Understanding turnover
By Sergio Valenzuela-Ibarra
The causes of retention and methods for reducing turnover vary across jobs, organizations, industry, and locations. A low retention rate may be desirable for organizations that want to keep only their best employees, and not their poor hiring choices (Bernthal & Wellins, 2001). Organizations monitor turnover in many different ways, but the simplest way to calculate turnover is to use a formula. Turnover equals the number of employee terminations during a one month period divided by the total number of employees in the middle of the month. This calculation is used by the United States Bureau of Labor Statistics. According to Bernthal and Wellins (2001), companies that know and understand employee retention issues and methods for keeping good employees will have a competitive advantage. Turnover in organizations is expected to increase. It is of great importance that in order to avoid the costly effects of increased turnover, companies must step up their methods to retain their best employees.
Allen, Bryant, and Vardaman (2010) state that there are five common misconceptions about employee turnover. The first is the assertion that all turnover is the same, and it is all bad. The authors clarify that there are different types of turnover, some turnover is functional, and turnover costs vary. The second misconception is the belief that people quit because of pay. In this regard, the authors hold that pay level and pay satisfaction are relatively weak predictors of individual turnover decisions, turnover intentions and job search are among the strongest predictors of turnover decisions, key attitudes such as job satisfaction and organizational commitment are relatively strong predictors, and management/supervision, work design, and relationships with others are also consistent predictors. The third misconception is that people quit because they are dissatisfied with their jobs. In response to this assertion, the authors argue that job dissatisfaction is the driving force in fewer than half of individual turnover decisions, there are multiple paths to turnover decisions, different paths have different retention implications, and it is also important to consider why people stay. The fourth misconception is the belief that there is little that managers can do to directly influence turnover decisions. The authors suggest that there is evidence-based human resource practices associated with turnover. For example, recruitment, selection, and socialization practices during organizational entry affect subsequent retention. Managers can also influence the work environment and turnover decisions through training, rewards, and supervisory practices. Finally, the fifth misconception is that a simple one-size-fits-all retention strategy is most effective. The authors clarify that context-specific evidence-based strategies are more effective, turnover analysis helps diagnose the extent to which turnover is problematic, organizational context matters for interpreting turnover data, and multiple data collection strategies enable more targeted and effective retention strategies.
Another way to understand turnover is analyzing the paths that employees follow when leaving their organizations. Lee and Mitchell (1994) developed a model to understand the paths to turnover. This model is called the unfolding model and it explains four paths that employees can follow to leave their organizations. These paths are: Leaving an unsatisfying job, leaving for something better, following a plan, and leaving without a plan. Leaving an unsatisfying job is the traditional approach of turnover. It asserts that employees leave their job because they do not feel motivated and satisfied with their job. Leaving for something better does not assume that the employee is unsatisfied. Indeed, he or she could be highly motivated. The employee may leave a job because of a better offer from another company. Following a plan consists on leaving a job as a response to planned events. For example, an employee could decide leaving the job after completing a training or educational program. Finally, leaving without a plan corresponds to more impulsive quits due to unplanned or unexpected events.
The different paths to turnover have in common that they are initiated by a shock. A shock is an event that leads someone to consider quitting his or her job (Lee & Mitchell, 1994). Shocks can be positive, neutral, or negative events, expected or not expected, and job-related or non job-related. Examples of shocks are: being mistreated by a co-worker, being passed over for a promotion, completing a professional certification, receiving a job offer, a merger or acquisition announcement, and receiving a negative performance evaluation (Mitchell, Holtom, Lee, Sablynski, & Erez, 2001).
According to the unfolding model, organizations should implement differentiated strategies in order to manage the different paths to turnover. In addition, organizations should also manage and avoid negative shocks that can lead employees to consider quitting their job.
An interesting concept that has been proposed as a way to deal with turnover is job embeddedness. It is defined as the forces that lead employees to stay at work. These forces include factor such as community involvement, job tenure, and marital status (Crossley, Bennet, Jex, & Burnfield, 2007). In this sense, to the extent to which an employee has several motives that link him or her to an organization, that employee will be less prone to leave his or her job.
