Motivations to Manage Turnover
1. Economic Trends
• Directly related to economic conditions
∙ Unemployment rate Aug. 2015: Nation 5.1% Iowa 3.7%
∙ Unemployment rate Aug. 2007: Nation 4.6% Iowa 3.6%
Unemployment rate Feb. 2010: Nation 9.7% Iowa 6.7%
• T/O high when unemployment is low; T/O low during poor
economic times. See graph.
2. Demographic Trends
• Retirement patterns
• Low number of workforce entrants
• Next generation may prefer to work
fewer hours
3. Changing Employment Patterns
∙ Shorter job tenures
• Ages 18 to 32: 8.6 jobs, 18 to 42: 10.8 jobs
• Overall, employees changing jobs every 4 years
Note inverse relationship between voluntary turnover and
unemployment rates in U.S.
Motivations to Manage Turnover
4. Normal Turnover?
● Need industry specific data: BLS, Fortune magazine,
CompDataSurveys.com
Some industries (manufacturing) are lower: 5.9%/year
Some are higher (hospitality): 24.1%
Better companies have lower rates;
Average is 15%
● Fortune Magazine’s 100 Best Companies
● Company rate or level may not be ideal anyway
(AZ Council)
← Includes terminations
Turnover Trends 2008-2014
Year
Voluntary Turnover
Overall
Turnover
2014
11.0%
15.7%
2013
10.4%
15.1%
2012
9.8%
15.2%
2011
9.1%
14.4%
2010
9.2%
15.9%
2008
12.5%
18.7%
Reminder: 2008 & 2014 were very “good” economic years
(Source: Compensationforce.com)
Fortune’s 100 Best Firms Demonstrate Low Turnover
Company
Top 100 Ranking in
2014/2015
2015
% Turnover
1/1
na
Not listed/3
1
Wegmans Food Markets
12/7
5
Edward Jones
4/6
7
David Weekley Homes
13/14
12
The Container Store
28/27
9
Devon Energy
56/38
8
Mayo Clinic
53/73
5
Google
Acuity Insurance (WI)
Fortune 2-13; 2-14. 3-15-15
Turnover Rates: Mental Health
Jobs
66
Human Resource Assistant
14
Secretary
200
Maintenance Worker
Driver
Therapist
27
0
34
40
47
Cook
Case Manager
Teachers
92
Behavioral Health Technician
16
Teachers Aide
60
Supervisor
36
Clinical Director
100
Accountant
33
HR Manager
60
Controller
Executive Director
0
0
50
100
150
200
Annual Turnover Rates
250
Motivations to Manage Turnover
5. Need to Consider Customer Satisfaction
Sears also linked T/O to customer satisfaction
▲Stores w/high customer sat: 54% turnover
▲Stores w/low customer satisfaction: 83% turnover
6. Relationship to Organizational Performance
Recent meta-analysis shows ρs of -.15 (voluntary T/O),
-.17 (RIF T/O), and -.01 (involuntary T/O)
7. Need to Manage Turnover and Miminize Turnover Costs
▪ Who is quitting?
▪ What are the replacement costs?
TURNOVER COSTS
Based on Entry Level Salary of
$48,463*
Replacement Acquisition
- Direct hiring costs
$1149
- Other hiring costs
725
Replacement Training
- Pre-assignment
- Learning curve
3017
832
(see learning curve graph)
Other Costs
- Unabsorbed burden
- Loss profit contribution
*Entry level salary of Fortune 500 employee (2013 figures)
2668
1519
TOTAL
$9,911
Percent of Standard Proficiency Attained
Hypothetical Learning Curve for New Hires
100
80
60
40
20
0
1
25
50
75
Employment Duration (Days)
100
Turnover Rates Among Fortune 100’s
Best
Potential Savings
Company
Number of
Employees
(US)
Turnover
Rate
Estimated
Turnover Cost
per employee1
Reducing
Turnover 1%
Savings / year
Merck
39,489
9%
$7592
$2,765,000
Cerner
2,953
14%
$8000
$240,000
Charles
Schwab
18,863
12%
$8329
$1,512,000
MBNA
America
Bank
16,960
15%
$4800
$1,000,000
10,000
15.6%
$5000
$500,000
Avg US
Co: 2000
Notes:
