New Horizons in Management series
Edited by George Saridakis and Cary L. Cooper
Chapter 12: A diagnostic methodology for discovering the reasons for employee turnover using shocks and events
. . . provides for the first time a set of tools for diagnosing existing jobs – and a map for translating the diagnostic results into specific action steps for change. (Hackman et al., 1975, on job enrichment) Employee turnover has been an organizational resource drain for over 100 years. Fisher (1916) reported that the Ford Motor Company reduced turnover from 400 percent to 23 percent in one year (between 1913 and 1914). The secret was ‘nine months of profit-sharing’ (Fisher, 1916: 144). Fisher (1916) estimated that $2 040 000 was saved, which is equivalent to $47 676 228 today. Over a half-century later, Mirvis and Lawler (1977) estimated that a substantial increase in satisfaction could potentially save a bank $125 160 in a year for 160 employees or approximately $482 686 after adjusting for inflation. After almost another decade, McEvoy and Cascio (1985) reviewed ‘Strategies for reducing employee turnover’, citing two strategies – realistic job previews and job enrichment – with enough evidence to analyze the effect across studies. The researchers estimated that from approximately $10 200 to $120 200 per year, for every 100 employees in an organization, could be saved through use of these methods combined (McEvoy and Cascio, 1985). Today, that would save approximately $22 154 to $261 074. More recently, the conversation has turned to costs alone. Kacmar et al. (2006) cite the retraining costs of the US fast-food industry at $4.3 billion per year.
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