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Impact of Employee Turnover Intentions on SMEs of the UK


Small and medium enterprises (SMEs) are considered to play a very essential role in the national economy of countries and are considered to be the backbone of the development of the industry. In 2021, there were around 5.58 million UK businesses and 99.9% were SMEs having less than 250 employees. Moreover, SMEs account for 51.9% of the turnover of the private sector in 2020 (Merchant Savvy, 2022). SMEs are important for the economy of the UK and their contribution is enhancing every year. Coetzer et al. (2019) mentioned that the managers of SMEs of the UK face different challenges regarding human resource management (HRM) like the hardship in retaining and attracting different talented employees. By sustaining skilful employees, SMEs form a feasible environment in this competitive economy of the free market that will increase the returns. The comprehension of viewpoints of employees and examining their factors of retention are important for the success of the company. Comprehending employee viewpoints and analysing their retention factors are significant to an organization’s success. Coetzer et al. (2019) mentioned that the decision of employees to resign is impacted by two essential factors that comprise of perceived ease of movement that considers to the evaluation of perceived opportunity or alternatives and “perceived desirability of movement” impacted by job satisfaction. This explains how the balance is considered both for the employees and also for the organizations based on inducements like contribution like work and pay that makes sure ongoing efficiency of the organization. Generally, when the incentives are raised by the firm that will decline the tendency for the worker to leave. Similarly, the managers of the UK have to be aware of whether the decision to leave might have been avoided by the company. This has become very essential for the planning of the intervention and it is realistic to manage the turnover as unavoidable rather than preventive measures are taken to minimize them.

The turnover intentions to employees’ intentions to leave their positions, resign, or become dissatisfied with their employers. When organisations resign, it is voluntary and when an organisation decides to evacuate employees, it is not involuntary. Given the critical role of SMEs in economic growth and development in the majority of the world, including the UK, it is reasonable to investigate the relationship between turnover intentions of SMEs in the UK (Ma et al. 2016).

This study is important to conduct because the private sector of the UK particularly SMEs have been forced to implement a policy of staff reduction, which has resulted in a geometric increase in the amount of unemployment in the UK. The exploitation of workers and underemployment by labour leaders who are aware that many others are eligible for employment, voluntary termination of employment, and gross resignation when better chances occur are all results of this circumstance. Those who leave or retire from an organisation may possess additional abilities and skills than those who remain. This leads to a decrease in organisational efficiency and a decrease in the rate of growth of the business. Additionally, there have been very limited studies conducted on turnover intentions in the context of SMEs of the UK, as a result, this study contributes to the existing literature and also helps the HR team of the SMEs of the UK to make strategies and policies to retain employees.

To conduct this study effectively, the following are the research questions of the study:

  • What is the impact of employee turnover intentions on SMEs of the UK?
  • What types of problems are faced by SMEs of the UK due to employee turnover?
  • What are the remedies and solutions to improve employee turnover in the SMEs of the UK?

Literature Review

The turnover rate in the SMEs of the UK

In 2021, the SMEs of the UK had an amalgamated turnover of more than 2.3 trillion British pounds having businesses that have less than 10 people working and that is contributing 953 billion pounds (Statista, 2022). The timeline numbers of the turnover rate in the SMEs of the UK from 2012 to 2021 are shown below:

Turnover rate in the SMEs of the UK from 2012 to 2021

Figure 1: Turnover rate in the SMEs of the UK from 2012 to 2021

Source: Statista, 2022

Moreover, the proportion of turnover and employment by business size is shown below graph:

The proportion of turnover and employment by business size

Source: Merchant Savvy, 2022

Additionally, during the global pandemic, there was not much turnover reported among SMEs of the UK. According to the monthly Business Impact of Coronavirus Survey (BICS), it indicates that very few businesses are facing a decline in turnover every month. Moreover, it is anticipated that the businesses in the hospitality and service sectors have witnessed huge enhancements in turnover. Moreover, in November 2021 around 44.3% of businesses in the fields of recreation and arts entertainment sector and around 48.3% of other businesses’ services are reporting lesser than anticipated turnover in 2021 (Merchant Savvy, 2022). Merchant Savvy (2022) mentioned that around 38.5% of businesses in the foodservice activities and accommodation reported a decline in turnover in comparison of conventional and food service activities considered a decline in turnover in comparison with the conventional expectations for this time of year and it is a huge amount, however significantly better than 57.8% as stated in 2021. Moreover, 51% of businesses showed that they had no impact on turnover in comparison with the conventional anticipations for this time of year. Moreover, only 7% of businesses showed an enhancement in turnover in comparison with normal expectations.

