doi.org/10.61506/01.00015
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
170
some specific factors like remuneration, cash incentives, work-life balance, supervisor support and employee recognition
that affect the organizational overall productivity.
2. LITERATURE REVIEW
2.1. EMPLOYEE TURNOVER
Two main kinds of employee turnover in the organization are (1) voluntary turnover, and on the other hand (2) involuntary
turnover. However, different people have different| approaches to turnover. As an example, a happy disposition typically
makes it less likely that someone will leave their position (Demir et al. 2020). Nowadays one of the foremost issues for
Human Resource (HR) managers is to retain the workers within the organization for a protracted time and minimize
turnover (Top & Ali, 2021). Growing the amount of employee turnover decreases organizational overall productivity and
organizational efficiency (Jamal et al. 2021). Hence this study creates an impact on organizational profit through much
focus on employee turnover (TR) in the organization. Turnover includes monetary rewards, and other benefits as well as
non-monetary rewards such as recognition, responsibility career prospects etc. The total reward system contains a
combination of monetary rewards, employee benefits and non-monetary rewards. Siyanbola and Gilman (2017) stated that
employees leave an organization due to critical practices with their higher level of management and create a situation that
is not required for the productivity of an organization. Talim, et al. (2021) stated that Human Resources square measure
thought of the most structured supply. Sorguli et al. (2021) explained that growing the percentage of turnover employee
turnover (TR) in the organization will outcome in a rise in the cost of recruitment consequently the output of the organization
will decrease. Sabir et al. (2021) stated that nowadays many researchers, academicians, managers and researchers are
compensable consideration for employee turnover. Hamza et al. (2021) described that people with high stages of turnover
intention are usually thought about as less operative and continuously try and notice how to depart the organization.
According to Shaw (2011) retires, terminates, resigns and layoffs who departed are counted as turnover and it also includes
both voluntary and involuntary.
2.2. REMUNERATION
Remuneration means to pay or compensation; it includes commissions, basic salary, and deferred compensation.
Remuneration can be identified as a dimension of employee turnover that has a negative relationship with organizational
profit. Remuneration plays a crucial part in the well-being of employees in an organization. Akter et al. (2020) declared
some variables that can impact the relationship between the remuneration for employees and organization output,
specifically company potency, company scope and company age. Darmawan (2019) stated that the solution to employee
engagement at work is to provide remuneration that increases employee loyalty, motivation, and welfare. Agustiningsih et
al. (2016) stated that the overall compensation received by the employees in return for the services he or she has done is
remuneration. Ramat, 2020 stated that pay or compensation is remuneration. Harymawan et al. (2020) stated that
remuneration plays a vital role in the organization which increases the company’s performance.
2.3. CASH INCENTIVES
Cash incentives are the payments by employers to employees including commissions, paychecks, and cash bonuses. On the
other hand, non-cash incentives include free vacation, work flexibility, and experiential rewards. Ihsani & Wijayanto (2020)
declared that two kinds of incentives have appeared: incentives supported the intent and on the opposite hand incentives
supported the shape of the inducement itself. Abdullah et al. (2017) explained that the best ways to establish the rewards
are the outcomes, which can be restrained in terms of work time, quality and efficiency. Two kinds of incentives for
employees rely on the purpose of the incentive. (I)Positive incentives and (II) negative incentives.
2.4. WORK-LIFE BALANCE
As reported by scholars, the organization has no universal meaning for work-life balance. Armstrong and Taylor (2014)
explained that employees in the organization must fill their time for different aspects of life and personal life to ensure good
performance at their job. It is also explained as an organizational policy that contains individual leaves, flexibility in work
changes, and help to dependent care. Every individual has different priorities and lives and how they balance work and life.
Farivar & Cameron (2015) expressed that work-life balance in the organization will have a positive effect on recruiting
staff, motivating staff and maintaining a staff.
2.5. SUPERVISOR SUPPORT
A supervisor is often believed to be the most popular among the workers. Maertz et al. (2007) explained that the influence
of perceived supervisor support and perceived structure support on ratio, there is a solid connection between supervisor
support and turnover and organization. It further explained that supervisor support and organization are valuable inferences
in turnover management. In the organization, the supervisor should be accountable to employees to create a work
environment and productive relationships. Son (2014) stated that in an organization supervisor acts as an agent, and
employees who receive good support from the supervisor, respond by holding in the organization. It further explained that
there is psychological contact between supervisors and employees in the organization.
