Recruitment and retention in low-wage service industries

A REPORT published by the Joseph Rowntree Foundation Everything under a fiver: recruitment and retention in lower paying labour markets documents the full staff turnover process from vacancy posting through to staff leaving. The study, by researchers at the Centre for Economic Performance at the London School of Economics, explores the costs incurred by firms as a result of turnover, and how pay and morale are affected.

The study, conducted in 1996-97, covered five large companies that operated in at least five of seven different local areas selected for the research. The companies were a restaurant chain, a leisure company, a supermarket chain, a hotel group and a food manufacturing company. The areas covered were chosen to include cities and smaller urban or semi-urban areas across England. Company records were supplemented with questionnaires covering current staff, appointees, leavers and managers. Wages in almost all entry-level jobs in these companies were already higher than the national minimum wage introduced in April 1999.

In these companies it typically took a month to fill a vacancy. Existing employees and Jobcentres were the most common methods of attracting job applicants. On average each vacancy attracted three applicants and the number of applicants was sensitive to the wage on offer relative to local pay rates and local unemployment. Firms found it easier to recruit in towncentre sites than for those on the outskirts, partly because of the availability of transport.

Turnover costs accounted for between 5 and 10 per cent of wage costs. The costs of staff turnover included the cost of newspaper advertising; management time; lower productivity of new staff while they learned the job and by supervisors and experienced staff who were involved in their training; and loss of capacity while a vacancy was unfilled. In all the firms studied the level of staff turnover was high, ranging from 40 per cent per year in the case of the food manufacturer to 100 per cent in the restaurant. The workplaces in the study that had the highest earnings relative to their local labour market had the lowest turnover rates. Workers were also less likely to leave when there was more competition for alternative job opportunities. The study suggests that reduced turnover costs would not be sufficient to offset completely the higher wage bill resulting from paying higher rates.

Most of the workers in the study firms were women, except in the food manufacturing company, which employed 80 per cent men. They were mainly young, many were students and a third had dependent children. Relationships with colleagues and ease of travel to work were the most highly valued aspects of jobs in all five companies. Pay was the least satisfactory aspect in all cases other than retailing where the pay was higher relative to the local labour market than in the other companies. Women were more satisfied, and young people and those with higher qualifications were less satisfied than other workers. However no relationship was found between job satisfaction and turnover.

* Everything under a fiver: recruitment and retention in lower paying labour markets, by Donna Brown. Richard Dickens, Paul Gregg, Stephen Machin and Alan Manning. Published by the Joseph Rowntree Foundation. ISBN 1 899987 83 5, available at L13.95 plus L2 postage from York Publishing Services Ltd, 64 Hallfield Road, Layerthorpe, York Y031 7ZQ, tel. 01904 430033, e-mail orders@yps.ymn.co.uk.

Copyright The Controller of Her Majesty's Stationery Office Mar 2001
Provided by ProQuest Information and Learning Company. All rights Reserved