Lecture 26: Turnover and Retention (12/2)

Reading: Hom, Lee, Shaw, & Hausknecht - 2017

What is turnover?

The number or percentage of workers who leave an organization and are replaced by new employees

People leaving organizations

Individual movements across the membership boundary of a social system

What are the 6 types of turnover, what are their definitions,a nd what are other terms to describe them

How has turnover rate trends changed?

Voluntary turnover is decreasing. Voluntary and involuntary turnover seem to intersect at times of high economic decline/instability (covid/great recession)

Which of the following industries has the highest voluntary turnover rate:

A. Government

B. Leisure and Hospitality

C. Retail

D. Manufacturing

B. Leisure and Hospitality

What are the consequences of turnover?

• Increased costs

• Loss of human and social capital

• Operational disruption

• Negative effects on customer outcomes, productivity, safety, sales/profits, etc…

What are the costs of turnover?

Separation Costs

• HR staff time (exit interview, payroll administration, benefits)

• Manager’s time (retention attempts, exit interview)

• Accrued paid time off (vacation, sick pay)

• Temporary coverage (contingent employees, overtime for remaining employees)

Replacement Costs

• Job posting and advertising

• Hiring inducements (signing bonus, relocation expenses)

• Hiring manager and department employee time

• HR staff time (payroll, benefits enrollment)

Training Costs

• Orientation program time and materials

• Formal training (trainee and instruction time, materials)

• On-the-job training (supervisor and employee time)

• Productivity loss due to learning curve

Other Costs

• Delays in production and customer service

• Lost clients and customers

• Disruptions to team-based work

• Loss of workforce diversity

What are 3 approached to understanding and predicting turnover?

turnover antecedents, unfolding model of turnover, job embeddedness

Which of the following antecedents has been found to exhibit the strongest relationship with employee turnover:

A. Pay

B. Promotion chances

C. Relationship with leader

D. Stress

C. Relationship with leader

What are the implications and Limitations of turnover antecedents?

Implications

• Monitor key antecedents to foreshadow turnover risk

• Focus improvement efforts on most powerful antecedents and those most salient to critical populations

Limitations

• Importance of different antecedents depends on a variety of factors (e.g., job level, performance level)

• Employee turnover is typically driven by a series of decisions, not isolated factors

What is are the components of the unfolding model of turnover?

Shocks: jarring events that prompt thoughts about leaving

Scripts: Preexisting plans for leaving

Image Violations: Violations of employees’ values, goals, or goal strategies

Job satisfaction

Search and/or evaluation of alternatives

Likelihood of external offer

What are the Implications and Limitations of the unfolding model of turnover?

Implications:

• Leavers do not always quit for other jobs

• Shocks drive turnover more than dissatisfaction

• Some paths take longer to unfold than others, which impacts the time available to intervene

Limitations:

• The model focuses on a limited number of variables that shape individuals’ decisions to remain with or leave an organization

What are the 3 components of job embeddedness? What are the organization (formal) and community (unformal) ties to each?

Links: connections to institutions and other people

• Organization: tenure in company, interactions with coworkers, membership in teams and work committees

• Community: spouse/partner status, family members and friends living nearby

Fit: Compatibility or comfort with organization and environment

• Organization: match with organization’s values and culture, professional growth and development opportunities

• Community: suitable weather, availability of leisure activities

Sacrifice: Cost of material or psychological benefits that may be lost by leaving a job

• Organization: job freedom, perks, promotional opportunities, compensation and benefits

• Community: respected by others in the community, neighborhood safety

What are the Implications and Limitations of Job Embeddedness?

Implications

• Job embeddedness predicts turnover over and above traditional antecedents, such as job satisfaction

• Job embeddedness can attenuate the deleterious consequences of shocks

• Important to consider the role of external factors in turnover decisions

Limitations

• Organizations may have limited influence over external factors

What are the effects of layoffs?

Studies have shown that companies that conduct large-scale layoffs often perform more poorly than companies that engage in smaller or no layoffs

This pattern holds even after controlling for company performance at the time of the layoff

What are some factors that shape the effects of layoffs?

Time frame: Jobs must remain unfilled for at least 6 to 12 months to realize any benefit

Goal: Layoffs conducted for strategic repositioning or due to a merger/acquisition have more positive effects than those conducted for cost-cutting reasons