Khan, Z. U., Alam, N., Badar, A., and Ahmad, M. B. (2023). Impact of Employee Turnover on Organizational Profit with Moderating Role of Recruitment. Bulletin of Business
and Economics,12(3), 169-176. https://doi.org/10.61506/01.00015
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
171
2.6. EMPLOYEE RECOGNITION
According to the beliefs of many employers, turnover increases when workers are not happy. They largely apply
straightforward procedures of recognition to prevent the speed of turnover. According to a large number of employers,
employee turnover percentage increases, when they are not satisfied with their job. Although employers apply measures of
recognition to reduce the turnover rate. Pancasila et al. (2020) stated that employees would be more determined if their
managers recognize them well. Although employers apply measures of recognition to reduce the turnover rate. Febrianti &
Se (2020) stated that high presentation is good merchandise of a mixture of two things ability on the job and the other hand
motivation.
Syamsir (2020) expressed that some authors stress the name of worker gratefulness as an honest foundation of
encouragement. Alrawahi et al. (2020) expressed that one of the foremost necessary foundations of organization
deployment and input is recognition.
2.7. RECRUITMENT
Paauwe and Boon (2018) explained that in many organizations human resource (HR) managers are accountable for
recruitment and selection procedures and do not follow proper procedures.
Wattoo et al. (2020) explained that the infiniteness of the method is needed for the time of accomplishment and choice for
the appointment of new staff for the organization. Farndale et al. (2018) stated that recruitment and selection have a good
position in the organization as they confirm that the accurate employee enters the organization for those places, where they
can assist the organization to get short-term and, on the other hand, long-term goals. Shilling (2020) stressed that Human
Resource professionals must attention to and review candidates that best match the organization's wants. According to
Cattermole (2019), recruitment includes increasing one’s business, which starts with management defining a hiring need.
Brown et al., (2019) Stated that the process of selection is the right chance to fill in many circumstances in the organization.
2.8. ORGANIZATIONAL PROFIT
Profit is defined as when revenue from a business exceeds expenses, taxes, and costs. Hines et al. (1988) stated that profit
is not solely necessary for public sector organizations but additionally for private organizations but the concept of profit for
both organizations either public or private is uncertain and problematic. Profit is an economic driver of an organization.
Profit is enriched when organization size increases and decreases riskiness. Stewart (2007) stated that any organizational
goal is profitability. According to Ricardo (2001), productivity was the capacity of work accomplished in a specified amount
of time, and on the other hand, performance was a broader indicator that comprises productivity and another factor. Opkara
(2002) the study found that certain aspects influence the level of job fulfilment of the employee. These areas unit
compensation, promotion chances, work, relationships with co-employees, and direction. The pay was thought-about the
leading thing about the activity the duty satisfaction of staff. Javier (2002) stated that the 3Es, effectiveness, efficiency and
economy are equal to the performance of a certain movement. Hefferman and Flood (2000) explained that there are two
main problems that organizational performance suffers, the first one is the definition and another is measurement.
Performance was sometimes confused with production in the organization.
3. CONCEPTUAL FRAMEWORK
The objective of this study is to examine the impact of employee turnover on organizational profit. Employee turnover is
examined on organizational profitability with the moderating role of recruitment. An analysis of the relevant literature has
been used to develop the following conceptual framework.
The five (5) independent variables such as remuneration, cash incentive, work-life balance, supervisor support, and
employee recognition can be identified as dimensions of the turnover that have a negative relation with the organizational
profit. Organizational profit is the dependent variable.
Employee Turnover
Organizational Profit
Remuneration
Recruitment
Cash Incentives
Work-life Balance
Supervisor Support
Employee
Recognition
Khan, Z. U., Alam, N., Badar, A., and Ahmad, M. B. (2023). Impact of Employee Turnover on Organizational Profit with Moderating Role of Recruitment. Bulletin of Business
and Economics,12(3), 169-176. https://doi.org/10.61506/01.00015
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172
4. RESEARCH METHODOLOGY
4.1. RESEARCH DESIGN
A quantitative correlational research design was used to find the relationship between employee turnover (TR), recruitment,
and organizational profit.
