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Retaining Talent - Final PDF
Retaining Talent - Final PDF
Retaining
Talent
A Guide to Analyzing and
Managing Employee Turnover
SHRM Foundation’s Effective Practice Guidelines Series
Talent
and Managing Employee
Turnover
i
RETAINING
Talent
This publication is designed to provide accurate and authoritative information regarding the subject matter covered. Neither the pub-
lisher nor the author is engaged in rendering legal or other professional service. If legal advice or other expert assistance is required,
the services of a competent, licensed professional should be sought. Any federal and state laws discussed in this book are subject to
frequent revision and interpretation by amendments or judicial revisions that may significantly affect employer or employee rights and
obligations. Readers are encouraged to seek legal counsel regarding specific policies and practices in their organizations.
This book is published by the SHRM Foundation, an affiliate of the Society for Human Resource Management (SHRM©). The
interpretations, conclusions and recommendations in this book are those of the author and do not necessarily represent those of the
SHRM Foundation.
©2008 SHRM Foundation. All rights reserved. Printed in the United States of America.
This publication may not be reproduced, stored in a retrieval system or transmitted in whole or in part, in any form or by any means,
electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the SHRM Foundation, 1800
Duke Street, Alexandria, VA 22314.
The SHRM Foundation is the 501(c)3 nonprofit affiliate of the Society for Human Resource Management (SHRM). The SHRM
Foundation maximizes the impact of the HR profession on organizational decision-making and performance by promoting innova-
tion, education, research and the use of research-based knowledge. The Foundation is governed by a volunteer board of directors,
comprising distinguished HR academic and practice leaders. Contributions to the SHRM Foundation are tax deductible. Visit the
Foundation online at www.shrm.org/foundation.
ii
Table of
Contents
v Foreword
vii Acknowledgments
1 Retaining Talent
27 Conclusion
28 References
iii
Foreword Dear Colleague:
This process ensures that the advice you receive in these reports is useful
and based on solid academic research.
We are confident that the Effective Practice Guidelines series takes us one
step closer to making that vision a reality.
Major funding for the Effective Practice Guidelines series is provided by the
Human Resource Certification Institute and the Society for Human
Resource Management.
vii
Retaining Talent
ix
In 2006, 23.7% of American workers voluntarily quit their jobs.
-- U.S. Bureau of Labor Statistics
Retaining Talent
One of the most critical issues facing organizations today is how to retain the
employees they want to keep. Yet nearly one quarter of all U.S. workers quit
their jobs in 2006, and in some industries the turnover rate is considerably
higher. There are more than 1,000 published research articles on turnover
and retention. As a busy human resource practitioner, do you have the time
to read them all, synthesize their recommendations, and translate them into
usable practices to improve retention? If you’re like most HR professionals, you
probably do not. That’s why the SHRM Foundation prepared this report—to
summarize the latest research findings on employee turnover and retention and
offer ideas for putting those findings into action in your organization.
Why employees leave and why they stay. This presents the major theories
and research findings in this area and explores the practical implications of
each. A model is provided depicting how employees make turnover decisions.
Let’s start by exploring what turnover is and why it is important to manage it.
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Retaining Talent
Voluntary Involuntary
Functional Dysfunctional
Unavoidable Avoidable
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Retaining Talent
lead to high replacement costs. By because of health problems or a Organizations that systematically
contrast, functional turnover does desire to return to school, there may manage retention—in good times
not hurt an organization. Examples be little the organization can do to and bad—will stand a greater chance
of this type of turnover include the keep them. of weathering such shortages.
exit of poor performers or employees
The distinction between avoidable Turnover matters for three key
whose talents are easy to replace.
and unavoidable turnover is reasons: (1) it is costly; (2) it affects
This distinction between functional important because it makes little a business’s performance; (3) it may
and dysfunctional turnover is sense for a firm to invest heavily become increasingly difficult to
relative. What makes an employee in reducing turnover that arises manage. The sections below examine
valuable and difficult to replace from largely unavoidable reasons. each of these reasons in greater
will vary by job, organization, However, the line between avoidable detail.
industry, and other factors. To and unavoidable turnover can be
illustrate, a high turnover rate may fuzzy. To illustrate, your company Turnover is costly
be more dysfunctional in an industry has no control over whether an
characterized by skills that are in employee decides to start a family. Employee departures cost a
rare supply. Moreover, the question Yet it can elect to offer paid company time, money, and other
of whether the benefits of retaining maternity leave, on-site child care, resources. Research suggests
a valued worker are worth the costs and other benefits intended to help that direct replacement costs can
may generate a different answer working parents stay with your reach as high as 50%-60% of an
in some companies than in others, organization. employee’s annual salary, with
depending on the organization’s total costs associated with turnover
strategy and the current labor ranging from 90% to 200% of
Why Turnover annual salary.4 Examples include
market.
Matters turnover costs of $102,000 for a
Could your organization retain all journeyman machinist, $133,000 for
its valued employees if it wanted Does turnover matter? Absolutely—
an HR manager at an automotive
to? The answer is no. Even if you even during times when the job
manufacturer, and $150,000 for an
invested heavily in keeping every market is tight and people are
accounting professional.5 If these
key employee on board, some of strongly motivated to stay with their
estimates strike you as high, keep in
those individuals would still leave. current employer. At such times,
mind that in addition to the obvious
This brings up another important it would be shortsighted to ignore
direct costs associated with turnover
distinction: Some voluntary turnover retention management. That’s
(such as accrued paid time off and
is avoidable and some is unavoidable. because even high unemployment
replacement expenses), there are
Avoidable turnover stems from rates have little impact on the
numerous other costs. Consider
causes that the organization may be turnover of top-performing
Table 1: Voluntary Turnover Costs
able to influence. For example, if employees or those with in-demand
and Benefits.6
employees are leaving because of low skills.2 Thus, organizations that
job satisfaction, the company could ignore retention may inadvertently Clearly, turnover costs can have
improve the situation by redesigning plant the seeds for losing these an alarming impact. One study
jobs to offer more challenge or more highly marketable workers. estimated that turnover-related costs
opportunities for people to develop Moreover, businesses everywhere represent more than 12% of pre-tax
their skills. Unavoidable turnover are facing impending shortages of income for the average company
stems from causes over which the overall talent as well as a dearth and nearly 40% for companies at the
organization has little or no control. of employees with the specialized 75th percentile for turnover rate.7
For instance, if employees leave competencies companies need to However, remember that not all
stay ahead of the competition.3 turnover is harmful (dysfunctional)
3
Retaining Talent
for an organization. As noted Turnover affects nurses accounted for 68% of the
earlier, some turnover may generate organizational variability in per-bed operating
important benefits; for example, performance costs.8 Likewise, reducing turnover
the new hire turns out to be more A growing body of research links rates has been shown to improve
productive or skilled than the high turnover rates to shortfalls in sales growth and workforce morale.
previous employee. To develop an organizational performance. For In addition, high-performance
effective retention plan, you need to example, one nationwide study HR practices (including reduction
consider both the costs and benefits of nurses at 333 hospitals showed of dysfunctional turnover rates)
associated with turnover in your that turnover among registered increase firm profitability and market
organization. value.9
4
Retaining Talent
More and more observers agree that as the inducements it offers (such
a talent scarcity is looming—and as satisfactory pay, good working Spotlight: Turnover Is Tougher
that this shortage will make finding conditions, and developmental on Small Organizations
and keeping the right people opportunities) are equal to or
The loss of key employees can
with the right skills increasingly greater than the contributions (time,
have a particularly damaging
challenging for organizations. In a effort) required of the person by
impact on small organizations:
SHRM survey of HR professionals, the organization. Moreover, these
62% of the respondents reported judgments are affected by both • Departing workers are more
already having difficulty hiring the individual’s desire to leave the likely to be the only ones
workers with the skills essential for organization and the ease with which possessing a particular skill or
a 21st century workforce.12 Many he or she could depart. knowledge set.
business leaders worry that this
Clearly, turnover is a complex process. • A small company’s culture
problem will worsen with important
That is, although some individuals suffers a more serious blow
demographic shifts (such as waves of
may quit a job on impulse, most when an essential person leaves.
retirements among aging workers).
