Working paper discussing the employee turnover problem in Egypt. This paper was presented at the second international conference of business development, innovation & challenges.

1. EFFECT OF EMPLOYEE
TURNOVER ON NATIONAL
ECONOMY
PresentedBy: Mohamed Moharam
FACULTY OF FINANCIAL AND ADMINISTRATIVE
SCIENCES
PHAROS UNIVERSITY IN ALEXANDRIA

2. Agenda
 Introduction
 Research Focus
 Research Questions
 Research Importance
 Research Design
 Research Findings
 Recommendations

3. Introduction
 What is employee turnover phenomenon?
 How to control this phenomenon?

4. Research Focus
 This research explores the problem of
employee turnover and the relation between
this phenomenon and the unemployment rate
in Egypt.

5. Research Questions
1- What is the effect of unemployment rates on
the Egyptian economy?

6. Research Importance
 This research discusses one of the most
important problems that must be discussed
deeply.
 A lot of researches discussed the Egyptian
unemployment rate only without illustrating the
turnover rate neglecting the direct relationship
between them.
 Illustrating the two sectors with the highest
turnover rate in Egypt.

7. Research Design
 A survey was conducted using personal
interviews and questionnaires focusing on
random sample of employees in two sectors:
Fast food and medical sectors

8. INTRODUCTION
 Employee turnover is one of the main problems that must
be discussed deeply nowadays; this condition widely
appeared since 2011 (after the revolution) .
 it’s not surprising to say that this phenomenon is increasing
till now.
 Employee turnover has a direct effect on the unemployment
rate which is a very important problem in Egypt especially
for fresh graduates.
 Employee turnover has four types:
 voluntary
 involuntary
 Desirable and Undesirable turnover

9. Voluntary turnover
 When an employee leaves the company of his / her own
volition, it's called voluntary termination. [Ruth Mayhew]
 They may be accepting employment with another
company, relocating to a new area or dealing with a
personal matter that makes it impossible to work.[Ruth Mayhew]
 When an employee voluntarily terminates the
employment relationship, he / she generally gives the
employer verbal or written notice of intent to resign
from his / her job.[Ruth Mayhew]

10. Voluntary turnover (cont’d)

11. Involuntary turnover
 Employee termination for poor job performance, absenteeism or
violation of workplace policies is called involuntary turnover (also
referred to as termination, firing or discharge). [Ruth Mayhew]
 It's involuntary because it wasn't the employee's decision to leave
the company. [Ruth Mayhew]
 layoff procedures usually are handled different from termination.[Ruth
Mayhew]
 Some layoffs is due to laws and regulations forced by the
government on the company because of performance or policy
violations.[Ruth Mayhew]
 EX: Auditors must have CPA

12. Desirable and Undesirable
turnover
 Turnover often has a negative connotation, yet turnover isn't always a
negative event.[Ruth Mayhew]
 It's desirable because poor job performance, absenteeism and tardiness
are costly.[Ruth Mayhew]
 replacing a poor performer with an employee who does his job can
improve the company's profitability.[Ruth Mayhew]
 Desirable turnover also occurs when replacing employees infuses new
talent and skills, which can give an organization a competitive advantage.
[Ruth Mayhew]
 undesirable turnover means the company is losing employees whose
performance, skills and qualifications are valuable resources.[Ruth Mayhew]

13. Employee turnover statistics

14. EFFECTS OF EMPLOYEE
TURNOVER
 High turnover can be a serious obstacle to productivity, quality, and
profitability at firms of all sizes. [ Clint Johnson ]
 For the smallest of companies, a high turnover rate can mean that
simply having enough staff to fulfill daily functions is a challenge,
even beyond the issue of how well the work is done when staff is
available.[ Clint Johnson ]
 Turnover is no less a problem for major companies, which often
spend millions of dollars a year on turnover-related costs.[ Clint Johnson ]
 For service-oriented professions, such as management consulting
or account management, high employee turnover can also lead to
customer dissatisfaction and turnover, as clients feel little
attachment to a revolving contact.[ Clint Johnson ]

