Employee Turnover and Retention

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Recommended: Employee retention theory and constructs

Employee Turnover an Observation

When discussing employee turnover and retention the immediate reaction is to view turnover as a negative and retention as a positive. Psychologists have been researching and documenting their findings on the subject for over 50 years, mostly focusing on why people leave organizations (Staw, 1980, p. 253). One cannot deny there are organizational costs due to an employee’s departure; however, it would be naïve not to recognize there are benefits as well. Organizations must weigh the costs of turnover, recognize the benefits, and strive to find a balance.

There is no debate that employee turnover results in some amount of accountable monetary expense. Additionally, there are expenses that are difficult to place a value on. Expenses include paying out accumulated benefits such as vacation, costs associated with out-processing and in-processing personnel, recruiting, training, lost productivity, operational restraints, not to mention experience and knowledge that is no longer available once the employee walks out the door (Dalton & Todor, 1982, p. 212).

Researchers have done much analysis trying to put a monetary value on the consequences of employee turnover. One study conducted at the Saratoga Institute estimated replacing an employee costs an organization $8300 plus an additional one percent of the salary for training purposes. The estimate did not include any travel or relocation expenses. The formula Saratoga used was based on the average total revenue per employee per day, multiplied by the number of workdays the position was vacant, plus the cost of any temporary employees or overtime paid, minus salary/benefits not paid during the vacancy (Fitz-enz, 1997, p. 50). In a similar stud...

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...ns, provide advance notice, and their positions can be filled through succession (Staw, 1980, p. 257).

References

Dalton, D. R., & Todor, W. D. (1979, April). Turnover turned over: an expanded and positive perspective. The Academy of Management Review, 4(2), 225-235. Retrieved from http://www.jstor.org/stable/257776

Dalton, D. R., & Todor, W. D. (1982, April). Turnover: A lucrative hard dollar phenomenon. The Academy of Management Review, 7(2), 212-218. Retrieved from http://www.jstor.org/stable/267299

Fitz-enz, J. (1997, August). It’s costly to lose good employees. Workforce, 76(8), 50-51. Retrieved from

Staw, B. M. (1980, October). The consequences of turnover. Journal of Occupational Behavior, 1(4), 253-273. Retrieved from http://www.jstor.org/stable/3000143

Sunoo, B. P. (1998, July). Employee turnover is expensive. Workforce, 77(7), 19. Retrieved from

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