1. Estimated Turnover Costs Calculated at 20% of most common entry level salary ($42,940) as provided in note 1.
Forms of Turnover
• Nonvoluntary:
Employer controlled
(layoffs,
terminations,
downsizing)
• Voluntary:
Employee controlled
(quits, retirements)
• Gray Area: (spouse
relocation,
child/elder care
problem, exit
Primary Reason For Leaving In Nursing Sample
Reasons Unknown
Personal Reasons
Death
Retirement
Poor Health
Temporary Position
Completed Prescribed Service or Course
Geographic Factors: Job Too Far, Leaving City
Family Illness or Home Duties
To Stay Home
To Attend School
Pregnancy
Marriage
Enter Military Service
Unsatisfactory Work Hours
Work Too Difficult; Misunderstanding of Duties
General Job Dissatisfaction
Present Wages Inadequate
Other Employment
10
15
0
0
0
0
0
30
0
5
5
0
20
0
5
0
0
0
10
0
Raises questions about the
value of exit interview
5
10
15
20
25
Percent of Voluntary Leavers
30
35
Analyzing Forms of Turnover
Among Nurses from A Managerial
Perspective: Organizational Level
Turnover
14.6%
Voluntary
87%
Functional
42%
Involuntary
13%
Dysfunctional
58% (7.37% rather than 14.6%)
Turnover Measures
1. Separation Rate
=
# of employees who left during period
avg. # of employees during period
X 100
a. Jan. 1 - 20 employees 7 quit and are replaced, 2 new hires
Jan 31 - 22 employees
7/(20 + 22)/2 = 7/21 = 1/3 = .33 .33 x 100 = 33%
b. Growth scenario
Feb. 1 - 22 employees 16 new hires, 7 quit & are replaced
Feb. 28 - 38 employees
7/(22 + 38)/2 = 7/30 = .23 or 23%
Turnover Measures (Continued)
II. Instability Rate
# of initial employees who leave during a period
=
# of initial employees
X 100
a. Jan.: 7/20 = .35 or 35%
b. Feb.: 7/22 = .32 or 32%
III. Wastage Rate
# of new employees who leave during a period
=
# of new members
X 100
a. Between Feb. 1 & 28, 8 new hires quit: 8/16 = .50 or 50%
IV. Avg. Length = Sum of length of service for each employee
of Service
# of members
Wastage Rate Example
Predictors of Voluntary Turnover
1.  Age  Turnover
(around ρ = -.14)
Length of service
▪ side bets
▪ health insurance less problematic
if coverage is continuous
3. Sex & family size
Men & women quit at similar rates
↑ # of dependents → ↓ T/O
4. Pre-employment predictors:
▪ prior turnover behavior
▪ others in Barrick & Zimmerman
Predictors of Voluntary Turnover
5. Personality
▪ Conscientiousness (ρ = -.20)
▪ Emotional stability (ρ = -.18)
▪ Agreeableness (ρ = -.25)
▪ Extraversion (ρ = -.04) [zero]
▪ Openness (ρ = .10)
▪ Self-confidence (B&Z)
▪ Decisiveness (B&Z)
6. Union presence
7. Attitudes (job satisfaction, organizational
commitment; see upcoming Hom Griffeth model)
8. Pre-employment interventions (e.g., RJPs)
Providing Job Candidates With Accurate and Complete
Information About the New Job Reduces Turnover
Sewing Machine
Operators
40
11.1
11.5
6
West Point Cadets
50
33.8
Telephone Operators
27
19
Insurance Agents
35
15
Bank Tellers
22.4
U.S. Marines
33.1
Control Group
21.1
8.5
RJP Group
Nurses
0
10
20
30
Turnover Rates
40
50
60
Predictors of Voluntary Turnover
9.  Work group size  Turnover
10.  Job enrichment  Turnover
11.  Task repetitiveness   Turnover
12.  Considerate leadership  Turnover
13.  Stress   Turnover