4.2. STUDY POPULATION
4.2.1. INCLUSION
The people who were members of the organization service were included.
Male and female participants were included.
Participants from all religions were included.
4.2.2. EXCLUSION
Participants with physical disabilities were excluded.
Participants who were doing internships in their respective organizations were not included.
Participants belonging to other countries were excluded.
4.2.3. SAMPLE AND SAMPLE TECHNIQUE
For the sample and sampling technique, a non-probability convenience sampling strategy was adapted for data collection.
The sample consisted of N=100 participants. This study sample included the manager, receptionist, and Guest Relations
Officer. The sample was drawn based on the following criteria.
4.3. DATA COLLECTION METHOD
For data, collection permission had been taken from my Supervisor, the Head of the department, and the authors of the
scales. The questionnaire was created for data collection permission had been taken from all the relevant authorities of the
organizations through a physical approach. After explaining the nature and aim of the research, participants were identified
by exclusion and inclusion criteria and informed consent was taken from them. Data collected from employees from
respective organizations offer an awesome environment for understanding the nature of research and variables and involve
especially excessive stages of client interaction and require high exceptional service quality compared to less reputed hotels.
They were confident that their data might be kept secret. All the queries were catered to. After the data collection,
participants were thanked for their cooperation.
4.4. DATA COLLECTION PROCEDURES
A total of 250 questionnaires were circulated among organization employees.
4.4.1. DATA COLLECTION SOFTWARE AND TECHNIQUE
For data analysis, the SPSS software system is employed to look at the results. Reliability analysis is formed to check the
reliability of the study variable. For more data analysis, Correlation and as well as hierarchical linear regression analyses
are run to spot the affiliation between variables.
5. DATA ANALYSIS
In the demographics, the majority of the respondents in my study in the gender group were male 52.4%. According to age
majority of the applicants were between the ages of 26 to 35 years that was 50.0%, according to marital status most of the
respondents were single that was 70.8%, according to residential area majority of the respondents were urban 50.8%,
according to education majority of the respondents were master that was 34.8 % and according to organization majority of
the respondents were private that was 69.6 %and according to experience, the majority of the respondents were between
the experience of 1-5 years that was 44.0%.
Cronbach’s alpha scales from 0.6-0.7, although 0.7 is taken into account as acceptable. 0.8 reliability displays that reliability
is fine however the values that area units more than 0.95 are an upsetting condition (Hulin, Netemeyer, & Cudeck 2001).
The variance for the worth of the liableness constant is from zero.5 to one higher the worth would be the liableness of the
information. Cronbach’s alpha ranges from zero.6-0.7, while 0.7 is taken into account as acceptable. 0.8 Liableness shows
that liableness is sweet however the values that area unit more than zero.95 area unit associate degree dire condition (Hulin,
Netemeyer, & Cudeck 2001).
For reviewing the reliability of the survey Cronbach’s alpha has been applied. During this knowledge, organizational profit
indicates 0.868 reliability which is the highest worth among all different values. Recruitment shows 0.811, turnover
indicates 0.852 reliability, thus entirely the variables area unit acceptable as they are reliable to run any study.
Mean, Std. Deviation Skewness and Kurtosis are given in the above table. Employee turnover shows a 3.4540 mean and
it’s Std. The deviation is 0.790 which shows the variation of the data from the mean. Recruitment shows a 2.2187 mean
and 1.317 Std. Deviation, while organizational profit shows 3.4553 and 0.816 mean and std. deviation. A higher variation
from the mean is shown in recruitment.
The table 4 shows that turnover positively correlated with the Recruitment process which explains that an increase in
turnover intention will also increase an organization's recruitment process while the recruitment process negatively
correlated with organizational profit while the recruitment process negatively affected organizational profit.