people who leave spend time initially
Inadequate educational systems, • There is a smaller internal pool
evaluating their current job against
increasingly mobile employees, of workers to cover the lost
possible alternatives, developing
and even generational differences employee’s work and provide a
intentions about what to do, and
in perceptions about the nature replacement.
engaging in various types of job-
of work and careers will all likely
search behavior.14 • The organization may have fewer
aggravate matters further. HR
professionals who take time now Figure 2: Comprehensive Voluntary resources available to cover
to create strategies for dealing with Turnover Model captures this replacement costs.
these developments will put their process. The research shows that
organizations at a competitive specific turnover drivers affect key
advantage. job attitudes such as satisfaction
with one’s role and commitment to
the organization. Low satisfaction
Why Employees Leave and commitment can initiate
the withdrawal process, which
Much research on talent retention includes thoughts of quitting, job
has centered on understanding the searching, comparison of alternative
varied reasons behind employees’ Managing the Inducements-
opportunities, and the intention
decisions to leave organizations, Contributions Balance
to leave. This process may lead to
as well as the processes by which turnover if the organization fails Organizations can actively
people make such choices. By to manage it effectively. Turnover manage employees’ turnover
understanding why people leave, drivers may also produce other work decisions by influencing the
organizations can also gain a better behaviors that suggest withdrawal, inducements-contributions
idea of why people stay and can learn such as absenteeism, lateness, and balance.
how to influence these decisions. poor performance, any of which
To manage this balance, make
The theory of organizational may end in a departure without
changes affecting how intensely
equilibrium13 can shed valuable the person going through a job
employees want to leave as well
light on these matters. According search, evaluation of alternatives, or
as how easy it is for them to
to this theory, an individual will extended consideration of quitting.
leave.
stay with an organization as long The lesson? To proactively manage
5
Retaining Talent
On-Boarding
Realistic Embeddedness Shocks/Scripts
Previews
Socialization
Work Behaviors
Absenteeism
Lateness
Target Populations: e.g., new hires, high performers, high-demand skills, demographic groups Performance
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Retaining Talent
Lateness (+)
Education (+)
Marital Status (-)
Sex
Cognitive Ability (+)
Race
Note: a plus (+) indicates that the predictor is positively related to turnover. (As the predictor increases, so does turnover.)
A minus (-) indicates that the predictor is negatively related to turnover. (As the predictor increases, turnover decreases.)
7
Retaining Talent
Through surveys and exit interviews, the work environment. Be prepared to minimize prevalent negative
organizations can identify the percent to deal with external offers for valued shocks (such as harassment or
of people leaving who follow each employees. perceptions of unfair treatment). Give
of the four primary paths to turnover. employees realistic previews and clear
• Plans: It may be difficult to counter
Each path has different implications communication to minimize unexpected
these directly. Increasing rewards tied
for the company’s retention strategies: shocks. Provide support mechanisms
to tenure may alter some employees’
to help employees deal with shocks (for
• Dissatisfaction: Attack this with plans. Determining which plans are
instance, grievance procedures, flexible
traditional retention strategies such common in your workforce may help
work arrangements, and employee
as monitoring workplace attitudes you develop a tailored response; for
assistance programs).
and managing the drivers of turnover example, more generous maternity and
identified earlier. family-friendly policies if you discover Example: UPS has countered the threat of
numerous family-related plans. better job alternatives by providing well-
• Better alternatives: Ensure that above-market wages, ample vacation time,
your organization is competitive in • No plan: Analyze the types and free health insurance, and a highly competitive
terms of rewards, developmental frequencies of shocks that are driving pension plan.This approach has resulted in an
opportunities, and the quality of employees to leave. Provide training unusually low annual turnover rate of 1.8%.18
8
Retaining Talent
9
Retaining Talent
To build and strengthen • Tie financial incentives to tenure. • Encourage home ownership (for
sacrifice. . . instance, by providing home-buying
• Provide unique incentives that
assistance).
might be hard to find elsewhere
(such as sabbaticals). • Develop career paths that do not
require relocation.
10
Retaining Talent
help his or her organization retain job types, geographic locations, and
talent. But they’re not enough in even individuals. Thus, one-size-fits- Ongoing Retention
themselves. That’s because simple all retention initiatives may backfire. Management at American
one-shot retention efforts (for Home Shield
How, then, should you approach
example, a single employee attitude
the task of developing the right American Home Shield
survey, a one-time bonus, or a
retention management plan for your recognized that to retain
once-offered management training
company? its most valued employees,
program) are unlikely to exert much
impact over the long run. Figure 4: Developing a Retention managers first had to
To manage retention most Management Plan26 on page 12 understand why some
effectively, you need to engage in an shows the important steps in this employees leave and
ongoing diagnosis of the nature and process. In the sections below, we others stay. To capture this
causes of turnover, as well as develop examine each of these steps more information, an employee
(and constantly hone) the right mix closely. turnover project team
of retention initiatives. surveyed a sample of
employees who had already
That calls for thinking about left the organization. It also
Step 1: Is Turnover a Problem
retention before employees are implemented an ongoing
for Us?
hired, while they’re working at your procedure to survey people
company, and after they leave. As an As we noted earlier, not all
who left the organization after
HR professional, you have a critical voluntary turnover is harmful for
the initial survey. In addition, it
role to play in this process. Indeed, an organization. Turnover among
surveyed remaining employees
many organizations are integrating underperformers, turnover that
on a quarterly basis throughout
their retention efforts into a broader enables your company to tap
the project to determine which
talent management strategy. Talent fresh perspectives and skill sets or
aspects of their jobs made
management comprises workforce lowers labor costs are all examples
them stay and which caused
planning, hiring, development, of functional turnover. Moreover,
them to consider leaving.
and retention to ensure that the in most cases, it’s impossible to
organization has access to the prevent every employee from leaving The team found that supervisor
quality and quantity of talent it a company. However, turnover availability, job training, and job-
needs to compete now and in the becomes dysfunctional when the requirement communications
future. A recent study concluded wrong people are leaving, or when were the most important, yet
that 53% of organizations have a the turnover rate becomes so high most dissatisfying, aspects of
talent management initiative in that the accompanying costs and working at American Home
place, and 76% of these enterprises instability outweigh the benefits. Shield.
identify talent management as a top To determine whether turnover is
organizational priority.25 problematic in your enterprise, you
need to conduct a turnover analysis.
But keep in mind that each
organization is unique, operates in
Turnover analysis
its own idiosyncratic environment,
and has its own human capital An effective turnover analysis
strategies and challenges. Even examines three questions: (1) How
within a single organization, many people are leaving (turnover
retention goals and challenges may rate)? (2) Who is leaving? (3) What
differ across departments, divisions, are the relative costs and benefits of
11
Retaining Talent
Turnover Analysis
Targeted
How Many Are Leaving? Develop Strategies
Retention Implementation Evaluation
Who Is Leaving?
Goals
Costs and Benefits? Broad based
Strategies
Data Collection
Why People Quit or Stay
in General
Retention Research
Needs Assessment Best Practices
External Internal Benchmarking Surveys
our current turnover? Let’s look at performance level of departing schedules are an effective retention
each of these in turn. workers). These breakout data help strategy, and are more likely to
you identify “turnover hotspots” to cite a relocating spouse, child care
How many are leaving? focus on. issues, conflict with co-workers,
Use the equation on page 13 to and difficulty balancing work and
calculate turnover rate over a certain Who is leaving? personal life as reasons for leaving
time period (e.g., monthly The question of who is leaving is organizations.28 Owing to these and
or yearly).27 crucial for assessing the extent to other differences, you should track
which turnover is functional or breakout data on the performance
Also track types of turnover (such levels, skills (especially high-demand
as voluntary vs. involuntary and dysfunctional, because not every
employee is of equal value to or hard-to-replace skills), tenure, and
avoidable vs. unavoidable), type of membership in underrepresented
employee (part-time or full-time), your organization. Furthermore,
some employees may leave for groups (e.g., minorities, females)
job category, job level, geographic of individuals who leave. This
location, and other categorizations different reasons than others. For
example, a SHRM survey found information will give you a more
that may be important in your complete picture of the extent to
organization (for instance, that women are more likely than
men to report that flexible work which turnover is a problem in your
12
Retaining Talent
company, and will help you develop manufacturing organization, Another source of external
more effective retention strategies. this rate is absolutely too high. benchmarking data could be private
That’s because such organizations organizations such as the Attrition
typically experience much lower Consortium. This group of 25
What are the relative costs and
levels of turnover. But for hourly Fortune 500 companies provides
benefits of our current turnover?
