The problem of short-term employees and high turnover

6/04/2013

When I first came in I was surprised to find out that my reporting and planning manager had only been at Janssen herself for three weeks and that she was still learning about the company. At the time I just thought it was your regular ‘a full-time employee has left and she has come to replace her’ but over the few months I have been here there seems to be a developing trend that one person leaves every few weeks. First it was the finance manager, then the management accountant manager, the management accountant, the SOX assistant, the commercial analyst, another commercial analyst and last but not least our financial controller! We also welcomed many new people such as our new rebates person, two new commercial analysts, a new systems processor expert and the grads also did a rotation so there were an additional two new faces. It’s almost safe to say that half the team came in after I did!

I found out through talking to people that one of the reasons for this high turnover was that may people were hired as contractors rather than full-time employees. I am not too clear as to the reason why but I’m sure J&J has its reasons. Contractors are hired for a definitive period, paid by the hour and do not receive the benefits that full-time employees receive such as sick leave and annual leave. If the company decides they want to keep them then their contract gets extended for a couple more months and if not then they leave. Some people have extended their contracts multiple times over a few years.

Having experienced this life cycle of employees coming and going all the time I discovered many issues that are accompanied with high turnover rates. Firstly information is often lost between people as handovers can be very brief or there may not even be time to do one in the case where an employee leaves before someone arrives to replace them. This then results in trying to reach out to people about the details of the new employee’s tasks and wasting a lot of time and effort to get their job done right. Not only this but a piece of culture is gone as traditions and events in the workplace are not handed down and forgotten. In light of the Agency Theory where employees are generally motivated by self-interest this incentive plan of being a contractor may mean that the organisation’s goals and their personal goals may not be perfectly congruent and may result in dysfunctional behaviour. The duration of their stay is stipulated in the contract so there may be hardly any incentive to put in a lot of effort towards the end of the contract. Of course this may not be the case for all people because in the end it really depends on a person’s individual personality.

However one up side to having a new team is that we can start off fresh again, challenge old ideas, be creative and innovative to come up with new processes, bring change to our team and influence the organisation in a better way.