Turnover Unveiled and Myths Dispelled
Employee retention remains a critical issue for organizations and managers: the costs associated with recruiting, selecting, and training new employees often exceed 100% of the annual salary for the position being filled and the Bureau of Labor Statistics reports that the national annual voluntary quit rate in the United States are on the rise.
The direct costs, work disruptions, and losses of organizational memory associated with turnover are significant issues. Many organizations are also increasingly concerned about their ability to retain key employees (e.g., high performers and employees with high-demand or difficult-to-replace skill sets). Yet, despite extensive scholarly research and organizational interest in employee turnover, there remains a gap between science and practice in this area.
In this newsletter, we will bridge the gaps and replace the associated myths with facts and guidelines for evidence-based retention management strategies, knowledge of cause-and-effect relationships, and practices on how to adapt this knowledge and apply it to work contexts.
Myth #1: “All turnover is bad”
There are difference types of voluntary turnover.
Functional- benefits the organization (e.g., a difficult employing leaving)
Dysfunctional- harms the organization (e.g., a high performer leaving or losing an employee with difficult to replace skill sets)
Avoidable- occurs for reasons the organization is able to influence (e.g., poor management)
Unavoidable- occurs for reasons that the organization has no control over (e.g., health and relocation of spouse)
Therefore, it is critical to understand the primarily type of turnover our organization is facing, only then can we best allocate our resources and develop an effective strategy at reducing turnover.
Myth #2: “People quit because of pay”
Pay level and pay satisfaction are actually relatively weak predictors of individual turnover decisions. The highest prediction of employee turnover is the relationship with their immediate manager/supervisor and alternative job opportunities.
The Organizational Equilibrium serves as a foundation for most turnover:
Meaning, if an employee does not feel that the inducements offered by the organization are equal or greater than the contributions required then they are more likely to leave.
Take note: Inducements can be specific, such as pay and tangible rewards or less specific such as favorable working conditions, relationships, and future opportunities. Either way, employees must feel that their contributions are match by these inducements.
Myth #3: “People quit because they are dissatisfied with their jobs”
Job dissatisfaction is the driving for less than 50% of individual turnover decisions.
It is important to understand that there are multiple paths to turnover decisions, and different paths have different retention implications
Expected (e.g., retirement)
Unexpected (e.g., being mistreated by a co-worker or supervisor)
Retention Strategy: access workplace conditions and manager relations.
Job Related (e.g., being passed over for a promotion)
Retention Strategy: base rewards and promotion on merit alone to avoid perception of unfair biases.
Non-job Related (e.g., spouse offered an opportunity else where, child birth)
Retention Strategy: provide flexible work opportunities.
It is also important to consider my people stay at the organization.
Myth #4: “There is little managers can do to directly influence turnover decisions”
Research shows that managers can influence the work environment and turnover decisions through on-the-job training, rewards, and supervision practices.
Supervisors can practice socialization methods to employees such as connections to others, positive feedback, and clear information to also reduce the likelihood of turnover in the critical first year on the job.
Myth 5: “Retention strategies are one-size-fits all”
Organizational context matter for interpreting turnover data.
A retention strategy tailored to an organization is the key driver for success.
Multiple data collection strategies enable more targeted and effective retention strategies.
Therefore, listening carefully to employees through survey and data collection will allow for a better understanding of the reasons behind turnover, leading to a more customized solution.
Overview: Understanding the facts of turnover and creating organizational-tailored retention strategies will lead to lower turnover and higher retention.
Sources:
Allen, D. G., Bryant, P. C., & Vardaman, J. M. (2010). Retaining talent: Replacing misconceptions with evidence-based strategies. The Academy of Management Perspectives, 24(2), 48-64.