employees in a retail or food-service quit-rate statistics to a third-party
Most retention strategies require environment, it almost certainly organization that compiles the data
investments of time, money, or is not, because these types of and circulates benchmark statistics.30
other resources. To design strategies organizations often experience much
that yield acceptable returns on Through internal benchmarking,
higher turnover. Benchmarking
those investments, you need a you track your organization’s
and needs assessment can give
clear idea of how much the costs turnover rates over time. If the
you additional information for
associated with turnover in your rate is increasing, overall or among
determining whether turnover is a
company outweigh the benefits particular groups or locations, that
problem in your organization.
associated with turnover. Using this could be a red flag.
information, you can calculate total Through external benchmarking,
turnover costs as well as costs per you compare your organization’s
Needs assessment
incident of turnover. The formulae turnover rates against industry and
competitor rates. If your rates are Through a needs assessment,
you use may vary based on factors
significantly higher than those of you evaluate the implications of
such as job type or level, employee
rival companies, your firm may turnover for your organization in the
type, or employee performance level.
be at a competitive disadvantage. context of future labor demand and
A variety of resources are available
Alternatively, relatively low rates availability.
to help you develop cost-benefit
formulae and metrics, including in your company could provide Using an external needs assessment,
the SHRM Retention Toolkit an edge over rivals. One source of you consider trends in the industry
available at www.shrm.org.29 In external benchmarking data is the and larger labor market that may
practice, your turnover-cost metrics U.S. government. For instance, affect supply and demand of
need not be “perfect.” It’s more the Department of Labor (DoL) human capital. Some trends (such
important that you arrive at an publishes the Job Openings and as industry growth) may increase
internal consensus on appropriate Labor Turnover Survey (JOLTS; demand for employees valued by
measures, so that the analysis, www.bls.gov/jlt). Table 3: JOLTS your organization. Others (such as
conclusions, and recommendations 2006 Quit Rates on page 14 shows retirements of baby boomers) may
are seen as credible by others in your an example. These data represent worsen already shrinking supplies of
organization. annual and monthly quit rates as a labor.
percentage of total employment for
all non-farm employment across the Through an internal needs
Benchmarking assessment, you evaluate your
United States. On the DoL’s web
Is a 15% annual turnover rate too site, you can find breakdowns by organization’s future strategic
high? This question is impossible to industry, geographic region, public- direction and that direction’s
answer in isolation. For managerial private, and government sector. implications for your labor
employees in a stable, mature requirements. Some strategies
13
Retaining Talent
Annual Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
23.7% 1.8% 1.6% 1.9% 1.8% 2.1% 2.2% 2.1% 2.7% 2.1% 1.9% 1.7% 1.7%
14
Retaining Talent
that provide a positive cost-benefit organization or at large subsystems, In addition, you’ll want to learn
ratio, even if they require extensive and are intended to address overall from best practices—the strategies
resources. Finally, when neither retention rates.31 Examples might that other organizations are
the rate nor who is leaving is include providing across-the-board doing and are finding effective
problematic but turnover costs are market-based salary increases, or ineffective. For example, a
high, seek to streamline and reduce changing your company’s hiring WorldatWork survey of HR
the costs associated with each person process to incorporate retention- professionals found the following
who quits. related criteria, and improving the top ten retention initiatives in use:32
work environment. The data to help
Note that broad-based and targeted
you proceed can come from several
strategies don’t have to be mutually 62% Market adjustment/base
sources, including (1) retention
exclusive. Indeed, general retention salary increase
research, (2) best practices, and (3)
best practices can help you keep
benchmarking surveys. 60% Hiring bonus
specific employees on board and
determine which organization- Retention research can shed valuable 49% Work environment (e.g.,
specific turnover drivers to measure. light on the primary drivers of flexible schedules, casual dress,
At the same time, data that you turnover in organizations. Earlier telecommuting)
collect on those organization- in this report, you saw a summary
specific drivers can help you reduce of the predictors most consistently 28% Retention bonus
overall turnover rates. Still, you’ll related to turnover and the relative 27% Promotion and career-
get the best returns on your strengths of those relationships. development opportunities
retention investments if you use data The Annotated Bibliography at
collection and retention strategies the end of this report describes 24% Above-market pay
that are tailored to your particular additional useful resources. You may 22% Special training and
turnover problem. Let’s take a closer also want to attend conferences of educational opportunities
look at the differences between certain professional associations to
broad-based and targeted strategies. gain access to the latest research on 22% Individual spot bonuses
turnover and retention; for example,
19% Stock programs
the Academy of Management
Broad-based strategies
and the Society for Industrial and 15% Project milestone/completion
As we’ve seen, broad-based retention Organizational Psychology. bonuses
strategies are directed at the entire
Turnover Rates Acceptable Acceptable High or High or Acceptable Acceptable High or High or
Increasing Increasing Increasing Increasing
Who is Leaving Functional Dysfunctional Functional Dysfunctional Functional Dysfunctional Functional Dysfunctional
15
Retaining Talent
16
Retaining Talent
To get the most from exit in what’s causing employees to stay may have considered leaving your
interviews:36 at your organization. Interviews or organization, why they have opted
focus groups with current employees to stay, and the factors they consider
• Use neutral interviewers (such as
can be valuable additional sources most important for remaining with
someone from HR or an external
of information for developing the company in the future.
consultant).
targeted retention strategies. In
You can get the most from current-
• Train interviewers. particular, these methods can shed
employee focus groups by paying
light on the reasons employees
• Use a structured interview format. particular attention to the input of
17
Retaining Talent
employees whom your organization individual survey responses and that may underlie employee
is most interested in retaining (such individual turnover decisions. departures. These methods typically
as high performers or individuals Employees complete attitude and require more resources. However,
in high-turnover jobs). As with the opinion surveys (often developed they can sometimes reveal patterns
other methods discussed, be sure in the same manner as described or relationships that surveys don’t
to use trained neutral parties and above). Then, after some period of capture.
a structured format, emphasize time (typically six months or one
Qualitative studies may include
confidentiality to the extent possible, year), you track who leaves and
repeated interviews with
and provide a clear mechanism for who stays. The goal is to statistically
representatives of key employee
using the information generated. examine the relationships between
groups as well as analysis of diaries in
survey responses and subsequent
which workers record their thoughts
retention patterns.
Linkage research about the employment relationship.
Through linkage research, you Predictive surveys provide clear data These studies may also take the form
measure employee attitudes and on the strength of the relationships of experience sampling methods, in
opinions through anonymous between specific predictors and which workers respond to repeated
surveys, aggregate the responses actual turnover decisions in your measures of their employment
to the business-unit level, and organization–valuable information relationship at a particular point
statistically correlate the aggregated for determining how to craft in time. For instance, you might
responses with your company’s targeted retention strategies. provide specific individuals with a
turnover rates and other important However, this method requires personal digital assistant and ask
business outcomes (such as customer employees to identify themselves them to report their job satisfaction
satisfaction, sales, and profitability). so that you can link their survey at random times.
This technique can give you a clear responses to subsequent turnover
picture of the drivers of business- decisions. Without the comfort that Targeting specific employee groups
unit turnover rates. comes with anonymity, employees
may be unwilling to give candid After collecting data through one
How do you decide what to measure responses during the surveys. Thus, or several of the above-described
with a linkage survey? Draw from you’ll need to take special care to means, you may discover that some
retention research and best practices, protect confidentiality and reassure groups or types of employees leave
exit interviews, and focus group data participants that their supervisor will for different reasons than others.
from those who stay. Also look to not see their responses. The use of For example, suppose the data show
your own hypotheses about what outside researchers or consultants that a particular division or location
may be causing turnover in your can help make employees feel more has higher and more dysfunctional
organization. University researchers comfortable. turnover than others. Moreover,
and outside consultants can further employees of that division or
help you design and administer location report lower job satisfaction
the surveys as well as analyze and Qualitative studies and less positive relationships
interpret the results. Finally, it may be worthwhile to with supervisors than workers in
conduct more in-depth qualitative other divisions or locations, and
studies. Instead of focusing on these differences are related to
Predictive turnover studies
quantifying relationships between the differences in turnover rates.
