Introduction
High turnover rate creates serious difficulties for organizations: increased expenses, knowledge drain, lost business, dissatisfied customers, low quality services, reduced employee commitment, negative market reputation, high pressure on the recruiting team and others. Below I’ve analyzed the main causes of employee turnover, the types of employee turnover and why voluntary turnover is the largest turnover issue in organizations.
Turnover and retention, the good and the bad
Employee retention is one of the most important items on top executive’s agenda in organizations across the globe. (Herman, 2005)
As the economic growth creates more jobs that need to be filled by knowledgeable and skilled employees, organizations will face difficulties if they do not have enough qualified workers.
The employee turnover is a critical issue for companies and managers, while the recruiting, selecting, and training costs for new employees exceeds the annual salary for the recruited position (Allen et all, 2010).
Ployhart et all (2011) confirms that retaining high-performing employees is a critical asset for organizations that successfully adapt their strategy to market changes.
Probably, the key fact is that retaining skilled and motivated employees naturally boosts the bottom-line (Covella et all, 2017).
Receiving significant attention from scholars and practitioners, employee turnover is widely studied, most papers trying to answer the question of why individual employees leave organizations (Hausknecht & Trevor, 2011).
The employability paradox is an issue for organizations. (Nelissen & Verbruggern, 2017)
The concept means that activities that are increasing individuals employability also increase the risk of turnover. The authors found that horizontal career advancement is a sign of career success and it increases the employee’s external market attractiveness and turnover intentions. Also, the internal career alternatives do not influence the turnover intentions, if they are not perceived as being more attractive than the external alternatives.
It seems that the employability paradox does not always apply and trainings pay-back for the organization.
In another study, Kampkotter & Marggraf (2015) found that there is a reciprocity connection between company sponsored trainings, absence behavior and turnover probability. The authors argue that the employees may be willing to pay-back the trainings with higher commitment to the organization and increased efforts. Their study concluded that general trainings provided by organizations lead to lower turnover rates, even more for the new employees.
De Cuyper & Witte (2011) also found that organizations providing general trainings to their workers are considered as more attractive to work for, and they even suggest that employers that increase the workers’ self-rated employability also reduce the turnover rates.
Evidence of increased retention effects are also associated with employee involvement in Corporate Social Initiatives with positive social impact (Bode and Rogan, 2015).
The study found that women, young- employees and high performers may greatly benefit from participating in CSI projects and that the activities increased their individual motivation, identification with the firm and positively related with retention rates in the organization.
High levels of employee engagement in organizations leads to reduced turnover intentions. (Smith & Macko, 2014)
Gruman and Sacks (2011) highlight the fact that it is possible to increase employee performance by involving the performance management system in the development of employee engagement. According to the authors, firstly the organization should provide the employees with the resources needed to perform the job. Secondly, when the employees are assigned tasks and jobs, managers need to ensure that there is a good match between them and the employee skills, knowledge and characteristics. Thirdly, the authors consider that an important part of increasing employee engagement through the performance management system are evaluation and feedback.
The relation an employee has with his first line manager is often the deciding factor in the turnover decisions (Allen et all, 2010).
Leader Member Exchange is a concept defined by Covella et all (2017) as a negotiation medium between leaders and subordinates focused on creating a relationship that fosters employee engagement and influences employee’s career decisions. The authors show that organizations that provide leadership and communication trainings increase the quality of the manager – employee relations and lowers the turnover intention.
Job satisfaction is directly related to employee’s resignation decisions (Ployhart et all, 2011).
By using periodic employee surveys, organizations can identify changes in job satisfaction and they can react to turnover intentions. By focusing on the dynamics of job satisfaction, organizations can adapt retention strategies for greater impact.
Hom and Kinicki (2001) point to how job dissatisfaction progresses into turnover.
Job avoidance manifested as excessive absences and lateness are signs of turnover intentions and the organization’s efforts to penalize these behaviors may accelerate the resignation decisions. Inter- role conflict is a source of job avoidance and turnover. Unhappy employees experience not only job-content related dissatisfaction, but also other disengagement factors such as work schedules and business travel that are not aligned with their personal duties.
Hom et all (2012) found 4 employee states: enthusiastic leavers and stayers and reluctant leavers and stayers.
Enthusiastic stayers willingly remain within the company for as long as they can. They are committed, engaged and they are treated well by the organization. Reluctant stayers remain with the company until something happens and they can leave. Enthusiastic leavers are described as the most analyzed subpopulation in turnover and retention studies. This category, also named “voluntary leavers” want to resign and can do so. Reluctant leavers would like to stay but need to leave. Named “involuntary leavers” they are the employees picked-out for dismissals and layoffs.
Turnover is not uniformly bad (Allen et all, 2010).
Positive outcomes of employees’ turnover such as reduced labor costs, increased innovation and flexibility, career growth, promotions opportunities, greater performance and productivity have been identified by Hausknecht and Trevor (2011).