Reasons for turnover among SMEs in the UK

Among the SMEs of the UK, there are many reasons for turnover. The first reason for static pay is that the more people spend in a position, the more they invest in the company and want their salary to reflect this. But if the annual wage is not increasing and the promotions and incentives are not coming, people who may not be underrated in their current role may feel and decide to move elsewhere and it is not an uncommon case (Long et al, 2014).

Another reason for turnover intentions is a bad manager and if a person uses the word “Horrible Boss” it means they are referring to a manager who is obnoxious or aggressive, the type of person who fosters an unhealthy work atmosphere. However, a manager does not have to be openly unfriendly to make work miserable. A middle manager can be anyone who fails to motivate and guide their direct reports. According to Li et al. (2019), employees have bosses who are committed to their work, who focus on their talents, assist them in setting performance goals, and are approachable and open. Moreover, the employees want a manager who invests in their success and is committed to sustaining their progress and delivering feedback throughout the year, not only at the end of the year performance review. Indeed, if staff meet with their managers once a year to discuss goals and progress, they may not stay that long. Therefore, it is essential to ensure that a person can conduct regular check-ins with all of the personnel (Lai et al. 2017).

Another reason is having a weaker level of relationship among the colleagues. In other words, having professional friends is more critical than a person may believe. According to Abubakar et al. (2014), employees who enjoy high levels of peer regard and esteem are more likely to wish to stay in their current employment. Therefore, whether it is their manager or their colleagues, employees want to feel respected and appreciated by the people they work with. All of this stems from the hiring process and ascertaining that a person hires the appropriate individuals for the job and the firm.

The reason for turnover intentions among the SMEs of the UK is that when there is no flexibility. According to Jaharuddin and Zainol (2019) the ability to work flexibly while on the road is one of the most desirable characteristics of a prospective job. When a business is adamant about adhering to a rigorous timetable, employees may see it as an indication that the company’s management is closed, meaning that the environment is not conducive to growth and prosperity. If the staff members are asked on a consistent basis that they are normally being asked to work on more and additional projects having fewer resources and longer hours, they will burn out very early. Moreover, according to Karavardar (2014), it is identified that the workers who try and burnout have 31% more chances to think about looking for a new job as compared to their colleagues who do not feel like burning out.

Theoretical underpinning

The two widely accepted approaches are turnover intentions. They are the human capital theory and the social exchange theory. Understanding these dimensions are regarded as a highly effective strategy for comprehending workplace behaviour (Mathieu et al. 2016). The first is predicated on the premise that education is vital and indispensable for boosting a population’s productive capability. When applied to an organisational setting, this means that human capital is the most valuable asset and that employee development entails increasing employee productivity in organisations other than the established company (Reukauf, 2018) or increasing their employability within the company by stimulating a market that can rotate for a better job. The latter approach holds that relationships evolve through time into mutually beneficial, loyal, and trusting commitments and that investing in employee development might result in a more favourable opinion toward the organisation among employees (Sarfraz et al. 2018). Moreover, according to social exchange theory, the employees fail one another and interfere with their intent to leave (Park et al. 2018). This creates an atmosphere of respect for the organization’s relationship with the employee and it is not possible to determine which theory better accounts for rotating behaviour. Sewwandi and Perera, (2016) found strong support for the theory of social exchange and the conclusion that investing in employees results in lower job turnover in a study of 1,000 organisations, while (Akanji, 2017) found strong support for the theory of social exchange and the conclusion that investing in employees results in lower job turnover in a study of banks. However, the decision to remain a member of an organisation or to depart from it does not occur in a vacuum, nor is it unusual. For the most part, it was a rational decision on the employee’s part and is the product of maturing behaviour over time the variation in conduct is not purely coincidental and there are other reasons for it including cultural differences, external market forces, and organisational structure.

Argument 1: The impact of employee turnover intentions on SMEs of the UK

The secret to turnover is determining the likelihood of a person leaving a business. Hofaidhllaoui and Chhinzer, (2014) quantified the turnover intentions by examining it over specific periods, considering it as a possibility for an employee to leave a present firm. According to (Okolocha et al. 2020), good turnover intention continues to associate with actual voluntary turnover, making this a critical problem for organisation managers to explore and prevent, as high turnover has a detrimental effect on businesses. Mendy et al. (2021) identified several characteristics that may contribute to an employee’s likelihood to leave an organisation, including job satisfaction and job integration (Nica, 2016). Kessler et al. (2014) identified that generational differences may result in changes in how employees value their positions and in the number of workers, resulting in greater turnover intentions in SMEs of the UK. According to ( ) managers who understand generational variations in the workforce can adopt policies that better match the demands of each generation. Because the baby boomer generation controls the majority of firms and experts have claimed that there may be discrepancies between the values of millennial managers and employees ( ). Moreover, ( ) identified that their productivity and innovation are boosted by an awareness of the demands and differences of millennials in the labour force, which frequently results in increased job satisfaction and decreased turnover intentions.