Whereas linkage surveys look for turnover and other factors, These findings may prompt you to
connections between trends at the qualitative studies attempt to develop a retention strategy (such as
business-unit level and turnover uncover the complex, harder-to- supervisor training) targeted at that
rates, predictive surveys examine measure decision-making processes particular division or location.
direct relationships between
18
Retaining Talent
Alternatively, suppose the data performers, your organization may Fostering a pro-diversity work
reveal that employees with high- be particularly concerned about climate can help mitigate turnover
demand and hard-to-replace retaining women and minorities; related to unsupportive co-workers
skills (for example, engineers) are for example, if the company views or performance pressures stemming
generating particularly high and workforce diversity as a means of from, say, being the only woman in
costly turnover. In addition, you’ve gaining a competitive advantage. a division staffed by men. Recent
found that departing engineers Though research shows a weak research has shown that the diversity
are especially unhappy with their correlation between sex or race and climate in an organization is related
compensation. You may develop a individual turnover decisions, data to turnover intentions, especially
targeted retention strategy that calls suggests that in the labor market as among African-Americans.40
for changing their compensation to a whole, women and minorities may
Finally, you may want to consider
reflect the engineering labor market. be somewhat more likely than men
retention strategies based on
and members of majority groups to
In both of these cases, a targeted generational differences. Although
depart an organization.38
strategy will be far more cost- research shows that the likelihood
effective than a system-wide one. If you want to develop targeted of turnover generally declines
strategies for retaining women and with age, many organizations are
You can likewise use turnover
minorities, take care to understand finding that different generations of
data to craft targeted strategies for
the unique drivers behind their employees look for different things
retaining high-value employees,
employment decisions. For from their professional lives. For
such as (1) star performers, (2)
example, women may be more instance, as baby boomers (those
women and minorities, and (3) new
likely to report leaving because born between 1946 and 1964)
generations entering the workforce.
of family or relationship issues. A approach retirement age, they may
Any turnover among high performers
recent summary of potential causes value schedules that allow them to
may be exceptionally dysfunctional
of turnover among women and transition to part-time work and
for some organizations. The research
minorities included seven drivers:39 then full-time retirement. Their
highlights three primary conclusions
employers must decide how to retain
for how organizations can best retain • Supervisor bias
their knowledge and experience
these workers:37
• Pay inequity while making room for the next
• Performance-based rewards can generation of leaders. Meanwhile,
• Less interesting jobs members of Generation X (born
increase retention among high
performers (and may increase • Performance pressures 1965 to the late 1970s) experienced
turnover among low performers). the breakdown of the lifetime
• Blocked careers employment contract and bring
• Top performers in jobs or to the workplace an emphasis on
occupations with extensive • Unsupportive co-workers
market-based rewards, personal
visibility or easily documented • Sexual harassment and professional development
performance accomplishments are opportunities, work-life balance,
more at risk for turnover. and use of technology. Members
Many of these drivers can be
• The ability of well-designed pay- of Generation Y (born early 1980s
addressed with training (such as
for-performance plans to reduce to 2000) are now entering the
workshops on avoiding sexual
harmful turnover can more than workforce, expect to be changing
harassment or prejudice) or with
offset these plans’ increased costs. jobs frequently, and have been wired
HR practices (for example, equitable
to technology since childhood. Some
In addition to developing compensation schemes and career
sources feel these employees will be
retention strategies targeted at star development opportunities).
extraordinarily technologically savvy,
19
Retaining Talent
at ease with global business and your new strategy and be prepared what return your company is getting
diversity, and skilled multi-taskers. to answer those concerns. on its investment in the strategies.
Nevertheless, other observers believe Do these results support your
After implementing your plan, it will
they have less of a work ethic than company’s retention goals? If not,
be important to evaluate the results.
older employees, have unrealistic are some of those goals unrealistic,
Retention efforts may require
expectations regarding career and do they need to be modified?
substantial investments, so you’ll
advancement, and lack the ability to Do unsatisfactory results suggest
want to assess their impact relative
make independent decisions.41 the need to gather new kinds of
to the cost. For example, consider
data or to develop a more effective
So far, research suggests that how many employees are leaving,
implementation approach? Exploring
generational differences may which employees are leaving, and
be overstated as drivers of job
satisfaction and turnover.42 Still,
considering generational differences
Implementing and Evaluating Retention Strategies at American
in employees’ reasons for leaving
Home Shield
may be helpful for developing
targeted retention strategies. For Armed with an understanding of why some of their employees were
example, some evidence indicates leaving, the American Home Shield retention management team was ready
that younger employees may place to develop and implement a plan. The plan included both broad-based and
higher value on work-life balance targeted strategies, and was organized around the three job characteristics
and advancement opportunities than the team had identified as particularly problematic: job training, supervisor
older employees.43 availability, and job requirement communications. The team included
several solutions in their plan as well as a management “dashboard” it
would use on an ongoing basis to ensure that all solutions continued to
STEPS 3 and 4: Implementing
deliver as promised.
Your Plan and Evaluating the
Results Several solutions implemented by American Home Shield were based
The third phase of retention directly on the data the team had collected:
management is implementation
• Reorganize the training schedule so that it matched the typical learning
of your plan, while the fourth is
curve of the specific job.
evaluating the plan’s results. Let’s
consider implementation first. • Increase the authority of front-line employees to free up supervisors to
handle higher-level issues.
The actions you take to implement
your plan will depend on the • Streamline the procedure for communicating job-requirement changes by
strategies you are pursuing and (a) giving only department managers the authority to make job-requirement
the unique circumstances of changes and (b) giving department employees e-mail accounts through
your organization. With any which all job-requirement changes would be communicated.
organizational change, you’ll want
American Home Shield also implemented a solution suggested by research
to get top management support
the team had reviewed: improve hiring procedures. This solution consisted
and buy-in for your strategy. It
of structured interviews of job candidates using a trained interview team
will also be important to develop a
asking pre-screened behavioral questions. The purpose of this solution
communications plan to ensure that
was to increase the reliability and validity of the selection process and the
managers understand the changes
likelihood of hiring employees who would be a good fit for the job and the
and are prepared to implement new
organization.
policies and procedures. Try to
anticipate any possible objections to
20
Retaining Talent
these questions can help you tease work environment. However, they
out the causes behind less-than- can also reduce applicant pools, as
How to create a Realistic Job
ideal outcomes. This allows you to some applicants decide that the job
Preview (RJP): 46
objectively assess your retention or organization is not for them.
strategies and make the changes Thus, RJPs are most appropriate for 1) Interview incumbents about
needed to improve the results. positions in which retention is an their job duties and work
issue but for which the organization experiences.
does not have great difficulty finding
A Menu of enough qualified applicants. 2) Identify common themes
Retention Practices and descriptors.
21
Retaining Talent
22
Retaining Talent
23
Retaining Talent
24
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25
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26
Retaining Talent
Conclusion
To get the most from your retention management plans, you’ll need to: (1)
analyze the nature of turnover in your organization and the extent to which
it is a problem (or likely to become one); (2) understand research findings on
the drivers of employee turnover and the ways in which workers make turnover
decisions; (3) diagnose the most important and manageable drivers of turnover
in your company; and, (4) design, implement, and evaluate strategies to improve
retention in ways that meet your organization’s unique needs. The research,
guidelines, and examples provided in this report will help you to tackle this
challenging but crucial responsibility.
27
Retaining Talent
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52 Griffeth, R.W. & Hom, P.W. 2001. Retaining 63 Cappelli, P. 2000. A market-driven approach to
Valued Employees. Sage. Kammeyer-Mueller, J.D. & retaining talent. Harvard Business Review, Jan-Feb,
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entry process: Disentangling multiple antecedents
64 Griffeth, R.W. & Hom, P.W. 2001. Retaining Valued
and their pathways to adjustment. Journal of Applied
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2006. Staffing Organizations, 5th edition. McGraw Hill
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66 Aquino, K., Griffeth, R.W., Allen, D.G., & Hom, P.W.