New ideas, perspectives and reduced staff costs are also turnover advantages (Smith and Macko, 2014). On the one hand, low turnover rates may cause stagnation, high personnel costs, undesirable homogeneity, and a high number of low performers. On the other hand, when turnover is high, increased recruiting, training costs and human and social capital loss are detrimental (Hancock et all, 2013).
Not all industries are the same.
Turnover rates that seem high in general could be lower than those of direct competitors. High/low replacement costs, individualistic/collective cultures, managerial/non-managerial positions, and high/low skill requirements are powerful differentiators when we analyze an organization turnover.
Voluntary turnover is started by the employee, while involuntary turnover is initiated by the firm. (Allen et all, 2010).
While organizations should manage involuntary turnover, the retention strategy should concentrate on voluntary turnover, because these are the workers we would like to keep.
Key recommendations for counteracting employee turnover are:
Creating a motivating vision for employees, one that focuses on improving the work conditions, that promotes internal employability and develops career plans. When promotion rates are high, we see an increase in job satisfaction, performance and a reduction in high-performers voluntary turnover.
Investing in training and preparing the employees in building job-specific skills, and increasing their interpersonal, relational aptitudes by providing soft-skills and leadership trainings. Training or hiring a human resources retention specialist will support management to reduce turnover and its related costs.
Increasing employee engagement is an effective method of reducing voluntary turnover, of stimulating performance and organizational attachment. Companies need to ensure that the employees have the skills and resources to fulfill their day to day tasks. Coworkers need to trust that they have equal chances, benefits and fair treatment. Evaluation and feedback, performance rewards and incentives will increase employee engagement, as well as involving our socially-minded colleagues in corporate social initiatives.
References:
Allen, D. G., Bryant, P. C., & Vardaman, J. M. (2010) Retaining Talent: Replacing Misconceptions With Evidence-Based Strategies. Academy of Management Perspectives, 24(2), 48–64. Available from: https://doi.org/10.5465/AMP.2010.51827775
Bode, C., Singh, J., & Rogan, M. (2015) Corporate Social Initiatives and Employee Retention. INSEAD Working Papers Collection, (34), 1–39. Available from: http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=102362400&site=ehost-live
Chen, G., Ployhart, R. E., Thomas, H. C., Anderson, N., & Bliese, P. D. (2011) The Power of Momentum: A New Model of Dynamic Relationships between Job Satisfaction Change and Turnover Intentions. Academy of Management Journal, 54(1), 159–181. Available from: https://doi.org/10.5465/AMJ.2011.59215089
Covella, G., McCarthy, V., Kaifi, B., & Cocoran, D. (2017) Leadership’s Role in Employee Retention. Business Management Dynamics, 7(5), 1–15. Available from: http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=127910858&site=ehost-live
De Cuyper, N., & De Witte, H. (2011) The management paradox. Personnel Review, 40(2), 152–172. Available from: https://doi.org/10.1108/00483481111106057
Kampkötter, P., & Marggraf, K. (2015) Do employees reciprocate to intra-firm trainings? An analysis of absenteeism and turnover rates. International Journal of Human Resource Management, 26(22), 2888–2907. Available from: https://doi.org/10.1080/09585192.2015.1005655
Gruman, J. A., & Saks, A. M. (2011) Performance management and employee engagement. Human Resource Management Review, 21(2), 123–136. Available from: https://doi.org/10.1016/j.hrmr.2010.09.004
Hausknecht, J. P., & Trevor, C. O. (2011) Collective Turnover at the Group, Unit, and Organizational Levels: Evidence, Issues, and Implications. Journal of Management, 37(1), 352–388. Available from: https://doi.org/10.1177/014920631038391
Herman, R. E. (2005) HR managers as employee-retention specialists. Employment Relations Today (Wiley), 32(2), 1–7. Available from: https://doi.org/10.1002/ert.20058
Hancock, J. I., Allen, D. G., Bosco, F. A., McDaniel, K. R., & Pierce, C. A. (2013) Meta-Analytic Review of Employee Turnover as a Predictor of Firm Performance. Journal of Management, 39(3), 573–603.
Hom, P. W., & Kinicki, A. J. (2001) Toward a Greater Understanding of How Dissatisfaction Drives Employee Turnover. Academy of Management Journal, 44(5), 975–987. Available from: https://doi.org/10.2307/3069441
Hom, P. W., Mitchell, T. R., Lee, T. W., & Griffeth, R. W. (2012) Reviewing Employee Turnover: Focusing on Proximal Withdrawal States and an Expanded Criterion. Psychological Bulletin, 138(5), 831–858.
Nelissen, J., Forrier, A., & Verbruggen, M. (2017) Employee development and voluntary turnover: testing the employability paradox. Human Resource Management Journal, 27(1), 152–168. Available from: https://doi.org/10.1111/1748-8583.12136
Smith, J., & Macko, N. (2014) Exploring The Relationship Between Employee Engagement And Employee Turnover. Annamalai International Journal of Business Studies & Research, 6(1), 56–69. Available from: http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=109025157&site=ehost-live
Toma, L. C, (2019) Strategies to reduce voluntary turnover in ABC organization. The University of Sheffield International Faculty, City College
