Turnover is the separation of a member from an organization. Turnover can be categorized as voluntary (e.g., an employee voluntarily quits working at Firm A to start a new job at Firm B) or involuntary (e.g., an employee is laid off, downsized, or fired). Though in both cases the organization has one less member, the causes and consequences are highly likely to be different. In the case of voluntary turnover, most organizations are concerned about the many costs associated with the loss of needed personnel. In the case of involuntary turnover, most organizations are pleased to obtain the cost savings associated with the reduction in personnel. From the employee perspective, both voluntary and involuntary turnover have important implications for career development.
Because employers initiate involuntary turnover, it is generally assumed to be in the organization’s best interest. At the same time, this action has a major impact on the individual asked to leave. In the long term, organizational separation will likely alter an individual’s career path. After experiencing involuntary turnover, an individual may seek work in the same field and move up, stay at the same level, or move back on the same career track. However, many individuals reevaluate their career path at critical junctures, such as organizational separation, and decide to change careers.
In contrast, voluntary turnover is generally initiated by an employee and is generally assumed to be in the employee’s best interest. Many employees quit to start new jobs, to commence new careers, or to pursue personal interests. Evidence indicates that nearly all of these people expect the value of the new opportunity to be greater than the one they are leaving behind. At the same time, most organizations find voluntary turnover to be extremely expensive. They experience separation costs (e.g., exit interviews, administration costs, separation benefits, productivity declines, overtime and temporary help expense, lost revenues from turning away clients), replacement costs (e.g., recruitment, entrance interviews, testing, applicant selection, moving expenses), and incremental training costs (e.g., orientation, formal job training, off-site training, on-the-job training, inefficiency). Estimates of these costs vary by industry, position, and geography. They range from a few thousand dollars for low-skill positions to hundreds of thousands of dollars for high-skill positions.
However, not all of the consequences of voluntary turnover are bad. Resources formerly allocated to departed employees may be used to enable increased advancement opportunities for remaining employees. New employees may also bring new ideas, technology, or enthusiasm when they join the organization. Furthermore, when marginal or overpaid performers leave, employers may be advantaged, as they expect to replace them with better performers at lower wages. However, in the aggregate, research suggests that organizations that experience high exit rates underperform relative to their industry peers.
Because organizations and managers would like to have greater control over voluntary turnover, researchers have devoted a considerable amount of attention to the topic. Many theories that seek to understand the causes or antecedents of turnover have been advanced. Among the leading theories are job characteristics theory, met expectation theory, organizational demography, leader-member exchange, person-organization fit, the unfolding model, and job embeddedness. The most widely studied model of turnover is based on James March and Herbert Simon’s pioneering work. They conceptualized employee turnover as a reflection of an employee’s decision to participate in the activities of the organization. They explain the participation decision through the perceived desirability of movement and perceived ease of movement. Over the past five decades, the perceived desirability of movement has evolved to be defined as work attitudes like job satisfaction or organizational commitment, whereas the perceived ease of movement has come to mean perceived job alternatives or actual unemployment rates. In sum, this model posits that people leave if they are unhappy with their job and if job alternatives are available. Although valid, this model has had modest success in predicting turnover, with the variables seldom explaining more than 10 percent of the variance in turnover.
More recently, others have focused on why people stay rather than why they leave. Reflecting this different approach, researchers have drawn attention to the reasons people stay through a concept called job embeddedness. This concept reflects a sense of being “situated or connected in a social web.” Its key considerations are (a) the extent to which people have links to other people or activities, (b) the extent to which their job and community fit with the other aspects in their life space, and (c) the ease with which links can be broken—what they would give up if they left. These dimensions are important both on and off the job. After controlling for job satisfaction, organizational commitment, job alternatives, and job search behavior, job embeddedness explains a significant amount of turnover behavior. In sum, job embeddedness with its focus on why people stay represents an important complement to the job dissatisfaction approach that focuses on the reasons why people leave.
Many meta-analytic studies are available to help organizations understand the correlates of turnover. As would be expected, job satisfaction, organizational commitment, leader-member exchange, met expectations, and person/job fit all exhibit modest negative correlations with turnover. Important career variables also exhibit modest negative correlations with turnover, including promotions, promotion satisfaction, promotional opportunity, pay satisfaction, and performance. Turnover is positively correlated with similarly dysfunctional organizational outcomes such as lateness and absenteeism.
Because of its significant organizational consequences, turnover has received a great deal of research attention over the past 50 years. To date, the research still only explains a fraction of the variance in turnover behavior. Therefore, it is highly likely that additional work will be done in this area. Some of the most interesting areas have profound career development implications (e.g., alternative work arrangements, outsourcing, and retention of women and minorities).
- Griffeth, R. W., Hom, P. W. and Gaertner, S. 2000. “A Metaanalysis of Antecedents and Correlates of Employee Turnover: Update, Moderator Tests, and Research Implications for the Millennium.” Journal of Management 26:463-488.
- Maertz, C. P. and Campion, M. A. 1998. “25 Years of Voluntary Turnover Research: A Review and Critique.” International Review of Industrial and Organizational Psychology 13:49-81.
- March, J. G. and Simon, H. A. 1958. Organizations. New York: John Wiley.
- Mitchell, T. R., Holtom, B. C. and Lee, T. W. 2001. “How to Keep Your Best Employees: The Development of an Effective Attachment Policy.” Academy of Management Executive 15:96-108.