55 Adapted from Griffeth, R.W. & Hom, P.W. 2001. 1997. An integration of justice constructs into the
Retaining Valued Employees. Sage. turnover process: Test of a referent cognitions model.
Academy of Management Journal, 40, 1208-1227.
56 Allen, D.G., Shore, L.M., and Griffeth, R.W. 2003.
The role of perceived organizational support and 67 Tepper, B. 2000. Consequences of abusive supervision.
supportive human resource practices in the turnover Academy of Management Journal, 43, 178-190.
process. Journal of Management, 29, 99-118.
68 Rutigliano, Tony. “Tuning up your talent engine.”
57 Hom, P.W. & Griffeth, R.W. 1995. Employee Gallup Management Journal. Fall 2001: 1-3.
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69 Vance, R.J. 2006. Employee engagement and
58 Heneman, H.G. & Judge, T.A. 2006. Staffing commitment. SHRM Foundation.
Organizations, 5th edition. McGraw Hill Irwin.
70 Ramsay, C.S. 2006. Engagement at Intuit: It’s the
59 Griffeth, R.W., Hom, P.W., & Gaertner, S. 2000. people. Society fo Industrial and Organizational
A meta-analysis of antecedents and correlates of Psychology 21st Annual Conference, Dallas, TX.
employee turnover: Update, moderator tests, and Vance, R.J. 2006. Employee engagement and
research implications for the next millennium. Journal commitment. SHRM Foundation.
of Management, 26, 463-488.
71 Vance, R.J. 2006. Employee engagement and
60 Heneman, H.G. & Judge, T.A. 2006. Staffing commitment. SHRM Foundation.
Organizations, 5th edition. McGraw Hill Irwin.
72 See note 70.
61 Griffeth, R.W., Hom, P.W., & Gaertner, S. 2000.
A meta-analysis of antecedents and correlates of
employee turnover: Update, moderator tests, and
31
Strengthening employee engagement in your organization can also
help you retain talent. One report on measuring engagement at Intuit
found that highly engaged employees were five times less likely to quit
than employees who were not engaged.72
Retaining Talent
Past research has suggested that workers leave either voluntarily or involuntarily.
In this article, the author holds that this approach excludes some involuntary
departures from analysis, while treating all people who leave voluntarily as
being similar. Drawing on Dalton, Krackhardt, and Porter’s (1981) suggested
taxonomy of avoidable and unavoidable turnover, this article examines whether
the taxonomy aids in the analysis of turnover. The key finding from this research
is that unavoidable departures and retentions did not significantly differ on four
variables: Commitment, satisfaction, job tension, and withdrawal cognitions.
These findings suggest that researchers should consider the circumstances of job
quits when analyzing the causes of employee turnover.
Alexander, J., Bloom, J., & Nuchols, B. 1994. Nursing turnover and
hospital efficiency: an organization-level analysis. Industrial Relations, 33,
505-520.
33
Retaining Talent
Additionally, three socialization The results provide support for the evaluations of the desire to leave the
tactics, collective, fixed, and proposed model of the performance- organization, 2) actual and perceived
investiture, are shown to turnover relationship, and may help mobility in the job market, and 3)
be positively related to job explain the complex relationship performance, which may lead more
embeddedness. These results suggest between performance and turnover. directly to turnover in response to
that how new hires are socialized The results indicate that visibility performance-related shocks in the
can more fully embed them in moderates the relationship between system.
the organization, and thus reduce performance and alternatives,
turnover. and that reward contingencies
moderate the relationship between Allen, D.G., Shore, L.M., and
performance and satisfaction. Griffeth, R.W. 2003. The role of
Allen, D.G. and Griffeth, The mediation results were less perceived organizational support
R.W. 2001. Test of a mediated clear because of a lack of direct and supportive human resource
performance-turnover relationship effects involving performance. practices in the turnover process.
highlighting the moderating Additionally, the potentially Journal of Management, 29,
roles of visibility and reward conflicting mechanisms of ease and 99-118.
contingency. Journal of Applied desirability of movement may help
to explain the mixed results found A model investigating antecedents
Psychology, 86, 1014-1021.
regarding the performance-turnover of perceived organizational support
A model of the performance- relationship. (POS) and the role of POS in
turnover relationship was tested predicting voluntary turnover
that addressed at least three was developed and tested in two
shortcomings of previous research samples via structural equation
Allen, D.G., and Griffeth, R.W.
(first empirical test of a mediated modeling. Both samples of
1999. Job performance and
performance-turnover relationship). employees (N=205 department sales
turnover: A review and integrative
First, the model recognized that people; N=197 insurance agents)
multi-route model. Human
performance may have simultaneous completed attitude surveys that
Resource Management Review, 9,
and sometimes conflicting effects were connected to turnover data
525-548.
on both the desire and the ability collected approximately one year
to leave an organization. Second, The authors argue that research later. Procedures were similar in
the model explicitly included two should examine which individuals both samples, except measures in
important moderators of these are leaving the organization. If, sample one were taken at two points
relationships: contingent rewards for example, only the poorest in time, whereas those in sample
and visibility. Third, the model performing individuals are leaving, two were taken at three points.
suggested that performance is a turnover could be beneficial and Identical analyses were performed
somewhat psychologically distal not negative for the organization. on both samples. A confirmatory
antecedent of turnover with effects Conversely, if the very highest factor analysis (CFA) was performed
that are mediated by other variables. performers are leaving, the results to assess the distinctiveness of the
Data consisted of organizational could be highly negative for the measures.
performance and turnover records organization. An integrative
The results suggest that perceptions
for 130 employees of a medical model of the relationship between
of supportive human resources
services organization. During the individual job performance and
practices (participation in decision-
period under investigation, 20% of turnover is proposed, which argues
making, fairness of rewards, and
the sample voluntarily quit. that performance may lead to
growth opportunities) contribute to
turnover through three different
the development of POS, and that
routes: 1) cognitive and affective
34
Retaining Talent
POS mediates their relationships not hold this belief, poor outcomes employee turnover. Specifically,
with organizational commitment can produce negative responses the chapter provides methods for
and job satisfaction. Further, POS directed inward (stress, depression) calculating the associated costs of
is negatively related to withdrawal, or outward (absenteeism, poor separation and organizational quit
with the relationship between performance, resignations). Linkages rates, and offers three categories
POS and withdrawal mediated by between referent cognitions, of turnover costs: Separation costs,
commitment and satisfaction. Thus, turnover intentions, and turnover replacement costs, and training
the authors suggest that POS may were established. costs. Separation costs are those
be a more distal determinant of costs associated with the loss of
turnover that affects turnover as a continuity from an employee
critical antecedent to commitment. Batt, R. 2002. Managing leaving. Replacement costs are
Customer Services: Human costs associated with finding
Resource Practices, Quit Rates, employees to take the place of
Aquino, K., Griffeth, R.W., Allen, and Sales Growth. Academy employees who leave. Training
D.G., & Hom, P.W. 1997. An of Management Journal, 45, costs are costs associated with
integration of justice constructs 587-597. getting new employees integrated
into the turnover process: Test into the prevalent practices of the
This study examines relationships organization.
of a referent cognitions model.
between high-involvement HR
Academy of Management Journal,
practices, quit rates, and sales
40, 1208-1227.
growth. A sample of call centers
Dalton, D.R., Todor, W.D.,
The authors propose a model for across the United States yielded a
& Krackhardt, D.M. 1982.
clarifying psychological processes mean quit rate of 14%. Notably,
Turnover overstated: A
by which felt deprivation instigates high-involvement HR practices were
functional taxonomy. Academy of
quitting. Using referent cognitions significantly negatively correlated
Management Review, 7, 117-123.
