Research Handbook on Employee Turnover

Research Handbook on Employee Turnover

New Horizons in Management series

Edited by George Saridakis and Cary L. Cooper

Covering the period of the financial crisis, this Research Handbook discusses the degree of importance of different driving forces on employee turnover. The discussions contribute to policy agendas on productivity, firm performance and economic growth. The contributors provide a selection of theoretical and empirical research papers that deal with aspects of employee turnover, as well as its effects on workers and firms within the current socio-economic environment. It draws on theories and evidence from economics, management, social sciences and other related disciplines.

Chapter 6: Employee turnover as a cost factor of organizations

Anne-Marie Mohammed, Yanqing Lai, Maria Daskalaki and George Saridakis

Subjects: business and management, human resource management, organisational behaviour

Extract

The termination of the contract, both official and psychological, is known as employee turnover (Krausz, 2002; Macdonald, 1999) and is considered as an index of organizational effectiveness. It is closely related to firm performance (Chikwe, 2009; Cho et al., 2006). The consequences of employee turnover can have either positive or negative impacts on organizational performance (Price, 1977; Mobley, 1982; Siebert and Zubanov, 2009; Ingersoll and May, 2012). Building up and maintaining a pool of good-quality employees is costly, as there are various costs associated with the human resource, which can be either direct or indirect (recruitment, selection, training, and so on). For instance, Hinkin and Tracey (2000) found that the overall costs of turnover of one front office attendant (including separation costs, replacement costs and lost productivity) ranged from about $6000 to $12,000, in which the loss of productivity accounted for the largest percentage of the cost. The findings from empirical studies have emphatically shown that for any organization to thrive it must hold on to its top talent (Holtom et al., 2005). Thus, it is imperative for the organization to maintain a labour force of employees with robust institutional knowledge, with employee turnover being kept to a minimum.

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