Low Employee Retention Issues

Low Employee Retention Issues

Riordan manufacturing employs high-tech employees, and is facing for the first time the potential of higher employee turnover. Management at Riordan realizes the need to prevent this issue, and that consequences can be extremely harmful. Several American companies located within the United States (US) have had to deal low employee retention issues, as well as American companies located in Mexico. This paper will discuss methods that will help companies prevent the loss of employees, and raise employee retention.

Maquiladoras are American owned companies that operate assembly plants on the American Mexican border in order to be able to price their products more competitively in global markets based on lower productivity and taxation costs. Accomplishing this because of the lower pay and then taxed on this low labor value when returned to the US. Because of the phenomenal growth of Maquiladoras, retaining employees is growing to be more difficult. Maquiladora factories currently have a fixed pay scale that includes base pay, overtime, and cost of living adjustments. This issue is stronger in cases where the need for higher skilled employees is required (Miller, Hom, & Gomez-Mejia, 2001).

In the article, The High Cost of Low Wages: Does Maquiladora Compensation Reduce Turnover? (Miller et al., 2001) there are two main hypotheses presented to combat the high turnover in the Maquiladora companies. The first hypothesis is to offer variable pay based on seniority, productivity, and attendance. The second major hypothesis dealt with employee benefits that conform to the Maquiladora culture, as most of these workers are women that are the main caregivers (Miller et al.).

With the first hypothesis of variable pay, the employees pay is according to their seniority, attendance, and their productivity levels. While in the United States this method would work, but not in Mexico. In Mexico, the culture is that of collectivism and uncertainty avoidance. The employees would then stop working as a team, and threaten the group effort. The second hypothesis deals with the effects of