theory, which holds that individual with quit rate (r = -.28), and quit
dissatisfaction arises when a person rate was negatively correlated This article provides a critical look
compares existing reality to a with sales growth, with a pairwise at how turnover is viewed as well as
more favorable alternative, the correlation of -.10. measured. The key theme posited
results illustrate that outcome and is that turnover among employees
The results of the article suggest
supervisor satisfaction are negatively who are evaluated negatively by
that HR practices that emphasize
related to withdrawal cognitions. the organization is a positive for
an investment in human capital
said organization. Specifically, that
Referent cognitions occur when reduce turnover and thus increase
while too much turnover may
individuals compare their outcomes firm performance. Key among the
be negative, limited amounts of
with another person’s, and thus findings is the confirmation of the tie
turnover may actually be positive for
think about “what might have between quit rates and performance.
the performance of the firm. The
been”. The results explained that
authors hold that recommendation
people may view existing outcomes
for rehire is an adequate proxy
as temporary because satisfaction Cascio, W.F. 2006. Managing for “good” (functional versus
may be influenced by what they Human Resources: Productivity, dysfunctional) turnover.
expect to receive in the future. If Quality of Work Life, Profits
they believe that the organization (7th ed.). Burr Ridge, IL: Irwin/
can change, then inferior outcomes McGraw-Hill.
may not necessarily produce
dissatisfaction. But, if employees do The portion of this text devoted
to turnover concerns the costs of
35
Retaining Talent
Dess, G., & Shaw, J. 2001. Fitz-Enz, J. 2002. How To Regression analysis revealed a
Voluntary turnover, social capital Measure Human Resources curvilinear relationship. The findings
and organizational performance. Management (3rd ed.). McGraw- indicate that high turnover was
Academy of Management Review, Hill. harmful, but the proposed inverted
26, 446-456. U-shape was not found.
The chapter of this text devoted
This treatise draws upon the work to turnover focuses on the hidden
of Dalton, Todor, and Krackhardt costs of high organizational quit
Griffeth, R.W. & Hom, P.W.
(1982) to further the notion that rates and provides a unique look
2004. Innovative Theory and
turnover is not always a “problem” into the categorization of people
Empirical Research on Employee
for the organization. The authors who leave. Separations, as the
Turnover. Information Age
expound on the idea the general authors call them, are divided
Publishing.
indicator quit rate is not adequate into quits, layoffs, and discharges.
to explain the impact of turnover on The text also offers formulas for This missive offers a look at
firm performance. Specifically, it is accession rate (total hires/average particularly innovative research on
proposed that losses of individuals headcount) and separation rate (total turnover and retention. Multiple
with large amounts of social capital termination/average headcount). theoretical perspectives are offered.
may be more damaging to firm The key theme put forth is that The book offers a view into the
performance than quitting by low- retention management should be a history, scope, theory development,
capital employees. proactive process, not an eleventh- and generalizability of research on
hour afterthought. The authors turnover and retention. Additionally,
also provide illumination on hidden the authors delve into unresolved
Ferris, G.R. 1985. Role of costs of turnover, such as costs issues in existing theoretical
leadership in the employee for unemployment and workers’ frameworks of turnover. Issues
withdrawal process: A compensation insurance. regarding models from March and
constructive replication. Journal Simon’s equilibrium framework to
of Applied Psychology, 70, 777-781. the job embeddedness construct
Glebbeek, A., & Bax, E. 2004. are discussed. A key advance on
The contributions of average
Is high employee turnover really turnover theory in this text is the
exchange and leader-member
harmful? An empirical test using notion of turnover as a risky decision
exchange (LMX) to explaining
company records. Academy of that weighs upon the individual
variance in employee turnover
Management Journal, 47(2), organization member. The
were examined in an investigation
277-286. interaction of individual risk traits
designed to constructively replicate
as well as risky situational aspects is
a study by Graen, Liden, and Hoel The authors tested the hypothesis
discussed in the context of extant
(1982). The results showed LMX to that employee turnover and firm
turnover models.
be a stronger predictor of turnover performance have an inverted
than average leadership style, U-shaped relationship. The article
although the effect size was not as hypothesizes that overly high or
Griffeth, R.W. & Hom, P.W.
large as in the Graen et al. study. low turnover is harmful for firm
2001. Retaining Valued
Also, LMX predicted turnover better success. The analysis was based on
Employees. Sage.
than did employee attitudes, despite performance data from 110 offices
the fact that employee attitudes of a temporary employment agency. This work provides a comprehensive
seemed to mask the LMX-turnover The offices had high variation in look at how firms can keep key
relationship. turnover but were otherwise similar, members of the organization.
allowing the researchers to control A national survey of American
for important intervening variables. corporations reveals that 52% of
36
Retaining Talent
companies report that turnover is the predictors of turnover. The Heneman, H.G. & Judge, T.A.
increasing. The authors also draw on meta-analysis yields new findings. 2006. Staffing Organizations, 5th
survey results to state that employee Notably, intentions to quit remain edition. McGraw-Hill Irwin.
loyalty at U.S. companies is at an the best predictor of turnover with
This text examines three types of
all-time low, making employee a correlation of .46, up from .35
turnover: voluntary, discharge,
retention a key issue in the 21st in the 1995 study. Commitment
and downsizing. Each form of
century. The key issue raised by and satisfaction were shown to
turnover and its drivers are explored.
the authors is that academic studies be modest predictors of turnover
Additionally, each type is examined
on turnover and retention, while with correlations of .27 and -.19
from the perspective of three
theoretically insightful, have offered respectively, consistent with the
primary causes—ease of movement,
very little in the way of direction for 1995 study. The study examined 6
cost of leaving, and availability of
management practitioners. general variable categories and their
alternatives. Also examined are
prediction of turnover: personal
A turnover classification scheme development and initiation of
characteristics, satisfaction, other
which delineates voluntary versus retention strategies, with a particular
dimensions of work experience,
involuntary, functional versus focus on reducing voluntary
external environmental factors,
dysfunctional, and unavoidable and turnover, employee discharges, and
behavioral predictors, and
avoidable turnover is put forth. the consequences of downsizing.
withdrawal cognitions.
Also discussed are the tangible
and intangible costs of turnover.
Specifically addressed are the often Hom, P.W. & Griffeth, R.W.
Harrison, D.A., Newman,
unrecognized costs of turnover, such 1991. Structural equations
D.A., & Roth, P.L. How
as a loss of organizational memory modeling test of a turnover
important are job attitudes?
and a lack of seasoned mentors theory. Journal of Applied
Meta-analytic comparisons of
that comes with high turnover Psychology, 76, 350-376.
integrative behavioral outcomes
rates. Tactics for reducing turnover
and time sequences. Academy This study uses Hom, Griffeth,
are offering, such as an increased
of Management Journal, 49, and Sellaro’s (1984) theoretical
emphasis on socialization of new
305-325. alternative to Mobley’s
hires to promote job embeddedness.
(1977) turnover model in two
This article proposes that overall
investigational studies. Study 1
job attitudes (satisfaction and
validated conceptual distinctions
Griffeth, R.W., Hom, P.W., commitment) predict a variety
among model constructs and
& Gaertner, S. 2000. A meta- of behavioral criteria, including
operationalizations of those
analysis of antecedents and turnover. The study confirmed
constructs. A sample of 206 nurses
correlates of employee turnover: a moderate correlation between
was surveyed, and constructs were
Update, moderator tests, and overall job attitude and turnover
assessed with multiple indicators.
research implications for the (corrected r = -.22). The 95%
This article illustrates how the use
next millennium. Journal of confidence interval (-.12 through
of structural equation modeling
Management, 26, 463-488. -.36) indicates that although
(SEM) identified more parsimonious
the correlation is moderate, it is
This article provides an update to conceptualization than do previous
legitimate. This article emphasizes
the turnover meta-analysis of Hom linear growth models.
that when examining the impact of
and Griffeth (1995). Among its
job attitudes on job-related behavior,
contributions is the identification of
researchers should view the outcome
various moderators of antecedent-
at a high level of abstraction, with
turnover correlations. Additionally,
the idea being that a general attitude
this article is the most wide-ranging
will be linked to a general outcome.