14.  Perceived job availability   Turnover
15. Withdrawal behaviors:  Lateness (ρ = .001)   Turnover
and  absenteeism (ρ = .253)   Turnover
15. Job performance (low performers quit more than high
performers but low and high performers quit more than
avg. performers)
Predictors of Voluntary Turnover
9.  Work group size  Turnover
10.  Job enrichment  Turnover
11.  Task repetitiveness   Turnover
12.  Considerate leadership  Turnover
13.  Stress   Turnover
14.  Perceived job availability   Turnover
15. Withdrawal behaviors:  Lateness (ρ = .011)
and  absenteeism (ρ = .253)   Turnover
16. Job performance (low performers quit more
than high performers but low and high
performers quit more than avg. performers)
Hom-Griffeth Model of Turnover
Satisfaction Influences:
•Job Complexity
•Role Stress
•Group Cohesion
•Compensation
•Leader-Member Relations
•Met Expectations
•Negative Affectivity
Commitment Influences:
•Procedural Justice
•Attraction of Internal Roles
•Job Security
•Job Investments
•Extra Organizational Conflicts
•Conditions of Job Entry
•Commitment Propensity
Job
Satisfaction
Organizational
Commitment
Labor Market:
•Unemployment
•Knowledge of
Other Jobs
•Relocation Costs
Shocks
Decisions to
Quit
Job-Seeking
Costs &
Benefits:
Turnover
Costs &
Benefits
Job
Search
Evaluate
Alternatives
Resignation
POSSIBLE POSITIVE
CONSEQUENCES OF TURNOVER
1. Displacement of poor performers
2. Increased satisfaction among stayers
3. Infusion of new knowledge/technology via replacements
4. Facilitate organizational change
5. Increased internal mobility opportunities
6. Decrease in other “withdrawal” behaviors
7. Opportunities for cost reduction
PRACTICAL STRATEGIES FOR
MANAGING TURNOVER
1.
2.
3.
4.
5.
6.
7.
8.
9.
Hire carefully within legal/ethical constraints: personality
Use pre-employment interventions (see example)
Promote job satisfaction
Promote job autonomy through job enrichment
Use small work groups
Reduce task repetitiveness
Improve human relations skills of supervisors
Reduce stress
Promote organizational commitment (e.g., career counseling;
side bets)
10. Emphasize person/job fit
11. Address non-work sources of turnover (e.g., EAPs)
12. Monitor lateness and absenteeism
Demonstrating Cost Savings of RJP Retention Strategy
Practical Application of a Control Group Evaluation
Comparison
Turnover
Number of
Turnover
Total
Groups
Rates (%)
Leavers (No. of
Cost per
Turnover
New Employees
Leaver ($)
Costs ($)
Per 100)
Control
Realistic
Job Preview
Recipients
17
17
6,018
102,306
5
5
6,018
30,090
Cost
Savings
(Difference)
Based on public accounting firm case study, 1999
72,216
Four “Do’s and Don’ts” for Managing Turnover
• Don’t fail to make the business case for
managing turnover—Do provide cost/ benefit
data
• Don’t fail to approach turnover strategically--Do
plan to attract & retain talent independent of
market conditions
• Don’t just throw money at the problem—Do
realize that compensation is often not the most
important determinant of turnover
• Don’t ignore employee priorities—Do appreciate
that employees first loyalty is to their own careers
& that their assessment of prospects in and
outside of your company will drive their turnover
behavior.
