Susan Quinn, the daughter of the founder of FABRICS of New York, successfully ran the business for over 38 years. When she retired, investors from Indiana acquired 51% stakes in the company and hence became the new owners. Post the change of management, the company witnessed a good growth in profits by 23% and overall business volume by 17%. However, in the two years since the new owners took over, 71 of the company’s 315 staff have quit their jobs while top performers are looking out for new work opportunities. This case study is aimed at analyzing the situation and deducing reasons for the sudden increase in employee attrition.
People leave managers, not organizations [ CITATION Tat05 \l 1033 ].
Susan Quinn is said to have known each and every one of the 315 employees by name. This shows a high level of personal interaction on the part of the previous owner. Comparatively, although the current owners are courteous, the employees notice that they do not have Susan’s personal touch. The loss of a leader that they looked up to would make the employees feel uncomfortable in the same workplace where they have been employed for years. Employer – employee relationship defines the level of loyalty towards the company in employees. The formal approach of the new owners of FABRICS NY towards their employees may be a cause of the increase in employee attrition. The management should consider changing their policies to make way for a more personal approach that would be suitable for an SMB/ SME.
Attrition Cause #2: Over Working Employees
The fact that business volumes went up by 17% shows that the new owners place great emphasis on increasing productivity of their employees. While it is natural for any business to focus on maximizing profits, leadership often neglects the individual capacity of the employees. If the management fails to strike a fine balance between productivity and profit making, the employees may feel that they are being pushed beyond human limits to improve their performance. In such cases, employees may consider leaving the organization even it manages to match pay increases at par with previous years. The new management at FABRICS NY should thoroughly analyze factors such as over time, productivity and remuneration to identify an optimum working level for each of its employees.
Attrition Cause #3: Remuneration and Benefits
If an employer expects employees to put in extra efforts towards improving the quantity and quality of goods produced, the employees too have certain expectations for being remunerated adequately for their added efforts. If the new owners of FABRICS NY have driven their employees to improve performance in accordance with growing business volumes, that it may not be enough to match the rate of pay increase of previous years. The new management should consider providing performance based incentives and bonuses to ensure an increase in productivity as well as compensate employees fairly.