quantitative review to date of
37
Retaining Talent
Hom, P.W. & Griffeth, R.W. that properties that are correlated The article establishes the role
1995. Employee Turnover. South- at one level of aggregation are not of strategic human resources
Western. necessarily correlated within the management in the success of the
same unit at the individual level. organization, specifically by reducing
This text features a meta-analysis
organizational turnover rates. In
of research on turnover among The labor market/turnover
this study, HPWS were shown
individuals. The meta-analysis literature shows the consistency
to improve corporate financial
categorizes antecedents of turnover and strength of the negative
performance through reduced costs
into six groups: Demographic and relation between job opportunities
associated with high quit rates.
personal determinants, satisfaction, or unemployment and voluntary
work environment, job content, job terminations (turnover) in
external environment, and aggregated data – sharing up to 70%
Ippolito, R.A. 1991. Encouraging
withdrawal cognitions. Examples of of the variance. However, in studies
long-term tenure: Wage tilt or
variables in each category include of individual decisions to turnover,
pension? Industrial and Labor
cognitive ability (demographic the consistency and strength of the
Relations Review, 44, 520-535.
determinants), job satisfaction effect is not as large as expected
(satisfaction), compensation (work based on the aggregate data. In This article examines the influence
environment), job scope (job addition, results do not show that of wage tilt (the payment of below-
content), labor market conditions alternative job options or assessment market wages in the early years of
(external environment), and of labor conditions behave at the the worker’s employment with a firm
turnover intentions (withdrawal individual level in the same manner and above-market wages in the later
cognitions). as at aggregate level. years) and the presence of defined
benefit pension plans on worker
The study yielded interesting results.
tenure. A sample of 6,416 persons
Turnover intentions proved to be
Huselid, M. 1995. The impact in 109 firms was examined to test
the best predictor of actual turnover
of human resource management whether wage tilt or pension plan
(r=.35). However, the passage of
on practices, on turnover, was a greater contributor to tenure.
time between developing intentions
productivity, and corporate Contrary to the popular (but little
to quit and quitting weakened
financial performance. Academy tested) belief that wage tilt creates
the relationship. Satisfaction and
of Management Journal, 38, commitment by workers to the
commitment showed a consistent
291-313. organization, the results show that
but weak correlation with turnover.
wage tilt had no significant effect on
This study provides a wide-ranging
tenure. On the other hand, pensions
evaluation of the links between
increased average tenure by more
Hulin, C.L., Roznowski, M., & systems of High Performance
than 20%.
Hachiya, D. 1985. Alternative Work Systems (HPWS) and firm
opportunities and withdrawal performance. Results based on a
decisions: Empirical and nationwide sample of almost 1,000
theoretical discrepancies and an firms indicate that HPWS have
integration. Psychological Bulletin, an economically and statistically
97, 233-250. significant impact on both
intermediate employee outcomes
The authors argue that aggregate
(turnover and productivity) and
and individual level data may not
short- and long-term measures of
come to the same conclusions
organizational financial performance.
about turnover. This phenomenon,
termed an ecological fallacy, means
38
Retaining Talent
Ippolito, R.A. 2002. Stayers as as a precursor to various antecedents These factors are proposed to
workers and savers. Journal of of turnover. This theoretical advance contribute to the decisions and
Human Resources, 37, 275-308. has implications for both turnover behavior of people who voluntarily
researchers and HR managers in leave an organization. The unfolding
This paper presents an alternate
understanding how to keep valued model utilizes constructs from
explanation to the traditionally
employees. Beach’s (1990) generic decision-
held belief that deferred wage
making model, image theory, to
contracts keep employees in the
understand the specific issues of
organization. The authors propose
Kammeyer-Mueller, J.D., employees’ decisions to quit. In the
that deferred wages instead attract
Wanberg, C.R., & Ahlburg, D. unfolding model, screening rather
employees who are inclined to
2005. Turnover processes in a than choosing among options is
save, or “savers”, and that savers
temporal context: It’s about time. the most important mechanism for
are generally better employees than
Journal of Applied Psychology. understanding decisions. Screening
non-savers. Because it is in the best
is a process that ascertains whether
interest of the organization to retain This article puts forth a turnover new information can be integrated
good employees, savers are induced model incorporating dynamic easily into a set of three domain-
to stay with the organization. predictors measured at 5 distinct specific images: value, trajectory, and
This proposed process creates points in time. To better understand strategic.
organizational situations whereby the process of organizational
deferred wages and high levels of withdrawal, turnover was examined The unfolding model has four
compensation are coupled with low by following a large occupationally decision paths. Two key concepts
quit rates. Therefore, low turnover and organizationally diverse sample to the four paths are shock to
rates are a function of good selection over a 2-year period. Results show the system and decision frames.
techniques. Simply by attracting that turnover can be predicted by A shock to the system is a very
“savers”, firms can produce low rates critical events if they are measured distinguishable event that jars
of organizational turnover. soon after organizational entry. employees toward deliberate
Other factors such as alternative judgments about their jobs and,
opportunities also became significant possibly, to voluntarily quit their
Jackofsky, E.F. 1984. Turnover predictors when measured over jobs. A decision frame is simply
and job performance: An time. In line with Lee and Mitchell’s an individual frame of reference.
integrated process model. unfolding model, critical events Also proposed is a path of quitting
Academy of Management Review, such as shocks predicted turnover abruptly with no plan in place,
9, 74-83. separately from attitudinal factors. known as impulsive quitting.
39
Retaining Talent
Maertz, C.P. & Campion, M.A. concept, known as equilibrium examined individually, and partial
2004. Profiles in quitting: theory, holds that inducements are correlation results revealed greater
Integrating process and content payments made by (or through) and more pervasive adverse effects
turnover theory. Academy the organization to its participants for downsizing (reduction in force)
of Management Journal, 47, (e.g., wages to a worker, service in comparison with the effects of
566-582. to a client). Contributions are voluntary and involuntary turnover.
payments made by a participant in The results reaffirm the differential
In this review and integration of
an organization to the organization effects of downsizing, placing an
process models (how people quit)
(e.g., work from the worker, fee emphasis on the need to move
and content models (why people
from the client). beyond the traditional voluntary-
quit) of turnover, the authors
involuntary classification system
studied 159 quitters to cull four The inducements-contribution
that is prevalent in existing turnover
generic turnover decision types balance is a function of two
theory.
that they believe each quitter uses major components: the perceived
in his or her decision to leave a desirability of leaving the
job. The first of these decision organization and the perceived ease
McKay, P.F., Avery, D.R.,
types is impulsive quitting, which is of movement from the organization.
Tonidandel, S., Morriss, M.A.,
characterized by quitting without The perceived desirability of
Hernandez, M., & Hebl, M.R.
an alternate plan of action and a movement is a function of both
2007. Racial differences in
short, precipitous decision process. the individual’s satisfaction with
employee retention: Are diversity
The second decision type identified his/her present job and his/her
climate perceptions the key?
is comparison quitting, which is perception of alternatives that do
Personnel Psychology, 60, 35-62.
simply the act of leaving a job not involve leaving the organization.
for another job one deems more The perceived ease of movement is This study examined the role of
desirable. The third decision type is a function of the number of extra- diversity climate perceptions on
termed preplanned quitting, and is organizational alternatives perceived. turnover rates among Whites,
distinguished by an advanced plan African-Americans, and Hispanics.
to quit, after a specific event occurs The authors hypothesized that
or a specific time period has passed. McElroy, J., Morrow, P., & perceptions of a climate of diversity
The final decision type identified is Rude, S. 2001. Turnover and would be most negatively correlated
conditional quitting, a plan to quit organizational performance: A with turnover intentions among
only if a specific event occurs. comparative analysis of voluntary, African-Americans, followed by
involuntary, and reduction-in- Hispanics and then Whites. The
force turnover. Journal of Applied findings were indeed strongest
March, J.G. & Simon, H.A. 1958. Psychology, 86, 1294-1299. among Blacks, but contrary to the
Organizations. John Wiley. hypothesized effects, both White
In this study, data were collected
men and women showed stronger
This piece puts forth the notion from 31 regional sub-units of a
effects than Hispanics.
that the decision to participate national financial services company.
