Determinants of employee-turnover intentions in atypical employment: the FIFO mining industry in Western Australia.

• Author: Brown, Alan
• Position: Contributed Article - Report

Abstract

In the Western Australian mining sector, a significant portion of the workforce (at least 50 per cent) is employed in fly-in fly-out (FIFO) arrangements. This involves flying to isolated mining sites and working consecutive days usually for 11 or 12 hour shifts and returning home after a period of time (days or weeks). Such employment presents unique stresses on employees and at the same time offers significant opportunities such as high pay levels. During a decade of substantial growth in the industry, high levels of employee turnover have been experienced. This article examines the individual and organisational factors which contribute to this turnover.

A questionnaire was used to measure employee views about their job and company, along with their intentions to stay or quit their job. This was administered in an iron-ore company with FIFO work arrangements. Findings show both organisational factors (rosters, supervisors, managers, and company culture) and personal factors (career goals and family circumstances) can influence turnover intentions.

Introduction

Employee turnover generally falls into three broad categories--voluntary/ involuntary, functional/dysfunctional and avoidable/unavoidable (Allen et al. 2010).This categorisation is useful, since explanations for turnover and strategies to manage it will vary depending on the type of turnover being considered. The current study focuses on voluntary, dysfunctional, and avoidable turnover. That is, turnover initiated by the employees themselves (voluntary), and which the organisation considers damaging in some way, for example departure of workers with difficult-to-recruit skills, experience, and professions (dysfunctional); and avoidable in that the reasons for departure of the employee are to some extent within the organisation's control such as salary and working conditions. High turnover can be detrimental to an organisation's productivity due to the continual loss of skilled workers and the associated cost and time taken to recruit and train new employees.

The relative isolation of many mining operations in Western Australia without towns close by to use as employee bases, companies frequently utilise FIFO or long-distance commuting (LDC) arrangements. As the name suggests, these are arrangements where workers are flown to the site for a fixed period and are then flown back to their home base at the end of the work roster cycle. Since the mine sites generally operate for 24 hours and there are no close towns with the accompanying infrastructure, employees often work longer shifts than is usual (generally 10 to 12 hours per day) over a compressed working week, which is followed by a number of days off when they return home. Many different shift patterns are in use--ranging from 3x1 where workers work three weeks followed by one week off, 8x6 with eight days work and six days off, and other variations. The actual shift patterns are determined in part by travel times and distances, by safety considerations, and by employee preferences. Mining companies often vary roster patterns to improve retention rates. In other parts of Australia, notably Queensland, FIFO arrangements may be used where there is insufficient labour supply and accommodation in local towns, and where employees may prefer to commute rather than relocate to the existing towns (Queensland Resources Council Workforce Accommodation Survey 2012).

There is currently considerable attention on FIFO mining in Australia for a variety of reasons including: the rapid growth, the social impact, employment of imported workers, health and safety, and the impact on regional towns. The downside of the practice has often been the focus of attention. One upside has been the survival of regional towns where key industries have closed and redundant employees are able to stay by commuting to new jobs in the mines, families can remain in their home base, and there are high earnings levels. In 2012, the Australian Government conducted an inquiry into the practice, primarily to investigate its impact. However, a paper by Houghton (1993) shows that the practice of LDC was happening in the 1960s when a number of new mining projects commenced in Western Australia. The practice had also been used in the offshore oil and gas industry, since there were no alternatives, and had also been in use in Canada (Storey and Shrimpton 1988). Research on the social consequences of this employment pattern (Clifford 2009, Hosking and Western 2008, Sibbel 2001; 2010) has emerged, yet so far very limited attention has been paid to the issue of labour turnover.

Although there is extensive research and academic literature on employee turnover, most of this examines employees in traditional employment situations involving daily commuting to and from their workplaces on a five days on/two days off working pattern. Although many of the factors influencing turnover decisions in general are likely to be relevant to FIFO operations too. this research sought to identify whether any additional and (or) prevalent factors are evident in this context.

1. Literature

   Employee Turnover and FIFO Mining

   Indications are that in the mineral and energy sector up to 46,800 employees are in FIFO operations (about 52 percent of the total workforce), and that 46 per cent of publicly owned mining companies in Western Australia use FIFO operations (CMEWA 2011). Estimates suggest by 2015 there will be 110,000 people employed in mining in Western Australia with about 63,500 (57 per cent) in FIFO arrangements (CMEWA 2011). Apart from FIFO employment directly in mining operations, there are also significant numbers of people employed in the construction of new mining projects, again particularly in Western Australia. These are for fixed periods until the completion of the new projects and often involve longer periods of time on-site with the rosters in operation.

   Statistics shows labour mobility to be higher in the Australian mining industry than most other industry sectors (ABS 2013). The mining industry may have special characteristics which help to explain this relatively high labour mobility, and the FIFO mining operations are unique in the industry, which makes turnover research particularly interesting. The cost of turnover to an organisation can be substantial, for example Beach et al. (2003) estimated that the annual turnover cost for a FIFO mine with 300 employees was in the order of AUD2.8 million. By understanding the factors that affect turnover, an organisation could increase the retention rate and reduce costs. While individual mining companies are reluctant to divulge their turnover statistics, anecdotal evidence from people in the industry suggests that it is 35 per cent or more per annum.

   Limited research has been done relating to workforce turnover in the mining industry in Australia, and little has focused specifically on FIFO operations. The Zheng et al. (2007) study explored the link between strategic human resource management and performance of coal-mining firms in Queensland. The focus was not on turnover specifically, but it did identify the biggest challenge of coal-mining companies as being the issue of duality, that is, attracting and retaining skilled labour, while managing a flexible workforce that contains core and peripheral labour.

   One study of turnover in FIFO operations in Australia by Beach et al. (2003) compared turnover levels between seven mining operations in Queensland and Western Australia. Among the mines included in the study, five operated on a FIFO basis, with two day-commute mines included as a control. The study found that turnover at the sites studied varied between 10 and 28 per cent per annum and that this level did not tend to stabilise, regardless of the length of time of a mine's operation. The study found that turnover rates were influenced by factors such as the FIFO roster structure, management commitment to employee training, workplace culture, and whether management accepted high turnover as normal. In conclusion, the study found that high turnover was not a necessary consequence of FI FO operations and that specific management initiatives could assist to manage the turnover rate better. One of the limitations of the study was that it relied on data that were readily available from sites, and through telephone and email interviews, primarily with human resource and management personnel. Employees were not surveyed, and the study excluded the contractor workforce, a large component of the mining workforce in Australia. A number of the suggestions for future research align with the objectives of the research reported in this paper, particularly the impact of workplace culture on turnover, investigation of strategies to improve workplace turnover in highvalue job categories such as mine professionals and managers, the impact of remuneration, and whether turnover involves leaving the site, FIFO, or the industry. Jenkins (1997) found salary to be an important motivation for FIFO jobs and, once employed, interest in the work became important.

   Since the Beach et al. (2003) study was conducted, there has been significant growth in the mining industry in Australia, generally acknowledged as a boom, although this has slowed during 2013-2014. Most of this significant growth has been in the iron-ore mining sector in Western Australia. This growth has led to labour and skill shortages, often dealt with by high wages growth and the employment of overseas workers in a labour market which has been very favourable for employees and their ability to find jobs and change employers.

   Employee-turnover Research

   Significant research into turnover has been conducted over the past 50 years with a literature review by Holtrom et al. (2008) highlighting different foci, as this research has grown over time. Early models focused on what organisational and individual factors might contribute to turnover through...