15. TURNOVER CALCULATIONS
 Basic turnover calculations are relatively simple. If your company
employs 100 employees and 15 employees are fired or quit, your
turnover is 15 percent.[Ruth Mayhew]
 Most organizations use more detailed calculations to determine what
underlies turnover.[Ruth Mayhew]
 Assume five employees leave in January, one employee leaves in
May and four employees leave in November. Your annual turnover
rate is 10 percent, and your average monthly turnover is 8.3 percent.
[Ruth Mayhew]

16. LIST OF COMPANY’S with the
shortest tenure

17. LIST OF COMPANY’S WITH THE
LOWEST TURNOVER RATE

18. Research Hypothesis
 From previous literature, this research
hypothesis is formulated as follow:
H1: There is a direct significant effect of
turnover rates on the Egyptian economy.

19. Results

20. Effect On Egyptian Economy
 Egyptian government spent more than 600 million
pound annually on employee turnover in all sectors.
 This high turnover rate in the governmental sector
occur due to the dissatisfaction with salaries.
 Till now there is no definite solution for this problem.

21. CAUSES OF EMPLOYEE
TURNOVER

22. Reasons for employee turnover in the fast foods sector in
Egypt
 The results of this study revealed that more than 59% of the
employees who terminated employment during the period had been
employed for 4-6 months. The greatest percentage of respondents
left because of dissatisfaction with treatment by the supervisor
(51.2%), followed by (12.7%) who left for dissatisfaction with salary.
Seventy-seven percent of those who left were male, compared to
twenty-three percent female. This imbalance reflects the overall
gender imbalance of employees. The findings revealed significant
differences in satisfaction with the supervisors of former and current
employees at McDonald's. In particular, the group of former
employees was less satisfied with their supervisor.

23. CAUSES OF EMPLOYEE TURNOVER
(cont’d)
 Reasons for employee turnover in the medical
representative sector in Egypt:
 Pharmaceutical industry is rapidly growing industry in
Egypt. This industry requires huge skilled and efficient
manpower. Medical representative are the front line for
marketing any product. Medical representative spent most of
their business in their territory, talking with pharmacists,
hospital personnel, physicians, patient and detailing and
promoting their company’s products and increasing the
volume of their sales. They represent the company image.

24. Reasons for employee turnover in medical
representative sector in Egypt (cont’d)
 As medical representative are the core of the pharmaceutical
business, thus increasing their satisfaction will lead to increase in the
revenue of the company. But there are observed huge turnover due to
lack of proper job satisfaction and lack of proper motivation, turnover
intention, and level of experience, manager’s support, compensation
and benefits. The problem in medical reps turnover is that it cost the
companies a lot. When sales territories are vacant, medical rep/doctor
relationships become threaten. This could lead to decrease of market
share. Also cost of recruiting new medical reps, cost of training new
medical reps, decreased morale and productivity among retained
workers and loss of future key talent. The main reason for medical reps
turnover was that they are not feeling satisfied neither from the salaries
nor from the managers treatment.

25. Recommendation
 At the end of this research I am attempting to recommend some ways to solve
the turnover phenomenon especially in Egypt, turnover rate in Egypt increased
after the revolution by approximately 55% so the unemployment rate increased
also by 50% which cause a real economic crisis.
 After a very specific study and questioners I found that most of turnovers was
voluntary especially at the age from 23 to 31, I was not surprised because this age
is searching for the best salary also to feel safe (contracts, insurance, etc.…).
 SOLUTIONS:
 HR specialists must be aware when choosing the employee, hiring the right
person is the best way to reduce turnover
 employee interpersonal skills must be examined carefully to be sure that he
will fit well with the company, managers and co-workers.

26. Recommendation
 Managers must be aware to employees personal needs and offers flexibility when
they can
 Motivation and respect are the two main weapons manager can use to reduce the
turnover rate
 Business cycles must be used widely and in different ways to satisfy both work
and employees needs.
 Finally any employee needs to feel that he is helpful and useful to the firm and an
appreciation word from the manager is better than any salary he / she can get.