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The Five Misconceptions of Employee Turnover

SIOP Member Connects Evidence-Based Research With Voluntary Turnover

By Stephany Schings Below, Communications Manager

As the economy slowly continues to recover, more employees are finding the gumption to say “I quit” to their jobs. Although employers may assume this type of voluntary turnover is a bad sign for their organization, one SIOP member says this might not be the case at all.
 
Early in 2010, the U.S. Bureau of Labor Statistics (BLS) noted a phenomenon they hadn’t seen in a while. In February, the number of employees voluntarily quitting their jobs surpassed the number being fired or laid off for the first time since October 2008. Before February, the BLS had recorded more layoffs than resignations for 15 straight months. In April, 2 million people quit their jobs, the highest number of resignations in more than a year. Some economists took this as another sign the economy was recovering, but organizations experiencing the turnover may not have felt positively about it.
 
One common misconception is that voluntary turnover is a negative occurrence because organizations may be losing talented employees, says SIOP Member David G. Allen, but in his recent article published in The Academy of Management’s Perspectives publication (May 2010, Volume 24, Number 2), Allen argues these perceptions can be misconceptions.
“Voluntary turnover can be very undesirable because it can be costly and disruptive, especially when really talented and/or hard to replace employees leave,” Allen explained. “However, it is not always undesirable. Some level of voluntary turnover is probably necessary to keep the organization vibrant, and there may be cases where voluntary turnover presents an opportunity to upgrade or restructure the workforce.”
 
In his article, Retaining Talent: Replacing Misconceptions With Evidence-Based Strategies, written with Phillip C. Bryant and James M. Vardaman, Allen and his co-authors explore the practices regarding employee turnover and retention while considering the differences between scholarly research and what is actually occurring in the workplace.
 
“My primary motivation for writing the article was to summarize scholarly research on voluntary turnover in a form that would be accessible and useful for practicing managers and future thought leaders—graduate students,” Allen explained.
 
Allen, who is currently a professor in the Management Department of the Fogelman College of Business at the University of Memphis, explained that voluntary turnover is necessary for all businesses to function effectively and outlines five misconceptions of turnover. One such misconception is that all turnover is bad. Allen said it does have potential benefits.
 
Misconception #1: All Turnover Is the Same, and It Is All Bad

Employee turnover can be a negative occurrence and may even be devastating for organizations that lose good employees. However, turnover is a complex phenomenon that comes in many shapes and sizes, Allen said. In some cases, it may even be good for the organization.
 
“Some potential benefits have to do with the opportunity to upgrade the workforce,” Allen explained. “The vacancy may present an opportunity to hire a better performer and organization citizen. The vacancy may present an opportunity for the infusion of new skills or creativity into the organization. It may create transfer or promotion opportunity for others, or it could present an opportunity to enhance workplace diversity.”
 
Other potential benefits have to do with the opportunity to gain efficiency, he added.
 
“The departure may offer the opportunity to reorganize the work unit,” he explained. “Cost savings may be achieved by not replacing the leaver; cost savings may be achieved by hiring a replacement with less experience or seniority.”
 
Another common misconception regarding turnover is that it usually results from an employee being unhappy with their pay.
 
Misconception #2: People Quit Because of Pay
 
Although employees do leave their jobs for higher paying positions, Allen said research shows (Griffeth, Hom & Gaertner, 2000) that pay level and pay satisfaction are relatively weak predictors of individual turnover decisions.
 
“Some people do quit jobs because of pay dissatisfaction or to take a higher paying job elsewhere,” he noted. “However, predictive studies show that pay level and pay satisfaction are not as predictive of individual quit decisions as a variety of other factors, such as relationships with supervisors/managers, promotion opportunities, role clarity and role conflict, stress, and many others. It may also be the case that many individuals who leave to take higher paying jobs elsewhere were originally motivated to search for those alternative jobs by factors other than pay.”
 
Misconception #3: People Quit Because They Are Dissatisfied With Their Jobs
 
It is true that job dissatisfaction is one of the most consistent attitudinal predictors of turnover. However, research is showing that job dissatisfaction might be the driving force for fewer than half of individual turnover decisions (Lee, Mitchell, Holtom, McDaniel, & Hill, 1999).

Allen explained that other causes of turnover outside of the common explanations—pay and job dissatisfaction—should also be considered.
 
“Other paths to turnover decisions include quitting in response to turnover-related shocks—which are events that lead someone to consider whether they should leave their job,” Allen explained. “Examples might be being passed over for an expected promotion, the organization announcing a merger, your spouse being offered a job out of town, or even winning the lottery. Others could include quitting as part of a preexisting plan, such as saying, ‘I will quit this job when I finish my degree, or when I pay off my car, or when I or my spouse gets pregnant’ or impulsive quitting, such as opening the emergency door of an airplane and leaving via the emergency slide!”
 
Allen says it is also a misconception that managers have no control or can do little to control voluntary turnover.
 
Misconception #4: There Is Little Managers Can Do to Directly Influence Turnover Decisions
 
Allen said managers actually do have influence on what employees choose to do, according to research on the cause-effect relationships and human resource practices that can affect turnover. He advises organizations experiencing voluntary turnover to assess their situation and figure out what is really causing it, as opposed to relying on common explanations. A one-size-fits-all approach probably is not the most effective solution.
 
Misconception #5: A Simple One-Size-Fits-All Retention Strategy Is Most Effective
 
“Broadly speaking, the first step would be to carefully analyze turnover in terms of turnover rates, who is leaving, and relative costs and benefits,” Allen explained. “The next step would be to interpret turnover data in light of organizational context—industry norms, organizational expansion, or contraction plans—and the next step would be to collect data to diagnose the driving forces of turnover in a particular organization.”
 
     Lee, T.W., Mitchell, T.R., Holtom, B. C., McDaniel, L. S., & Hill, J. W. (1999). The unfolding model of voluntary turnover: A replication and extension. Academy of Management Journal, 42(4), 450-462.
     Griffeth, R. W., Hom, P. W., & Gaertner, S. (2000). A meta-analysis of antecedents and correlates of employee turnover: Update, moderator tests, and research implications for the next millennium. Journal of Management, 26(3), 463-488.
 
About David G. Allen
 
Allen earned his PhD from the Beebe Institute of Personnel and Employment Relations at Georgia State University. He is currently First Tennessee Professor and an associate professor of Management in the Fogelman College of Business and Economics at the University of Memphis. His primary research interests include the flow of people into and out of organizations and the role of technology in human resource management. His research on these topics has been published in Academy of Management Journal, Journal of Applied Psychology, Journal of Management, Personnel Psychology, Organizational Research Methods, Human Relations, Human Resource Management, and other outlets. Allen is a recipient of a First Tennessee Professorship, and a 2008-2009 recipient of a Suzanne Downs Palmer Professorship award for research. He teaches undergraduate and graduate courses primarily in the areas of human resource management and organizational behavior, as well as research methods. He does organizational research and consulting on topics such as recruitment, retention, and organizational effectiveness, and has worked with organizations such as the Red Cross, Campbell Clinic, Georgia Department of Family and Children Services, Harrah’s Entertainment, Methodist Hospitals, Pfizer, Region’s Bank, and the U.S. Navy.