eThesis - School of Business electronic theses

The increasing needs for talents and the shortage of qualified talents have intensified the war for talents among companies in China. The outcomes of talent war were high employee turnover rate and the negative impacts of voluntary employee turnover on companies were considerable. This study was motivated by an empirical managerial problem of a Chinese domestic SME in Shanghai. The case company has faced the problem of high employee turnover rate and retaining qualified employees in recent few years. Based on that, the objective of this study was to find the reasons of voluntary employee turnover in Chinese domestic SMEs and the employee retention strategy of Chinese SMEs. To be specific, the research questions are: (1) What's the impact of voluntary employee turnover on Chinese domestic SMEs? (2) Why do employees in Chinese domestic SMEs decide to leave? (3) How do Chinese domestic SMEs retain valuable employees?

The research methodology of this study is qualitative and single case study. The case company Famous Work Ltd is a Chines domestic SME in consumer electronics industry located in Shanghai. The data was collected by questionnaire survey and semi-structured interviews. The employee job satisfaction and turnover questionnaire was distributed to all the employees in case company by online questionnaires. After that, five semi-structured interviews with CEO, HR director, design director, operation manager and one designer were conducted. The data analysis were based on the result of questionnaire survey and interviews.

This study found that the voluntary turnovers of employees in different positions have different impact on the company's performance. The impacts of professional employees' and managers' turnovers include direct and indirect impacts. Among those impacts, the fit problem between the new employees and the company is the one of the most important turnover impacts. Regarding the employee turnover reasons, this study confirmed the previous finding that the salary and other monetary-related factors are key reasons motivating employees in Chinese domestic SME to leave. Besides, the lack of vacation and career development are also reasons for leave. Additionally, demographic factors such as age, gender and tenure are also important determinants for employee turnover in the case company. Overall speaking, the voluntary employee turnover in Chinese SMEs can be explained by the reasons identified by previous research based on firms of western countries. However, the underlying reasons under each turnover determinants are different within Chinese social, economic and cultural context.

This study identified that five major employee retention strategies were adopted in the case company. Preventive practices addressing relational and transactional employee contracts were main retention strategies of the case company. The retention strategies in Chinese domestic SMEs are different from that in MNCs from Anglo-Saxon countries and are similar to European and Japanese MNCs' retention strategies.