Allen et al. (2010)
• Discuss Allen et al. (2010), enlarged
model in readings packet
• What could you say to your boss to
offset view that T/O is presently low
and does not need to be managed?
• Did any of the 5 turnover
misconceptions (shown on next slide)
surprise you? (Based on Table 1 &
meta-analytic summary in Figure 3)
5 Turnover Misconceptions
• All T/O is the same
• People quit because of pay (relatively weak)
• People quit because of job dissatisfaction
(overstated, about half). Raise the Q of why
do people stay? Stresses upcoming concept
of job embeddedness
• Little can be done to influence T/O decisions
(focus on pre-& post entry interventions)
• One retention strategy is most effective
Take-Aways
•
•
•
•
•
5 T/O misperceptions
Turnover model with shocks and scripts
Specific strategies for reducing T/O (Table 3)
Noted importance of benchmarking in Figure 4
Excellent blend of evidence-based mgmt and
practical strategies.
Additional points from Bryant & Allen (2013)?
Bryant and Allen (2013) Take-Aways
Holtom et al.
• Article rich in practical suggestions and examples
of retention
• Emphasis is on aligning the retention strategy with
the business strategy (Wegmans)
• What is job embeddedness?
• Why is it important?
Holtom et al.
• How can job embeddedness be managed?
• Examples of ways firms can strengthen
embeddedness (Tables 2 & 3):
–
–
–
–
Community fit (e.g., work proximal to home)
Links in the Organization (e.g., on site gyms)
Community links (e.g., paid volunteer time)
Stress sacrifice associated with leaving the
organization (e.g., benefits, side bets, office
concierge)
– Stress sacrifice associated with leaving the
community (e.g., easy commute, home loans)
Manz et al. (2015) Take-Aways
Barrick & Zimmerman
• Can “people problems” like turnover be
avoided by selection using dispositional
factors (e.g., personality)?
• How well do RJPS do, using evidence-based
management? (Trying to build on
its success)
• What is biodata? Why are some forms
not used?
• What types of biodata are hypothesized
to predict turnover? (H1-H3)
Barrick & Zimmerman
Re-worded Hypotheses (so supportive
correlations will be negative in direction)
• H1: ↑ Prior Tenure → ↓ Turnover
• H2: ↑ Were Referred → ↓ Turnover
• H3: ↑ Friends & Family → ↓ Turnover
• What are pre-employment factors known as
“clear purpose” and “disguised
purpose” predictors?
Barrick & Zimmerman
• Clear purpose = pre-employment intentions
* Intent to stay
* Desire for Job
• Disguised purpose = personality traits
Thought to be less obvious, less fakeable
* Self Confidence * Decisiveness
• How do these factors relate to turnover?
(H 4-7)
Barrick & Zimmerman
Re-worded Hypotheses (so supportive
correlations will be negative in direction)
•
•
•
•
H4:
H5:
H6:
H7:
↑ Intent to Stay → ↓ Turnover
↑ Desire for Job → ↓ Turnover
↑ Self Confidence → ↓ Turnover
↑ Decisiveness → ↓ Turnover
Barrick & Zimmerman
• 2 Samples. Appears all applicants were hired &
completed pre-entry surveys. Those fired/left for
involuntary reasons deleted.
Nonprofit N=176 (118 stayers, 58 leavers)
Meat proc N=269 (110 stayers, 159 leavers)
• How much time elapsed before turnover was
assessed?
• Were the hypotheses supported (Table 1)?
• Which predictor category is best: biodata, clear
purpose or disguised purpose? Table 2
Barrick & Zimmerman
• Remaining analyses are complicated; focus on Table 1
• Practical implications: Biodata indicators examined here,
along with “disguised purpose” measures of selfconfidence and decisiveness predict turnover as well as
RJPs.
• The value may be in combining biodata and
personality/disguised purpose measures with job factors
(like job sat) to reduce turnover. RJPs may also help—
turnover a complex human behavior.