Employee Compensation and Turnover Essay

Employee Compensation and Turnover Essay

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Employee Compensation and Turnover

Often, "an excessively high turnover rate compared to the industry standard is a symptom of problems within the organization" (Gomez-Mejia, Balkin & Cardy 1998). Managers must realize that "high staff turnover can prove costly, particularly to small businesses" (Oliver 1998). Strategies have to be crafted that will minimize turnover and the costs associated with it. Although strategies used to retain employees can be expensive, turnover is a cyclical problem that usually becomes more expensive in the long run (Brannick 1998). Costs that organizations face when employees depart include recruitment costs associated with finding replacements, selection costs associated with interviewing, relocating and screening, training costs and separation costs such as severance pay (Gomez-Mejia, Balkin, & Cardy 1998). Managers can reward employees with tangible or intangible compensation (Brannick 1998). Tangible compensation includes salary increases, benefits, bonuses, potential for advancement and stock options (Brannick 1998). The good news for managers is that there are also inexpensive strategies that can be implemented to make and keep employees happy with their jobs. Intangible compensation includes respect, feedback, recognition, the opportunity to be heard and encouragement (Armentrout 1998). All of these means of compensation can be effective if managers take the time to get to know their employees and what makes them happy. The human resource function, compensation management is at the center of all of these issues.


Employee turnover rate is defined as the measure of the rate at which employees leave a firm (Gomez-Mejia, Luis, Balkin & Cardy 1998). Turnover has b...

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... (1998). Controlling employee turnover [5 paragraphs]. [Online]. Available WWW:http://www.auxillium.com/staffing.htm

Brannick, Joan (1998). Decreasing the staggering costs of turnover in your organization [14 paragraphs]. [Online]. Available WWW:http://www.florida-speakers.com/turnover-costs.htm

Condodina, Jen, Ermel, Lauren (1997). Compensating packages changing shape. HRFocus, p.S-1.

Davis, Barbara (1997). Strategies for managing retention. HRFocus, p.S-3.

Gomez-Mejia, Luis, Balkin, David, Cardy, Robert (1998). Managing Human Resources, New Jersey: Prentice Hall.

Oliver, Judith (1998). High staff turnover- find out why your staff are leaving. Management Today, p.84.

Shaw, Jason, Delery, John, Jenkins, Douglas, Gupta, Nina (1998). An organization-level analysis of voluntary and involuntary turnover. Academy of Management Journal, 41, p.511.

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