Khan, Z. U., Alam, N., Badar, A., and Ahmad, M. B. (2023). Impact of Employee Turnover on Organizational Profit with Moderating Role of Recruitment. Bulletin of Business
and Economics,12(3), 169-176. https://doi.org/10.61506/01.00015
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
173
Table 1: Demographic Study of the Population
N
Min
Max
Mean
Std. Deviation
Frequency
Percentage
Gender
250
1
2
1.52
0.50
Female
119
47.6
Male
131
52.4
Age
250
1
5
1.83
0.87
18-25
93
37.2
26-35
125
50.0
36-45
17
6.8
46-55
10
4.0
Above 55
5
2.0
Marital status
250
1
2
1.29
0.46
Single
177
70.8
Marriage
73
29.2
Residential area
250
1
2
1.50
0.50
Urban
127
50.8
Rural
123
49.2
Education
250
1
6
2.64
1.01
Intermediate and below
33
13.2
Bachelor
80
32.0
Master
87
34.8
M.Phil.
44
17.6
PhD
4
1.6
Others
2
.8
Organization
250
1
3
1.34
0.55
Private
174
69.6
Public (govt.)
66
26.4
None
10
4
Experience
250
1
5
2.81
0.86
Never
14
5.6
Less than 1 year
75
30.0
1 to 5 years
110
44.0
More than 5 years
47
18.8
Others
4
1.6
Table 2: Reliability and Factor Analysis
Constructs No. of items Cronbach’s Alpha (a)
Recruitment 3 .811
Organizational profit 6 .868
Turnover 6 .852
Table 3: Descriptive Statistics
Constructs K Mean Std. Deviation Skewness Kurtosis
Employee Turnover 6 3.4540 .79016 .090 -.450
Recruitment 3 2.2187 1.31761 .684 -1.014
Organizational Profit 6 3.4553 .81657 .005 -.552
Khan, Z. U., Alam, N., Badar, A., and Ahmad, M. B. (2023). Impact of Employee Turnover on Organizational Profit with Moderating Role of Recruitment. Bulletin of Business
and Economics,12(3), 169-176. https://doi.org/10.61506/01.00015
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174
Table 4: Correlation Analysis
1
2
3
TR
-
.044
.033
R
-
-.028
OP
-
Note: TR= Turnover, R = recruitment, OP= organizational Profit
Table 5: Hierarchical Regression for Moderator Analysis
Variables M1 (β) M2 (β)
Step-1
TR .036**
R -.038**
R2 .002
Step-2
TR×R -.015**
R2 .005
ΔR2 0.003
Note: TR= Turnover, R= Recruitment, **p<0.01 (two-tailed)
We applied two hierarchical regressions. In the first step Turnover (TR) and Recruitment (R) treat independent variables
and note significant impact. We can see R reversed the association between Turnover (TR) and Organizational profit OP.in
the second step we added an interactional term and see a significant impact. Significant impact shows that moderation
exists.
5.1. LIMITATIONS AND FUTURE DIRECTIONS
Though this research presented some useful theoretical and managerial information, still, it is still not free from the
limitation that gives rise to new future research. Most importantly, this study was conducted at intervals of restricted time
that imposed limits on the number of questionnaires circulated. Later, if future research could be performed within a
lengthier period, additional questionnaires could be circulated, showing that the sample size would be higher, therefore,
increasing the population's outcome. A qualitative method is not utilized in this research like discussions to document the
arguments of the employee. Therefore, future studies may use other techniques such as case studies to refine the results,
especially regarding hypothetical relationships. Data collection by a cross-sectional approach is also a limitation of this
study, which may be overcome in the future by using a longitudinal approach. The proposed model might be expanded in
future research by looking at another moderator. This makes the research results more accurate.
6. CONCLUSION
The research intended to observe the result of employee turnover and recruitment on organizational profit. In this approach,
this study found that turnover in the organization and the procedures of recruitment play an essential part in organizational
development. Additionally, this study has also recognized that the selection of the right candidate recruitment procedure is
extra support for the organization. The HR supervision department will be accomplished in the organization by selecting
the right worker. In addition to this, only the recruitment of accurate workers is not sufficient for the organizational profit,
but the facility of more suitable working conditions for the employees plays a vital character in raising their presentation
that will directly have a positive effect on the organization’s profit. It is also discovered that the appointment of the right
candidate is more serious for the organization to retain them inspired and attempt to reduce employee turnover (TR).
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