lies at the core of organizational Differential aspects of 3 types of
equilibrium, a condition of survival turnover (voluntary, involuntary,
of an organization. Equilibrium reduction-in-force) on measures of
reflects the organization’s success organizational subunit performance
in arranging payments to its were examined. Each type of
participants adequate to motivate turnover showed adverse effects
their continued participation. This on sub-unit performance when
40
Retaining Talent
Mitchell, T.R., Holtom, B.C., a broad constellation of influences and turnover is significant and
& Lee, T.W. 2001. How to keep on employee retention. Two related consistent, it is not very strong. The
your best employees: Developing research frameworks that help author suggests that it is probable
an effective retention policy. explain the core of this construct are that other variables mediate the
Academy of Management Executive, embedded figures and Kurt Lewin’s relationship between job satisfaction
15, 96-108. field theory. The critical aspects of and the act of quitting. Key among
job embeddedness are 1) links—the these variables is the concept of
This article examines turnover from
extent to which people have links behavioral intentions. The model
a practitioner perspective. Drawing
to other people /activities, 2) presented is one of the first to
on the idea that competition to
fit,—the extent to which their jobs propose the role of intentions to
retain key employees can be intense,
and communities are similar to or fit quit in the turnover process.
the authors hold that top-level
with the other aspects of their life,
executives and HR departments
and 3) sacrifice—the ease with which
spend large amounts of time, effort,
these links can be broken. Sacrifice Mobley, W.H., Griffeth, R.W.,
and money trying to figure out how
encompasses the perceived cost of Hand, H.H., and Meglino, B.M.
to keep their people from leaving.
material or psychological benefits 1979. Review and conceptual
This article describes new research
that may be forfeited by leaving a analysis of the employee turnover
and its implications for managing
job. process. Psychological Bulletin, 86,
turnover and retention. In doing
493-522.
so, the conventional wisdom that The major contribution of the
dissatisfied people leave and money study is that it develops and The authors define turnover as a
makes them stay is challenged. The tests the aforementioned new form of employee withdrawal where
notion that people often leave for organizational attachment construct: the employee voluntarily leaves
reasons unrelated to their jobs is job embeddedness. Embeddedness the organization. The belief is that
explored. Multiple other causes is a new way of looking at turnover turnover is an individual choice
are put forth. In many situations, because it reflects the totality of behavior; therefore, individual is the
unexpected events or shocks are the forces that constrain people from primary unit of analysis. Specifically,
cause. Conversely, employees often leaving their current employment. the authors do not address turnover
stay because of personal attachments Results provided support for the that comes involuntarily, such as
and fit, both on the job and in their argument that people who are dismissal.
community. Recommendations for embedded in their jobs have less
integrating research into practice are intent to leave and do not leave Besides putting forth an expanded
offered. as readily as those who are not model of turnover, the article
embedded. Thus, off-the-job and offers a comprehensive review
non-affective causes have utility for that illustrates key themes in the
predicting turnover. turnover literature. Central among
Mitchell, T.R., Holtom, B.C.,
them are that satisfaction does not
Lee, T.W., Sablynski, C.J., & Erez,
seem to be an adequate composite
M. 2001. Why people stay: Using
of other precursors and correlates
job embeddedness to predict Mobley, W.H. 1977. Intermediate
of turnover. Also, behavioral
voluntary turnover. Academy linkages in the relationship
intentions—directly or as part of
of Management Journal, 44, between job satisfaction and
commitment—enhance prediction
1102-1121. employee turnover. Journal of
of turnover. Age, tenure, overall
Applied Psychology, 62, 237-240.
This paper introduces the construct job satisfaction and reactions to job
job embeddedness to the turnover Although it is clear that the content consistently and negatively
domain. Embeddedness represents relationship between job satisfaction are associated with turnover.
41
Retaining Talent
Greater variance in turnover can be Shaw, J.D., Gupta, N., & reduce quit rates. Quit rates were
explained using multiple variables, Delery, J.E. 2005. Alternative negatively linked to performance
and a great deal of variance is still conceptualizations of the measures. Hence, high-involvement
unexplained. Based upon these relationship between voluntary HR practices are tied to increased
findings, the authors put forth a turnover and organizational performance through the mediating
model of turnover. One of the major performance. Academy of effect of reduced quitting.
additions to the model is the role Management Journal, 48, 50-68.
of time. The authors posit that the
Four alternative predictions
temporal dimension may be relevant Steel, R.P. 2002. Turnover
regarding voluntary turnover
to the extent that organizational theory at the empirical interface:
and workforce performance are
socialization processes are important Problems of fit and function.
offered. Primarily, the authors
in turnover. Academy of Management Review,
suggest a curvilinear relationship
27: 346-360.
between turnover and workforce
performance. Voluntary turnover The author argues that turnover
Shaw, J.D., Duffy, M.K., Johnson,
is proposed to have a negative theory has relied too heavily on
J.J., & Lockhart, D. 2005.
relationship with workforce rational analytic decision models,
Turnover, social capital losses,
performance that attenuates as and suggested alternative decision
and performance. Academy
turnover increases. Hence the theory frameworks as good jumping-
of Management Journal, 48,
inverted U-shaped relationship off points for advancing turnover
594-606.
between turnover and performance theory. The theoretical model
This article tests the theory that found by Gleebek and Bax (2004) is presented in this article suggests
turnover among those who possess supported. The authors draw on 2 that search is a dynamic process that
social capital leads to greater losses studies to support their contentions. involves a confluence of traditional
in firm performance than those affective models of withdrawal.
who do not possess such capital. This model proposes that as
This study of 38 upscale restaurants Shaw, J., Delery, J., Jenkins, G., & search processes evolve over time,
supported the idea that turnover Gupta, N. 1998. An organization- individuals receive greater feedback
is negatively correlated to firm level analysis of voluntary and and gain more knowledge about
performance when the turnover involuntary turnover. Academy their potential alternate employment
occurs among high-social capital of Management Journal, 41, opportunities, which in turn
individuals. Alternatively, turnover 511-525. influences their turnover responses.
among low-social capital employees
This research examines the effects
has a relatively small impact on
of human resource management
firm performance. The authors also Steel, R.P., Griffeth, R.W., &
practices on quit rates at the
hypothesize that network density Hom, P.W. 2002. Practical
organizational level. This study
moderates the relationship between retention policy for the practical
used organizational-level data from
social capital losses and performance. manager. Academy of Management
227 organizations in the trucking
That hypothesis was not supported, Executive, 16, 149-161.
industry to explore this issue.
and the findings suggest instead
Results show that human resource This paper suggests that
that social capital losses are most
management practices predict organizations must employ a
damaging when overall turnover was
performance through quit rates. comprehensive retention policy in
low.
order to deal with the consequences
High-involvement HR practices
of spiraling replacement costs for
(those that involve investment in
employees. The suggestion is to
human capital) were shown to
42
Retaining Talent
integrate research on retention in retention tool. The findings of the average performers. Moderating
order to create a comprehensive study suggest that using utility the curvilinear relationship were
policy. The synthesis of research analysis can assist firms in evaluating salary growth and promotion. Salary
presented attests that average the usefulness of incentive-laden growth in particular moderated the
performers are less likely to quit than compensation. relationship for high performers.
high or low performers. Those with high salary growth were
less likely to turn over whereas those
The authors suggest a process for
Trevor, C.O. 2001. Interactions with low salary growth were more
the formulation of a retention
among actual ease of movement likely to leave the organization.
policy. This process begins with
determinants and job satisfaction
the comparison of organizational
in the prediction of voluntary
quit rate with the quit rate of the
turnover. Academy of Management
industry and an assessment of the
Journal, 44, 621-638.
organization’s retention goals
and projected workforce needs. In this article, interactions between
This leads to an assessment of determinants of ease of movement
the organization’s focused and and job satisfaction are hypothesized
blanket strategies and ultimately the to predict voluntary turnover. The
formulation of an organizational study features a longitudinal design
retention policy. and a sample of 5,506 individuals
who participated in the National
Longitudinal Survey for Youth
Sturman, M.C., Trevor, C.O., (NLSY). Using survival analysis,
Boudreau, J.W., & Gerhart, the authors found the impact of
B. 2003. Is it worth it to win job satisfaction and unemployment
the talent war? Evaluating the rate on employee turnover was
utility of performance-based moderated by education level,
pay. Personnel Psychology, 56, general mental ability, and job
997-1035. training.
43
Retaining Talent
45
Retaining Talent
46
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