De la Torre-Ruiz et al. (2019) identified that an appropriate association exists between the turnover and financial performance of SMEs in the UK and as a result, assessing the employee’s turnover intentions is a key area in the SMEs business. The turnover intentions of employees are essential to assess because the high rate of attrition can influence the SMEs of the UK indirectly or directly and that result in increased training and hiring costs, declined profits, lost production, and declined morale of employees (Okolocha, 2020). Kim and Chang (2014) further mentioned that a ripple impact from employee turnover can lead to a global economic slowdown that can impact the entire society.

Implications of theory and practice

The findings of this study indicate that there is an impact exists on turnover intentions among SMEs of the UK. Managers who understand the relationship between job satisfaction and integration at work can direct their efforts toward creating work environments that suit the requirements of employees and integrate them into the business and their tasks. However, once managers recognise the importance of turnover intentions, they must begin developing specific strategies that are tailored to their employees’ needs and aid in their integration into the organisation and workplace. According to scholars, job satisfaction characteristics are not constant (Bai et al. 2017). Additionally, each employee is unique, and what a person nests in one job may not have the same effect on another. To assist a SMEs business in strengthening its fundamental production, sales, and profits, it is still necessary to explore how to increase job happiness and engagement to reduce turnover intent.

As Revilla-Camacho et al. (2015) mentioned that turnover intentions of employees in SMEs lead to lesser growth of the economy as the rate of unemployment enhances in communities that might impact social programs and tax collections. Other more indirect problems from employee turnover start with mental and physical issues of health. Moreover, there are other societal advantages as well to the managers working to minimise turnover apart from better mental and physical health. Ali and Mehreen (2019) mentioned that enhanced employee retention enhances the profits of organizations and that positively impact the abilities of companies to enhance philanthropic donations to the nearby community (Belete, 2018). Moreover, Theriou et al. (2020) identified that the SMEs in the UK, which are regularly taking part in philanthropic donations in the community have more chances to have associated and loyal employees, robust levels of productivity, and stronger corporate social responsibility. Moreover, the frontline employees of the SMEs of the UK act as a liaison between the customers and the company (Bamfo et al. 2018). They serve as agents who directly make an image of the company in the minds of customers. As a result, work performance is regarded as important for SMEs. Additionally, the productivity of SMEs of the UK is related directly to the performance of employees, while burnout and workload often decline their performance. As a result, the decline of burnout in the SMEs of the industry is directly associated with the performance of employees, therefore, minimizing burnout is an essential problem of enterprises. Burnout is an issue not only within the companies but also for the governmental agencies, as burnout is a social phenomenon that has appealed to considerable attention. Additionally, to affect the health of people and goals of the company, productivity, service quality, and excessive work pressure damage social stability. Additionally, the departments of government must take measures to defend the rights, interests, and mental and physical health of employees by improving social harmony and confirming sustainable development of the SMEs (Theriou et al. 2020).


This assignment assesses different critical strategies for reducing staff turnover in SMEs in the UK. Employee turnover has a negative influence on job performance mostly because of the company’s ineffective resource management. According to the findings, it is identified that the financial element was the primary reason for employee turnover at SMCF with salaries, followed by marginal perks, a lack of financial management, and finally, unfair or inadequate pay. The study concludes that SMEs must prioritise advanced planning and a systematic approach to avoiding employee turnover. This study demonstrated the critical nature of analysing personnel turnover rates in SME’s work performance and suggested strategies for reducing turnover rates. This is accomplished through staff training, a mentoring program, employee feedback, in-house recruitment, the establishment of a positive work environment, and the recognition and reward of employees’ manual labour. Employee turnover in SMEs in the UK is influenced by a variety of factors, including financial, management, organisational, and personality concerns. Continued indifference will result in an increase in personnel turnover and a decline in job performance. This research identifies potentially beneficial strategies for reducing staff turnover in SMEs. While this cannot be accomplished covertly, additional information is required to measure the effect of employee turnover on the work performance of SMEs.

Future Research Areas

This study can examine the turnover of employees and its impact on the measures and job performance through which it can be reduced. A more comprehensive analysis of data on turnover might include getting additional information from the customers on how the turnover intentions of employees have influenced the competition of their projects. This research has emphasized the authors who have contributed to resource management in both the developing and developed nations. Additionally, understanding the causes of the turnover rate of employees is important and the way through which the rate of turnover can be reduced. This study has also assessed that the SMEs should train and recruit the employees within the SMEs.


UK SME Data, Statistics & Charts (2022) (2022). Available at: (Accessed: 17 March 2022).

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